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Budget Highlights = 2012

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S

S.Ramanathan

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Source: CA SUBASH CHANDRA SARAF, CALCUTTA
Budget Proposal
Impact
ü Exemption limit for the general category of individual taxpayers is enhanced from Rs. 1,80,000/- to Rs. 2,00,000/-, New Slab is as under:

Upto Rs. 2 Lakh
Exempt
From Rs 2 lakh to Rs 5 lakh
10%
Rs 5 lakh to Rs 10 lakh
20%
Beyond Rs 10 lakh
30%

Favorable
ü Savings Bank Interest upto Rs. 10,000/- is allowed to be deducted from the taxable income.

Favorable
ü A new deduction of Rs. 5,000/- for preventive health check up is introduced.

Favorable
ü Senior citizens who are not having any business income will not be required to pay any advance tax.

Favorable
ü New Tax deduction of 50% on investments upto Rs. 50,000/- for retail investors in Rajiv Gandhi Equity Scheme having income upto Rs. 10 lakh. Lock in period will be 3 years.

Favorable
ü Sale of residential property exempted from capital gains if invested in equity or equipment of an SME.

Favorable
ü Tax deduction at source on transfer of immovable property (other than agricultural land) above a specified threshold.

Unfavorable
ü Tax collection at source on purchase in cash of bullion or jewellery in excess of Rs. 2 lakh.

Unfavorable
ü Turnover limit for tax audit of accounts and presumptive taxation of SMEs is raised from Rs. 60 Lakhs to Rs. 1 Crore

Favorable
ü Capital Gain on sale of Residential Property is exempted from taxation if the sale Consideration is used for subscription in equity of a manufacturing SME for purchase of New Plant & Machinery

Favorable
ü Securities Transaction Tax (STT) reduced from 0.125 per cent to 0.1 per cent on Delivery Transactions.

Favorable
ü Minimum Alternate Tax (MAT) extended to all persons, other than Companies, claiming profit linked deductions.

Unfavorable
ü Rate of TDS on interest payment of ECB by stressed infrastructure sectors is reduced from 20 % to 5 % for 3 years.
Favorable
ü Inclusion of New sectors for the purposes of investment linked deductions
ü Introduction of weighted deduction of 150 % on expenditure incurred for agri-extension services.

Favorable
ü Introduction of weighted deduction at 150 % of expenditure incurred on skill dev elopement in manufacturing sector.

Favorable
ü Sunset date for setting power sector undertakings extended by one year for claiming 100 % deduction for 10 years.

Favorable
ü Increase of Weighted Deduction for certain capital expenditure and in-house R & D expenditure.

Favorable
ü Increasing the onus of proof on closely held companies for funds received from shareholders as well as taxing share premium in excess of fair market value.

Unfavorable




  • Indirect Tax
Budget Proposal
Impact
ü Rate of Service tax increased to 12 %
Unfavorable
ü Rate of Standard Excise Duty increased to 12 %
Unfavorable
ü Service Tax net widened to cover all services except 17 specified services as per negative list
Unfavorable
ü Return filing process for Excise and Service Tax simplified by introducing a Common 1 page return (EST-1)
Favorable
ü Common Tax code for Service tax and Excise to be introduced
Favorable
ü Abatement to branded readymade garment sector increased from 55 % to 70 %
Favorable
ü Full exemption from basic customs duty and a concessional CVD of 1 per cent to Steam coal for a period of two years till March 31, 2014
Favorable
ü Full exemption from basic duty is also being provided to the following fuels for power generation:
  • Natural Gas and Liquified Natural Gas; and
  • Uranium concentrate, Sintered Uranium Dioxide in natural and pellet form.
Favorable
ü Exemption of Customs Duty of 5 % on equipments for fertilizer plants
Favorable
ü Customs duty on imports of parts aircraft, tyres and testing equipment, equipment for road and highway construction - fully exempted
Favorable
ü Reduction in custom duty from 7.5% to 2.5% on import of plant and machinery for setting up or substantial expansion of iron ore pellet plants
Favorable
ü Full exemption from custom duty on automatic shuttle-less looms
Favorable
ü Full exemption from basic customs duty on waste paper, LCD and LED TV panels, and parts of memory card for mobile phones
Favorable
ü Basic customs duty on bicycles from 10 per cent to 30 per cent and on bicycle parts from 10 per cent to 20 per cent
Favorable
ü Excise duty on large cars raised from 22 % to 24 %
Unfavorable
ü Customs duty on Standard gold raised from 2 % to 4 %
Unfavorable
ü Revision Application Authority and Settlement Commission being introduced in Service Tax for dispute resolution
Favorable
ü New scheme announced for simplification of refunds
Favorable
ü Rules pertaining point of taxation being rationalized
Favorable

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