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Home > Union Budget: 2012-13
UNION BUDGET 2012-2013
Direct Taxation

  • DTC Bill to be enacted at the earliest after expeditious examination of the report of the Parliamentary Standing Committee.
  • DTC rates proposed to be introduced for personal income tax.
  • Exemption limit for the general category of individual taxpayers enhanced from INR 1,80,000 to INR 2,00,000.
  • Upper limit of 20 per cent tax slab raised from INR 8 lakhs to INR 10 lakhs.
  • Deduction of INR 10,000 allowed to individual tax payers for interest from savings bank accounts.
  • Deduction of up to INR 5,000 allowed for preventive health check up.
  • Senior citizens not having income from business exempted from payment of advance tax.
  • Repatriation of dividends from foreign subsidiaries of Indian companies at a lower tax rate of 15 per cent up to 31.3.2013 to be allowed.
  • Low cost funds to be provided to stressed infrastructure sectors, rate of withholding tax on interest payment on ECBs proposed to be reduced from 20 per cent to 5 per cent for 3 years for certain sectors.
  • Restriction on Venture Capital Funds to invest only in 9 specified sectors to be removed.
  • Investment link deduction of capital expenditure for certain businesses to be provided at the enhanced rate of 150 per cent.
  • New sectors to be added for the purposes of investment linked deduction.
  • Weighted deduction of 200 per cent extended for R&D expenditure in an in-house facility for a further period of 5 years beyond March 31, 2012.
  • Weighted deduction of 150 per cent extended on expenditure incurred for agri-extension services.
  • The sunset date for setting up power sector undertakings to be extended by one year for claiming 100 per cent deduction of profits for 10 years.
  • Turnover limit for compulsory tax audit of account and presumptive taxation of SMEs to be raised from INR 60 lakhs to INR 1 crore.
  • Exemption from Capital Gains tax on sale of residential property, if sale consideration is used for subscription in equity of a manufacturing SME for purchase of new plant and machinery.
  • Weighted deduction to be provided at 150 per cent of expenditure incurred on skill development in manufacturing sector.

Indirect Taxation

Service Tax

  • All services except those in the negative list comprising of 17 heads to be taxed
  • Service tax law to be shorter by nearly 40 per cent.
  • To harmonize the Central Excise and Service tax a common simplified registration form and a common return comprising of one page has been provided.
  • Revision Application Authority and Settlement Commission being introduced in Service Tax for dispute resolution.
  • Utilization of input tax credit permitted in number of services to reduce cascading of taxes.
  • Place of Supply Rules for determining the location of service to be put in public domain for stakeholders’ comments.
  • New scheme announced for simplification of refunds.
  • Service tax rate to be raised from 10 per cent to 12 per cent, with corresponding changes in rates for individual services.

General

  • Drafting of model legislation for the Centre and State GST in concert with States is under progress.
  • Standard rate of excise duty to be raised from 10 per cent to 12 per cent, merit rate from 5 per cent to 6 per cent and the lower merit rate from 1 per cent to 2 per cent with few exemptions.
  • Excise duty on large cars to be enhanced.
  • Agriculture and Related Sectors
  • Basic customs duty reduced for certain agricultural equipment and their parts.
  • Full exemption from basic customs duty for import of equipment for expansion or setting up of fertiliser projects upto March 31, 2015.

Infrastructure

  • Proposal for full exemption from basic customs duty and a concessional CVD of 1 per cent to steam coal till 31st March, 2014.
  • Full exemption from basic duty provided to certain fuels for power generation.
  • Mining Full exemption from basic customs duty to coal mining project imports. Basic custom duty to be reduced for machinery and instruments needed for surveying and prospecting for minerals.

Railways

  • Basic custom duty to be reduced for equipments required for installation of train protection and warning system and up gradation of track structure for high speed trains.

Roads

  • Full exemption from import duty on certain categories of specified equipment needed for road construction, tunnel boring machines and parts of their assembly.

Civil Aviation

  • Tax concessions for parts of aircraft and testing equipment for third party maintenance, repair and overhaul of civilian aircraft.

Gas

  • Blueprint to be developed for long distance gas pipelines leading to a National Gas Grid to facilitate transportation of gas across the length and breadth of the country.

