Union Budget 2012-13: Tax Proposals
After devolution to States, the net tax to the Centre in 2012-13 is estimated at 771071crore rupees. The Non Tax Revenue Receipts were estimated at 164614crore rupees and Non-debt Capital Receipts at 41650 crore rupees. The total expenditure for 2012-13 is budgeted at 1490925 crore rupees. Of this 521025crore rupees is the Plan Expenditure while 969900 crore rupees is budgeted as Non Plan Expenditure.
The budget stated that individual income upto 2 lakh rupees will be free from income tax; income upto 1.8 lakh rupees was exempt in 2011-12. Income above 5 lakh rupees and upto 10 lakh rupees will carry tax at the rate of 20 per cent.
The following provisions were stated under Direct Taxes:
• Tax proposals for 2012-13 mark progress in the direction of movement towards DTC and GST.
• DTC rates proposed to be introduced for personal income tax.
• Exemption limit for the general category of individual taxpayers proposed to be enhanced from 180000 rupees to 200000 rupees giving tax relief of 2000 rupees.
• Upper limit of 20 per cent tax slab proposed to be raised from 8 lakh rupees to 10 lakh rupees.
• Proposal to allow individual tax payers, a deduction of upto 10000 rupees for interest from savings bank accounts.
• Proposal to allow deduction of upto 5000 rupees for preventive health check up.
• Senior citizens not having income from business proposed to be exempted from payment of advance tax.
• To provide low cost funds to stressed infrastructure sectors, rate of withholding tax on interest payment on ECBs proposed to be reduced from 20 per cent to 5 per cent for 3 years for certain sectors.
• Restriction on Venture Capital Funds to invest only in 9 specified sectors proposed to be removed.
• Proposal to continue to allow repatriation of dividends from foreign subsidiaries of Indian companies at a lower tax rate of 15 per cent upto 31.3.2013.
• Investment link deduction of capital expenditure for certain businesses proposed to be provided at the enhanced rate of 150 per cent.
• New sectors to be added for the purposes of investment linked deduction.
• Proposal to extend weighted deduction of 200 per cent for R&D expenditure in an in house facility for a further period of 5 years beyond 31 March 2012.
• Proposal to provide weighted deduction of 150 per cent on expenditure incurred for agri-extension services.
• Proposal to extend the sunset date for setting up power sector undertakings by one year for claiming 100 per cent deduction of profits for 10 years.
• Turnover limit for compulsory tax audit of account and presumptive taxation of SMEs to be raised from 60 lakhs rupees to 1 crore rupees .
• Exemption from Capital Gains tax on sale of residential property, if sale consideration is used for subscription in equity of a manufacturing SME for purchase of new plant and machinery.
• Proposal to provide weighted deduction at 150 per cent of expenditure incurred on skill development in manufacturing sector.
• Reduction in securities transaction tax by 20 per cent on cash delivery transactions.
• Proposal to extend the levy of Alternate Minimum Tax to all persons, other than companies, claiming profit linked deductions.
• Proposal to introduce General Anti Avoidance Rule to counter aggressive tax avoidance scheme.
• Measures proposed to deter the generation and use of unaccounted money.
• A net revenue loss of 4500 crore rupees estimated as a result of Direct Tax proposals.
Given below are the major provisions under the Indirect Taxes
Service Tax
• Sevice tax confronts challenges of its share being below its potential, complexity in tax law, and need to bring it closer to Central Excise Law for eventual transition to GST.
• Overwhelming response to the new concept of taxing services based on negative list.
• Proposal to tax all services except those in the negative list comprising of 17 heads.
• Exemption from service tax is proposed for some sectors.
• Service tax law to be shorter by nearly 40 per cent.
• Number of alignment made to harmonise Central Excise and Service Tax. A common simplified registration form and a common return comprising of one page are steps in this direction.
• Revision Application Authority and Settlement Commission being introduced in Service Tax for dispute resolution.
• Utilization of input tax credit permitted in number of services to reduce cascading of taxes.
• Place of Supply Rules for determining the location of service to be put in public domain for stakeholders’ comments.
• Study team to examine the possibility of common tax code for Central Excise and Service Tax.
• New scheme announced for simplification of refunds.
• Rules pertaining to point of taxation are being rationalised.
• To maintain a healthy fiscal situation proposal to raise service tax rate from 10 per cent to 12 per cent, with corresponding changes in rates for individual services.
• Proposals from service tax expected to yield additional revenue of 18660 crore rupees.
Other proposals for Indirect Taxes
• Given the imperative for fiscal correction, standard rate of excise duty to be raised from 10 per cent to 12 per cent, merit rate from 5 per cent to 6 per cent and the lower merit rate from 1 per cent to 2 per cent with few exemptions.
• Excise duty on large cars also proposed to be enhanced.
• No change proposed in the peak rate of customs duty of 10 per cent on nonagricultural goods.
• To stimulate investment relief proposals for specific sectors - especially those under stress.
Agriculture and Related Sectors
• Basic customs duty reduced for certain agricultural equipment and their parts;
• Full exemption from basic customs duty for import of equipment for expansion or setting up of fertiliser projects upto 31 March 2015.
Infrastructure
• Proposal for full exemption from basic customs duty and a concessional CVD of
• 1 per cent to steam coal till 31 March, 2014.
• Full exemption from basic duty provided to certain fuels for power generation.
Mining
• Full exemption from basic customs duty to coal mining project imports.
• Basic custom duty proposed to be reduced for machinery and instruments needed for surveying and prospecting for minerals.
Railways
• Basic custom duty proposed to be reduced for equipments required for installation of train protection and warning system and upgradation of track structure for high speed trains.
Roads
• Full exemption from import duty on certain categories of specified equipments needed for road construction, tunnel boring machines and parts of their assembly.
Civil Aviation
• Tax concessions proposed for parts of aircraft and testing equipment for third party maintenance, repair and overhaul of civilian aircraft.
Manufacturing
• Relief proposed to be extended to sectors such as steel, textiles, branded readymade garments, low-cost medical devices, labour-intensive sectors producing items of mass consumption and matches produced by semi-mechanised units.
Health and Nutrition
• Proposal to extend concessional basic customs duty of 5 per cent with full exemption from excise duty/CVD to 6 specified life saving drugs/vaccines.
• Basic customs duty and excise duty reduced on Soya products to address protein deficiency among women and children.
• Basic customs duty and excise duty reduced on Iodine.
• Basic customs duty reduced on Probiotics.
Environment
• Concessions and exemptions proposed for encouraging the consumption of energy-saving devices, plant and equipment needed for solar thermal projects.
• Concession from basic customs duty and special CVD being extended to certain items imported for manufacture for hybrid or electric vehicle and battery packs for such vehicles.
• Proposal to increase basic customs duty on imports of gold and other precious metals.
Comments
Post a Comment