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Budget 2012

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  • 1. KUMBHAT & CO., Chartered Accountants CoimbatoreKUMBHAT & CO, Chartered Accountants March 2012 1
  • 2.  For Indian economy, recovery was interrupted this year due to intensification of debt crises in Euro zone, political turmoil in Middle East, rise in crude oil price and earthquake in Japan. GDP is estimated to grow by 6.9 per cent in 2011-12, after having grown at 8.4 per cent in preceding two years. India however remains front runner in economic growth in any cross-country comparison. Monetary and fiscal policy response for better part of past 2 years aimed at taming domestic inflationary pressure. Growth moderated and fiscal balance deteriorated due to tight monetary policy and expanded outlays. Indicators suggest that economy is turning around as core sectors and manufacturing show signs of recovery. At this juncture , it is necessary to take hard decision to improve macroeconomicenvironment and strengthen domestic growth drivers. Twelfth Five Year Plan to be launched with the aim of “faster, sustainable and more inclusive growth”. Five objectives identified to be addressed effectively in ensuing fiscal year. If India can build on its economic strength, it can be a source of stability for world economy and a safe destination for restless global capital. KUMBHAT & CO, Chartered Accountants March 2012 2
  • 3. • GDP growth estimated at 6.9 per cent in real terms in 2011-12.• Slowdown in comparison to preceding two years is primarily due to deceleration in industrial growth.• Headline inflation expected to moderate further in next few months and remain stable thereafter.• Steps taken to bridge gaps in distribution, storage and marketing systems have helped in more effective management of inflation.• Developments in India’s external trade in the first half of current year have been encouraging. Diversification in export and import market achieved.• Current account deficit at 3.6 per cent of GDP for 2011-12 and reduced net capital inflow in the 2nd and 3rd quarters put pressure on exchange rate.• India’s GDP growth in 2012-13 expected to be 7.6 per cent +/- 0.25 per cent.• Deterioration in fiscal balance in 2011-12 due to slippages in direct tax revenue and increased subsidies. KUMBHAT & CO, Chartered Accountants March 2012 3
  • 4.  Advance Pricing Agreements FDI in retail in consultations with other Political parties GST – Proposed from Aug 2012 Rationalization of Refund for Exporters KUMBHAT & CO, Chartered Accountants March 2012 4
  • 5. Status Basic Limits Slab rateIndividual – 2.00 lacs •Upto 2 lacs –NilMen/Women < • > 2 lacs < 5 lacs – 10%60 years • > 5 lacs < 10 lacs – 20% • > 10 lacs – 30%Senior Citizen 3.00 lacs •Upto 3.00 lacs – Nil>60 years < 80 • > 3.00 lacs < 5 lacs –years 10% •> 5 lacs < 10 lacs – 20% • > 10 lacs – 30%Super Senior 5.00 lacs •Upto Rs. 5.00 lacs – NilCitizen > 80 • > 5 lacs – 10 lacs – 20%years •> 10 lacs - 30% KUMBHAT & CO, Chartered Accountants March 2012 5
  • 6. KUMBHAT & CO, Chartered Accountants March 2012 6
  • 7. KUMBHAT & CO, Chartered Accountants March 2012 7
  • 8.  2 (47) – Definition of Transfer -w.e.f.1.4.1962 9 – Income deemed to accrue or arise in India – w.e.f.1.4.1962 10(10D)(c) – money received under insurance policy in excess of 20% of actual capital sum assured restricted up to 31.3.12 10 (10D)(d) - money received under insurance policy in excess of 10% of actual capital sum assured applicable after 1.4.12 40 A – If the transactions at arm length price with related parties, then no disallowance 44AB – Rs. 1.00 crores for business/ Rs. 25 lacs for Professionals – limit for audit 44AD – Rs. 1.00 crores not applicable for Commission or agency business and profession as specified in 44AA – AY 11-12 onwards 50 D - Sale consideration not ascertainable – Fair market value is the deemed consideration KUMBHAT & CO, Chartered Accountants March 2012 8
  • 9.  54GB – Sale of residential plot or house and proceeds invested in Equity Shares and then used to purchase Plant and Machinery within one year – new plant and machinery and the shares should > 5 years - 31.3.2017 56(vii) (e)–HUF is also a relative – w.e.f. 1.10.2009 56 (viib) – Shares sold at premium, if price above the fair market value, the excess is treated as income from other sources KUMBHAT & CO, Chartered Accountants March 2012 9
