Budget PLUS 2012-Key Features of Indias Union Budget 2012-13-16march

Budget PLUS 2012
Key features of Indias Union Budget 2012-13
Presenters
Industry Ajay Lalvani
Direct Tax Pranav Sayta
Indirect Tax Harishanker Subramaniam

Harishanker (Hari) is a licensed customs broker. His domain of expertise lies in advising companies on resolution of import pricing at arms length on customs special valuation representations, export incentive programs, cross border transactions, tax structuring, and tax efficient supply chains
Moderator Sudhir Kapadia
Ajay Lalvani is a Chartered Accountant with over 25 years of industry experience. Currently, he is the Head of Taxation with Hindustan Unilever Ltd. responsible for both Direct and Indirect taxes. Ajay is a regular speaker on tax & policy issues and has represented industry bodies at various platforms
Pranav has been rated as one of the leading tax advisors in India by International Tax Review & by the Legal Media Group Guide to the Worlds Leading Tax Advisers. His area of expertise lies in international tax matters, cross border and domestic mergers, acquisitions & joint ventures
Sudhir has a rich experience of more than two decades in advising multinational companies in inbound investment strategies and domestic companies in relation to their outbound investment strategies, including tax efficient supply chain and transfer pricing
March 2012
Page 2
Budget PLUS 2012
1. Budget backdrop 2. Budget Snapshot 3. Budget 2012
Key policy announcements

Direct Tax proposals Indirect Tax proposals
Budget PLUS 2012
Contents
Budget PLUS 2012
Budget backdrop
Budget backdrop
Economy expected to grow at 6.9% in FY 2011-12

Agriculture 2.5% Industry 3.9% Services 9.4%
Growth in next fiscal expected to be 7.6% Gross fiscal deficit stands at 5.9% of GDP (5.1% last year) Revenue deficit to be 1.8% of GDP in FY 2012-13 (3.4% last year) Direct tax revenue expected to go up by 13.84% and indirect tax revenue to go up by 26.67%
Page 5 Budget PLUS 2012
March 2012
Budget PLUS 2012
Budget snapshot
Budget snapshot
Particulars Particulars Total Tax Revenues - Direct Tax Receipts - Indirect Tax Receipts Non-tax revenues Total Expenditure - Plan expenditure - Non-plan expenditure BE FY 2011-12 (a) 932,440 534,624 397,816 125,435 1,257,729 441,547 816,182 RE FY 2011-12 (b) 901,664 502,968 398,696 124,737 1,318,720 426,604 892,116 BE FY 2012-13 (c) 1,077,611 572,567 505,044 164,614 1,490,925 521,025 969,900 Variance (%) of (c) over (b) 19.51 13.84 26.67 31.97 13.06 22.13 8.72
Amounts in crores of INR
March 2012
Page 7
Budget PLUS 2012
Budget 2012
Key policy announcements Direct Tax proposals Indirect Tax proposals
Budget PLUS 2012
Budget 2012
Budget PLUS 2012
Tax reforms
Direct tax code to be enacted at the earliest
Expeditious examination of the Parliamentary Standing Committee report expected Drafting of model legislation for Centre and State GST under progress Structure of GST IT enabled Network (GSTN) approved - GSTN will be operational by August 2012
Plan to introduce GST on course

March 2012
Page 10
Budget PLUS 2012
Foreign Direct Investment reforms
Efforts to arrive on consensus on FDI in multi-brand retail trade upto 51%
Active consideration to allow foreign airlines to participate upto 49% in air transport
ECB to be allowed for

financing rupee debt of existing power projects capital expenditure for maintenance and operations of toll systems for roads and highways working capital for airline industry
low cost affordable housing projects
March 2012
Page 11
Budget PLUS 2012
Financial reforms

Allowing QFIs to access Indian corporate bond market IPOs above INR 100 million to be mandatorily issued in electronic form through stock exchanges Permitting two way fungibility in Indian Depository Receipts
March 2012
Page 12
Budget PLUS 2012
Other reforms
Amendments to the following bills to be moved during current session
Banking Laws (Amendment) Bill

