Union Budget 2012 - 13 D Arvind D Arvind & Associates Chartered Accountants 1.

Union Budget 2012 - 13

D Arvind

D Arvind & AssociatesChartered Accountants

1

Contents

Performance Budget Expectations

Indirect Tax Direct Tax

Direct Tax Proposals Indirect Tax Proposals Tax Impact - Sector Wise Tax Impact – Consumers / Individuals


216th March 2012

Performance


316th March 2012

GDP Growth Rate


416th March 2012

Inflation

D Arvind & Associates 516th March 2012

Fiscal deficit as a % of GDP


616th March 2012

Sector wise Growth performance


716th March 2012

Unbalanced Growth

Growth down from 8.4% to 6.9% in FY 11-12 Lowest in recent past (except for FY 09)

Economic Survey: Resilience largely due to services sector

Manufacturing and Agricultural sector key to balanced growth


Budget Expectation


916th March 2012

Direct Tax - Expectations

Implementation of DTC Abolition of surcharge on corporate tax Abolition of DDT Increase in Tax slabs for Individuals Measures to minimize Black money Reduction in MAT from 19.93% to 15% Reduction in Corporate Rate of IT


1016th March 2012

Indirect Tax - Expectations

Implementation of GST Reduction / Abolition of CST Reduction in peak rate of customs on raw

materials and inputs Cenvat Credit on Diesel / LDO / HSD for

manufacturer 100% credit on CG in the year of receipt Excise Duty exemption for Inter unit

transfers Service Tax based on Negative list approach


1116th March 2012

Indirect Tax - Expectations

Service Tax credit for Brand owners Decrease in rate of composition under

works contract service from 4% to 3% Clarity on taxes on software Clarity on supply of tangible goods

service- VAT and Service Tax Abolition of SAD / Reduction of SAD


1216th March 2012

Direct Tax Proposals


1316th March 2012

Proposed Changes- Personal Taxation

Minimum threshold limit raised to Rs. 2 Lac Maximum rate of tax of 30% is from Rs.10 Lac Maximum Effective saving is Rs. 22660 Interest on savings account exempt up to Rs.10000 Deduction of Rs. 5000/- for preventive check up Salaried tax payers with Income up to 5 Lac not

required to file tax return Exemption for Investment in Equity up to 50% of

Investment subject to maximum investment of Rs.50000


1416th March 2012

Proposed Changes- Corporate Taxes Taxation of foreign dividends at 15%

instead of marginal rate- extended up to March 13

Extension of sun set clause for tax holiday for power sector for one more year

Cascading effect of DDT eliminated for multi tiered structures

Withholding tax on Interest on ECB in Infrastructure sector reduced from 20 to 5%

MAT Applicable to other entities TDS on sale of immovable properties at 1%


1516th March 2012

Incentives

Tax Holiday in Power sector – commencement date extended to 31 March 2013

Initial depreciation of 20 % allowed to power companies

Investment linked incentives for specified business (Cold Chain facility etc.) increased from 100% to 150%


Incentives

Investment linked incentives extended to ‘Container Freight Station’ ‘Inland Container Depot’, ‘ Warehousing facility for storage of Sugar’ etc

200% Weighted deduction for In-House Research expenditure extended for 5 years (i.e. upto AY 2017-18)


Indirect Tax Proposal


1816th March 2012

Service Tax


1916th March 2012

Widened Services tax net

Increase in Rate from 10 to 12% Taxation on basis of Negative list – Net

widened Negative List to include specified

services in relation to agriculture, education, trading of goods, services by Government or local authority, residential renting, interest or discount on deposits, loans or advances


2016th March 2012

Service Tax – Negative List Shift from “selective taxation” to”

Compreheive taxation” Service defined to mean

Any activity For consideration Carried out by a person for another Including declared services like

construction, works contracts, renting of immovable properties, leasing , IT Software, IPR, Non compete, catering


2116th March 2012

“Service” does not include

Any activity that constitutes only a transfer in title of goods, immovable property by way of sale, gift or in any other manner

Transaction of only money or actionable claim

Any service provided by an employee to an Employer in the course of employment

fee payable to Tribunals and courts


2216th March 2012

Other Important Changes

Export and Import Rules to be revamped- New “ Place of provision of services Rules to be introduced

Amendments in POT Rules to ease administrative hurdles

Amendments in valuation to provide specfic inclusions and exclusions

Mega Exemption List in addition to Negative list


2316th March 2012

Other Important Change in Export of Service

Five Export conditions incorporated in Service Tax Rules:

Location of service provider in taxable territory; Location of service recipient outside India; Service provided is a service other than in the

negative list. Place of Provision of the service is outside India;

and Payment received in convertible foreign exchange


2416th March 2012

Other Important Changes

“Dominant Nature test” for taxing services Sweeping changes in reverse charge

mechanism- Joint liability of service provider and recipient in 3 cases

Simplified registration and one pager return format for Central Excise and Service Tax tabled for public comments – Returns to be monthly

Adjustment of excess Service Tax paid allowed without any monetary limit effective 1 April 2012


2516th March 2012

Cenvat Credit Rules


2616th March 2012

Proposed Changes

Reversal under Rule 6(3) of CCR increased to 6% from 5%

Rule 3(5) and 3(5A) are being amended to prescribe that in case the capital goods on which Cenvat credit has been taken are cleared after being used then the amount payable shall be either the amount calculated on the basis of Cenvat credit taken at the time of receipt reduced by a prescribed percentage or the duty on transaction value whichever is higher

.


