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

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Presentation on theme: "Union Budget 2012 - 13 D Arvind D Arvind & Associates Chartered Accountants 1."— Presentation transcript:

1 Union Budget D Arvind D Arvind & Associates Chartered Accountants 1

2 Contents Performance Budget Expectations Indirect Tax Direct Tax Direct Tax Proposals Indirect Tax Proposals Tax Impact - Sector Wise Tax Impact – Consumers / Individuals D Arvind & Associates Chartered Accountants 2 16 th March 2012

3 Performance D Arvind & Associates Chartered Accountants 3 16 th March 2012

4 GDP Growth Rate D Arvind & Associates Chartered Accountants 4 16 th March 2012

5 Inflation D Arvind & Associates5 16 th March 2012

6 Fiscal deficit as a % of GDP D Arvind & Associates Chartered Accountants 6 16 th March 2012

7 Sector wise Growth performance D Arvind & Associates Chartered Accountants 7 16 th March 2012

8 Unbalanced Growth Growth down from 8.4% to 6.9% in FY Lowest in recent past (except for FY 09) Economic Survey: Resilience largely due to services sector Manufacturing and Agricultural sector key to balanced growth D Arvind & Associates8 16 th March 2012

9 Budget Expectation D Arvind & Associates Chartered Accountants 9 16 th March 2012

10 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 D Arvind & Associates Chartered Accountants th March 2012

11 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 D Arvind & Associates Chartered Accountants th March 2012

12 Indirect Tax - Expectat ions 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 D Arvind & Associates Chartered Accountants th March 2012

13 Direct Tax Proposals D Arvind & Associates Chartered Accountants th March 2012

14 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 Interest on savings account exempt up to Rs 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 D Arvind & Associates Chartered Accountants th March 2012

15 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% D Arvind & Associates Chartered Accountants th March 2012

16 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% D Arvind & Associates16 16 th March 2012

17 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 ) D Arvind & Associates17 16 th March 2012

18 Indirect Tax Proposal D Arvind & Associates Chartered Accountants th March 2012

19 Service Tax D Arvind & Associates Chartered Accountants th March 2012

20 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 D Arvind & Associates Chartered Accountants th March 2012

21 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 D Arvind & Associates Chartered Accountants th March 2012

22 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 D Arvind & Associates Chartered Accountants th March 2012

23 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 D Arvind & Associates Chartered Accountants th March 2012

24 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 D Arvind & Associates Chartered Accountants th March 2012

25 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 D Arvind & Associates Chartered Accountants th March 2012

26 Cenvat Credit Rules D Arvind & Associates Chartered Accountants th March 2012

27 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. D Arvind & Associates Chartered Accountants th March 2012

28 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 D Arvind & Associates28 7 January 2014

29 Central Excise 7 January 2014D Arvind & Associates29

30 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 D Arvind & Associates Chartered Accountants th March 2012

31 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 D Arvind & Associates Chartered Accountants th March 2012

32 D Arvind & Associates Chartered Accountants th March 2012 Customs

33 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 D Arvind & Associates Chartered Accountants th March 2012

34 Exci se 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 & Associates34 7 January 2014

35 Impact on Business – Sector wise D Arvind & Associates Chartered Accountants th March 2012

36 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% D Arvind & Associates Chartered Accountants th Mrach 2012

37 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 D Arvind & Associates Chartered Accountants th March 2012

38 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 D Arvind & Associates Chartered Accountants th March 2012

39 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% D Arvind & Associates Chartered Accountants th March 2012

40 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 D Arvind & Associates Chartered Accountants th March 2012

41 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 D Arvind & Associates Chartered Accountants th March 2012

42 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 D Arvind & Associates42 7 January 2014

43 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 D Arvind & Associates Chartered Accountants th March 2012

44 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 D Arvind & Associates Chartered Accountants th March 2012

45 Expectation Gap DTC implementation deferred Uncertainty in GST Implementation No Clarity on multiple taxes on Intangibles and software SAD Continues CST Continues D Arvind & Associates45 7 January 2014

46 Thanks D Arvind & Associates Chartered Accountants th March 2012


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