Insurance Laws (Amendment) Bill Micro Finance Institutions Bill Indian Stamp (Amendment) Bill
Following bills to be introduced shortly

White paper to tackle Black Money to be introduced Central KYC depository to be developed
March 2012
Page 13
Budget PLUS 2012
Budget 2012
Budget PLUS 2012
Rates of tax

No change in tax rates of individuals Non taxable threshold limit for individuals enhanced to INR 200,000 Non taxable threshold limit has now been aligned for resident women and individuals (other than senior citizens) Taxable slab of 20% enhanced to INR 1,000,000
Present Proposed Rate Nil 10% 20% Income slab (`) Up to 200,000 200,001 500,000 500,001 1,000,000 Rate Nil 10% 20%
Income slab (`) Up to 180,000 180,001 500,000 500,001 800,000
Above 800,000
March 2012 Page 15
30%
Budget PLUS 2012
Above 1,000,000
30%
Rates of tax

No change in Corporate tax rates Securities Transaction Tax on delivery based transactions of equity shares and mutual fund units reduced to 0.1% from 0.125%
March 2012
Page 16
Budget PLUS 2012
Rates of tax
Dividend Distribution Tax (DDT)
DDT payable by holding company to be reduced by DDT paid by subsidiary now available in multi-tier corporate structure
March 2012
Page 17
Budget PLUS 2012
Key international tax proposals
Indirect transfers
Income deemed to accrue or arise in India through transfer of a capital asset situate in India to include, inter-alia:
Income deemed to accrue or arise:

by means of; in consequence of; or by reason of transfer of that capital asset
Share or interest in a company or entity registered or incorporated outside India deemed to be situated in India
If it derives its value, directly or indirectly, substantially from Indian assets
March 2012
Page 18
Budget PLUS 2012
Capital asset definition amended to include
Rights in or in relation to an Indian company, including rights of management or control or any rights whatsoever Disposal of an asset or creating any rights therein

Transfer definition proposed to be amended to include:
Directly or indirectly Absolutely or conditionally Voluntarily or involuntarily By way of an agreement (whether entered into or outside India) or otherwise
Notwithstanding that the transfer of rights are characterized as being effected or dependent upon or flowing from transfer of shares of a company registered or incorporated outside India
March 2012
Page 19
Budget PLUS 2012
Validation clause proposed to be inserted
To validate all demands raised/ notices sent or purporting to have been sent prior to coming into force of the validating clause notwithstanding any judgment or decree of a court / tribunal / other authority
Amendments referred to as clarificatory and proposed with retrospective effect from FY 1961-62
March 2012
Page 20
Budget PLUS 2012
Obligation to withhold tax from payment to non residents proposed to be made applicable to all persons, resident or non-resident, irrespective of whether the non resident payer has

Residence or place of business or business connection in India; Any other presence in any other manner whatsoever in India
Amendments referred to as clarificatory and proposed with retrospective effect from 1 April 1962
March 2012
Page 21
Budget PLUS 2012
Foreign dividend
Beneficial tax rate of 15% on dividends declared, distributed or paid by specified foreign company extended for one more year
Tax Residency Certificate
Submission of tax residency certificate made a mandatory condition for availing benefits under any tax treaty
Meaning of treaty terms
Terms of treaty clarified through subsequent notifications deemed to be effective retroactively from later of 1 October 2009 or coming into force of the tax treaty
March 2012
Page 22
Budget PLUS 2012
It is clarified with retrospective effect that DRP shall have powers to enhance the variation on matters raised or not by the assessee
Direction of the DRP now appealable by the tax authority with effect from 1 July 2012
March 2012
Page 23
Budget PLUS 2012
Anti-avoidance measures
General Anti-Avoidance Rule (GAAR) to be introduced to deal with aggressive tax planning involving use of sophisticated structures
Codification of anti-abuse rules which permit declaration of an arrangement as an impermissible avoidance arrangement
Impermissible avoidance arrangement is one where the main purpose or one of the main purposes is to obtain a tax benefit and satisfy atleast one of the following conditions

