A précis of Union Budget 2012-13

1. UNION BUDGET
KEY POINTS:
2012-13
A précis of India’s Fiscal Policy 1 6 . 0 3 . 2 0 1 2
• India’s GDP is
estimated to grow
at 6.9% in FY 2011-
12
• Allocation of funds
An Overview
to National Health
Rural Mission to be
• Exemption limit for personal • Limit on tax free infra bonds to • Minimum of 20% of Annual
income tax enhanced to Rs. 2 be raised to 600 Crores purchases of CPSEs to be from
increased to
Rs. 20,822 Crore
Lakhs Micro, Small and Medium
• Food security act to be fully Enterprises
• Disinvestment target of Rs. 300 funded
• GST network as a
billion in FY 2012-13 • Senior citizens having no
National
income from business
Information Unit to • 50% income tax exemption for exempted from Advance tax
be made operational equity investors who invest up
by August 2012 to Rs. 50,000 and whose • Turnover limit for Compulsory
a n n u a l i n c o m e i s l e ss tax audit of accounts of SMEs
• Bharat Livelihoods than Rs. 10 lakhs raised to Rs. 1 Crore
Foundation of India
to be established to • IPOs of Rs. 10 Crore or more • Alternate Mi n i m u m T a x
scale up civil society mandated to be in electronic extended to all persons other
form than companies, claiming profit
• Service tax and Excise rates linked deductions
• Shareholders' meeting by raised to 12%
INSIDE THIS e-voting to be made • Introduction of compulsory
compulsory for top listed • Direct Import of Air Turbine reporting requirement in case of
ISSUE: companies Fuel by Indian carriers assets held abroad
permitted to ease financial
Direct taxes 2 • Rs. 15,888 Crore for crisis in aviation sector • Full exemption of coal exports
capitalization of Public sector from customs to power sector
banks, RRBs including • Establishment of Rs. 5,000
Excise & Customs 2 NABARD crore India Opportunities
Venture Fund for SMEs
• Reduction of STT to 0.1%
Service Tax 2
Revenue forgone 3
Income-tax Slabs
Promises FY 2011-12 FY 2012-13 Rate of tax (%)
Vs 3
Performance Up to1,80,000 Up to 2,00,000 Nil
Foreign Up to 1,90,000 (for women) Up to 2,00,000 (for women) Nil
Investment 3
Up to 2,50,000 Up to 2,50,000 Nil
Environment
(for resident individual of 60 (for resident individual of 60
years or above) years or above)
1,80,001 – 5,00,000 2,00,000 – 5,00,000 10
5,00,001 – 8,00,000 5,00,001 – 10,00,000 20
8,00,001 upwards 10,00,001 upwards 30

