Budget changes 2011 12

UNION BUDGET 2011
Bharat Kumar Soni AAO

India Budget
 The Union Budget of India also
called the General India Budget
 Presented each year on the last
working day of February
 It outlines all the economic planning
of the Government of India for the
next year.

Origin and History
 The first general budget of India was
presented by the India's first Finance
Minister Sir R.K. Shanmugham Chetty on
November 26, 1947.
 28 Union Finance Ministers have been
presenting the budget year after year.
 This is the 6th Budget of Mr. Pranab
Mukherjee
 Agricultural sector alone was focused
initially, but later on, the focus shifted to
the many sectors including the industrial,
financial and other sectors.

Passing of Budget
 The annual India budget has to be passed
by the House of the parliament before it
can come into effect on April 1, the start
of India's financial year
 The Indian parliament has one month to
review and modify the government's
budget proposals
 If by April 1, the parliamentary discussion
on the budget has not been completed,
the budget as proposed by the minister of
finance goes into effect subject to
retroactive modifications after the
parliamentary review.

INFRASTRUCTURE
 Allocation of Rs 2,14,000 crores for
infrastructure in 2011-12 at an increase
of 23.3 % over 2010-11- amounts to
48.5 % of total plan allocation.
 Comprehensive policy for PPP projects.
 To boost infrastructure development,
tax free bonds of Rs 30,000 crore
proposed to be issued by Government.

TAX REFORMS
• DTC proposed to be effective from
April 1, 2012.
• GST issues narrowed down with
states.
• Companies Bill to be introduced in
Lok Sabha during the current
session.

SUBSIDIES

 Subsidy for urea under
consideration.

 Direct transfer of cash subsidy to
people living below poverty line for
better delivery of kerosene, LPG and
fertilizers

HOUSING SECTOR FINANCE
 Existing scheme of interest subvention of
1% on housing loan further liberalised.
 Housing loan limit enhanced to Rs 25 lakhs
for dwelling units under priority sector
lending.
 Rural Housing Fund enhanced to Rs 3,000
crores.
 Central Electronic Registry to prevent
frauds involving multiple lending on the
same immovable property.

BLACK MONEY
 Five fold strategy to be put into
operation to deal with the problem of
generation and circulation of black
money.
 Membership of various international
fora engaged in anti money
laundering, Financial integrity and
Economic development, Exchange of
information for tax purposes and
transparency to be secured.

 Various Tax Information Exchange
Agreements (TIEA) and Double
Taxation Avoidance Agreements
(DTAA) concluded. Foreign Tax
Division of CBDT has been
strengthened to effectively handle
increase in tax information exchange
and transfer pricing issues.
 Enforcement Directorate strengthened
three fold to handle increased number
of cases registered under amended
Money Laundering Legislation

 Finance Ministry has commissioned
study on unaccounted income and
wealth held within and outside the
country.
 Comprehensive national policy to be
announced in near future to strengthen
controls over prevention of trafficking
on narcotic drugs

IMPROVING GOVERNANCE
 IT Initiatives
 Various IT initiatives for efficient tax
administration such as:-
 e-filing and e-payment of taxes
 adoption of ‘Sevottam’ concept by CBEC
and CBDT
 web based facility for tax payers to track
the refunds and credit for pre-paid taxes
 augmentation of processing capacity.

 A new scheme with an outlay of Rs
300 crores to be launched to provide
assistance to States to modernise
their stamp and registration
administration and roll out e-
stamping in all the states in the next
three years.
 A new simplified form ‘Sugam’ to be
introduced to reduce the compliance
burden of small tax payers falling
within presumptive taxation

 Three more benches of Settlement
Commission to be set up to fast track
the disposal of cases.

 Steps initiated to reduce litigation and
focus attention on high revenue cases

CORRUPTION

 Group of Ministers constituted to
consider measures for tackling
corruption.

FINANCE BILL 2011
DIRECT TAXES

Definition of “charitable purpose”
 It is proposed to amend section
2(15) to enhance the current
monetary limit in respect of receipts
from ancillary activities from ten
lakhs rupees to twenty-five lakhs
rupees.
 This amendment is proposed to take
effect from A.Y 2012-13

Exemption of certain perquisites of Chairmen
and Members of Union Public Service
Commission
 It is proposed to amend section 10 to
extend benefit of exemption in respect of
specific perquisites and allowances, which
will be notified by the central government,
received by both serving as well as retired
Chairmen and Members of Union Public
Service Commission.
effect retrospectively from 1st April,2008.