Is not for bona fide business purpose Creates rights and obligations which are not normally created between persons dealing at Arms Length Price (ALP)
March 2012
Page 24
Budget PLUS 2012

Results, in misuse or abuse of the provisions of the tax law Lacks commercial substance or is deemed to lack commercial substance
Tax benefit widely defined to mean
A reduction, avoidance or deferral of tax, increase in refund of tax (even if it as a result of a tax treaty), reduction, avoidance or deferral of tax due to a tax treaty, reduction in tax bases including increase in loss
Illustrations of consequences if arrangement is held to be impermissible avoidance arrangement provided for
March 2012
Page 25
Budget PLUS 2012
Onus on the taxpayer to prove that obtaining tax benefit is not the main purpose Tax treaty will not apply once GAAR applies Definition of deemed to lack commercial substance introduced GAAR applicable prospectively
March 2012
Page 26
Budget PLUS 2012
Proposed process of applying GAAR
AO to make reference to CIT If CIT is of the opinion that GAAR provisions to be invoked, he shall refer matter to Approval Panel
CIT to hear taxpayer
Final order invoking GAAR to be passed by AO after approval of CIT and such order is appealable directly to ITAT
AO to determine consequences of impermissible avoidance arrangement
Approval Panel* shall either declare the arrangement to be impermissible avoidance arrangement or otherwise
* Approval Panel to dispose off the reference within 6 months from the end of the month in which the reference was made by CIT
March 2012 Page 27 Budget PLUS 2012
Key transfer pricing provisions
Advance Pricing Agreements (APA)
APAs to be introduced with effect from 1 July 2012

CBDT empowered to enter into an APA with any person, determining the ALP or specifying the manner in which ALP is to be determined in relation to an international transaction APA shall be binding on both the taxpayer and the tax authority for a period not exceeding five years except
If there is a change in law or facts or where APA obtained by fraud or misrepresentation
Appropriate provisions made for modification of return, assessment, extension of period of limitation, etc. consequent to conclusion of APA
CBDT given the powers to prescribe a scheme specifying the manner, form, procedure and any other matters in respect of APA
March 2012
Scope of transfer pricing provisions to be expanded with effect from 1 April 2013 by including specified domestic transaction if aggregate value of such transactions exceeds INR 50 million. Specific compliance provisions introduced International transactions to include transactions in relation to tangible / intangible property, financing including debt arising in course of business, provision of services and business restructuring (irrespective whether such restructuring has effect on income in year of the transaction) Intangible property widely defined to include intangibles in relation to marketing, technology, artistic, data processing, engineering, customer, contract, etc.
March 2012
Determination of ALP
Upper ceiling of 3% to apply to percentage of allowable variation between the ALP and the transfer price
New allowable variation is yet to be notified
Earlier allowable variation of 5% to apply to all the assessment or reassessment proceedings pending before assessing officer as on 1 October 2009
Clarified with retrospective effect that assessee not entitled to the benefit of the earlier allowable variation of 5% as a standard deduction
March 2012
Page 30
Budget PLUS 2012
With effect from 1 June 2002 TPO empowered to examine any international transaction whether or not referred by the AO
No reopening of any proceedings to be triggered only on account of such adjustment
Penalty @ 2% to apply for non-reporting of transactions in accountants report in Form 3CEB
March 2012
Page 31
Budget PLUS 2012
Widening of tax net
Tax withholding on transfer of immovable properties
Tax to be withheld at the rate of 1% in case of transfer of immovable property after 30 September 2012, if the consideration exceeds

