DNS Budget Highlights 2012
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Budget Highlights 2012

Budget Highlights 2012

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DNS Budget Highlights 2012 DNS Budget Highlights 2012 Document Transcript

  • Overview of Union Budget 2012 A. Preface B. Snapshots of Sectoral Analysis C. Direct Tax Proposals D. Indirect Tax Proposals E. FRBM Amendments F. Contact UsCopyright @ DNS Advisors Private Limited
  • A. PrefaceFinance Minister Pranab Mukherjee presented the Union Budget 2012-13 in parliament on Friday in the backdropof challenges faced by the economy during 2011-12 due to global crisis in the form of intensification of thesovereign debt crisis in the Euro zone, uncertainty due to political turmoil in Middle East, rise in crude oil prices,an earthquake striking Japan. With an optimism to improve our macroeconomic environment and strengthendomestic growth drivers to sustain high growth in the medium term, the Finance minister presented the keyobjectives of Twelfth Five Year Plan aimed at ―faster, sustainable and more inclusive growth.‖The government is faced with a major challenge of Implementation gaps, leakages from public programmes andthe quality of outcomes. Also the Impression of drift in governance and gap in public accountability is misplaced.The government has a challenge to improve the regulatory standards and administrative practices. The unionBudget 2012-13 to serve as a transition towards a more transparent and result oriented economic managementsystem in India.Economic Overview  India‘s GDP is estimated to grow at 6.9 per cent in real terms in 2011-12 which is a significant slowdown in comparison to the preceding two years, primarily due to deceleration in industrial growth, more specifically in private investment.  The headline inflation remained high for most part of the year. It was only in December 2011 that it moderated to 8.3 per cent followed by 6.6 per cent in January 2012.  The current account deficit as a proportion of GDP for 2011-12 is likely to be around 3.6 per cent. This, along with reduced net capital inflows in the second and third quarters, put pressure on the exchange rate.  India‘s GDP is expected to grow at 7.6% with an outside band of +/- 0.25% in 2012-13  Average inflation expected lower next year and current account deficit smaller aided by improvement in domestic financial savings  The developments in India‘s external trade in the first half of the current year were encouraging. Exports have grown by 23 % to reach US Dollar 243 billion, while imports have recorded a growth of 29 % at US Dollar 391 billion during April to January 2011-12.The implementation of the Fiscal Responsibility and Budget Management Act, 2003 (FRBM Act) at Centre andthe corresponding Acts at State level has been the pivot in the successful consolidation of our fiscal balance.Following the announcement in the last Budget, amendments to the FRBM Act have been introduced as part ofFinance Bill, 2012.Implementation of Direct Taxes Code (DTC) and Goods and Service Tax (GST) regime with effect from April 1,2012 has been extended. GSTN will be set up as a National Information Utility and is proposed to be operationalby August 2012 which will implement common PAN-based registration, returns filing and payments processingfor all States on a shared platform.Government committed to retain at least 51 % ownership and management control of the Central Public SectorUndertakings. Rs. 30,000 Crore to be raised through disinvestment in 2012-13.The decision in respect of allowing FDI in multi-brand retail trade up to 51 per cent, subject to compliance withspecified conditions, has been held in abeyance.Allocation for social sector in 2011-12 (Rs. 1, 60,887 Crore) increased by 17 % over current year. It amounts to36.4 % of total plan allocation.Copyright@ DNS Advisors Private Limited Page |2
