PERSONAL TAXATION – DEDUCTIONS / EXEMPTIONS - BUDGET 2013 - 14

[CS Swati Dodhi]

PERSONAL TAXATION – DEDUCTIONS / EXEMPTIONS - BUDGET 2013 - 14

1. Sum received under a life insurance policy  - Presently any sum received under a life insurance policy is exempt, provided that the premium paid for such policy does not exceed 10 per cent of the “actual capital sum assured”. This ceiling of 10 per cent is proposed to be raised to 15 per cent of the “actual capital sum assured” for persons suffering from a disability or suffering from a disease or ailment as specified.

2. Contribution made by an individual to the CGHS - Presently, this contribution does not exceed in the aggregate of Rs 15,000 as a deduction from taxable income. It is proposed that the benefit of this deduction shall also be allowed in respect of any payments as do not exceed in the aggregate Rs. 15,000, to such other health scheme as may be notified by the Central Government.

3. Listed equity shares acquired in accordance with the Rajiv Gandhi Equity Savings Scheme  - Presently, a resident individual is allowed a deduction of 50 per cent of the amount invested in such equity shares subject to a maximum of Rs. 25,000 for the assessment year in which such investment is made. It is proposed to amend these provisions so as to provide that investment in listed units of an 'equity oriented fund' shall also be eligible for deduction. It is further proposed to provide that this deduction shall be allowed for 3 consecutive assessment year, beginning with the year in which the investment is first made and whose gross total income for the relevant assessment year does not exceed Rs. 1,20,000.

4. Donations made to National Children's fund – Under the existing provisions donations to the National Children Fund are allowed to the extent of 50%. It is now proposed to allow the entire amount as deduction. Proposal to allow 100 per cent deduction from the gross total income of an assessee.

5. Deduction of Political Contributions -  Presently any sum contributed by an Indian company to any political party or an electoral trust in the previous year is allowed as a deduction in computing the total income of such Indian company. A similar deduction is available to an assessee being any person other than local authority and artificial juridical person. As presently there is no specific mode provided for making such contribution. It is proposed to amend these provisions to provide that no deduction shall be granted where the contributions are made by way of cash.

6. Exemption to income of Investor Protection Fund of Depositories - It is proposed that income of Investor Protection Fund of depositories set up in accordance with the regulations prescribed by SEBI shall be exempt from taxation. But, any amount of the fund not charged to income-tax during any year is shared wholly or partly with a depository, such amount shall be deemed to be the income of the previous year in which such amount is shared.

7. Exemption to National Financial Holdings Company Limited - It is proposed to extend exemption to the National Financial Holdings Company Limited in respect of its income accruing, arising or received on or before March 31, 2014. This is in view of the fact that these operations were being performed by Specified Undertaking of the Unit Trust of India which enjoyed a similar exemption which has been wound up and succeeded by NFHCL. This amendment will take effect retrospectively from April 1, 2013.

8. Keyman Insurance Policy -  Presently, any sum received under a life insurance policy other than a keyman insurance policy is exempt from taxation. Policies taken as keyman insurance policy even if assigned to the keyman before itsmaturity continue to be exempt from taxation upon maturity, it is proposed to provide that a keyman insurance policy which has been assigned to any person during its term, with or without consideration, shall continue to be treated as a keyman insurance policy to avoid any tax avoidance..