INR 5 million for property in an urban agglomeration INR 2 million for property in any other area
Stamp duty value to be deemed as consideration, if actual consideration is lower Registration of transaction only after submission of proof of payment of tax
March 2012
Page 32
Budget PLUS 2012
Widening of tax net
Definition of royalty expanded
Definition of royalty expanded to cover:
right for use of or right to use a, computer software (including granting of a licence) irrespective of the medium through which such right is transferred right, property or information, whether or not (i) the possession or control of it is with the payer, or (ii) it is used directly by the payer, or (iii) the location is in India transmission by satellite (including up-linking, amplification, conversion for down-linking of any signal), cable, optic fibre or by any other similar technology
March 2012
Page 33
Budget PLUS 2012
Widening of tax net
Scope of levy of Alternate Minimum Tax (AMT) of 18.5% extended to all persons other than companies (earlier applicable only to Limited Liability Partnerships)
AMT levy not applicable to individuals / HUFs whose Adjusted Total Income does not exceed INR 2 million
March 2012
Page 34
Budget PLUS 2012
Widening of tax net
Minimum Alternate Tax (MAT)
On disposal of revalued asset, revaluation reserve taken directly to general reserve to form part of book profits
Financial accounts prepared by certain companies (for example insurance, banking, electricity) as per the applicable regulatory Acts to be taken as basis for computing book profits for MAT purpose
Fair market value of asset to be taken as full value of consideration where consideration for transfer of a capital asset it not attributable or determinable
March 2012
Page 35
Budget PLUS 2012
Widening of tax net
Upward revision of daily tonnage income for qualifying ships

Present Rs 46 for each 100 tons Rs 460 plus Rs 35 for each 100 tons exceeding 1,000 Rs 3,610 plus Rs 28 for each 100 tons exceeding 10,000 Rs 7,810 plus Rs 19 for each 100 tons exceeding 25,000 Proposed Rs 70 for each 100 tons Rs 700 plus Rs 53 for each 100 tons exceeding 1,000 Rs 5,470 plus Rs 42 for each 100 tons exceeding 10,000 Rs 11,770 plus Rs 29 for each 100 tons exceeding 25,000
Qualifying ship having net tonnage Up to 1,000 1,001 to 10,000 10,001 to 25,000 Exceeding 25,000
March 2012
Page 36
Budget PLUS 2012
Exemptions and deductions
Conversion of sole proprietorship/ partnership into company
Cost of acquisition of assets in the hands of successor company proposed to be that of sole proprietorship or firm in case of tax exempt conversion with retrospective effect from 1 April 1999
No requirement for the parent company to issue shares to itself for amalgamation / demerger transaction to be tax neutral
March 2012
Page 37
Budget PLUS 2012
Investment linked tax incentive of 100% deduction of capital expenditure (other than on land, goodwill and financial instrument) also extended to :
Setting up and operating an inland container depot or a container freight station, a warehousing facility for storage of sugar
Bee-keeping and production of honey and beeswax
Incentive increased from 100% to 150% of capital expenditure :