  • B. Snapshots of Sectoral AnalysisInfrastructure and Industrial Development Housing Sector (Contd..) More focus on public private partnerships (PPP).  Enhance provisions under Rural Housing Fund Infrastructure investment will go up to Rs.50 lakh from Rs. 3000 crore to Rs. 4000 crore; crore with half of this expected from private sector.  Extend the scheme of interest subvention of 1 per Tax free bonds for financing infrastructure projects, cent on housing loan up to Rs. 15 lakh where the are proposed to raise to Rs.60,000 crore in 2012-13 cost of the house does not exceed Rs. 25 lakh for against Rs. 30,000 crore in last year. another year; and Coal India Limited (CIL) has been advised to sign  Enhance the limit of indirect finance under priority fuel supply agreements, with power plants that have sector from Rs. 5 lakh to Rs. 10 lakh. entered into long term Power Purchase Agreements with DISCOMs and would get commissioned on or before March 31, 2015. Textile Proposed to allow External Commercial Borrowings  The Government has recently announced a (ECB) to part finance Rupee debt of existing power financial package of Rs. 3,884 crore for waiver of projects. loans of handloom weavers and their cooperative societies Proposed to allow ECB for capital expenditure on the maintenance and operations of toll systems for Micro, Small and Medium Enterprises roads and highways so long as they are a part of the original project.  Proposed to set up Rs. 5,000 crore ‗India Opportunities Venture Fund‘ with SIDBI. To reduce the cost of Aviation Turbine Fuel (ATF), Government has permitted direct import of ATF by  To enable these enterprises greater access to Indian Carriers, as actual users. finance, two SME exchanges have been launched in Mumbai recently. To address the immediate financing concerns of the Civil Aviation sector, proposal to permit ECB for  Ministries and CPSEs to make a minimum of 20 working capital requirements of the airline industry per cent of their annual purchases from MSEs. Of for a period of one year, subject to a total ceiling of this, 4 per cent will be earmarked for procurement US Dollar 1 billion. from MSEs owned by SC/ST entrepreneurs. A proposal to allow foreign airlines to participate up Agriculture to 49 per cent in the equity of an air transport undertaking engaged in operation of scheduled and  The total plan outlay for the Department of non-scheduled air transport services is under active Agriculture and Cooperation is being increased by consideration of the Government. 18 per cent from Rs. 17,123 crore in 2011-12 to ` 20,208 crore in 2012-13.Housing Sector  The outlay for Rashtriya Krishi Vikas Yojana (RKVY) is being increased from Rs. 7,860 crore in Proposal to allow ECB for low cost affordable 2011-12 to Rs. 9,217 crore in 2012-13 housing projects;  Target for agricultural credit in 2012-13 to Rs. Set up Credit Guarantee Trust Fund to ensure 5,75,000 crore, an increase of Rs. 1,00,000 crore better flow of institutional credit for housing loans; over the target for the current year.Copyright@ DNS Advisors Private Limited Page |3 View slide
  • B. Snapshots of Sectoral Analysis (Contd..^2) Agriculture (Contd..) Better Governance  The interest subvention scheme for providing short  The enrolments into the Aadhaar system have term crop loans to farmers at 7 per cent interest per crossed 20 crore and the Aadhaar numbers annum will be continued in 2012-13. An additional generated up to date have crossed 14 crore. subvention of 3 per cent will be available to prompt  It has been proposed to allocate adequate funds to paying farmers. complete another 40 crore Aadhaar (UID) enrolments starting from April 1, 2012.  Allocation of Rs. 10,000 crore to NABARD for refinancing the Regional Rural Banks (RRBs) through RRB Credit Refinance Fund. Health  Kisan Credit Card (KCC) scheme will be modified  No new case of polio reported in last one year. to make it a smart card which could be used at Setting up of a new integrated vaccine unit near ATMs. Chennai to achieve vaccine security, disease eradication and prevention. Rural Development  National Rural Health Mission (NRHM) is being implemented through ‗Accredited Social Health  Allocation under Rural Infrastructure Development Activist‘- ‗ASHA‘. Allocation to NRHM from Rs. Fund (RIDF) to Rs. 20,000 crore. 18,115 crore in 2011-12 to Rs. 20,822 crore in 2012-13. Education  The Right to Education (RTE) Act is being Budget Estimates implemented with effect from April 1, 2010 through  Gross Tax Receipts estimated at Rs 1,077,612 the Sarva Shiksha Abhiyan (SSA). For 2012-13, Rs. crores for FY 2012-13 25,555 crore for RTE-SSA. This is an increase of 21.7 per cent over 2011-12.  Total expenditures budgeted at Rs 1,490,925 crores for FY 2012-13  In the Twelfth Plan, 6,000 schools have been proposed to be set up at block level as model schools to benchmark excellence. Of these, 2500 will be set up under Public Private Partnership. Defense/Security  In the Budget for 2012-13, a provision of Rs. 1,93,407 crore has been made for Defense Services (This space is intentionally left blank) which include Rs. 79,579 crore for capital expenditure.Copyright@ DNS Advisors Private Limited Page |4 View slide
