L&T-MHI Turbine Generators Pvt. Ltd Union Budget Highlights CA Manish Sodani 21 st March 2012

MS, 21 st March 2012 Turbine Generators Pvt. Ltd  Indian Economic Outlook  Direct Tax proposals  Indirect Tax proposals  General Points  Impact on LMTG Contents

MS, 21 st March 2012 Turbine Generators Pvt. Ltd Indian Economic Outlook

MS, 21 st March 2012 Turbine Generators Pvt. Ltd  GDP growth rate 6.9 % for FY , 7.6% in  Fiscal deficit 5.9% of GDP as against 4.1% Budgeted (target for is 5.1%)  Industry Growth slowdown (8.2% to 3.6%), high inflation  Exports grew by 22.2% and Imports by 29.4%  Growth rate of Investments declined from 35.1% to 34.7%  Sharp increase in interest rates Indian Economic Outlook

MS, 21 st March 2012 Turbine Generators Pvt. Ltd Indian Economic Outlook - GDP

MS, 21 st March 2012 Turbine Generators Pvt. Ltd Indian Economy – Other Key Factors

MS, 21 st March 2012 Turbine Generators Pvt. Ltd Key Budget Proposals Direct Taxes

MS, 21 st March 2012 Turbine Generators Pvt. Ltd  Significant changes impacting international taxation and cross border transactions  Several retrospective amendments proposed- overruling various judgments  Measures to prevent generation and circulation of unaccounted money  Advance Pricing Agreement introduced Direct Tax Overview

MS, 21 st March 2012 Turbine Generators Pvt. Ltd Personal Tax - Rates Change in slab, no change in rates NO SPECIAL SLAB FOR WOMEN PRESCRIBED

MS, 21 st March 2012 Turbine Generators Pvt. Ltd Personal Tax - Rates Marginal reduction in personal taxes

MS, 21 st March 2012 Turbine Generators Pvt. Ltd  Deduction up to Rs. 5,000 for preventive health check-up (Within overall limit of 80D RS. 15,000 ??)  Interest on savings bank account exempt upto Rs. 10,000  No tax return for Salaried tax payers (Income < Rs. 5 Lacs)  Rajiv Gandhi Equity Saving Scheme  Individuals income below Rs. 10 lacs  Deduction of 50 % of investment  Equity investment limited to Rs. 50,000 (3 years lock in)  Cash donations >Rs. 10,000 not eligible for tax deduction  Premium on life insurance with annual premium < 10 % of sum assured - eligible for deduction and exemption Personal Tax - Others

MS, 21 st March 2012 Turbine Generators Pvt. Ltd  No change in corporate tax rates  Cascading effect of Dividend Distribution Tax eliminated for multi-tiered structures (w.e.f 1 st July 2012)  Taxation of Dividends from foreign subsidiaries at 15 % (on gross basis) - extended to 31 st March 2013  Withholding tax on Interest on ECB in Infrastructure sector reduced from 20 % to 5 % for a period of 3 years  200% Weighted deduction for In-House Research expenditure extended up to AY Corporate Tax

MS, 21 st March 2012 Turbine Generators Pvt. Ltd  Initial depreciation of 20 % allowed to power companies  Tax Holiday in Power sector – commencement date extended to 31 st March 2013  Limits for Tax Audit revised  Business : From Rs. 60 to 100 lacs  Professionals : From Rs. 15 to 25 lacs  STT on delivery based trades cut from 0.125% to 0.1%  Withholding tax of 1 % on transfer of immovable property (other than agricultural land) :  Rs. 50 Lacs – Urban area  Rs. 20 Lacs – Rural area Other Tax Proposals

MS, 21 st March 2012 Turbine Generators Pvt. Ltd Key Budget Proposals Indirect Taxes

MS, 21 st March 2012 Turbine Generators Pvt. Ltd Indirect Tax Excise duty and service tax rate increased to 12 %  Drafting of GST legislation in progress, Model by August 2012  Negative list introduced for Service Tax  Interest payable only from wrongful utilization of Cenvat Credit  Increase in effective rate of customs duty from % to % (due to increase in excise duty)  Custom duty on import of gold bars increased (2% to 4%)

MS, 21 st March 2012 Turbine Generators Pvt. Ltd General Points

MS, 21 st March 2012 Turbine Generators Pvt. Ltd General Points Time limit for certain re-assessments extended with retrospective respect:  16 years for income from assets located outside India  6 years in case agent of non-resident Time limit for completion of withholding tax assessment for resident assessees extended from 4 to 6 years with retrospective effect from 1 April 2010 In 12 th plan investment in infrastructure expected to go up to Rs. 50 Lac Crore (50% to come from private sector) Specified domestic transaction sought to be covered under Transfer pricing ambit

MS, 21 st March 2012 Turbine Generators Pvt. Ltd Thank You