Setting up and operating a cold chain facility, a warehousing facility for storage of agricultural produce, a hospital with at least 100 beds for patients Developing and building a housing project under a scheme for affordable housing and Production of fertilizer in India
March 2012
Page 38
Budget PLUS 2012
Relief from long term capital gains on transfer of residential property (house or plot of land) if
invested in equity of new start up SME company in the manufacturing sector ; the company utilizes the funds for purchase of new plant & machinery and
subject to fulfillment of other conditions
March 2012
Page 39
Budget PLUS 2012
Weighted deduction benefit at 200% of expenditure incurred on approved in-house scientific research and development facilities extended for a further period of 5 years i.e up to 31 March 2017
March 2012
Page 40
Budget PLUS 2012
Exemption of income of SEBI registered Venture Capital Fund (VCF)/Venture Capital Company (VCC)
Restriction on business of Venture Capital Undertaking (VCU) removed Definition of VCU aligned to SEBI definition
Income accrual to VCF/VCC now taxable in hands of investors on accrual basis Exemption from applicability of TDS on income paid by VCF/VCC to investors withdrawn
March 2012
Page 41
Budget PLUS 2012
Tax incentive for funding of certain Infrastructure sectors
Tax rate reduced to 5% for interest received by a non-resident from companies engaged in the following sectors
Construction of (i) dam, (ii) port (including inland port), (iii) road, toll road or bridge, (iv) ships (in a shipyard)
Operation of aircraft Manufacture or production of fertilizers Generation, transmission or distribution of power Developing an affordable housing project in accordance with the notified scheme
Loan should be in foreign currency and may be taken between 1 July 2012 to 1 July 2015 with the previous approval of the Central Government
March 2012
Page 42
Budget PLUS 2012
Additional depreciation for power projects
Benefit of 20% additional initial depreciation extended to new machinery or plant (other than ships and aircraft) acquired by entities engaged in the business of generation or generation and distribution of power
Deduction in respect of generation, distribution and transmission of power
Sunset clause extended to 31 March 2013
Insurance policies issued after 1st April, 2012 wherein premium payable exceeds 10% (formerly 20%) of capital sum assured will not be eligible for deduction/exemption
March 2012
Page 43
Budget PLUS 2012
Measures to counter unaccounted money
Cash credits
Share application money, share capital, share premium, or other sum credited in the books of a closely held company to be taxed in its hands unless the resident shareholder/ subscriber (other than a registered venture capital fund) explains the nature and source of the investment
Taxation of cash credits, unexplained money and investments, etc.
Income of such nature to be taxed on a gross basis at the rate of 30%
March 2012
Page 44
Budget PLUS 2012
Consideration exceeding fair value of shares
Consideration in excess of fair value received by a closely held company on issue of shares at a premium to a resident (other than a registered venture capital fund) to be taxed as income from other sources
Fair value to be reckoned based on the higher of the value determined as per a method to be prescribed or as substantiated by the company to the assessing officer having regard to the value of the companys assets including intangible assets
Mandatory tax return filing in relation to foreign assets
Resident taxpayers having any asset (including any financial interest in any entity) located outside India or signing authority in any account located outside India mandatorily required to file a return of income
March 2012
Time limitation for reassessment
Time limit for initiation of reassessment of income/ wealth in a case where income/ wealth in relation to any asset (including financial interest in any entity) located outside India has escaped assessment extended to 17 years from the end of the relevant financial year Provision to be effective retrospectively
March 2012
Page 46
Budget PLUS 2012
Penalty on undisclosed income found in search cases
Penalty on undisclosed income in a search initiated on or after 1 July 2012 revised as follows, subject to conditions:
If undisclosed income is admitted during the search 10%

If undisclosed income is not admitted during the course of search but disclosed in the return of income filed after the search 20% In other cases - 30% to 90%
March 2012
Page 47
Budget PLUS 2012
Rationalization of TDS/ TCS provisions
Deemed date of payment of tax by the resident payee
W.e.f 1 July 2012, deductor who fails to deduct whole or any part of the tax on payment to resident deductee shall not be deemed to be an assessee in default if the resident deductee has:

furnished his return of income under section 139 taken into account such sum for computing his taxable income in his tax return
paid tax due on the above income
Deductor to furnish a certificate from an accountant in the prescribed form for the above
Interest under section 201(1A) payable from the date on which tax was deductible to the date of furnishing the tax return by the resident deductee
March 2012
Rationalization of TDS/ TCS provisions
Similar amendments for TCS provisions to clarify the deemed date of discharge of tax liablity by the buyer/ licensee/ lessee
Date of furnishing tax return by the resident deductee deemed to be the date of deduction and payment of tax by the deductor for the purpose of allowance of business expenditure under section 40(a)(ia) for the relevant FY
Fee/ penalty for delay in furnishing TDS/TCS statement and incorrect information enhanced/ introduced (with effect from 1 July 2012)
March 2012
Page 49
Budget PLUS 2012
Budget 2012
Budget PLUS 2012
Service tax
Service tax rate increased to 12% (with effect from 1 April 2012) Other key changes in composition tax rates (with effect from 1 April 2012)
Life insurance 3% on first year premia and 1.5% for subsequent years
Money changing rate increase by 20%

