|Union Budget 2012: Proposals & recommendations at a glance|
Direct tax proposals:
1. The basic general exemption limit hiked from INR 1.80 lakhs to INR 2.00 lakhs.
2. The upper limit for the 20% slab increased from INR 8 lakhs to INR 10 lakhs.
3. The proposed general slab for taxation would to Nil% for income up to INR 2 lakhs, 10% for income between INR 2 lakhs to INR 5 lakhs, 20% for income between INR 5 lakhs and INR 10 lakhs and 30% for income above INR 10 lakhs.
4. A deduction of up to INR 10,000 proposed for interest on SB account.
5. No requirement of filing IT returns for salaried employees having salary upt o INR 5 lakhs.
6. A deduction of INR 50,000 introduced under the Income tax act for investment in equity shares for retail investors having income below INR 10 lakhs. These investments will have a lock-in period of 3 years.
7. An additional deduction of INR 5,000 proposed for preventive health check up u/s 80D.
8. Senior citizens not having business income not required to pay any advance tax – thus reducing their compliance requirement.
9. No change in the corporate tax rates.
10. Withholding tax on ECBs reduced from 20% to 5%.
11. Remove the cascading effect of dividend distribution tax.
12. The turnover limit for income tax audit u/s 44AB increased from INR 60 lakhs to INR 100 lakhs (INR 1 crore).
13. The capital gain on sale of residential immovable property exempted if the gains are invested in subscription to equity of certain infra projects.
14. Weighted tax deduction available for R&D extended to another 5 years.
15. The STT rate reduced by 20% from 0.125% to 0.10% on delivery transactions.
16. Unexplained income and cash credits to be taxed at 30% irrespective of the tax slab of the assessee.
17. Allow reopening of tax assessments up to 15 years for overseas assets.
18. The direct tax proposals are estimated to leave a revenue loss of INR 4,500 crores.
Indirect tax proposals:
1. Seeking to widen the service tax net, introduced the negative list scheme whereby all services apart from those listed in the negative list to be subject to service tax.
2. Seventeen services included in the negative list, including power services, school education, renting of residential buildings, entertainment and amusement services, public transport etc. – surprisingly, even individual advocates providing services to non companies included in this list.
3. Common tax code introduced for service tax and excise – with a common simplified registration form and common return form called EST-1. The common return form will be a simplified one page return as compared to the present 15 page return.
4. The service tax rate increased from 10% to 12%.
5. The service tax proposals to yield INR 18,660 crores in revenue.
Excise duty and Customs:
1. The standard rate of excise duty increased from 10% to 12%.
2. No change in peak customs duty rates.
3. Full exemption on customs duty on coal.
4. Excise duty on large cars increased from 22% to 24%.
5. The 5% customs duty for equipments for fertilizer plants now exempted.
6. Thermal power companies exempted from customs duty for 2 years.
7. Coal and LNG exempt from customs duty.
8. Excise duty on iron ore machinery parts reduced from 7.50% to 2.50%.
9. Airline parts imports exempted from basic customs duty.
10. Basic customs duty on bicycles increased to 30%.
11. LCD and LED panels exempt from customs duty.
12. Basic Customs duty reduced on cigarettes. However, advalorem duty imposed on some cigarettes of more than 65mm length.
13. Excise duty increase on pan masala, tobacco and the packing material machinery for the same.
14. Customs duty on gold bars and coins raised to 4%.
15. Customs duty on refined gold raised to 3%.
16. Automated shuttle looms exempt from customs duty.
17. Brander silver jewellery exempt from excise duty.
18. Customs duty on imported cars pegged at 75%.
19. Customs duty on some medical devices cut.
20. The customs and excise proposals are expected to result in a revenue gain of INR 27,280 crores.
1. The GDP growth for FY13 is anticipated at 7.60% +/- 0.25% (i.e. 7.35% to 7.85%) whereas the projected GDP growth for FY12 is 6.90%.
