Key Features of Budget 2012-13 on Tax Front

INCOME TAX

1. Income tax exemption limit raised to Rs.2 lakh to provide relief of relief of Rs.2,000 for assessee in this category; 20 percent tax on income over Rs.10 lakh, up from Rs.8 lakh.

2. No change in corporate tax

3. Deduction of up to Rs.10,000 from interest from savings bank accounts

4. Withholding tax on external commercial borrowings reduced from 20 percent to five percent for power, airlines, roads, bridges, affordable houses and fertiliser sectors for a period of three years

5. New equity savings scheme (RAJIV GANDHI EQUITY SCHEME) to provide for income tax deduction of 50 percent for those who invest Rs.50, 000 in equity and whose annual income is less than Rs.10 lakh.

6. Proposal to allow deduction of upto `5,000 for preventive health check up.

7. Senior citizens not having income from business proposed to be exempted from payment of advance tax.

8. Investment link deduction of capital expenditure for certain businesses proposed to be provided at the enhanced rate of 150 per cent.

9. Proposal to extend weighted deduction of 200 per cent for R&D expenditure in an in-house facility for a further period of 5 years beyond March 31, 2012.

10. Turnover limit for compulsory tax audit of account and presumptive taxation of SMEs to be raised from  Rs. 60 lakh to Rs. 1 Crore.

11. Exemption from Capital Gains tax on sale of residential property, if sale consideration is used for subscription in equity of a manufacturing SME for purchase of new plant and machinery.

12. Proposal to provide weighted deduction at 150 per cent of expenditure incurred on skill development in manufacturing sector.

13. Re-open tax assessment for 15 years of overseas assets

14.Reduction in securities transaction tax by 20 per cent on cash delivery transactions.

15. Restriction on Venture Capital Funds to invest only in 9 specified sectors proposed to be removed.

16. Proposal to extend the levy of Alternate Minimum Tax to all persons, other than companies, claiming profit linked deductions.

17.Proposal to introduce General Anti Avoidance Rule to counter aggressive tax avoidance scheme.

CUSTOMS DUTY

18. Customs duty reduced from 7.5% to 2.5% for iron ore equipment

19. Customs duty on gold, platinum raised to 4% from 2%

20. Duty on tobacco in packets raised

21. No change proposed in the peak rate of customs duty of 10 per cent on non¬agricultural goods.

22. Cuts customs duty on rail equipment to 7.5% from 10%

23. Mobile phone parts exempted from basic customs duty 24. Thermal power companies exempted from full tax for 2 yrs 25.LCD and LED panels exempted from custom duty 26.No change in peak custom duty

EXCISE DUTY

27. Standard rate of excise duty to be raised from 10 per cent to 12 per cent, merit rate from 5 per cent to 6 per cent and the lower merit rate from 1 per cent to 2 per cent with few exemption

28. Excise duty on large cars also proposed to be enhanced

29. Branded silver jewellery fully exempt from excise duty

30.12% excise duty imposed on branded retail garments

SERVICE TAX

31 .All services to be taxed except the ones in negative list

32. School education exempt from service tax

33. Some infra construction services exempt from service tax

34.Propose to raise service tax rate from 10per cent to 12 per cent, with corresponding changes in rates for individual services.

35. Utilization of input tax credit permitted in number of services to reduce cascading of taxes.

36. New scheme announced for simplification of refunds.

OTHERS

37. Non tax revenue receipts at 1.65 lac cr; Gross taxes estimate at 10.6 of GDP

38. Interest subsidy on loan farm extended; 1% loan subsidy on home loans upto Rs 15 lac

39. No case of polio reported in the last 1 yr due to government prevention efforts UID allocation at Rs 14,232 cr for FY13

40. Mid-day meal program has improved enrolment and nutrition of children

41. Focus on micro-irrigation scheme projects; financing to be raised

42. Kisan credit card scheme will be modified

43. Work to improve farm technology; protein supplement to increase productivity

44. To work on National food security system; sustainable agriculture; oil seeds to increase productivity

45.Agriculture to be priority; initiative of green revolution has increased paddy production

46. Double tax free infra bonds to Rs 60,000 cr in FY12

47.To reduce cost of ATF; proposal to allow foreign investment in airlines at 49% 48. Increase investments in infrastructure through PPP

49.Rs 15,888 cr for capitalization of PSUs

50. Introduce new law for microfinance; to allow QFIs in bond market

51.Rs 30,000 cr for disinvestment in FY1 3

52. Have to fast rack policy decisions; effort on for consensus on FDI

53.GST rollout in March also awaits expert recommendations and will be operational in Aug 2012

54. DTC was intended for April rollout but will need more time

55.Mobile based fertilizer management system to be provided for transparent transfer of subsidy

56. Subsidies related to food will be extended under the Food Security Act and will be 2% of the GDP

57. Higher outlay in oil subsidies needed because of global price rise expected and avoid shock

58. Current account deficit for FY1 2 likely to be at 3.6%

59. Keeping in mind all global and domestic affects expect FY12 GDP at 7.6%, plus-minus 0.2%

60. Deal with malnutrition; coordinated implementation of delivery system and address problem of black m

61. Recognized goals for 12th 5 yr plan – Domestic demand driven growth recovery; increase private investment

62. FY1 2 GDP growth seen at 6.9%

63.Global economic crisis and political crisis injected uncertainty in the Indian economy

C.A. DAMODAR PRASAD AGRAWAL

PLACE: NEW DELHI