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Budget Summary 2012

Date 16 Mar 2012
Written By
2012 Tax Reforms: Personal Income Tax Slabs Relaxed, Service Tax Increased, New Exemptions for Senior Citizens and Savings Interest
The 2012 budget introduced several changes to India's tax structure. Personal income tax slabs were relaxed, with the exemption limit raised to Rs 2 lakh and the 20% tax bracket extended up to Rs 10 lakh. Interest from savings accounts up to Rs 10,000 became tax-exempt. Senior citizens were exempted from filing advance tax. Corporate tax remained unchanged, but withholding tax on certain overseas borrowings was reduced. Service tax increased from 10% to 12%, with a broader tax base except for a negative list of exempt services. Various customs and excise duties were adjusted, affecting a wide range of goods and services. - (AI Summary)

Income Tax

  • Tax collection up 15% 

    Income Tax proposals: 
  • Personal Income Tax slabs for individuals relaxed 
  • Exemption limit enhanced from Rs 1.8 lakh to Rs 2 lakh 
  • Upper limit of 20% tax raised from Rs 8 lakh to Rs 10 lakh

    New Slabs as follows: 
  • Upto Rs 2 lakh - Nil 
  • Rs 2-5 lakh - 10% 
  • Rs 5–10 lakh – 20% 
  • Above Rs 10 lakh – 30%
  • Interest from savings account up to Rs 10,000 to be exempt from tax
  • In addition to medical insurance, an additional Rs 5000 to be exempted for preventive health check-ups
  • Senior Citizens exempted from filing advance tax 
  • Compulsory reporting of assets sold abroad

    Corporate Tax
  • Corporate Tax structure left unchanged 
  • Withholding tax on certain overseas borrowings reduced to 5% from 20% 
  • Securities Transaction Tax cut by 20% for stock market orders

    Service Tax
  • Service Tax rate up from 10% to 12%
  • Higher Service Tax to add Rs 186.6 bn in revenue
  • Duty-free baggage allowance for Indians increased to Rs 35,000
  • Duty-free baggage allowance for children increased to Rs 15,000

    Proposal to tax all services except negative list

    Exempted services include:
  • Government services
  • Pre-school, school education, recognised education at higher levels and approved vocational education
  • Renting of residential dwellings, entertainment and amusement services to be exempt
  • Public transportation to be exempt from service tax
  • Agricultural activities and animal husbandry to be exempt from service tax
  • Health care
  • Charities, religious persons
  • Sportspersons
  • Performing artists in folk and classical arts
  • Individual advocates providing services to non-business entities
  • Independent journalists
  • Services related with animal care and car parking
  • Services of business facilitators and correspondents to banks and insurance companies
  • Construction services relating to specified infrastructure, canals, irrigation works, post-harvest infrastructure, residential dwelling, and low-cost mass housing up to an area of 60 sq. mtr.
  • Exemption for the monthly charges payable by a member to a housing society up from Rs 3,000 to Rs 5,000
  • Industry related with cinematographic films
  • To set up a Study Team to examine the possibility of a common tax code for service tax and central excise
  • New scheme to simplify refunds

    Indirect Taxes

    Other Indirect Taxes
  • Standard Excise duty raised from 10% to 12 %
  • Merit Excise duty raised from 5% to 6 %
  • Lower merit rate raised from 1% to 2 %
  • Lower merit rate for coal, fertilisers, mobile phones and precious metal jewellery retained at 1%
  • Excise duty on large cars up from 22% to 24%
  • Customs duty cut to 2.5% on sugarcane planter, root or tuber crop harvesting machine and rotary tiller and weeder
  • Customs duty cut to 5% on specified coffee plantation and processing machinery
  • To extend project import benefit to green house and protected cultivation for horticulture and floriculture 
  • Customs duty cut to 5 % on some water soluble fertilisers and liquid fertilisers
  • Customs duty cut to 2.5 % on urea
  • To extend concessional import duty for Mechanised Handling Systems and Pallet Racking Systems in mandis or warehouses for horticultural produce
  • Imports of equipment for initial setting up or expansion of fertiliser projects fully exempt for three years 
  • Steam coal fully exempt, concessional CVD of 1% for two years
  • Natural Gas and Liquified Natural Gas exempt 
  • Uranium concentrate, Sintered Uranium Dioxide in natural and pellet form exempt 
  • Customs Duty on Mining machinery cut to 2.5%
  • Customs Duty on Railways safety equipment cut to 7.5%
  • Import Duty on road, tunnel boring equipment fully exempt
  • Parts of aircraft, testing equipment and tyres exempt 
  • Customs Duty on coating material for manufacture of electrical steel cut to 5 %
  • Nickel ore and concentrate and nickel oxide/ hydroxide fully exempt 
  • Customs Duty on non-alloy, flat-rolled up at 7.5% 
  • Automatic shuttle-less looms fully exempt
  • Automatic silk reeling and processing machinery fully exempt
  • Second-hand textile machinery to attract basic duty of 7.5 %
  • Duty on wool waste and wool tops cut to 5% 
  • Duty on Titanium dioxide cut to 7.5% 
  • Aramid yarn and fabric used for the manufacture of bullet proof helmets fully exempt
  • Duty on branded ready-made garments with up at 12 %
  • Waste Paper fully exempt
  • LCD and LED TV panels fully exempt
  • Memory card for mobile phones fully exempt
  • Duty on Adult diapers cut to 5%
  • Duty on bicycles increased to 30%
  • Duty on bicycle parts increased to 20% 
  • Excise Duty on hand-made matches cut to 6%
  • Six specified life-saving drugs/ vaccines for HIV-AIDS, renal cancer etc fully exempt 
  • Customs Duty on Soya protein concentrate and isolated soya protein cut to 15% and 10% respectively 
  • Iodised salt to have concessional basic customs duty of 2.5%
  • Customs Duty on Probiotics cut to 5%
  • Solar energy equipment to be fully exempt 
  • Excise duty on LED lamps cut to 6 %
  • Hybrid vehicle batteries to be fully exempt
  • Customs duty on gold bars, gold coins increased to 4%
  • Customs duty on non-standard gold increased to 10% 
  • Customs duty on platinum increased to 4%
  • Basic duty on gold ore, concentrate and dore bars increased to 2%
  • Excise duty on refined gold increased to 3 %
  • Polished, coloured gem stones to attract 2% duty 
  • Excise duty on cigarettes to attract ad valorem component of 10% on existing rates
  • Excise duty on hand-rolled bidis increased to 10 per thousand
  • Excise duty on machine-rolled bidis increased to `21 per thousand
  • Duty increased on pan masala, gutkha, chewing tobacco, unmanufactured tobacco and zarda scented tobacco in pouches 
  • Cess on Crude petroleum oil increased to `4,500 per metric tonne
  • Customs Duty on large cars/ MUVs/ SUVs with value exceeding USD 40,000 enhanced from 60 per cent to 75 per cent ad valorem
  • Packaged cement to have unified rate of 12 % + `120 PMT for non-mini cement plants and 6 % + `120 PMT for mini-cement plants 
  • Non-branded jewellery to attract excise duty of 1% 
  • Branded silver jewellery fully exempt
  • Building of commercial vehicle bodies to attract an ad valorem rate of 3%

 

Regards

Vivek Harsh

9899627168

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