UNION BUDGETKEY POINTS: 2012-13 A précis of India’s Fiscal Policy 1 6 . 0 3 . 2 0 1 2• India’s GDP is estimated to grow at 6.9% in FY 2011- 12• Allocation of funds An Overview to National Health Rural Mission to be • Exemption limit for personal • Limit on tax free infra bonds to • Minimum of 20% of Annual income tax enhanced to Rs. 2 be raised to 600 Crores purchases of CPSEs to be from increased to Rs. 20,822 Crore Lakhs Micro, Small and Medium • Food security act to be fully Enterprises • Disinvestment target of Rs. 300 funded• GST network as a billion in FY 2012-13 • Senior citizens having no National income from business Information Unit to • 50% income tax exemption for exempted from Advance tax be made operational equity investors who invest up by August 2012 to Rs. 50,000 and whose • Turnover limit for Compulsory a n n u a l i n c o m e i s l e ss tax audit of accounts of SMEs• Bharat Livelihoods than Rs. 10 lakhs raised to Rs. 1 Crore Foundation of India to be established to • IPOs of Rs. 10 Crore or more • Alternate Mi n i m u m T a x scale up civil society mandated to be in electronic extended to all persons other form than companies, claiming profit • Service tax and Excise rates linked deductions • Shareholders meeting by raised to 12%INSIDE THIS e-voting to be made • Introduction of compulsory compulsory for top listed • Direct Import of Air Turbine reporting requirement in case ofISSUE: companies Fuel by Indian carriers assets held abroad permitted to ease financialDirect taxes 2 • Rs. 15,888 Crore for crisis in aviation sector • Full exemption of coal exports capitalization of Public sector from customs to power sector banks, RRBs including • Establishment of Rs. 5,000Excise & Customs 2 NABARD crore India Opportunities Venture Fund for SMEs • Reduction of STT to 0.1%Service Tax 2Revenue forgone 3 Income-tax SlabsPromises FY 2011-12 FY 2012-13 Rate of tax (%)Vs 3Performance Up to1,80,000 Up to 2,00,000 NilForeign Up to 1,90,000 (for women) Up to 2,00,000 (for women) NilInvestment 3 Up to 2,50,000 Up to 2,50,000 NilEnvironment (for resident individual of 60 (for resident individual of 60 years or above) years or above) 1,80,001 – 5,00,000 2,00,000 – 5,00,000 10 5,00,001 – 8,00,000 5,00,001 – 10,00,000 20 8,00,001 upwards 10,00,001 upwards 30
PAGE 2 Direct taxes • Direct Tax Code to be of up to Rs. 5,000 for from foreign subsidiaries of enacted at the earliest after preventive Health check up Indian companies to India at expeditious examination of has also been provided a lower tax rate of 15% the report of the allowed for one more year • Extension of the sunset Parliam entary Standing clause for tax holiday for • Capital gains tax on sale of a Committee power sector undertakings residential property • Exemption to individual tax for another one year i.e. up exempted for SMEs, if the payers on Saving Bank to March 31, 2013 sale consideration is used for Interest up to Rs. 10,000 has subscription in equity of a • Taxation of unexplained manufacturing SME been provided money, credits, investments, company for purchase of“Proposals on Direct • Tax collection at source on expenditures etc., at the new plant and machineryTaxes are estimated to purchase in cash of bullion or highest rate of 30 per cent jewellery in excess of Rs. 2 irrespective of the slab of • Exemption Wealth Tax forresult in a net revenue lakhs income residential house allotted toloss of Rs. 4500 crore” employee of a company by • Proposal to allow deduction • Repatriation of dividends increasing Gross Salary threshold to Rs. 10 Lakhs“Higherexcise duty to Excise & Customspull down • Merit Rate of Excise duty machinery and instruments exempted from Customs duty increased to 6% and Lower for surveying andmargins” prosp ecting in Mini ng • Basic customs duty on Merit Rate to 2% with few imported bicycles increased exceptions reduced to 2.5% from 10% to 30% • Full exemption from basic • Full exemption from Customs duty for Aircraft spares, tyres • Full exemption from CVD on customs duty on waste plant and equipments used in paper, LCD and LED TV and testing equipment setting up solar energy panels and memory cards • Effective excise duty on projects • Excise Duty on large cars branded apparels and made- ups reduced from 4.5% to • Basic customs duty on a t t r a c t i n g m i xe d rate MUVs/SUVs whose value increased to 27% 3.6% e xc e e d s U S D 4 0 , 0 0 0 • Basic customs duty on • Branded silver jewellery fully enhanced to 75% ad valorem “Proposals relating to Indirect Taxes Service tax are estimated to • New concept of Negative List to 40% • Establishment of Revision comprising of 17 heads • Utilization of Input Tax credit Application Authority and result in a net Introduced; Service tax (ST) Settlement Commission permitted to rem ove to be levied on all services cascading effect proposed to resolve disputes revenue gain of except those in negative list • A common simplified • Dual rate structure of Rs. 45,940 crore” • Exemption from ST on registration form and a maximum service tax of c o p yri g hts r el at i ng t o common return for Central Rupees 150 and Rupees 750 recording of cinematographic Excise and Service Tax to be in case of economy class films travel is being replaced by an introduced ad valorem rate of 12% • Abatement to hotels reduced UNION BUDGET 2012-13
A PRÉCIS OF INDIA’S FISCAL POLICY PAGE 3Revenue forgone under the Central Tax SystemSpecial tax rates, exemptions, deductions, subsidies, rebates, deferrals and credits have an impact on Government revenue and are called as “taxpreferences”. The Statement below seeks to list the revenue impact of such tax incentives or tax subsidies that are a part of the tax system of theCentral Government.Type of Sector FY 2010-11 Estimated in FY 2011-12 (in Rs. crores) (in Rs. crores) DIRECT TAXESCorporate Sector 57912 51292Non-Corporate [Firms/AOPs/BOIs] Sector 6173 6622Individual Taxpayers 30653 35698 INDIRECT TAXESExcise Duty 192227 212167Custom Duty 172740 223653Promises Vs. Performance “Overview of the announcements made in the previous budget as against its performance”Foreign Investment Environment• FDI in Multi-Brand Retail up to • Qualified foreign investors to be US $ 1 Billion 51% and Aviation Up to 49% are allowed to invest Corporate bond • ECB for capital under active consideration of market e xpenditure on the Government maintenance and • Reduction in the rate of• External Commercial Borrowings withholding tax on interest operations of toll systems (ECB) allowed as a funding option payments on ECB from 20% to for roads and highways so for cost affordable housing 5% for 3 years for certain long as they are a part of projects infrastructure sectors the original project• Proposal to allow ECB to part • ECB permitted for working capital • Two way fungibility in “Access to low cost ECB finance the rupee debt of existing of Airline Industry for 1 year Indian depository receipts will help in bridging the power projects period subject to total ceiling of permitted funding gap”
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