Lok Sabha passes Finance Bill; here are key amendments

After much uproar over coalgate scam and walkout by opposition, the Finance Bill for 2013-14 was finally passed in Lok Sabha without a debate, but with certain key amendments announced by the Finance Minister P Chidambaram.

Amendments included many initiatives that will help the government to attract more foreign investment much needed for bridging widening current account deficit.

One of the key amendments included dropping of sub section 5 in the Finance Bill, which essentially means that tax residency certificate (TRC) will now be enough proof for a foreign investor to claim tax benefits in India. In the Union Budget 2013 FM had said that the TRC would be a necessary but not a sufficient condition in order to claim treaty benefits. This move also cheered the Dalal Street.

In a bid to attract more foreign investment, FM reduced the withholding tax on long term infrastructure bonds to 5 percent from 20 percent. It had already been proposed on foreign borrowings and now it is being done on Government of India Securities (G-Secs) as well as for Qualified Foreign Investors (QFIs). Also, tax on rupee denominated bonds will now be 5 percent.

The requirement of holding a pan card for long term infra bonds for claiming 5 percent is also been done away with. So, those people who do not have a pan card would also get a 5 percent rate now.

FM also gave a clarification on imposition of wealth tax on farm land. He said that the government had no intention of charging wealth tax on agriculture land, providing relief to farmers. In the Budget, FM had proposed 1 percent wealth tax on value of farm land falling within an 8-kilometre radius of urban areas.

Chidambaram also exempted railways from payment of service tax for period between July, 1, 2012 to October 1, 2012 to avoid burden on loss making carrier.