  • C. Direct Tax ProposalsPersonal tax Corporate taxation Personal income-tax slabs are proposed to be revised  No change in Corporate Tax Rate, Minimum as under: Alternate Tax, Surcharge and Education CessRate % Revised Slab Existing Slab  Turnover Limit for compulsory tax audit ofNIL Upto Rs 200,000 Upto Rs 180,000 accounts u/s 44AB as for presumptive taxation proposed to be increased to Rs 1crore from Rs. 6010% 200,001 to 500,000 180,001 to 500,000 Lacs20% 500,001 to 10,00,000 500,001 to 800,000  Security Transaction Tax reduced by 20% (from 0.125% to 0.1%) on cash delivery transactions.30% Above 10,00,000 Above 800,000  Deeming provisions introduced to treat share premium received in excess of fair market value as No separate tax slabs for women assessee. Thus, the income in the hands of closely held investee maximum exemption limit for a resident women company below the age of 60 years would be Rs. 2,00,000 Limits remain unchanged for senior citizens (age of  Repatriation of dividends from foreign subsidiaries 60 years and above but less than 80 years) at Rs of Indian companies to India at a lower tax rate of 250,000 and for very senior citizen (age of 80 years 15 per cent as against the tax rate of 30 per cent and above) at Rs 500,000. Senior citizens not having extended for one more year i.e. upto March 31, income from business, shall be exempt from payment 2013 of advance tax.  The cascading effect of Dividend Distribution Tax Unexplained money, credits, investments, (DDT) in a multi-tier corporate structure proposed expenditures etc. will be taxed at the highest rate of to be removed. 30 per cent irrespective of the slab of income. A deduction of up to Rs. 10,000 has been proposed Tax Collection at Source for interest from savings bank accounts to individual taxpayers.  It is proposed to now levy tax collection at source Within the existing limit for deduction allowed for on purchase of bullion and jewellery in excess of Rs. health insurance, a deduction of upto Rs. 5,000 2 Lakh in cash. proposed for preventive health check-up.  Tax collection at source on trading of Coal, Lignite It is proposed to give Income Tax deduction of 50 and iron ore. per cent on investments of up to Rs 50,000 in savings scheme named after Rajiv Gandhi equity scheme for Others those who have annual income is less than 10 lacs. The scheme will have a Lock in period of 3 year  There shall be no disallowance under Sec. 40 (a) for non deduction of tax if due taxes are paid by the Premium paid on life insurance policies issued on or payee. after April 1, 2012 would be eligible for deduction under Section 80C only if premium paid does not  Section 68 is proposed to be amended to provide exceed 10% of the actual capital sum assured as that where assessee is a company (not being a widely against 20% at present. held company), the sum found credited in its It has been proposed to extend the levy of Alternate financial statement, consisting of share capital, Minimum Tax (AMT) on all persons other than security premium or any such amount, shall not be companies, claiming profit linked deduction. It is also deemed to be unexplained if shareholder explains proposed to provide exemption from AMT if the source of such share capital and such adjusted total income of an Individual or HUF or explanation in the opinion of the Assessing officer AOP or BOI does not exceed Rs. 25 lakhs. is satisfactory. Copyright@ DNS Advisors Private Limited Page |5
  • C. Direct Tax Proposals (Contd..^2)Tax Deduction at Source  Capital gain on sale of residential property exempted from if the sale consideration is used for subscription It is now proposed to deduct tax at source 1% of in equity of a manufacturing SME company for consideration amount on transfer of immovable purchase of new plant and machinery. property (other than agricultural land). Such deduction is only required if consideration exceeds  Weighted deduction at the rate of 150 per cent of Rs. 50lacs in case of property located in specified expenditure incurred on skill development in urban area and Rs. 20lacs in case property located in manufacturing sector proposed in accordance with any other area. specified guidelines. Withholding tax on interest payments on external  Deduction under Sec. 80G is proposed to be disallowed if donation is paid in cash in excess of Rs. commercial borrowings reduced from 20 percent to 5 10,000 percent for power, airlines, roads, bridges, affordable houses and fertilizer sectors. Additional measures to deter use of unaccounted money Threshold limit for deduction of tax from payment of interest on debentures u/s 193 increased from Rs.  