According to the Indian Budget 2013, the Government is considering for following major tax initiatives: the introduction of a Direct Tax Code (DTC), a goods and services tax (GST) and General Anti-Avoidance Rules (GAAR).
The main changes are summarized below:
A final withholding tax will be levied on profits distributed by unlisted companies to shareholders and the rate of tax on payments made by way of royalties and fees for technical services to non-residents will rise from 10% to 25%.
For domestic companies with taxable income in excess of INR 100 million the surcharge will rise from 5% to 10%, and, in the case of foreign companies, it will increase from 2% to 5% and these additional surcharges will be in force for one year.
Individual income of between INR 200,000 and INR 500,000 will receive a tax credit of INR 2,000 and a new surcharge of 10% will be levied on persons other than companies with a taxable income in excess of INR10 million.
Also, it has been confirmed that with this budget the GAAR will enter into effect from April 1, 2016.
