Budget Alert 2012-13 Agrya Consulting
-2-
Contents Direct tax proposals ................................................................................................................................................................ 3 Changes in tax rates ........................................................................................................................................................... 3 Changes impacting individual taxpayers ................................................................................................................... 4 Changes in other provisions ........................................................................................................................................... 5 Indirect tax proposals ............................................................................................................................................................. 7 Changes in tax rates ........................................................................................................................................................... 7 Service Tax Changes........................................................................................................................................................... 7
Budget Alert | 2012-13
Agrya Consulting
-3-
Direct tax proposals Changes in tax rates Individuals For assesses other than senior citizens FY 2011-12
FY 2012-13
Tax rate
0-180,000*
0-200,000
Nil
180,000-500,000
200,000-500,000
10%
500,000-800,000
500,000-1,000,000
20%
800,000+
1,000,000+
30%
*Rs. 190,000 in case of women assessees For senior citizen assessees aged 60 years and above FY 2011-12
FY 2012-13
Tax rate
0-250,000
0-250,000
Nil
250,000-500,000
250,000-500,000
10%
500,000-800,000
500,000-1,000,000
20%
800,000+
1,000,000+
30%
Corporates No change in taxes. The rates including MAT rate remain unchanged.
Introduction of withholding tax rates on additional areas
TDS on sale consideration of immoveable property TCS on sale of minerals being coal or lignite or iron ore TCS on sale of bullion or jewellery TDS on certain interest payments to certain non-residents
Budget Alert | 2012-13
1% 1% 1% 5%
Agrya Consulting
-4-
Changes impacting individual taxpayers Impact of tax rate changes
Class of assesses
TAX SAVED by an assessee having income upto Rs. 8 lakhs
more than Rs. 8 lakhs
Individual
2,000
22,000
Women
1,000
21,000
Senior citizen aged 60 years or more
Nil
20,000
Senior citizen aged 80 years or more
Nil
20,000
Impact of other changes Receipt from Life Insurance Company is taxable if Life insurance Premium paid on any years if the premium has exceeded 10% of the capital sum assured. Deduction on account of premium paid on insurance policies purchased after April 1, 2012 is limited to 10% of the sum assured reduced by any premium agreed to be refunded and any bonus accruing on the policy. An additional Rs. 5,000 is now eligible under section 80D for preventive health checkups. Any donation more than Rs. 10,000/- paid to institution specified under section 80G and political parties u/s 80GGA are eligible for deduction only if made in any mode other than cash Interest from savings bank account with Banks and post office is deductible upto Rs. 10,000/ Tax @ 1% is to be collected from buyers of bullion or jewellery if purchased in cash for more than Rs. 2 lakhs. TDS has been introduced on payment on sale of certain immovable property other than agricultural land The Finance Minister, in his speech has indicated that a new scheme called Rajiv Gandhi Equity Savings Scheme will be introduced. The scheme would allow for income tax deduction of 50 per cent to new retail investors, who invest up to Rs. 50,000 directly in equities and whose annual income is below Rs. 10 lakh. The scheme will have a lock-in period of 3 years. The details will be announced in due course.
Budget Alert | 2012-13
Agrya Consulting
-5-
Changes in other provisions 1. Income deemed to accrue or arise in India Section 9 of the income tax has been amended to include an explanation that 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 or interest derives, directly or indirectly, its value substantially from the assets located in India. 2. Exempt income Receipt from Life Insurance Company is taxable if Life insurance Premium paid on any years if the premium has exceeded 10% of the capital sum assured. [Section 10(10D)] 3. New tax benefits for businesses Venture Capital Companies and funds are now exempt from any income of earned from entities engaged in any business as opposed to a restricted number of businesses previously [Section 10(23FB)] Additional depreciation allowance is now available to companies in the business of generation or generation and distribution of power [Section 32(iia)] Expenditure on scientific research on in-house research and development facility is extended by another 5 years till March 31, 2017 Expenditure on agricultural extension project qualifies deduction of 150% of actual expenditure [New Section 35CCC] Expenditure on Skill development project notified by the board qualifies for a deduction of 150% of actual expenditure [New Section 35CCD] 4. Revisions in threshold for mandatory audit Tax audit is now necessary only if gross receipts from business exceed Rs. 1 crore or professional income exceeds Rs. 25 lakhs. 5. Capital Gains In the case of transfer of a capital asset where the consideration is not ascertainable or cannot be determined Fair Market Value has to be considered as full market value (Section 50D) Capital gain arising on sale of house property is exempt if invested in shares of a company incorporated during the previous year and the company invests in new plant and is engaged in the business of manufacturing. [Section 54GB] 6. Income from Other Sources The definition of relative has been amended to include members of HUF, where the HUF is the recipient of the gift. Share premium when received by a closely held company over and above the fair market value will be treated as income [Section 56]