Works Contract 4% to 4.8% Air transportation amended to ad valorem with abatement of 60%
March 2012
Page 51
Budget PLUS 2012
Service tax
Proposal to introduce Negative List basis of levy of service tax
Any service now taxable unless included in Negative List or exempt
Deeming fiction 9 declared services included such as renting of immovable property, construction of complex, temporary transfer of IPR, agreeing to an obligation to refrain from an act or tolerate an act Services provided by Government, RBI, local authority Trading of goods Services relating to agriculture Process amounting to manufacture Selling of time and space for advertisements (other than radio/ television) Access to road/ bridge
List of 17 services to be included in the Negative List, such as:

March 2012
Service tax

Admission to entertainment events or access to amusement facilities Renting of residential property Interest or discount on loans, advances and deposits Health care services Services provided by individual advocates and journalists Construction of specific infrastructure such as roads Copyright to cinematographic films Services of sports persons, folk and classical arts, etc.
Specific exemptions also proposed to be introduced, such as:

Rules of interpretation for determining taxability under Negative List Existing exemptions to be removed (limited to 10) Detailed guidance note on Negative List issued
March 2012
Service tax
Proposal to introduce the Place of Provision of Service Rules (PoS Rules)
Will provide basis for taxation of inter-state services under the GST regime Export Rules and Import Rules to be rescinded on implementation of PoS Rules
Service Tax Rules to be amended for:

Services provided from non-taxable territory Services provided by GTA Deletion of all services that are exempt such as mutual fund distribution
PoS Rules to apply on services provided inside the taxable territory irrespective of location of service provider and recipient
March 2012
Service tax
Impact on export of services on introduction of PoS Rules

Provisions relating to export to form part of Service Tax Rules Conditions of export

Service provider located in taxable territory Service recipient located outside India Service not included in negative List
PoS outside India

Payment received in convertible foreign exchange
To be notified from a date post assent of Finance Bill
March 2012
Page 55
Budget PLUS 2012
Service tax
Impact on import of services on introduction of PoS Rules
Definition of taxable territory services tax applicable on services provided in taxable territory
Jammu & Kashmir (J&K) excluded

Services received from J&K into taxable territory taxable under reverse charge
For specified services the reverse charge liability to be shared by service provider and service recipient

Supply of manpower Works contract services
Hiring of motor vehicles
To be notified from a date post assent of Finance Bill
March 2012
Page 56
Budget PLUS 2012
Service tax
Impact on Valuation Rules
New valuation rules for works contract services
40% original works i.e. new contructions and all types of additions/ alterations to make damaged structures workable 60% for other work contracts 25% for construction contracts where consideration received before consideration Total value to include gross amount plus value of material supplied under same or separate contract Credit on goods forming part of property not available Coastal shipping (50%) Railway passengers (new levy 70%) Outdoor catering (40%) and restaurant services (60%)
New rates of abatement on services, such as:

March 2012
Service tax
Inclusions in the value of taxable service:
Any amounts realised for service beyond period originally contracted such as demurrage
Exclusions from value of taxable service:
Interest on deposits and delayed payment (interest on loans to be exempt credit available on actual basis in lieu of current adhoc 50%) Charges towards accidental damage due to unforseen actions not relatable to the service
March 2012
Page 58
Budget PLUS 2012
Service tax
Amendments to the Point of Taxation Rules, 2011 (PoT Rules) (effective 1 April 2012)
Time period for raising invoice extended to 30 days
45 day relaxation for banks and financial institutions
PoT for exported services and 8 specified services provided by individuals/ firms shifted to payment basis (up to turnover of INR 5 million) Amendment to definition of continuous supply Rationailisation of provision on rate of tax applicable on continuous supply Specific rule for determining PoT in case of proposed change in rate with effect from 1 April 2012 Provision to determine PoT based on best judgment introduced
March 2012
Service tax
Amendments to Service Tax Rules, 1994
Alignment of service tax and excise procedures (with effect from from date to be notified)
Common PAN based tax code