Compulsory reporting requirement in case of assets 2,500 to Rs. 5,000. held abroad It is now proposed to deduct tax at source under Sec.  Reopening of assessment allowed up to the period 194J from remuneration paid to a director if such of 16years in relation to assets held abroad. payment is not subject to deduction of tax under Sec. 192.  Increasing the onus of proof on closely heldDeductions/ Exemptions companies for funds received from shareholders as well as taxing share premium in excess of fair It has been proposed to extend the weighted market value. deduction of 200 per cent for R&D expenditure in an in-house facility beyond March 31, 2012 for a further Amendment to Definition of Royalty u/s 9(1) period of five years.  Confirming the judgment passed in the case of Investment linked deduction of capital expenditure Gracemac Corporation vs. ADIT and putting aside incurred is proposed to be provided at the enhanced controversy that whether payment for use of rate of 150 per cent, as against the current rate of 100 software or copyrighted article would be taxable as per cent. for certain businesses which include cold royalty or not, definition of Royalty u/s 9(1) is chain facility, warehouse for storing food grains, proposed to be amended inserting Explanation 5 to hospital, fertilizer, new sectors eligible for investment include consideration in respect of any right, linked deduction property or information, whether or not—  the possession or control of such right, property Extension of the sunset date by one year for power or information is with the payer; sector undertakings so that they can be set up on or  such right, property or information is used before March 31, 2013 for claiming 100 per cent directly by the payer; deduction of profits for 10 years. Further, additional  the location of such right, property or depreciation of 20 per cent in the initial year is information is in India. proposed to be extended to new assets acquired by power generation companies.  Now, post amendment every payment for use of or right to use of software shall be taxable as royalty. Copyright@ DNS Advisors Private Limited Page |6
  • C. Direct Tax Proposals (Contd…^3)Overcome of Supreme Courts Ruling in Vodafones case- Retrospective amendments to sections 2(14),2(47) and 9 of the Income Tax Act, 1961 The Supreme Court in the instant case {Vodafone International Holdings B.V. v. UOI [2012] 17 taxmann.com 202 (SC)} held that transfer of shares of a foreign company which has an Indian Company as its subsidiary does not amount to transfer of any capital asset situated in India within meaning of section 9(1)(i). The Supreme Court‘s view in this respect was that: o ―controlling interest‖ is not a capital asset o the words ―directly or indirectly‖ do not qualify the transfer of the asset, o if a foreign company has a subsidiary in India, shares of foreign company are not deemed to be situated in India Pursuant to this judgment, the Finance Bill, 2012 seeks to tax indirect transfer of capital assets in India by inserting clarificatory explanations to Section 2(14), 2(47), 9(1) and 195 of the Act. The amendment is proposed to be applicable retrospectively from 1 April, 1962. Section 2(14): Definition of “Capital Asset” Explanation to section 2(14) is proposed to be added with effect from the 1st day of April 1962, so as to clarify that “the term „property‟ includes any rights in or in relation to an Indian company, including rights of management or control or any other rights whatsoever.” After the amendment, transfer of shares which result in transfer of ―controlling interest of an Indian Company‖ could give rise to a taxable event in India. Section 2(47): Definition of “Transfer” Explanation to section 2(47) is proposed to be added with effect from the 1st day of April 1962, so as to clarify that “transfer includes disposing of or parting with an asset or any interest therein, or creating any interest in any asset in any manner whatsoever, directly or indirectly, absolutely or conditionally, voluntarily or