2. The debt crisis in Eurozone intensified in Y12.
3. Y12 was a year of recovery and hence necessary to take hard decisions now.
4. Y12 reality turned different from anticipation.
5. The farm and service sector continue to perform well.
6. The economy is now showing signs of turnaround.
7. The fiscal rate and policy proposed is aimed at taming inflation.
8. Identified 5 areas of focus in FY13.
9. The fiscal balance deteriorated in FY12.
10. Expect inflation to decline further.
11. Expect farm sector to grow at 2.50%.
12. Expect the current account deficit to fall.
13. The average crude price in FY12 seen at @115.
14. Plans to introduce amendments to FRBM Act, to put it back to track.
15. Plans to keep FY13 subsidy under 2% of GDP and to bring it to 1.70% of the GDP in 3 years time.
16. Propose direct transfer of subsidy to retailers and farmers.
17. To examine parliamentary panel report on DTC – thus not having any clear idea on the effective implementation date yet.
18. The structure of the GST network has been approved by the state finance ministers – paving way for its likely implementation by Aug 2012.
19. The proposed divestment in FY13 pegged at INR 30,000 crores.
20. A deduction of INR 50,000 introduced under the Income tax act for investment in equity shares for retail investors having income below INR 10 lakhs. These investments to have a lock-in period of 3 years.
21. Allow QFIs to access corporate bond market.
22. Advance pricing agreements as proposed in the DTC to be included in this finance bill.
23. Ten percent of all IPOs above INR 10 crores to be via electronic mode only.
24. To introduce new law for microfinance companies.
25. Allocation of INR 15,888 crores for re-capitalisation of PSUs.
26. Proposes a central KYC depository.
27. Intimates that 81 out of 82 RRBs have already migrated to core banking solutions.
28. Extend the RRB capitalization scheme by another 2 years.
29. To increase investment in infrastructure projects through enhanced PPP model.
30. Proposes irrigation projects to be eligible for viability gap funding.
31. The tax free bonds doubled to INR 60,000 crores.
32. Allocation of INR 10,000 crores tax free bonds each to NHAI, IRFC, power sector etc.
33. To allow ECB borrowings to part finance power projects.
34. Road projects of 8,800 kms to be awarded in FY13, up from 7,300 kms awarded in FY12.
35. Government to be permitted direct import of ATF.
36. Permit ECBs for working capital needs of the aviation industry upto USD 1 billion.
37. The proposal of FDI of upto 49% in aviation sector under active consideration – meaning no progress in this regard so far.
38. Allow ECBs for low cost affordable housing projects.
39. Outlay for agriculture increased from INR 17,123 crores to INR 20,208 crores for FY13.
40. Setting up a venture capital fund by SIDBI with allotment of INR 5,000 crores to aid MSMEs.
41. Government to set up a company to finance small and minor irrigation projects.
42. Allocation of INR 10,000 crores to NABARD to refinance RRBs.
43. Allocation of INR 15,850 crores for ICDS scheme for FY13 up from INR 10,000 crores in FY12.
44. Allocation of INR 11,937 crores for midday meal scheme.
45. Allocation of INR 14,000 crores for rural drinking water and sanitation projects.
46. Proposal to set up 5,000 schools in the 12th five year plan.
47. Alloction of INR 18,000 crores for RIDF out of which INR 5,000 crores for warehousing.
48. Allocation of INR 20,820 crores for NRHM, increased as compared to last year.
49. To allow two way fungibility of IDRS.
50. Enhanced allocation for various agricultural universities including INR 1,000 crores for the Kerala Agricultural University .
51. Loan subsidy proposed for home loans upto INR 15 lakhs.
52. Allocation of INR 14,232 crores for UID scheme – plans to achieve 40 crores enrolment by the end of this year.
53. The gross tax receipts is estimated to be INR 10,77,612 crores, which is 15.60% higher than that of last year. The same is around 10.60% of the GDP.
54. The total expenditure for the year 12-13 is estimated to be INR 14,90,925 cror5es out of which INR 5,21,025 crores would be for planned expenditure (18% increase) and INR 9,69,900 crores for non-planned expenditure (8.70% increase).
55. The direct tax collections in FY 12 were short by INR 32,000 crores as compared to the budget.
56. The non tax revenue receipt is estimated to be INR 1.64 lakh crores for FY 13.
57. The fiscal deficit for FY13 is estimated to be INR 5.13 lakh crores, being 5.10% of the GDP, reduced from 5.90% of the GDP in FY12.
58. The total revenue deficit is estimated to be INR 1,85,752 crores, being 1.80% of the GDP.
CA Sanjay Thampy
ACA, Grad.CWA, CS, DBM
For Kerala IT News
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