Common registration format Common returns

Simplification of return format (Form EST-1) Monthly service tax returns for large assessees
Adjustment of excess service tax paid allowed without limits (with effect from 1 April 2012)
March 2012
Page 60
Budget PLUS 2012
Service tax
Amendments to assessment procedures

Special audit provisions proposed Time period to issue notice increased 18 months (from 12 months) Limitation period for appeals aligned with central excise
Provisions relating to settlement commission introduced Provisions for revision mechanism introduced in alignment with central excise
March 2012
Page 61
Budget PLUS 2012
Service tax
Amnesty from 100% penalty for renting of immovable property services (enactment of Finance Bill)
If tax along with interest up to 6 March 2012 paid within 6 months from enactment of the Finance Bill
Retrospective effect to exemption notifications (enactment of Finance Bill)
Repair of roads with effect from 16 June 2005 (earlier from July 2009)
Management, maintenance or repair of non-commercial Government building with effect from 16 June 2005 (till introduction of Negative List)
March 2012
Page 62
Budget PLUS 2012
Customs duty
Rates effective from 17 March 2012

Peak rate maintained at 10% CVD enhanced from 10% to 12% due to increase in central excise levy Education Cess and Secondary and Higher Education Cess on CVD exempted
Effective peak rate of customs duty enhanced to 28.85% from 26.85%

Duty free baggage allowances enhanced
Adults - INR 25000 to INR 35000

Children (upto 10 years) INR 12000 to INR 15000
March 2012
Page 63
Budget PLUS 2012
Customs duty effective 17 March 2012
BCD increased on certain products such as

Present Proposed
Products
Large cars, MUVs, SUVs Flat rolled products of non-alloy steel Cut and polished coloured gems Digital Still Cameras Standard gold / platinum bars
Rate
60% 5% NIL NIL 2%
Rate
75% 7.5% 2% 10% 4%
BCD reduced on certain products such as

Present Products Isolated soya protein Specified life saving drugs/ vaccines and their bulk drugs Rate 15% 10% Proposed Rate 10% 5%
March 2012
Page 64
Budget PLUS 2012
Customs duty effective 17 March 2012
BCD fully exempted on certain products such as
Initial setting up and substantial expansion of fertilizer projects valid till 31 March 2015 Steam Coal valid till 31 March 2014 Natural gas / LNG imported for power generation by a power generating company Equipment imported for road construction projects awarded by Metropolitan Development Authorities Goods for Coal mining under Project Imports Parts of aircraft and testing equipment imported for maintenance and repair of aircraft by third party MRO units
CVD exempted on foreign going vessels imported into India subject to payment of duty if converted for coastal run
March 2012
Customs duty
Amendments from date of enactment of Finance Bill
Courier services recognised for serving demand notices/ orders/ summons under Customs law Retrospective amendment for CVD exemption provided to foreign going vessels for the period 1 March 2011 to 16 March 2012 Central Government to notify specific class or classes of importers to pay customs duty electronically
Offences under Customs Act punishable with the terms of three years or more imprisonment made cognizable
No bail to be granted by Court without Public Prosecutor presenting the case on behalf of department
Importer to declare State in which imported goods would be first sold and corresponding State VAT registration number to claim SAD exemption on identified goods with effect from 1 May 2012
March 2012
Cenvat credit
Input credit allowed for excise duty/ CVD on specified motor vehicles Refund scheme for service exporters simplified Rules to determine the manner of distribution of credit by Input Service distributors specified Manufacturer entitled to transfer the unutilized credit of SAD to other premises on a quarterly basis Interest payable only on wrong utilisation of credit
March 2012
Page 67
Budget PLUS 2012
Central excise
Median rate of Central Excise Duty enhanced from 10.3% to 12.36% with effect from 17 March 2012 Duty increases across the board, including products liable to lower rates (1 to 2%, 5 to 6%) Key products being cars, foodstuff, computer parts, foreign going vessels, etc. Cess on indigenous crude increased to Rs 4500 per tonne Excise duty reduced on branded textile articles, parts of hybrid vehicles, memory cards, etc. Offences punishable for more than 3 years imprisonment to be cognizable
March 2012
Goods and Service Tax (GST) and Central Sales Tax (CST)
GST

