Union Budget 2011-12 Presentation

8/7/2019 Union Budget 2011-12 Presentation

http://slidepdf.com/reader/full/union-budget-2011-12-presentation 1/29

Jameskutty Antony FCA, CISA

Union Budget 2011-12

Changes in DirectTax and Service Tax




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




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%




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




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from 18% to 18.50%MAT made applicable to SEZDevelopers and Units wef FY 2011-12Dividend Distribution Tax –exemption withdrawn for SEZ unitswef 01-Jun-2011




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




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%




Wealth Tax

Rate increased to 1% from 0.50%

Basic exemption increased to ` 30

lacs from `15 lacs




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




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




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





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





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





Business Support Service is expandedto include “operational oradministrative assistance in anymanner” instead of “operationalsupport for marketing”

This will cover all kinds of outsourcedsupport




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




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





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





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




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’




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%)




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.




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.




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.




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




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




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 ?




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.




THANK YOU !

Union Budget 2011-12 Presentation

Documents

Transcript of Union Budget 2011-12 Presentation