  • 10.  68 – Unexplained cash credits in the books of Company – like share application, premium , capital – Income of the Company if AO is not satisfied with the explanation Unexplained Credits/Investments/Money – tax at 30% 80C – Premium not in excess of 10% of actual sum assured; Actual sum assured means the minimum amount assured not taking into account the premium agreed to be returned or any benefit or bonus over and above the sum actually insured 80D – Expenditure for preventive health check up – Rs. 5000/- 80G/80GGA– Donation made in excess of Rs.10000/- in cash will not be eligible for deduction 80TTA – Savings Bank Interest exempt up to Rs. 10000/- for Individuals and HUF KUMBHAT & CO, Chartered Accountants March 2012 10
  • 11.  Rajiv Gandhi Equity Savings Scheme for income < Rs.10 lacs – 50% deduction if amount invested in Equities – Limit of Investment up to Rs.50000/- - Amount to be locked for 3 years. Time limit increased for completing assessments Penalty amount and time of imprisonment increased for certain kinds of failures Re-opening of assessments in case of assets held abroad can be done up to 16 years. KUMBHAT & CO, Chartered Accountants March 2012 11
  • 12.  Fee for delay in filing of TDS/TCS returns – Rs. 200/- per day of delay Penalty for non-filing or furnishing the incorrect information in TDS/TCS returns – Rs. 10000/- to Rs. 1.00 lac TDS levied on sale of immovable properties > Rs. 50 lacs in metros and Rs. 20 lacs in other cities TCS on sale of jewellery > Rs. 2.00 lacs KUMBHAT & CO, Chartered Accountants March 2012 12
  • 13.  To be at arm’s length price with associated enterprises Transfer pricing laws amended to include certain domestic transactions – all transactions > Rs. 5 crores MAT (AMT) applicable non-corporate assessee if gross income exceeds Rs. 20 lacs KUMBHAT & CO, Chartered Accountants March 2012 13
  • 14.  New Chapter X-A – GAAR Consequential amendment in Sec 90 and 90A – overriding the other provisions Benefit of DTAA based on certificate containing prescribed particulars from the Govt. of Non – Resident’s home country or territory – TAX RESIDENCE CERTIFICATE Allocation of expenses or interest or any cost or income in relation to specified domestic transactions –at arm’s length price Tolerance band for ALP – reduced to 3% KUMBHAT & CO, Chartered Accountants March 2012 14
  • 15.  International Transactions – definition expanded w.e.f.1.4.2002 – 92B Advance Pricing Agreement – 92CC and 92D to determine ALP Penalty for non-maintenance of records as per 92D is 2% KUMBHAT & CO, Chartered Accountants March 2012 15
  • 16.  Rate 12.36% w.e.f. 1.4.2012 Life Insurance – 3% on First premium, thereafter 1.5% Point of Taxation – Turnover > Rs.50 lacs on invoice/advance basis whichever is earlier for Individuals/Firms/LLP; < Rs. 50 lacs on receipt basis option available SME – refund of unutilized credits Cenvat credit on certain Vehicles – purchase, repairs, insurance can be availed Only 17 services - in negative list KUMBHAT & CO, Chartered Accountants March 2012 16
  • 17.  Services by Government or a local authority Services by the Reserve Bank of India Services by a foreign diplomatic mission located in India Services relating to agriculture Trading of goods Any process amounting to manufacture or production of goods Selling of space or time slots for advertisements Service by way of access to a road or a bridge on payment of toll charges Betting, gambling or lottery Admission to entertainment events or access to amusement facilities Transmission or distribution of electricity Services by way of education Services by way of renting of residential dwelling for use as residence Financial Sector Service of transportation of passengers Services by way of transportation of goods Funeral, burial, crematorium or mortuary services KUMBHAT & CO, Chartered Accountants March 2012 17