Exemption of specific income of notified body
or authority or trust or board or commission
 A new clause in section 10 of the Income-
tax Act is being inserted to provide
exemption from income tax to any
specified income of a body, authority,
board, trust or commission which is set up
or constituted by a Central, State or
Provincial Act or constituted by the Central
Government or a State Government with
the object of regulating or administering
an activity for the benefit of the general
public, provided-

 it is not engaged in any commercial
activity,
 is notified by the Central Government in
this behalf
 The nature and extent of income to be
exempted will also be specified while
notifying such entity.
 A consequential amendment is proposed in
section 139 to provide filing of the return of
income.
 These amendments are proposed to take
effect from 1st June 2011

Infrastructure Debt Fund
 In order to augment long term, low cost
funds from abroad for the infrastructure
sector, it is proposed to facilitate setting
up of dedicated debt funds, which will be
exempt u/s 10 of the IT Act, once notified
by the Central Government. It will
however, be required to file return of
income.

 It is also proposed to amend section 115A
of the Income tax Act to provide that any
interest received by a non-resident from
such notified infrastructure debt fund shall
be taxable at the rate of 5% on the gross
amount of such interest income.
 New section 194LB to provide that the tax
shall be deducted at the rate of 5% by
such notified infrastructure debt fund on
any interest paid by it to non-resident.
 These amendments are proposed to take
effect from 1st June 2011.

Provisions relating to MAT and
DDT in case of SEZ
 The above provisions were inserted
in the Income tax Act by the SEZ Act
w.e.f 10th February,2006.
 It is proposed to sunset the
availability of exemption from
minimum alternate tax in the case of
SEZ Developers and units in SEZ’s in
the Income tax Act as well as the
SEZ Act.

 This amendment to section 115JB of the
Income –tax Act will take effect from 1st
April,2012.
 It is further proposed to discontinue the
availability of exemption from DDT in the
case of SEZ Developers under the Income-
tax Act as well as the SEZ Act for
dividends declared, distributed or paid on
or after 1st June, 2011.
 This amendment to section 115-O of the
IT Act will take effect from 1st June,2011

Weighted deduction for contribution
made for approved scientific
research programme
 In order to encourage more
contributions to approved scientific
research programmes, it is proposed to
increase the weighted deduction u/s
35(2AA) from 175 % to 200% ,in
respect of amounts paid to National
Laboratories, Universities, IITs etc for
the purpose of approved scientific
research programme.
effect from 1st April, 2012.

Tax benefit for New Pension
System (NPS)
 It is proposed to amend section 80CCE so
as to provide that the contribution made
by the Central Government or any other
employer to a pension scheme u/s
80CCD(2) shall be excluded from the limit
of 1 lakh provided u/s 80CCE.

 Currently, the contribution made by
the employer towards a recognised
provident fund, an approved gratuity
fund is allowable as a deduction from
business income u/s 36, subject to
certain limits. However, the
contribution made by an employer to
the NPS is not allowed as deduction.

 It is, therefore, proposed to amend
section 36 so as to provide that any
sum paid by the assessee as an
employer by way of contribution
towards a pension scheme, as referred
to in section 80CCD(2) on account of an
employee to the extent it does not
exceed 10% of salary of the employee
in the previous year, shall be allowed as
deduction in computing the income
under the head “Profits and gains of
business or profession”
 These amendments are proposed to
take effect from A.Y 2012-13.

Deduction for investment in long-
term infrastructure bonds

80CCF to allow deduction on account
of investment in notified long term
infrastructure bonds for the A.Y
2012-13.

Extension of sunset clause for tax
holiday for power sector
 It is proposed to amend section 80-
IA(4)(iv) to extend the terminal date
for a further period of one year, ie
upto 31/03/12.
 This amendment will take effect from
1st April,2012

Rationalisation of provisions
relating to Transfer Pricing
 It is proposed to amend section 92C
of the Act to provide that instead of
present variation of 5% in respect of
pricing in Intl’ transaction, the
allowable variation will be such
percentage as may be notified by the
Central Government in this behalf.
effect from 1st April, 2012.

 It is proposed to amend section 92CA
so as to specifically provide that the
jurisdiction of the transfer pricing
officer shall extend to the
determination of the ALP in respect of
other international transactions, which
are noticed by him ,subsequently in the
course of proceedings before him.
 These international transactions would
be in addition to international
transactions referred to the TPO by the
Assessing Officer.

