Post on 08-Apr-2018
8/7/2019 Union Budget 2011-12 Presentation
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Jameskutty Antony FCA, CISA
Union Budget 2011-12
Changes in DirectTax and Service Tax
8/7/2019 Union Budget 2011-12 Presentation
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Jameskutty Antony FCA, CISA
General
There are not much changes inIncome tax
There are some major changes inService Tax
There are some changes in CentralExcise and Customs to make it alignwith GST which is due next year
8/7/2019 Union Budget 2011-12 Presentation
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Jameskutty Antony FCA, CISA
Income Tax – For IndividualsBasic Exemption Limits ChangedBasic Exemption Limits in `
Catgory Old Limit New LimitVery Senior Citizen No Such Category `5,00,000Senior Citizen `2,40,000 `2,50,000Women `1,90,000 `1,90,000Others `1,60,000 `,180,000
Rates – upto `5 L – 10%, `5-8 Lakhs 20%and above `8 L 30%
8/7/2019 Union Budget 2011-12 Presentation
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Jameskutty Antony FCA, CISA
Income tax – For IndividualsSenior Citizens – age limit reduced from 65years to 60 yearsA new category of Senior Citizens – 80years and above
For Salaried class – need not file ITR if whole of the tax payable is deducted by theemployer thru’ TDSAdditional investment of ` 20,000/- ininfrastructure bonds continuing for onemore year – Sec 80 CCF
8/7/2019 Union Budget 2011-12 Presentation
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Jameskutty Antony FCA, CISA
Income tax – For Companies
Surcharge Reduced from 7.5% to 5%for domestic companiesTo offset this decrease, MAT has beenincreased from 18% to 18.50%MAT made applicable to SEZDevelopers and Units wef FY 2011-12Dividend Distribution Tax –exemption withdrawn for SEZ unitswef 01-Jun-2011
8/7/2019 Union Budget 2011-12 Presentation
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Jameskutty Antony FCA, CISA
Income Tax – Other Changes
MAT is made applicable to LLP’s also
Direct Tax Code will be applicable
from FY 2012-13
There are a lot of changes in TransferPricing Regulations regarding thedetermination of ALP
8/7/2019 Union Budget 2011-12 Presentation
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Jameskutty Antony FCA, CISA
Income Tax – Transfer PricingGovt may declare some territories asnotified areas, where exchange of information is not possibleTransactions with parties in the notified
areas will be deemed to be transactionswith an associated partyExpenditure in respect of transaction withsuch parties will be allowed only if assessee
maintains prescribed recordsThere will be higher TDS in respect of payments made to such parties @ 30%
8/7/2019 Union Budget 2011-12 Presentation
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Jameskutty Antony FCA, CISA
Wealth Tax
Rate increased to 1% from 0.50%
Basic exemption increased to ` 30
lacs from `15 lacs
8/7/2019 Union Budget 2011-12 Presentation
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Jameskutty Antony FCA, CISA
Service TaxNo change in the rate – 10%
Major Change – Tax is charged on accrualbasis and not on receipt basis
Tax is due immediately on the provision of service
Point of Taxation Rules, 2011 applicablefrom 01.04.2011
8/7/2019 Union Budget 2011-12 Presentation
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Jameskutty Antony FCA, CISA
Service Tax – New ServicesNew Services added
1. Air Conditioned Restaurants having a license to servealcoholic beveragesA/c need not be throughout the yearA/c need not be in full or even in restaurant itself Abatement – 70%Applicable from date of enactment of Finance BillIssue – applicable only to food or to liquor also?Issue – Bar will be covered or not?
2. Short term accommodation by hotels if the room tariff is >` 1000/- for continuous occupation for less than 3 months
Abatement – 50%Applicable from date of enactment of Finance BillTariff is the published tariff, not the charged tariff
8/7/2019 Union Budget 2011-12 Presentation
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Jameskutty Antony FCA, CISA
Service Tax – Changes in services
Authorised Service Station will nowcover all – not only ‘authorised’
Cover all vehicles excluding ‘three-wheeler scooter auto-rickshaw’ andgood carriage vehicles
Decoration or any other similarservice is also added
8/7/2019 Union Budget 2011-12 Presentation
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Jameskutty Antony FCA, CISA
Service Tax – Changes in services
In the case of Life Insurancepremium, scope is expanded from‘risk cover’ to all types of servicesincluding management of investments.
So there can be a minimum 1.5%increase in premium
8/7/2019 Union Budget 2011-12 Presentation
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Jameskutty Antony FCA, CISA
Service Tax – Changes in services
In the case of commercial training orcoaching centre, scope is expandedto cover even course that are notrecognized by law
Club or Association Service isexpanded to include servicesprovided to non-members andaffiliated club members also
8/7/2019 Union Budget 2011-12 Presentation
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Jameskutty Antony FCA, CISA
Service Tax – Changes in services
Business Support Service is expandedto include “operational oradministrative assistance in anymanner” instead of “operationalsupport for marketing”
This will cover all kinds of outsourcedsupport
8/7/2019 Union Budget 2011-12 Presentation
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Jameskutty Antony FCA, CISA
Service Tax – Change in Services
Legal Services will now includeServices by a ENTITY to individualsRepresentational services before any court orauthority by ANY PERSON to a BUSINESS ENITY
Service of arbitration tribunal to a BUSINESSENTITY
Earlier applicability – business entity tobusiness entity only – other thanrepresentational servicesNow Individual to Individual is exempt
8/7/2019 Union Budget 2011-12 Presentation
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Jameskutty Antony FCA, CISA
Service Tax – Change in ServiceHealth Services totally revampedEarlier health checkup etc with cash lessfacility will insurance cos or employersalone was taxableNow, services by hospitals, clinics etchaving 25 beds or more and havingCentralised A/c is taxableDiagnostic services with the aid of a lab ormedical equipment is taxableServices by Doctors from such premises istaxable
8/7/2019 Union Budget 2011-12 Presentation
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Jameskutty Antony FCA, CISA
Service Tax – Change in Services
Issues areA/c can be in any part of theestablishment – operation theater orblood bank or even officeWhat is Centralised A/c ?Doctors getting remuneration asconsulting fee ?