2716th March 2012

Proposed Changes

Rule 10A is being inserted to permit transfer of unutilized credit of SAD lying in balance at the end of each quarter to another factory of the manufacturer

Rule 14 is being amended to substitute the word “or” with “and” so that interest is not payable on credit wrongly taken unless the same is utilized

Credit of Service Tax on hiring, insurance and repair of specific vehicles allowed

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Central Excise

April 10, 2023 D Arvind & Associates 29

Proposed Changes

Excise duty rate (effective 17 March 2012) Std. Rate from 10% to 12% Mean rate from 5% to 6%

Cess on Crude petroleum increased from INR 2,500 per MT to INR 4,500 per MT (effective 17 March 2012)

Inter-unit transfer of unutilized SAD credit permitted


3016th March 2012

Proposed Changes

Substantial expansion in units enjoying J&K exemption – ten year period to be computed from the expanded capacity

Specified pharma products duty slashed from 10 % to 6 %

Designated Central excise officers empowered to make arrests even without prior approval of the Commissioner


3116th March 2012


3216th March 2012

Customs

Proposed Changes

Peak rate of BCD retained at 10% Increase in effective rate by 2% due to

increase in ED (CVD) Exemption of SAD on Pre-packaged goods

intended for retail trade Import against duty scrips obtained

fraudulently – Powers to recover customs and attach property


3316th March 2012

Excise Changes

Increase in BCD: Gem & Jewellery: Import duty on gold / gemstones doubled / increased

Auto: Luxury cars of certain specifications to 75 %

•Exemption from BCD: Power: Thermal coal (CVD also reduced to 1%) valid upto 31 March 2014

Aviation: Parts of aircraft / testing equipment for MRO by third parties only

Mining: Coal mining projects D Arvind & Associates 34April 10, 2023

Impact on Business – Sector wise


3516th March 2012

Power

Expected Extension of sunset

clause for power projects

Rationalization of Indirect taxes i.e merger of Electricity duty

Refund of ED for setting up of Mega/Ultra Mega projects

Proposed Sunset clause for IT

exemption extended by another one year

Additional depreciation of 20% to power Cos

Import of Coal exempt from customs for power projects and CVD at 1%


3616th Mrach 2012

Infrastructure

Expected Increase in

infrastructure spending through higher allocation to various schemes

Tax Concessions

Proposed Increased allocation of

funds marginally Withholding Tax

reduction from 20% to 5% on Interest on ECB


3716th March 2012

Agriculture / Food

Expected Reduction in custom

duties for agricultural machinery

Reduction in CD for fertilsers

Proposed Reduction in customs

duties for specified agricultural machinery

Reduction in CD for fertilizer's

Services provided in relation to Agriculture is in the Negative list


3816th March 2012

Software & ITES

Expected Clarity on the taxation

of ‘right-to-use’ software whether under Service Tax and/or VAT

Proposed Increase in ED across

the board – PCs to cost more

Increase in Service tax from 10 to 12%


3916th March 2012

Automobiles

Expected Increase in ED Concession to fuel

efficient vehicles

Proposed Increase in ED Full exemption from

Customs for parts of hybrid Vehicles

Increase of 60% to 75% in CD on large cars


4016th March 2012

Pharma & Healthcare

Expected Infrastructure status

to Healthcare Exemption of ED on

physician samples Reduction in duties for

imports

Proposed Reduction in customs

for specified raw materials for manufacture of medical Kits

Service tax on Health care widened


4116th March 2012

GST Status

No date for implementation of GST announced Constitutional Amendment Bill for introduction

of GST to be tabled in the current session of Parliament

Status of other initiatives: Drafting of model legislation for Central GST and

State GST underway National Securities Depository Limited (NSDL) has

been selected as technology partner for establishing and operating the IT infrastructure for GST

NSDL to set up a pilot portal in collaboration with 11 States prior to rollout across the country


Business Implication in general

Increase in ED from 10% to 12% Increase in Service tax from 10% to 12% Service tax widened CENVAT credit curtailed GST implementation date yet to be

notified DTC from April 2013 White paper on Black Money Measures to check undisclosed Income All goods and services will be more costlier


4316th March 2012

Impact on Consumers

Marginal relief in Income tax Increase in ED by 1% on essential goods

and 2% on other goods. Cascading effect of VAT

Health services will become costlier All services and goods will be costlier Relief granted under IT is more than

taken under IDT


4416th March 2012

Expectation Gap

DTC implementation deferred Uncertainty in GST Implementation No Clarity on multiple taxes on

Intangibles and software SAD Continues CST Continues


Thanks


4617th March 2012

Union Budget 2012 - 13 D Arvind D Arvind & Associates Chartered Accountants 1.

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Transcript of Union Budget 2012 - 13 D Arvind D Arvind & Associates Chartered Accountants 1.