Budget 2012 proposals, Changes and effects – An analysis

Budget 2012 proposals, Changes and effects – An analysis

Posted: 07 May 2012 06:17 PM PDT

In the budget 2012, our Finance Minister Mr Pranab Mukherjee announced a series of proposals which intended to check tax evasion, improve tax compliance and tax collection. The most important among these proposals are: GAAR, TDS on immovable property purchases, Excise duty on gold jewellery etc....

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Exemption to LTCG on sale of unlisted securities in IPO + STT 0.2% on Such Sales

Posted: 07 May 2012 06:10 PM PDT

To promote further depth of the capital markets through listing of companies, I propose to extend the benefit of tax exemption on long term capital gains to the sale of unlisted securities in an initial public offer. For this purpose, I propose to provide the levy of Securities Transaction Tax...

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Budget 2012 – Clarificatory amendments do not override provisions of DTAA

Posted: 07 May 2012 06:06 PM PDT

I would like to confirm that clarificatory amendments do not override the provisions of Double Taxation Avoidance Agreement (DTAA) which India has with 82 countries. It would impact those cases where the transaction has been routed through low tax or no tax countries with whom India does not have a...

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GAAR – Advance Ruling Applies, Onus on Department, Change in Constitution, Applicable from AY 2013-14

Posted: 07 May 2012 05:59 PM PDT

(i) Remove the onus of proof entirely from the taxpayer to the Revenue Department before any action can be initiated under GAAR. (ii) Introduce an independent member in the GAAR approving panel to ensure objectivity and transparency. One member of the panel now would be an officer of the level of...

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Government withdraws Excise Duty on all precious metal jewellery, branded or unbranded

Posted: 07 May 2012 05:55 PM PDT

Imposition of Central Excise duty on unbranded precious metal jewellery at the rate of 1% - Government has decided to withdraw the levy on all precious metal jewellery, branded or unbranded, with effect from 17th March, 2012.

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Retrospective amendment to Sec. 9 not applicable where assessment order already passed

Posted: 07 May 2012 05:52 PM PDT

The retrospective clarificatory amendments now under consideration of Parliament will not be used to reopen any cases where assessment orders have already been finalized. I have asked the Central Board of Direct taxes to issue a policy circular to clearly state this position after the passage of...

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NoTCS on Cash purchase of Jewellery upto Rs. 5 lakhs

Posted: 07 May 2012 05:49 PM PDT

To curb the flow of unaccounted money in the bullion & jewellery trade, the Finance Bill proposes the collection of tax at source (TCS) by the seller at the rate of 1 per cent of the sale amount from the buyer for all cash transactions exceeding Rs.2 lakh. Responding to the representations...

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Exemption from service tax for specified service in the negative list extends to Agricultural produce

Posted: 07 May 2012 05:45 PM PDT

Exemption for specified services relating to agriculture in the Negative List has also been extended to agricultural produce enlarging the scope of the entry.

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Work Contracts definition enlarged to include movable properties

Posted: 07 May 2012 05:43 PM PDT

The negative list has been drawn keeping in view the federal nature of the polity. Some of the States, through the Empowered Committee of State Finance Ministers, have expressed their concerns. I have decided to address their concerns by making changes in the definition of "service" which will...

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Withdrawal of TDS on purchase of Immovable Property

Posted: 07 May 2012 05:41 PM PDT

The Finance Bill proposes that every transferee of immovable property (other than agricultural land), at the time of making payment for transfer of the property, shall deduct tax at the rate of 1% of such sum. I have received a number of representations pointing out the additional compliance burden...

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LTCG from sale of unlisted securities in case of NR / Private Equity Investors, to be taxed at 10%

Posted: 07 May 2012 05:36 PM PDT

Currently, long term capital gain arising from sale of unlisted securities in the case of Foreign Institutional Investors is taxed at the rate of 10% while other non-resident investors, including Private Equity investors are taxed at the rate of 20%. In order to give parity to such investors, I...

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Lower rate of withholding tax of 5% on fund augmented from foreign borrowings extends to all businesses

Posted: 07 May 2012 05:33 PM PDT

In order to augment long-term low cost funds from abroad for the infrastructure sector, Finance Bill proposes a lower rate of withholding tax of 5% for funding specific sectors through foreign borrowings. To further facilitate access to such borrowings, I propose to extend the lower rate of...

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FM Budget speech dated 7-5-2012 on Finance Bill, 2012

Posted: 07 May 2012 05:30 PM PDT

I presented the Budget for the year 2012-13 on 16th of March, 2012. Since then I have received a large number of suggestions both from within the House and outside. Most of these pertain to tax proposals and range from seeking modification of some proposals to reconsideration or review of certain...

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