budget 2012

KUMBHAT & CO.,Chartered Accountants

Coimbatore

March 2012 1KUMBHAT & CO, Chartered Accountants

For Indian economy, recovery was interrupted this year due to intensification ofdebt crises in Euro zone, political turmoil in Middle East, rise in crude oil priceand earthquake in Japan.

GDP is estimated to grow by 6.9 per cent in 2011-12, after having grown at 8.4per cent in preceding two years.

India however remains front runner in economic growth in any cross-countrycomparison.

Monetary and fiscal policy response for better part of past 2 years aimed attaming domestic inflationary pressure.

Growth moderated and fiscal balance deteriorated due to tight monetary policyand expanded outlays.

Indicators suggest that economy is turning around as core sectors andmanufacturing show signs of recovery.

At this juncture , it is necessary to take hard decision to improvemacroeconomicenvironment and strengthen domestic growth drivers.

Twelfth Five Year Plan to be launched with the aim of “faster, sustainable andmore inclusive growth”. Five objectives identified to be addressed effectively inensuing fiscal year.

If India can build on its economic strength, it can be a source of stability forworld economy and a safe destination for restless global capital.


• GDP growth estimated at 6.9 per cent in real terms in2011-12.

• Slowdown in comparison to preceding two years isprimarily due to deceleration in industrial growth.

• Headline inflation expected to moderate further in nextfew months and remain stable thereafter.

• Steps taken to bridge gaps in distribution, storage andmarketing systems have helped in more effectivemanagement of inflation.

• Developments in India’s external trade in the first half ofcurrent year have been encouraging. Diversification inexport and import market achieved.

• Current account deficit at 3.6 per cent of GDP for 2011-12and reduced net capital inflow in the 2nd and 3rd quartersput pressure on exchange rate.

• India’s GDP growth in 2012-13 expected to be 7.6 percent +/- 0.25 per cent.

• Deterioration in fiscal balance in 2011-12 due to slippagesin direct tax revenue and increased subsidies.


Advance Pricing Agreements

FDI in retail in consultations with other Political parties

GST – Proposed from Aug 2012

Rationalization of Refund for Exporters


Status Basic Limits Slab rate

Individual –

Men/Women <

60 years

2.00 lacs •Upto 2 lacs –Nil

• > 2 lacs < 5 lacs – 10%

• > 5 lacs < 10 lacs – 20%

• > 10 lacs – 30%

Senior Citizen

>60 years < 80

years

3.00 lacs •Upto 3.00 lacs – Nil

• > 3.00 lacs < 5 lacs –

10%

•> 5 lacs < 10 lacs – 20%

• > 10 lacs – 30%

Super Senior

Citizen > 80

years

5.00 lacs •Upto Rs. 5.00 lacs – Nil

• > 5 lacs – 10 lacs – 20%

•> 10 lacs - 30%


March 2012KUMBHAT & CO, Chartered Accountants 6

2 (47) – Definition of Transfer -w.e.f.1.4.1962

9 – Income deemed to accrue or arise in India –w.e.f.1.4.1962

10(10D)(c) – money received under insurance policy inexcess of 20% of actual capital sum assured restricted upto 31.3.12

10 (10D)(d) - money received under insurance policy inexcess of 10% of actual capital sum assured applicableafter 1.4.12

40 A – If the transactions at arm length price with relatedparties, then no disallowance

44AB – Rs. 1.00 crores for business/ Rs. 25 lacs forProfessionals – limit for audit

44AD – Rs. 1.00 crores not applicable for Commission oragency business and profession as specified in 44AA – AY11-12 onwards

50 D - Sale consideration not ascertainable – Fair marketvalue is the deemed consideration


54GB – Sale of residential plot or houseand proceeds invested in Equity Shares andthen used to purchase Plant and Machinerywithin one year – new plant and machineryand the shares should > 5 years -31.3.2017

56(vii) (e)–HUF is also a relative – w.e.f.1.10.2009

56 (viib) – Shares sold at premium, ifprice above the fair market value, theexcess is treated as income from othersources


68 – Unexplained cash credits in the books ofCompany – like share application, premium , capital– Income of the Company if AO is not satisfied withthe explanation

Unexplained Credits/Investments/Money – tax at30%

80C – Premium not in excess of 10% of actual sumassured; Actual sum assured means the minimumamount assured not taking into account thepremium agreed to be returned or any benefit orbonus over and above the sum actually insured

80D – Expenditure for preventive health check up –Rs. 5000/-

80G/80GGA– Donation made in excess ofRs.10000/- in cash will not be eligible for deduction

80TTA – Savings Bank Interest exempt up to Rs.10000/- for Individuals and HUF


Rajiv Gandhi Equity Savings Scheme for income <Rs.10 lacs – 50% deduction if amount invested inEquities – Limit of Investment up to Rs.50000/- -Amount to be locked for 3 years.

Time limit increased for completing assessments

Penalty amount and time of imprisonment increasedfor certain kinds of failures

Re-opening of assessments in case of assets held

abroad can be done up to 16 years.