 In order to enable the TPO to
conduct on -the-spot enquiry and
verification, it is proposed to amend
section 92CA (7) so as to enable the
TPO to also exercise the power of
survey conferred on the income- tax
authority u/s133 A of the Act.
 These amendments are proposed to
take effect from 1st June 2011.

 Corporate assessees face practical
difficulties in accessing contemporary
comparable data before 30th
September in order to furnish a report
in respect of their international
transactions. It is, therefore, proposed
to amend section 139 to extend the
due date of filing of income by such
corporate assesses to 30th November
of the AY.
effect from 1st April 2011.

Tool Box of counter measures in respect of
transaction with persons located in a
notified jurisdictional area
 In order to discourage transactions
by a resident assessee with persons
located in any country or jurisdiction
which does not effectively exchange
information with India, anti-
avoidance measures have been
proposed in the Income-tax Act.

 New section 94A to be inserted in the
Act to specifically deal with transactions
undertaken with persons located in
such non co-operative country or area .
 The proposed section provides :-
 an enabling power to the Central
Government to notify any country or
territory outside India, having regard to
the lack of effective exchange of
information by it with India, as a
notified jurisdictional area

 that if an assessee enters into a
transaction, where one of the parties
to the transaction is a person located
in a notified jurisdictional area, then
all the parties to the transaction shall
be deemed to be associated
enterprises and the transaction shall
be deemed to be an international
transaction and accordingly, transfer
pricing regulations shall apply to such
transactions;

 that no deduction in respect of
any payment made to any
financial institution shall be
allowed unless the assessee
furnishes an authorization, in the
prescribed form, authorizing the
Board or any other income-tax
authority acting on its behalf, to
seek relevant information from
the said financial institution

 that no deduction in respect of
any other expenditure or
allowance (including depreciation)
arising from the transaction with a
person located in a notified
jurisdictional area shall be allowed
under any provision of the Act
unless the assessee maintains
such other documents and
furnishes the information as may
be prescribed;

 that if any sum is received from a
person located in the notified
jurisdictional area, then, the onus
is on the assessee to satisfactorily
explain the source of such money
in the hands of such person or in
the hands of the beneficial owner,
and in case of his failure to do so,
the amount shall be deemed to be
the income of the assessee

 that any payment made to a
person located in the notified
jurisdictional area shall be liable to
deduction of tax at the higher of
the rates specified in the relevant
provision of the Act or rate or
rates in force or a rate of 30 per
cent.
 This amendment is proposed to
take effect from 1st June 2011

Taxation of certain foreign
dividends at a reduced rate
 New section 115BBD to provide that where
total income of an Indian company
includes any income by way of dividends
received from a foreign subsidiary
company, then such dividends shall be
taxable at the rate of 15%. (plus
applicable surcharge and cess) on the
gross amount of dividends. No
expenditure in respect of such dividends
shall be allowed under the Act.
 This amendment is proposed to take effect
from 1st April, 2012

Minimum Alternate Tax
115JB (1) to increase the rate of
MAT to eighteen and one-half per
cent from the existing rate of 18% of
such book profit.
 This amendment will take effect from
1st April, 2012

Alternate Minimum Tax for Limited
Liability Partnership (LLP)

 New Chapter XII-BA in the Income-
tax Act containing special provisions
relating to certain limited liability
partnerships.

 Where the regular income-tax
payable for a previous year by a
LLP is less than the alternate
minimum tax payable for such
previous year, the adjusted total
income shall be deemed to be
the total income of such LLP and
it shall be liable to pay income-
tax on such total income at the
rate of eighteen and one-half per
cent..

Collection of information on requests
received from tax authorities outside
India

 It is proposed to facilitate prompt
collection of information on requests
received from tax authorities outside
India in relation to an agreement for
exchange of information u/s 90 or
section 90A of the Income-tax Act.

