BUDGET 2012 – IMPORTANT TAX PROPOSALS

DIRECT TAX PROPOSALS

v     Changes in Tax Slabs :

The existing differentiation of Male and Female assessees has been removed. The tax rates for all Individual assessees below 60 years of age for the year 2012-13 is as follows :-

Income Level                                             Rate of Tax

Upto Rs. Rs. 2,00,000/-                                                Nil

Rs. 2,00,001 to Rs. 5,00,000/-                                      10%

Rs. 5,00,001 to Rs. 10,00,000/-                           20%

Above Rs. 10,00,000/-                                        30%

 

In case of Resident Individuals aged Sixty years or above will be taxed as under :-

Income Level                                             Rate of Tax

Upto Rs. Rs. 2,50,000/-                                                Nil

Rs. 2,50,001 to Rs. 5,00,000/-                                      10%

Rs. 5,00,001 to Rs. 10,00,000/-                           20%

Above Rs. 10,00,000/-                                        30%

 

In case of Resident Individuals aged Eighty years or above will be taxed as under :-

Income Level                                             Rate of Tax

Upto Rs. Rs. 5,00,000/-                                                Nil

Rs. 5,00,001 to Rs. 10,00,000/-                           20%

Above Rs. 10,00,000/-                                        30%

Benefit Chart

Income (Rs.)

Current Tax

New Tax

Benefit

500000 32000 30000 2000
750000 82000 80000 2000
1000000 152000 130000 22000
1500000 302000 280000 22000
2000000 452000 430000 22000

Firms

There is no change in the rate of Income-tax in respect of Partnerships firms. They will be charged @ 30% as income-tax on their income.

Companies

There is no change in the rate of Income-tax in respect of Companies. They will be charged @ 30% as income-tax on their income.

Surcharge

No Surcharge in respect of Individuals, HUF & Partnership firms.

The existing surcharge of five per cent in case of a domestic company shall continue to be levied.

Cess

Education Cess @ 2% and Secondary Education Cess @ 1% shall continue to be levied in respect of all types of assessees.

v     Minimum Alternate Tax (MAT) which was hitherto levied on Companies and LLPs are now applicable to assessees other than Companies also.

v     New Provision for Deduction of tax at Source (TDS) on sale of immovable properties introduced. As per this new provision , the transferee , at the time of making the payment or crediting any sum by way of consideration for transfer of immovable property , is required to deduct and deposit the TDS @ 1% of the consideration (sale value) , if the sale value exceeds :-

(a) fifty lakh rupees in case such property is situated in a specified urban agglomeration; or

(b) twenty lakh rupees in case such property is situated in any other area.

This will take effect from 1st July 2012

v     It is proposed to provide that the seller of bullion and jewellery shall collect tax at the rate of 1% of sale consideration from every buyer of bullion and jewellery if sale consideration exceeds two lakh rupees and the sale is in cash. This would be irrespective of the fact whether buyer is a manufacturer, trader or purchase is for personal use.

This will take effect from 1st July 2012

v     It is proposed to amend the provisions of section 139 so that furnishing of return of income under section 139 may be made mandatory for every resident having any asset (including financial interest in any entity) located outside India or signing authority in any account located outside India. Furnishing of return by such a resident would be mandatory irrespective of the fact whether the resident taxpayer has taxable income or not.

This amendment will take effect retrospectively from the 1st day of April, 2012 and will accordingly apply to assessment year 2012-13 and subsequent assessment years.

v     A new clause is proposed in respect of a company, not being a company in which the public are substantially interested, receives, in any previous year, from any person being a resident, any consideration for issue of shares. In such a case if the consideration received for issue of shares exceeds the face value of such shares, the aggregate consideration received for such shares as exceeds the fair market value of the shares shall be chargeable to income-tax under the head “Income from other sources. However, this provision shall not apply where the consideration for issue of shares is received by a venture capital undertaking from a venture capital company or a venture capital fund.

v     A concessional rate of tax @ 5% has been introduced in respect Interest Income from notified infrastructure investments by Non-residents during the period from 1st July 2012 to 1st July 2015.

v     The threshold limit for the purpose of requirement of audit of accounts u/s. 44AB of the Income-tax act has been enhanced to Rs. 1 Crore from the existing limit of Rs. 60 Lakhs in case of assessees carrying on business and in respect of professionals, it has been enhanced to Rs. 25 Lakhs from the existing limit of Rs. 15 lakhs.

v     It is proposed that a resident senior citizen, not having any income chargeable under the head “Profits and gains of business or profession”, shall not be liable to pay advance tax and such senior citizen shall be allowed to discharge his tax liability (other than TDS) by payment of self assessment tax.

v     A new provision has been made for granting relief from long term capital gains tax to an individual or an HUF on sale of a residential property (house or plot of land) in case of re-investment of sale consideration in the equity of a new start-up SME company in the manufacturing sector which is utilized by the company for the purchase of new plant and machinery.

v     An deduction of Rs.5000/- is being proposed u/s. 80 D in respect of expenditure on preventive health check-up. This is within the overall limit of Rs. 15000/- in respect of mediclaim payments. It is also proposed to amend that the payments in respect of the expenditure on preventive health check up shall be made in either in cash or by any other mode.

v     Under the proposed new section 80TTA of the Income-tax Act, a deduction up to an extent of ten thousand rupees in aggregate shall be allowed to an assessee, being an individual or a Hindu undivided family, in respect of any income by way of interest on deposits (not being time deposits) in a savings account (held with a bank,post office or post office)

v     A new provision has been introduced to levy a fee of Rs. 200/- per day for late furnishing of TDS returns from the due date of furnishing the return till the date of filing the TDS returns. In addition to this fee, a penalty ranging from Rs. 10000 to Rs. 100000 is also proposed to be levied for not furnishing the TDS return within due date.

v     Transfer Pricing regulations made applicable to certain domestic transactions also.

v     Time limit for completion of assessments has been increased by 3 months.

v     Presumptive method of taxation (8% of Turnover/Gross receipts) u/s. 44AD will not be applicable for the following :-

(i)                a person carrying on profession as defined under the act

(ii)              persons earning income in the nature of commission or brokerage

(iii)            person carrying on agency business.

v     Deduction on account of donations to charitable institutions u/s. 80G in excess of Rs.10000/- will be allowed only if the same is made otherwise than in cash.

v     Securities Transaction tax (STT) in respect of Cash delivery transactions has been reduced from 0.125% to 0.1%.

INDIRECT TAX PROPOSALS – SERVICE TAX

v     The rate of service tax is being increased from 10% to 12%.

v     A negative list approach for Service tax is being introduced. Now, all the services except those specified in the Negative list shall be liable to service tax.

v     Penalty waiver scheme for Service tax assessees in respect of service tax due on renting of immovable property service is being introduced. As per this scheme, if the Service tax along with Interest due is paid on or before the expiry of 6 months from the date of notification of this amnesty scheme, the entire penalty will be waived.

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