2. PAGE 2
Direct taxes
• Direct Tax Code to be of up to Rs. 5,000 for from foreign subsidiaries of
enacted at the earliest after preventive Health check up Indian companies to India at
expeditious examination of has also been provided a lower tax rate of 15%
the report of the allowed for one more year
• Extension of the sunset
Parliam entary Standing clause for tax holiday for • Capital gains tax on sale of a
Committee power sector undertakings residential property
• Exemption to individual tax for another one year i.e. up exempted for SMEs, if the
payers on Saving Bank to March 31, 2013 sale consideration is used for
Interest up to Rs. 10,000 has subscription in equity of a
• Taxation of unexplained manufacturing SME
been provided
money, credits, investments, company for purchase of
“Proposals on Direct • Tax collection at source on expenditures etc., at the new plant and machinery
Taxes are estimated to purchase in cash of bullion or highest rate of 30 per cent
jewellery in excess of Rs. 2 irrespective of the slab of • Exemption Wealth Tax for
result in a net revenue
lakhs income residential house allotted to
loss of Rs. 4500 crore” employee of a company by
• Proposal to allow deduction • Repatriation of dividends increasing Gross Salary
threshold to Rs. 10 Lakhs
“Higher
excise duty to Excise & Customs
pull down • Merit Rate of Excise duty machinery and instruments exempted from Customs duty
increased to 6% and Lower for surveying and
margins” prosp ecting in Mini ng
• Basic customs duty on
Merit Rate to 2% with few imported bicycles increased
exceptions reduced to 2.5%
from 10% to 30%
• Full exemption from basic • Full exemption from Customs
duty for Aircraft spares, tyres
• Full exemption from CVD on
customs duty on waste plant and equipments used in
paper, LCD and LED TV and testing equipment
setting up solar energy
panels and memory cards • Effective excise duty on projects
• Excise Duty on large cars branded apparels and made-
ups reduced from 4.5% to
• Basic customs duty on
a t t r a c t i n g m i xe d rate MUVs/SUVs whose value
increased to 27% 3.6%
e xc e e d s U S D 4 0 , 0 0 0
• Basic customs duty on • Branded silver jewellery fully enhanced to 75% ad valorem
“Proposals relating
to Indirect Taxes Service tax
are estimated to • New concept of Negative List to 40% • Establishment of Revision
comprising of 17 heads • Utilization of Input Tax credit Application Authority and
result in a net Introduced; Service tax (ST) Settlement Commission
permitted to rem ove
to be levied on all services cascading effect proposed to resolve disputes
revenue gain of except those in negative list
• A common simplified • Dual rate structure of
Rs. 45,940 crore” • Exemption from ST on registration form and a maximum service tax of
c o p yri g hts r el at i ng t o common return for Central Rupees 150 and Rupees 750
recording of cinematographic Excise and Service Tax to be in case of economy class
films travel is being replaced by an
introduced
ad valorem rate of 12%
• Abatement to hotels reduced
UNION BUDGET 2012-13

3. A PRÉCIS OF INDIA’S FISCAL POLICY PAGE 3
Revenue forgone under the Central Tax System
Special tax rates, exemptions, deductions, subsidies, rebates, deferrals and credits have an impact on Government revenue and are called as “tax
preferences”. The Statement below seeks to list the revenue impact of such tax incentives or tax subsidies that are a part of the tax system of the
Central Government.
Type of Sector FY 2010-11 Estimated in FY 2011-12
(in Rs. crores) (in Rs. crores)
DIRECT TAXES
Corporate Sector 57912 51292
Non-Corporate [Firms/AOPs/BOIs] Sector 6173 6622
Individual Taxpayers 30653 35698
INDIRECT TAXES
Excise Duty 192227 212167
Custom Duty 172740 223653
Promises Vs. Performance
“Overview of the
announcements
made in the
previous budget as
against its
performance”
Foreign Investment Environment
• FDI in Multi-Brand Retail up to • Qualified foreign investors to be US $ 1 Billion
51% and Aviation Up to 49% are allowed to invest Corporate bond • ECB for capital
under active consideration of market e xpenditure on the
Government maintenance and
• Reduction in the rate of
• External Commercial Borrowings withholding tax on interest operations of toll systems
(ECB) allowed as a funding option payments on ECB from 20% to for roads and highways so
for cost affordable housing 5% for 3 years for certain long as they are a part of
projects infrastructure sectors the original project
• Proposal to allow ECB to part • ECB permitted for working capital • Two way fungibility in “Access to low cost ECB
finance the rupee debt of existing of Airline Industry for 1 year Indian depository receipts will help in bridging the
power projects period subject to total ceiling of permitted funding gap”

4. DISCLAIMER
The above information is only indicative and solely for informational purpose and private circulation.
RANJ & Associates, Company Secretaries intend to, but do not guarantee or promise that it is correct, complete / up-to-date. We expressly
disclaim any liability to any person in respect of anything, and of consequences of anything done, or omitted to be done by any such person
in reliance upon the contents of this document.
The information in this document is as of March 16, 2012.