Budget Alert | 2012-13
Agrya Consulting
-6 Closely held companies should now maintain details regarding the nature and source of share application money received from residents, failing which such application monies become taxable for the company. [Section 68] 7. Deductions Deduction on account of premium paid on insurance policies purchased after April 1, 2012 is limited to 10% of the sum assured reduced by any premium agreed to be refunded and any bonus accruing on the policy. An additional Rs. 5,000 is now eligible under section 80D for preventive health checkups. Any donation more than Rs. 10,000/- paid to institution specified under section 80G and political parties u/s 80GGA are eligible for deduction only if made in any mode other than cash Interest from savings bank account with Banks and post office is deductible upto Rs. 10,000/[Section 80TTA] 8. Changes in tax avoidance provisions Certain specified domestic transactions have been brought under transfer pricing regulations. The CBDT can now enter into Advance Pricing Agreements with any person for determining the arm’s length price or specifying the manner in which arm’s length price is to be determined in relation to the assessee’s international transactions. Chapter X-A titled General Anti Avoidance Rules have been introduced to impose tax on transactions entered into for obtaining tax benefit without having any commercial substance. 9. Special rates of taxes Concessional rate of 15% for dividends received from overseas subsidiaries extended by another year. The scope of Minimum Alternate tax applicable to Companies and LLP has now been widened to include all assesses. However individuals, HUFs or Association of Persons or Body of Individuals with adjusted total income less than Rs. 20 lakhs are exempt from the applicability of the new MAT provisions. Tonnage tax rates applicable to shipping companies have been amended. 10. Tax Deduction and collection at source Tax is now deductible under section 194J for any remuneration or fees or commission by whatever name called other than salary paid to any director of a company. TDS has been introduced on payment on transfer of certain immovable property other than agricultural land. TDS @ 5% has been introduced on interest payments by certain companies to certain nonresidents Tax @ 1% u/s. 206C is to be collected from buyers of minerals, being coal or lignite or iron ore. Tax @ 1% is to be collected from buyers of bullion or jewellery if purchased in cash for more than Rs. 2 lakhs.
Budget Alert | 2012-13
Agrya Consulting
-7-
Indirect tax proposals Changes in tax rates Excise duty has been hiked from 10% to 12% Service tax rate has been hiked from 10% to 12% Customs duty has been retained at 10%
Service Tax Changes Major changes have been in service tax law consequent to the introduction of negative list of nontaxable services. A brief overview of the items in the negative list: 1.
Services by Government or a local authority excluding a.
Postal Service
b. Aircraft or vessel related services c.
transport of goods or passengers; or
d. support services, other than services covered under clauses (i) to (iii) above, provided to business entities 2.
Services by the Reserve Bank of India
3.
Services by a foreign diplomatic mission located in India
4.
Agricultural services
5.
Trading of goods
6.
Manufacture
7.
selling of space or time slots for advertisements other than advertisements broadcast by radio or television
8.
service by way of access to a road or a bridge on payment of toll charges
9.
betting, gambling or lottery
10. admission to entertainment events or access to amusement facilities 11. transmission or distribution of electricity by an electricity transmission or distribution utility 12. School, college and vocational education services 13. Services by way of renting of residential dwelling for use as residence; 14. Interest on deposits, loans and advances and forex dealer services 15. Transportation of passengers in stage carriers, non-ACs non-first class railways, metro, inland waterways, public transport, metered cabs, autos. 16. Transportation of goods a.
by road except by GTA or a courier agency
b. by an aircraft or a vessel from a place outside India c.
by inland waterways
17. funeral, burial, crematorium or mortuary services including transportation of the deceased
Budget Alert | 2012-13
Agrya Consulting
-8-
About Agrya Consulting Agrya Consulting is a professional services firm founded in 2010 with a vision of enabling clients’ businesses operates more efficiently and effectively. Their ability to combine practical knowledge in a multitude of industries with years of experience enable them to deliver timely solutions to a variety of problems that businesses face in today’s evolving environment. Agrya takes an approach to every engagement that seeks to ensure the highest degree of technical knowledge, experience and timely delivery.
Contact V C Padmapriya Email -
[email protected] M Jayakumar Email -
[email protected] Agrya Consulting Private Limited Suite No. A-1, Ground Floor, R.M. Towers, 108, Chamiers Road, Teynampet, Chennai - 600 018. India Phone - +91 44 2435 2299
Budget Alert | 2012-13
Agrya Consulting