  • 18.  Service to UN or specified International orgainsation Health Care services Veterinary Services Service by Trusts registered u/s 12AA of Income Tax Act Services for religious ceremony or renting of a religious place meant for general public Services provided by individual Advocates to persons other than business entity Technical testing of newly developed drugs, vaccines etc approved by Drug Controller General of India Training or coaching relating to Arts, Culture and Sports Services provided to recognized sports body Services provided to educational institutions who are exempt from Service Tax for catering mid day meals, transportation of staff and students and services in relation to admission to such students KUMBHAT & CO, Chartered Accountants March 2012 18
  • 19.  Sponsorship of tournaments or championships Services for restoration, erection, construction maintenance, repair of non-industrial or non commercial use, historical monuments, structure used for education, clinical or art and cultural establishment, canal, dams, sewerage, irrigation water treatment, residential complex meant for self use or employees’ use, roads for general public, tunnels, electric crematorium, airport, port etc Transportation of food grains, milk, eggs, fruits and vegetables Transportation of any consignment in a single goods carriage < Rs. 1500/- KUMBHAT & CO, Chartered Accountants March 2012 19
  • 20.  Transportation of any consignment for a single consignee < Rs. 750/- Services provided to Govt. or local authorities for repairs of ship, effluence treatment, waste collection Parking for general public excluding leasing of space Service by an unincorporated body or by entity registered as a SOCIETY by way of reimbursement of charges or share of contribution – upto Rs. 5000/- per month per member for sourcing of goods or services for the common use of its members in a housing society or a residential complex, trade union KUMBHAT & CO, Chartered Accountants March 2012 20
  • 21. Service % of Tax payable by % of Tax payable by Service Provider Service RecipientInsurance Agent 0 100%Goods Transport 0 100%Sponsorship 0 100%Arbitral Tribunal 0 100%Individual Advocate 0 100%Support Service by 0 100%Govt or localauthorityRenting vehicle to 0 100%carry passenger onabated value KUMBHAT & CO, Chartered Accountants March 2012 21
  • 22. Service % of Tax payable by % of Tax payable by Service Provider Service RecipientRenting vehicle to 60% 40%carry passenger onnon-abated valueSupply of manpower 25% 75%Works Contract 50% 50%Import of Taxable 0 100%Service KUMBHAT & CO, Chartered Accountants March 2012 22
  • 23.  Works contract composition scheme – The rate of tax has been enhanced from 4% to 4.8% (excluding cess) effective 01.04.2012 Rule 10A – Transfer of unutilized credit of SAD w.e.f.1.4.12 Point of taxation – whichever is earlier - Date of Invoice - Date of Completion of Service - Date of Payment - Exceptions removed KUMBHAT & CO, Chartered Accountants March 2012 23
  • 24. Taxable Service Percentage Conditions chargeableFinancial leasing Services 10% Nilincluding Equipmentleasing and hire purchaseTransport of goods by rail 30% NilTransport of passengers by 30% NilrailSupply of food in any 70% No Cenvat credit ispremises including hotel, to be taken underconvention center, club, Cenvat Credit Rulesshamiana, pandal 2004Transport by Air 40% No Cenvat Credit is to be taken KUMBHAT & CO, Chartered Accountants March 2012 24
  • 25. Taxable Service Percentage Conditions chargeableRenting of hotels , 60% No Cenvat Creditinns, guest house,clubs etcTransport of Goods 25% No Cenvat Credit(GTA)Service in relation to 70% No Cenvat CreditChitRenting of Vehicle to 40% No Cenvat Creditcarry passengersPackage Tour by tour 25% No Cenvat Credit andoperator bill should indicate that is inclusive of charges for the tour KUMBHAT & CO, Chartered Accountants March 2012 25
  • 26. Quarterly Return/payment Monthly Return/PaymentIf Service tax liability in the If Service tax liability in thepreceding year was less than Rs. preceding year was MORE than25 lacs Rs. 25 lacsQuarterly Payment Monthly paymentPeriod of Delay Penalty – Mandatory – Rule 7C15 days Rs.500/->15 < 30 days Rs.1000/-> 30 days Rs. 1000/- +Rs. 100/- per day but not exceeding Rs. 2000/- KUMBHAT & CO, Chartered Accountants March 2012 26
  • 27. For details, contact: coimbatore@kumbhatco.inKUMBHAT & CO, Chartered Accountants March 2012 27