Fee for delay in filing of TDS/TCS returns –Rs. 200/- per day of delay

Penalty for non-filing or furnishing theincorrect information in TDS/TCS returns –Rs. 10000/- to Rs. 1.00 lac

TDS levied on sale of immovable properties> Rs. 50 lacs in metros and Rs. 20 lacs inother cities

TCS on sale of jewellery > Rs. 2.00 lacs


To be at arm’s length price with associatedenterprises

Transfer pricing laws amended to includecertain domestic transactions – alltransactions > Rs. 5 crores

MAT (AMT) applicable non-corporateassessee if gross income exceeds Rs. 20lacs


New Chapter X-A – GAAR

Consequential amendment in Sec 90 and 90A –overriding the other provisions

Benefit of DTAA based on certificate containingprescribed particulars from the Govt. of Non –Resident’s home country or territory – TAXRESIDENCE CERTIFICATE

Allocation of expenses or interest or any cost orincome in relation to specified domestic transactions–at arm’s length price

Tolerance band for ALP – reduced to 3%


International Transactions – definition

expanded w.e.f.1.4.2002 – 92B

Advance Pricing Agreement – 92CC and 92D

to determine ALP

Penalty for non-maintenance of records as

per 92D is 2%


Rate 12.36% w.e.f. 1.4.2012

Life Insurance – 3% on First premium, thereafter1.5%

Point of Taxation – Turnover > Rs.50 lacs oninvoice/advance basis whichever is earlier forIndividuals/Firms/LLP; < Rs. 50 lacs on receipt basisoption available

SME – refund of unutilized credits

Cenvat credit on certain Vehicles – purchase,repairs, insurance can be availed

Only 17 services - in negative list


Services by Government or a local authority

Services by the Reserve Bank of India

Services by a foreign diplomatic mission located in India

Services relating to agriculture

Trading of goods

Any process amounting to manufacture or production of goods

Selling of space or time slots for advertisements

Service by way of access to a road or a bridge on payment of toll charges

Betting, gambling or lottery

Admission to entertainment events or access to amusement facilities

Transmission or distribution of electricity

Services by way of education

Services by way of renting of residential dwelling for use as residence

Financial Sector

Service of transportation of passengers

Services by way of transportation of goods

Funeral, burial, crematorium or mortuary services


Service to UN or specified International orgainsation

Health Care services

Veterinary Services

Service by Trusts registered u/s 12AA of Income Tax Act

Services for religious ceremony or renting of a religious place meant for general public

Services provided by individual Advocates to persons other than business entity

Technical testing of newly developed drugs, vaccines etc approved by Drug Controller General of India

Training or coaching relating to Arts, Culture and Sports

Services provided to recognized sports body

Services provided to educational institutions who are exempt from Service Tax for catering mid day meals, transportation of staff and students and services in relation to admission to such students


Sponsorship of tournaments or championships

Services for restoration, erection, constructionmaintenance, repair of non-industrial or noncommercial use, historical monuments, structureused for education, clinical or art and culturalestablishment, canal, dams, sewerage, irrigationwater treatment, residential complex meant for selfuse or employees’ use, roads for general public,tunnels, electric crematorium, airport, port etc

Transportation of food grains, milk, eggs, fruits andvegetables

Transportation of any consignment in a single goodscarriage < Rs. 1500/-


Transportation of any consignment for a singleconsignee < Rs. 750/-

Services provided to Govt. or local authorities forrepairs of ship, effluence treatment, waste collection

Parking for general public excluding leasing of space

Service by an unincorporated body or by entityregistered as a SOCIETY by way of reimbursementof charges or share of contribution – upto Rs.5000/- per month per member for sourcing of goodsor services for the common use of its members in ahousing society or a residential complex, trade union


Service % of Tax payable by

Service Provider

% of Tax payable by

Service Recipient

Insurance Agent 0 100%

Goods Transport 0 100%

Sponsorship 0 100%

Arbitral Tribunal 0 100%

Individual Advocate 0 100%

Support Service by

Govt or local

authority

0 100%

Renting vehicle to

carry passenger on

abated value

0 100%


Service % of Tax payable by

Service Provider

% of Tax payable by

Service Recipient

Renting vehicle to

carry passenger on

non-abated value

60% 40%

Supply of manpower 25% 75%

Works Contract 50% 50%

Import of Taxable

Service

0 100%


Works contract composition scheme – Therate of tax has been enhanced from 4% to4.8% (excluding cess) effective 01.04.2012

Rule 10A – Transfer of unutilized credit ofSAD w.e.f.1.4.12

Point of taxation – whichever is earlier

- Date of Invoice

- Date of Completion of Service

- Date of Payment

- Exceptions removed


Taxable Service Percentage

chargeable

Conditions

Financial leasing Services

including Equipment

leasing and hire purchase

10% Nil

Transport of goods by rail 30% Nil

Transport of passengers by

rail

30% Nil

Supply of food in any

premises including hotel,

convention center, club,

shamiana, pandal

70% No Cenvat credit is

to be taken under

Cenvat Credit Rules

2004

Transport by Air 40% No Cenvat Credit is

to be taken


Taxable Service Percentage

chargeable

Conditions

Renting of hotels ,

inns, guest house,

clubs etc

60% No Cenvat Credit

Transport of Goods

(GTA)


Service in relation to

Chit


Renting of Vehicle to

carry passengers


Package Tour by tour

operator

25% No Cenvat Credit and

bill should indicate

that is inclusive of

charges for the tour


Quarterly Return/payment Monthly Return/Payment

If Service tax liability in the

preceding year was less than Rs.

25 lacs

If Service tax liability in the

preceding year was MORE than

Rs. 25 lacs

Quarterly Payment Monthly payment

Period of Delay Penalty – Mandatory – Rule 7C

15 days Rs.500/-

>15 < 30 days Rs.1000/-

> 30 days Rs. 1000/- +Rs. 100/- per day

but not exceeding Rs. 2000/-


ory Penalty for Late filing of ST-3 Return under Rule 7C of Service Tax Rules, 1994


For details, contact: [email protected]

mailto:[email protected]

budget 2012

Documents

lacs kumbhat

lacs years

lacs nilmenwomen

lacs nilcitizen

lacs nil60 years

lacs forprofessionals

income rs

lacsupto rs