Manufacturing

  • Relief extended to sectors such as steel, textiles, branded readymade garments, low-cost medical devices, labour-intensive sectors producing items of mass consumption and matches produced by semi-mechanized units.

Health and Nutrition

  • Concessional basic customs duty of 5 per cent extended with full exemption from excise duty/CVD to 6 specified life saving drugs/vaccines.
  • Basic customs duty and excise duty reduced on Soya products to address protein deficiency among women and children.
  • Basic customs duty and excise duty reduced on Iodine.
  • Basic customs duty reduced on Probiotics.

Environment

  • Concessions and exemptions proposed for encouraging the consumption of energy-saving devices, plant and equipment needed for solar thermal projects.
  • Concession from basic customs duty and special CVD being extended to certain items imported for manufacture for hybrid or electric vehicle and battery packs for such vehicles.
  • Proposal to increase basic customs duty on imports of gold and other precious metals.
  • Additional Resource Mobilisation
  • Excise duty to be increased on ‘demerit’ goods such as certain cigarettes, hand-rolled bidis, pan masala, gutkha, chewing tobacco, unmanufactured tobacco and zarda scented tobacco.
  • Cess on crude petroleum oil produced in India revised to Rs 4,500 per metric tonne.
  • Basic customs duty to be enhanced for certain categories of completely built units of large cars/MUVs/SUVs


Sector Wise Analyze

Infrastructure and Industrial Development

  • During Twelfth Plan period, investment in infrastructure to go up to 50 lakh crore with half of this, expected from private sector.
  • More sectors added as eligible sectors for Viability Gap Funding under the scheme “Support to PPP in infrastructure”.
  • Government has approved guidelines for establishing joint venture companies by defence PSUs in PPP mode.
  • First Infrastructure Debt Fund with an initial size of `8,000 crore launched earlier this month.
  • Tax free bonds of 60,000 crore to be allowed for financing infrastructure projects in 2012-13.
  • A harmonised master list of infrastructure sector approved by the Government.
  • IIFCL has put in place a structure for credit enhancement and take-out finance for easing access of credit to infrastructure projects.

National Manufacturing Policy

  • National Manufacturing Policy announced with the objective of raising, within a decade, the share of manufacturing in GDP to 25 per cent and creating of 10 crore jobs.

Power and Coal

  • Coal India Limited advised to sign fuel supply agreements with power plants, having long-term PPAs with DISCOMs and getting commissioned on or before March 31, 2015
  • External Commercial Borrowings (ECB) to be allowed to part finance Rupee debt of existing power projects.

Transport: Roads and Civil Aviation

  • Target of covering a length of 8,800 kilometre under NHDP next year.
  • Allocation of the Road Transport and Highways Ministry enhanced by 14 percent to 25,360 crore.
  • ECB proposed to be allowed for capital expenditure on the maintenance and operations of toll systems for roads and highways, if they are part of original project.
  • Direct import of Aviation Turbine Fuel permitted for Indian Carriers as actual users.
  • ECB to be permitted for working capital requirement of airline industry for a period of one year, subject to a total ceiling of US $ 1 billion.
  • Proposal to allow foreign airlines to participate upto 49 per cent in the equity of an air transport undertaking under active consideration of the government.

Housing Sector

  • Various proposals to address the shortage of housing for low income groups in major cities and towns including allowing ECB for low cost housing projects and setting up of a credit guarantee trust fund etc.

Fertilisers

  • Government has taken steps to finalise pricing and investment policies for urea to reduce India’s import dependence in urea.

Textiles

  • Government has announced a financial package of Rs 3,884 crore for waiver of loans of handloom weavers and their cooperative societies.

Micro, Small and Medium Enterprises

  • Rs 5,000 crore India Opportunities Venture Fund to be set up with SIDBI.
  • Policy requiring Ministries and CPSEs to make a minimum of 20 per cent of their annual purchases from MSEs approved. Of this, 4 per cent earmarked for procurement from MSEs owned by SC/ST entrepreneurs.

General

FRBM ACT

  • Introduction of amendments to the FRBM Act as part of Finance Bill, 2012.

Subsidies

  • All three public sector Oil Marketing Companies have launched LPG transparency portals to improve customer service and reduce leakage.
FDI

  • Efforts to arrive at a broad based consensus in consultation with the State Governments in respect of decision to allow FDI in multi-brand retail up to 51 per cent


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