 Section 131(3) to be amended to
empower the tax authority, as
notified by the Board, to impound
and retain any books of account
and other documents produced
before it in any proceeding under
the Act.
 These amendments will take
effect from 1st June, 2011

Exemption to a class or classes of
persons from furnishing a return of
income

 In order to reduce the compliance burden on
small tax payers, it is proposed to insert sub-
section (1C) in section 139. This provision
empowers the Central Government to exempt, by
notification in the Official Gazette, any class or
classes of persons from the requirement of
furnishing a return of income, having regard to
such conditions as may be specified in that
notification
 These amendments will take effect from 1st June
2011

Notification for processing of returns
in Centralised Processing Centers
143(1B) to extend the existing time
limit for issue of notification to 31st
March 2012.
 This amendment will take effect
retrospectively from 1st April 2011

Extension of time limit for
assessments in case of exchange of
information
 It is proposed to exclude the time
taken in obtaining information from
the tax authorities in jurisdictions
situated outside India, under an
agreement referred to in section 90
or section 90A, from the statutory
time limit prescribed for completion
of assessment or reassessment.
 These amendments will take effect
from 1st June, 2011

Modification in the conditions for
filing an application before the
Settlement Commission
 It is proposed to expand the criteria
for filing an application for
settlement by a tax payer in whose
case proceedings have been initiated
as a result of search or requisition of
books of account in the case of his
relative.

 It is proposed to insert a new clause (ia)
in the proviso to section 245C(1). This
stipulates that an application can also be
made, where the applicant—
 is related to the person in whose case
proceedings have been initiated as a
result of search and who has filed an
application; and
 is a person in whose case proceedings
have also been initiated as a result of
search in the hands of his relative.
 the additional amount of income-tax
payable on the income disclosed in his
application exceeds ten lakh rupees

Omission of the requirement of
quoting of Document
Identification Number
 Considering the practical difficulties
due to non-availability of requisite
infrastructure on an all India basis, it
is proposed to omit section 282B of
the IT Act requiring every IT
Authority to allot DIN.
 This amendment will take w.r.e.f 1st
April 2011

Reporting of activities of liaison
offices
 It is proposed to seek regular information
from non-residents regarding the
activities of their liaison offices in India. A
new section 285 is proposed in the
Income-tax Act mandating the filing of
annual information, within sixty days from
the end of the financial year, in the
prescribed form and providing prescribed
details by non-residents as regards their
liaison offices.
 This amendment is proposed to take effect
from 1st June, 2011

INDIRECT TAXES
Service Tax
 Standard rate of Service Tax
retained at 10 per cent, while
seeking a closer fit between present
regime and its GST successor.
 Hotel accommodation in excess of Rs
1,000 per day and service provided
by air conditioned restaurants that
have license to serve liquor added as
new services for levying Service Tax.

 Service Tax on air travel both
domestic and international
raised.
 Services provided by life
insurance companies in the area
of investment and some more
legal services proposed to be
brought into tax net.

Tax on all services provided by-
 Hospitals with 25 or more beds with
facility of central air conditioning.
 Diagnostic services being provided by
a clinical establishment with the aid of
laboratory of other medical
equipment.
 Service provided by Doctor, not being
an employee of a clinical
establishment, from the premises of
such establishment

 All individual and sole proprietor tax
payers with a turnover upto Rs 60
lakh freed from the formalities of
audit.
 To encourage voluntary compliance
the penal provision for Service Tax
are being rationalised. Similar
changes being carried out in Central
Excise and Custom laws

TO COST MORE TO COST LESS
Medicines Life Saving Drugs,
Medical Equipments Homoeopathy
Medicine, Sanitary
Napkins, Diapers
Syringes/Needles
Branded Gold Gold Bars

Computer, CD Rom, Electronic Hardware,
CD Drive, Hard Disk Printer, Mobile
Drive, DVD Writer Phone, Battery
Charger

Clothes
Text Books, Note Agarbathis
Books, Fountain Pens,
Pencils, sharpners etc

Food in A/c Bar, Hotel Electric Car
Accommodation
Air Travel, Pastry,
Cake, Chocolates
Hospital Expenses, Agricultural
Litigation costs Equipments

AAM ADMI
Below is the actual price list of a canteen
and that too in India
Tea Rs. 1.00

Soup Rs. 5.50
Dal Rs. 1.50

Meals Rs. 2.00
Chapati Rs. 1.00
Chicken Rs.24.50
Dosa Rs. 4.00
Veg Biryani Rs. 8.00
Fish Rs.13.00

These items are meant for “POOR
PEOPLE” and are available at Indian
Parliament Canteen. The MPs who have
access to the canteen earn
Rs. 80,000/- per month along with
other perks

Now Judge for yourself as to who is the
“AAM ADMI”

Budget changes 2011 12

Recommandé

Recommandé

Contenu connexe

Tendances

Tendances (19)

En vedette

En vedette (7)

Similaire à Budget changes 2011 12

Similaire à Budget changes 2011 12 (20)

Dernier

Dernier (20)

Budget changes 2011 12