involuntarily, by way of an agreement (whether entered into in India or outside India) or otherwise, notwithstanding that such transfer of rights has been characterised as being effected or dependent upon or flowing from the transfer of a share or shares of a company incorporated outside India.” Thus, ‗transfer‘ would include indirect transfer of shares if rights in such shares are effected and dependent upon transfer of shares even of a foreign company. Clarification of „through‟ in Section 9(1) - Explanation 4 to Section 9(1) of the Act The Bill further proposes to clarify that the expression ‗through‘ shall mean and include and shall be deemed to have always meant and included ‗by means of‘, ‗in consequence of‖ or ‗by reason of‘. Section 9(1): Definition of income deemed to accrue or arise in India In section 9(1) of the Income Tax Act, Explanation 5 shall be inserted w.e.f. the 1st day of April 1962, so as to clarify that “an asset or a capital asset being any share or interest in a company or entity registered or incorporated outside India shall be deemed to be and shall always be deemed to have been situated in India, if the share of the interest derives, directly or indirectly, its value substantially from the assets located in India”. Accordingly, the amendment seeks to widen the scope of income under Section 9 of the Act and bring into tax net, the gains derived from transfer of share or interest if such share or interest derives either directly or indirectly its value substantially from assets located in India. Section 195: Withholding tax on payment to non residents A consequential amendment is proposed to be made in section 195 to extend applicability of withholding tax provisions u/s 195 to all persons whether resident or non- resident. It is further clarified that such non- resident may or may not have a residence or place of business or business connection or any other presence in any manner whatsoever in India. Copyright@ DNS Advisors Private Limited Page |7
  • C. Direct Tax Proposals (Contd….^4)TRC is mandatory to get treaty benefit, if GAAR invoked no Treaty benefitAs per existing provisions of section 90 of the Act, provisions of the DTAA entered into by India with other countriesor the provisions of the Act, whichever is more beneficial, would be applicable to the non-residents tax payers, beingresidents of such other countries.In view of such DTAAs, there are few countries, inter-alia, Mauritius, Cayman Islands, etc. wherein the right to taxcertain income (i.e. capital gains) is granted to the resident country. To ensure that the persons, availing the benefit ofsuch provisions in the DTAA, are actually residents of the corresponding country, the Assessing officer generally asksfor the Tax Residency Certificate (―TRC‖), to be issued by the tax authorities of such country.Presently, there is no specific provision in the Act to obtain a TRC to claim benefits under the DTAA except in thecase of Mauritius which is provided by Circular No. 789 dated 13th April, 2000 issued by CBDT wherein it wasclarified that that wherever a Certificate of Residence is issued by the Mauritian Authorities, such Certificate willconstitute sufficient evidence for accepting the status of residence as well as beneficial ownership for applying theDTAC accordingly.Amendment to Section 90 and 90AFinance Bill 2012 proposes to amend section 90 and 90A of the Act in order to provide that the non-residents wouldbe entitled to be governed by the provisions of DTAA only when TRC is obtained from the tax authorities of thecountry of residence of such non-resident.The amendment shall be applicable from 1 April 2013 to ensure that third party residents do not claim unintendedtreaty benefitsPrevention of Generation and Circulation of Black MoneyIt is proposed to lay a white paper on black money on the Table of the House in the current session of Parliament.Also it has been announced that there is advancement in tracking the trail of black money menace. The following havealready been done 82 Double Taxation Avoidance Agreements (DTAA) and 17 Tax Information Exchange Agreements (TIEA) have been finalized and information regarding bank accounts and assets held by Indians abroad has started flowing in. In some cases prosecution will be initiated; Dedicated exchange of information cell for speedy exchange of tax information with treaty countries is fully functional in CBDT; India became the 33rd signatory of the Multilateral Convention on Mutual Administrative Assistance in Tax Matters; and Directorate of Income Tax Criminal Investigation has been established in CBDT.The following legislative measures for strengthening anti-corruption framework are in various stages of enactment: Prevention of Money Laundering (Amendment) Bill, 2011 Benami Transactions (Prohibition) Bill, 2011 National Drugs and Psychotropic Substances (Amendment) Bill, 2011Copyright@ DNS Advisors Private Limited Page |8
