Tax proposals: How they will affect you

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March 17, 2012

New Delhi: Springing pleasant surprises, Finance Minister Pranab Mukherjee on Friday provided reliefs for tax payers. Higher tax exemption limit for individuals, significant benefits for senior citizens, and retention of corporate tax to its existent level were some of the major tax-related highlights of Union Budget 2012-13.

However, a 2% jump in service tax from the current 10% came as a dampener.

Revisions in Direct Tax:

Income Tax

1) Individuals:

March 17, 2012

New Delhi: Springing pleasant surprises, Finance Minister Pranab Mukherjee on Friday provided reliefs for tax payers. Higher tax exemption limit for individuals, significant benefits for senior citizens, and retention of corporate tax to its existent level were some of the major tax-related highlights of Union Budget 2012-13.

However, a 2% jump in service tax from the current 10% came as a dampener.

Revisions in Direct Tax:

Income Tax

1) Individuals:

Income up to Rs 2,00,000 – Nil

  • Rs 2,00,001 to Rs 5,00,000 – 10%
  • Rs 5,00,001 to Rs 10,00,000 – 20%
  • Rs 10,00,001 and above – 30%

2) Senior citizens:

 The Budget proposal exempted the senior citizens from filing advance tax.

  • Income up to Rs 2,50,000- Nil
  • Rs 2,50,001-Rs 5 ,00,000- 10%
  • Rs 5,00,001 to Rs 10,00,000 – 20%
  • Rs 10,00,001 and above – 30%

3) 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

4) Service Tax

  • Service Tax rates raised from 10% to 12%
  • To bring more businesses under Service Tax net; only 17 services exempted now
  • Higher Service Tax to add Rs 186.6 bn in revenue
  • Changes in direct taxes to result in revenue loss of Rs 45 bn

5) Direct tax for companies

  • Surcharge for companies cut to 5%, from 7.5%
  • New revised income tax return form `Sugam` to be introduced for small tax payers
  • Minimum alternate tax raised from 18% to 18.5% of book profits
  • Service tax retained at 10%; duty exemptions to be withdrawn on various items
  • Net loss from direct tax proposals estimated at Rs 11,500 crore for the year

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 branded ready-made garments with up at 12 %
  • LCD and LED TV panels fully exempt
  • Memory card for mobile phones fully exempt
  • Duty on bicycles increased to 30%
  • Six specified life-saving drugs/ vaccines for HIV-AIDS, renal cancer etc fully exempt
  • 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%

Courtesy: zeenews