Government institutions not covered50% abatement provided
8/7/2019 Union Budget 2011-12 Presentation
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Jameskutty Antony FCA, CISA
Service Tax – Change in Services
Air Travel AgentsDomestic (Economy) – ST increased from Rs.100/- to Rs. 150/- per ticketIntenational (Economy) – ST increased from Rs.500/- to Rs. 750/- per ticketDomestic (other than Economy) – Normal rateof 10.30% on gross value of ticket (?)
International Business class – nochange in rate
8/7/2019 Union Budget 2011-12 Presentation
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Jameskutty Antony FCA, CISA
Service Tax – Smaller ChangesMoney Changing Service – rate reducedfrom0.25% to 0.10%
Works Contract Service – Exemption given
to services to Major Ports, Other Ports, AirPort, JNURM, Rajiv Awas Yojana
25% abatement on ‘transportation of coastal goods, transportation thru’ nationalwater way or inland water’
8/7/2019 Union Budget 2011-12 Presentation
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Jameskutty Antony FCA, CISA
Service Tax -
Adjustment of excess amount paid tosubsequent quarter- limit increased from `1 lac to ` 2 lac
If the turnover < ` 60 lacs, no service taxaudit
If the turnover < ` 60 lacs, interest ondelayed payment will be less by 3% (=15%)
8/7/2019 Union Budget 2011-12 Presentation
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Jameskutty Antony FCA, CISA
Service Tax – Penal ProvisionsInterest on delayed paymentincreased from 13% to 18%.
If the turnover < `60 Lacs, 15%
Penalty for delay in filing return –maximum penalty increased from`2000 to `20,000
Earlier after 49 days, the penalty was`2,000 for any number of days.
8/7/2019 Union Budget 2011-12 Presentation
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Jameskutty Antony FCA, CISA
Service Tax - ProsecutionMost importantly, provision for prosecution andimprisonment is brought into. In the following cases,prosecution is provided:
Provision of service without issue of invoice;Availment and utilization of Cenvat credit withoutactual receipt of inputs or input services;
Maintaining false books of accounts or failure tosupply any information or submitting falseinformation;Non-payment of amount collected as service tax fora period of more than six months.
A new section 88 is introduced to create first chargeon the property of the defaulter for recovery of dues.
8/7/2019 Union Budget 2011-12 Presentation
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Jameskutty Antony FCA, CISA
Service Tax - Penalties
Penalty u/s 76 is reduced by half
This is the penalty for non payment of
ST
Earlier it was `200 per day or 2% permonth subject to max of ST payable.
8/7/2019 Union Budget 2011-12 Presentation
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Jameskutty Antony FCA, CISA
Service Tax - PenaltiesHowever, Penalty for short collection/shortpayment of ST on account of misstatementetc (where extended period can beinvoked) increased.
Reduction of penalty on voluntary paymentis not available.However, if the details of transactions are
available in the books and records, penalty@ 1% pm (subject to max 25% ) isavailable
8/7/2019 Union Budget 2011-12 Presentation
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Jameskutty Antony FCA, CISA
Service tax - PenaltiesFor other miscellaneous offenses u/s 77
where no specific penalty is given, theearlier penalty of ` 5,000/- is increased to`10,000/-
The penalty u/s 78 for supression of value ismade mandatory and fixed at amount equalto the ST (earlier twice the amount)
If the complete details are available from books,
penalty will be 50% of the aboveIf you pay the amount with interest within 30days of SCN(90 days for small assessees),penalty will be 25% of the above
8/7/2019 Union Budget 2011-12 Presentation
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8/7/2019 Union Budget 2011-12 Presentation
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Jameskutty Antony FCA, CISA
Point of Taxation RulesAn invoice has to be issued within 14 daysof provision of serviceOR penal provisions will apply
IssuesServices provided on last day of the quartershould be included in the turnover for that
quarter, though the invoice is not yet issuedTransitional provisions not specified?Discounts, Bad Debts, return of advances ?
8/7/2019 Union Budget 2011-12 Presentation
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Jameskutty Antony FCA, CISA
Amendments to ST Rules
New Rule 5B – tax rate at the time of provision of service is applicable
If an invoice issued and ST paid butno payment received or advancereceived but no service provided, you
can take the credit of ST already paidby issuing a credit note to the party.
8/7/2019 Union Budget 2011-12 Presentation
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Jameskutty Antony FCA, CISA
THANK YOU !