  • D. Indirect Tax Proposals – Service TaxRate  Cascading of taxes has been significantly reduced by permitting utilization of input tax credits in a Service tax rate raises from 10% to 12% effective number of services such as catering, restaurants, from 1 April 2012. hotel accommodation, pandal and shamiana and transport sectors.Levy of service tax:  As a measure of harmonization between Central The concept of negative list proposed to be Excise and Service Tax, the Government has introduced, i.e. all services will now attract service made a number of alignments. From now on tax, except those specified in the negative list. common simplified registration form and aExemptions common return for Central Excise and Service Tax, to be named EST-1 shall be filed. This The negative list has 17 heads and includes common return will comprise only one page, specified services provided by the government or which will be a significant reduction from the 15 local authorities, and services in the fields of pages of the two returns at present education, renting of residential dwellings, entertainment and amusement, public  Possibility of a common tax code for service tax transportation, agriculture and animal husbandry. and central excise would be examined Film industry also gets tax exemption on  The option of deferred payment is being allowed copyrights relating to recording of cinematographic for all service providers rather than for specific films. services. The facility will be available only to individuals and partnership firms (including In addition to the negative list, there is a list of limited liability partnership) up to a turnover of exemptions which include health care, services provided by charities, religious persons, taxable services of Rupees Fifty lakhs subject to sportspersons, performing artists in folk and the condition that their turnover of taxable classical arts, individual advocates providing services in previous year was below Rupees Fifty services to non-business entities, independent lakhs. journalists, and services by way of animal care or car parking which shall be exempt from service tax.  Service Tax Return The services of business facilitators and Periodi Quarterly Return Monthly correspondents to banks and insurance companies city of Return included in exemption list. Return Status Individual/ Assesses Assesses Construction services relating to specified Firm/LLP other than other than infrastructure, canals, irrigation works, post-harvest assessee Individual/ Individual/ infrastructure, residential dwelling, and low-cost Firm/LLP Firm/ LLP mass housing up to an area of 60 sq. mtr. under Limit Any amount Tax liability Tax liability the Scheme of Affordable Housing in Partnership of tax less than 25 more than are also included in the exemptions. liability in lakhs in 25 lakhs in immediately immediately immediately It is proposed to raise the exemption for the preceding preceding preceding monthly charges payable by a member to a housing F.Y financial financial society from Rs. 3,000 to Rs. 5,000. year yearRegulatory measures Revision Application Authority and Settlement Commission are being introduced in Service Tax to help resolve disputes with far greater ease.Copyright@ DNS Advisors Private Limited Page |9
  • D. Indirect Tax Proposals – Central Excise & CustomsCENTRAL EXCISE CENVAT CreditRate  Service provider to pay duty on scrap capital goods. Duty on higher of Depreciated value or Transaction Rate of Excise duty raises to 12% from 10% Value. (With CENVAT); Merit Rate of Excise duty raised to 6% from 5%  Restriction imposed on credit distribution by ISD. (With CENVAT); Merit Rate of Excise duty raised to 2% from 1%  In case of more than one unit - distribute amongst (Without CENVAT) with few exceptions as all relatable units proportionately on the basis of briefed below. turnoverIncrease in rate of Excise Duty Exemptions It is proposed to increase excise duty on demerit  It is proposed to extend