No announcement about GST implementation date Recommendations awaited from the Parliamentary Standing Committee on the Constitution Amendment Bill GST Network (GSTN) proposed to be operational from August 2012
GSTN will implement common PAN-based registrations, returns, payments processing for all States on a shared platform
CST
CST Rate - No amendment proposed (2% continues against Form C)

Excise Duty rate on Declared goods increased from 5 to 6% - No enabling provision in CST
March 2012
Questions?
Visit our India Budget 2012 webpage to read our published thought leadership series on the Union Budget 2012-13.
You may also visit our Tax & Regulatory Services webpage to know more about our services.
This presentation contains information in summary form and is therefore intended for general guidance only. It is not intended to be a substitute for detailed research or the exercise of professional judgment. Neither Ernst & Young Pvt. Ltd. nor any other member of the global Ernst & Young organization can accept any responsibility for loss occasioned to any person acting or refraining from action as a result of any material in this publication. On any specific matter, reference should be made to the appropriate advisor.
Ernst & Young Pvt. Ltd.

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Budget PLUS 2012-Key Features of Indias Union Budget 2012-13-16march

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Budget PLUS 2012-Key Features of Indias Union Budget 2012-13-16march

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Budget PLUS 2012

Key features of Indias Union Budget 2012-13

Industry Ajay Lalvani

Direct Tax Pranav Sayta

Indirect Tax Harishanker Subramaniam

Moderator Sudhir Kapadia

Budget PLUS 2012

1. Budget backdrop 2. Budget Snapshot 3. Budget 2012

Key policy announcements

Budget PLUS 2012

Budget PLUS 2012

Economy expected to grow at 6.9% in FY 2011-12

Agriculture 2.5% Industry 3.9% Services 9.4%

Budget PLUS 2012

Budget PLUS 2012

Key policy announcements Direct Tax proposals Indirect Tax proposals

Budget PLUS 2012

Key policy announcements Direct Tax proposals Indirect Tax proposals

Budget PLUS 2012

Key policy announcements

Direct tax code to be enacted at the earliest

Plan to introduce GST on course

Budget PLUS 2012

Key policy announcements

Foreign Direct Investment reforms

Efforts to arrive on consensus on FDI in multi-brand retail trade upto 51%

low cost affordable housing projects

Budget PLUS 2012

Key policy announcements

Budget PLUS 2012

Key policy announcements

Amendments to the following bills to be moved during current session

Banking Laws (Amendment) Bill

Following bills to be introduced shortly

Budget PLUS 2012

Key policy announcements Direct Tax proposals Indirect Tax proposals

Budget PLUS 2012

Income slab (`) Up to 180,000 180,001 500,000 500,001 800,000

Budget PLUS 2012

Dividend Distribution Tax (DDT)

Budget PLUS 2012

Key international tax proposals

Income deemed to accrue or arise:

by means of; in consequence of; or by reason of transfer of that capital asset

If it derives its value, directly or indirectly, substantially from Indian assets

Budget PLUS 2012

Key international tax proposals

Capital asset definition amended to include

Transfer definition proposed to be amended to include:

Budget PLUS 2012

Key international tax proposals

Validation clause proposed to be inserted

Budget PLUS 2012

Key international tax proposals

Budget PLUS 2012

Key international tax proposals

Tax Residency Certificate

Meaning of treaty terms

Budget PLUS 2012

Key international tax proposals

Budget PLUS 2012

Budget PLUS 2012