concessional basic goods such as certain cigarettes, hand rolled bidis, customs duty of 5 per cent with full exemption pan masala, gutka, chewing tobacco, un from excise duty/ CVD to six specified life-saving manufactured tobacco and zarda scented tobacco. drugs/ vaccines. It is proposed to enhance cess on crude petroleum  Branded Silver jewellery exempted from excise duty oil produced in India to Rs. 4500/- per metric tonne from Rs. 2500/- per metric tonne  Import of foreign-going vessels to be exempted from CVD of 5 per cent retrospectively. In the case of cars that attract a mixed rate of duty per vehicle, it has been proposed to increase the duty and switch over to an ad valorem rate as CUSTOMS mentioned in the table below Increase in rate of Custom Duty Current 10% 10% + 22% 22% + Rate Rs. Rs.  It has been proposed to enhance basic customs 10,000 15,000 duties on completely built units of large cars/ Proposed 12% 15% 24% 27% Multi-Utility Vehicles/ Sports Utility Vehicles Rate having engine capacity above prescribed threshold from 60 percent to 75 per cent ad valorem. Excise duty rationalized for packaged cement,  Increase basic customs duty on gold and platinum whether manufactured by mini-cement plants or bars from 2% to 4%. 5% to 10% on non-standard others. gold; Levy of excise duty of 1 per cent on branded  Impose basic customs duty of 2 per cent on cut precious metal jewellery to be extended to include and polished, coloured gem stones at par with unbranded jewellery. diamonds; Chassis for building of commercial vehicle bodies  Increase in BCD on bicycles from 10% to 30% and to be charged excise duty at an ad valorem rate parts of bicycles from 10% to 20%. instead of mixed rate. Increase basic customs duty on Digital Still 12% excise duty imposed on branded retail Cameras from NIL to 10% not qualifying the garments. Abatement increased from 55% to 70%. specification mentioned in Notification No. 15/2012-CusReduction in rate of Excise Duty Excise duty on LED lamps reduced to 6 per centCopyright@ DNS Advisors Private Limited P a g e | 10
  • D. Indirect Tax Proposals – Central Excise & CustomsReduction in rate of Custom Duty  Full exemption from import duty on specified equipment imported for road construction by Duty on soya protein concentrate and isolated soya contractors of Ministry of Road Transport and protein to 10 per cent from the present 30 per cent Highways, NHAI and State Governments is or 15 per cent respectively being extended to contracts awarded by Metropolitan Development Authorities Basic customs duty and excise duty reduced on iodine from 6 per cent to 2.5 per cent.  Imports of equipment for initial setting-up or substantial expansion of fertilizer projects are Basic customs duty on probiotics is now 5 per cent being fully exempted from basic customs duty of reduced from 10 per cent. 5 per cent for a period of three years up to March 31, 2015 Basic customs duty on sugarcane planter, root or tuber crop harvesting machine and rotary tiller and  Coating chemical used for compact fluorescent weeder and parts has been reduced from 7.5 per lamps fully exempt from basic customs duty. cent to 2.5 per cent Legislative Changes Basic customs duty reduced from 7.5 per cent to 5 per cent on specified coffee plantation and  Section 28AAA inserted for initiating proceeding processing machinery. against alternate person in case duty free instrument obtained by way of collusion, willful misrepresentation or suppression of facts. Basic customs reduced on some water soluble fertilizers and liquid fertilizers, other than urea,  Computation of Education Cess and Secondary from 7.5 per cent to 5 per cent and from 5 per & Higher Education Cess is simplified to cent to 2.5 per cent exempt the cesses as leviable on CVD portion of customs duty to avoid computation of such The duty-free baggage allowance for eligible cesses twice. passengers of Indian origin has been increased from Rs.25,000 to Rs. 35,000 and for children upto 10  CENVAT Credit Rules are amended to permit years from Rs.12,000 to Rs.15,000. transfer of unutilised credit of SAD lying in balance at the end of each quarter to other Concession from basic customs duty and special registered premises of same manufacturer. CVD is being extended to certain items imported for  21/2012-Cus consolidates SAD exemptions manufacture for hybrid or electric vehicle and under 20/2006-Cus and 29/2010-Cus. Further a battery packs for such vehicles. condition inserted requiring the importer of the specified goods to declare the State of Customs duties on imported plant & machinery for destination where the goods are intended to be iron ore plants reduced to 2.5% sold for the first time on payment of VAT after import along with VAT registration number.Exemptions Full exemption given 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 5% customs duty exempted on equipment for fertilizer plants (This space is intentionally left blank) Full exemption from basic duty to Natural Gas and Liquified Natural Gas and Uranium concentrate, Sintered Uranium Dioxide in natural and pellet formCopyright@ DNS Advisors Private Limited P a g e | 11
  • E. Amendments to Fiscal Responsibility and Budget Management Act, 2003 (FRBM)Tax Reforms Financial Sector Direct Tax Code Bill: Report of the  Income tax deduction of 50 per cent to new retail Parliamentary Standing Committee submitted investors under ―Rajiv Gandhi Equity Savings March 9, 2012 is being examined and necessary Scheme‖, who invest up to Rs. 50,000 directly in steps for the enactment of DTC at the earliest are equities and whose annual income is below Rs. 10 being taken.. lacs. The scheme will have a lock-in period of 3 Goods and Services Tax (GST): years. Drafting of model legislation for Centre and State Capital Markets GST in concert with States is under progress.  Proposed to Allow Qualified Foreign Investors The structure of GST Network (GSTN) has been (QFIs) to access Indian Corporate Bond market; approved by the Empowered Committee of State Finance Ministers. GSTN will be set up as a  In order to simplify the process of issuing Initial National Information Utility and will become Public Offers (IPOs), it is proposed to make it operational by August 2012. mandatory for companies to issue IPOs of Rs. 10 The GSTN will implement common PAN-based crore and above in electronic form through registration, returns filing and payments nationwide broker network of stock exchanges; processing for all States on a shared platform.  Providing opportunities for wider shareholder participation in important decisions of theDisinvestment companies through electronic voting facilities, besides existing process for shareholder voting, The government propose to raise Rs. 30,000 crore which would be made mandatory initially for top in 2012-13 through disinvestment as against a listed companies; target of 40,000 crore last year (In actual raised 14000 crore in last year)  Permitting two-way fungibility in Indian Depository Receipts subject to a ceiling with the At least 51 per cent ownership and management objective of encouraging greater foreign control in Central Public Sector Enterprises (CPSEs) will remain with the Government. participation in Indian capital market.Foreign Direct Investment At present, FDI in single brand retail and in cash and carry wholesale trade is permitted to the extent of 100 per cent. Efforts are on to arrive at a broad based (This space is intentionally left blank) consensus in consultation with the State Governments to allow FDI in multi-brand retail trade up to 51 per cent, subject to compliance with specified conditions.. Copyright@ DNS Advisors Private Limited P a g e | 12
  • F. Contact UsDNS Advisors Private LimitedW – 123, Greater Kailash Part - IINew Delhi – 110048Tel: 011 40535910Contact PersonsCA Neha Bansal CA Naveen GoyalMob: 9810904228 Mob: 9911095297Email: neha@dnsadvisors.com Email: naveen@dnsadvisors.comCA Deepak Gupta CA Naveen WadhwaMob: 9811300590 Mob: 9891352716Email: Deepak@dnsadvisors.com Email: naveen.wadhwa@dnsadvisors.com Services offered:  Business Set up Services  Business Valuation and Financial Advisory  Project Funding  Taxation and Legal Advisory  Audit / Assurance  XBRL Conversion Services  Conversion services to Revised Schedule VI  Advisory on Company Law & FEMA matters  Secretarial CompliancesDisclaimer:This document is prepared for information purposes only. No reader should act on the basis of any statement contained hereinwithout seeking professional advice. The firm expressly disclaims all and any liability to any person who has read this, document orotherwise, in respect of anything, and of consequences of anything done, or omitted to be done by any such person in relianceupon the contents of this document.Sponsored by:WWW.COMPANIESCART.COMYOUR GATEWAY TO BUSINESS SET UP IN INDIACopyright@ DNS Advisors Private Limited P a g e | 13