HIGHLIGHTS OF UNION BUDGET – 2011-12

  1. The basic exemption limit in the case of individuals increased from Rs.1.60 lacs to Rs.1.80 lacs. However, there is no increase in basic exemption limit in the case of Resident Women who is below 60 years at any time during the previous year.
  2. The qualifying age limit for senior citizens has been lowered from 65 years to 60 years and  increased the current exemption limit under two categories
  3. Category -1 – Age of Individual – 60 years or more but less than 80 years at any time during the previous year. The basic exemption limit is increased from Rs.2.40 lacs to Rs.2.50 lacs
  4. Category – 2 –   Age of Individual beyond 80 years or more at any time during the previous year. The basic exemption limit is Rs.5.00 lacs.
  5. In the case of domestic companies the surcharge has been reduced from Rs.7.5% to 5%
  6. In the companies other than domestic companies the surcharge has been reduced from 2.5% to 2%
  7. The definition of charitable purpose u/s 2 (15) includes “the advancement of any other object of general public utility”. The monetary limit in respect of such activities has been enhanced from Rs.10.00 lacs Rs.25.00 lacs.
  8. The amount paid by an assessee as an employer by way of contribution towards pension scheme, as referred to in sec 80CCD(2) on account of an employee to the extent it doesn’t exceed 10% of the salary of employee in the previous year, shall be allowed as a deduction u/s 36 in computing the income under the head profit and gains of business or profession.
  9. The Indian company which receives foreign dividend from foreign subsidiary company such dividend is taxable at the 15% as against 30% plus applicable surcharge.
  10. The rate of MAT is increased to 18.5% from the existing rate of 18% of such book profit.
  11. Minimum Alternative Tax has been introduced for Limited Liability Partnership (LLP) in line with MAT on companies with effect from the Assessment Year 2012 – 2013.
  12. The Government  exempts assessees having no other income other than salary from furnishing the return of income by notification. The proposed amendment shall be effective from 1st June, 2011.
  13. It is proposed to omit the requirement of quoting of Documentary Identification Number in notices / order / correspondences issued by Income tax department.
  14. The SEZ developers are required to pay dividend distribution tax on dividends declared / distributed on or after 1st June, 2011.
  15. The deduction u/s 80CCF to investment in notified long term infrastructure bonds extended for the A.Y. 2012-13 also.
  16. Liaison offices of a company will be required to file Annual Information in the prescribed form with in the 60 days from the end of the financial year.
  17. The tax holiday for power sector has been extended for further period of one year i.e. upto 31.03.2012.

SERVICE TAX

 

  1. The following two new services have been proposed
    1. Services by air conditioned restaurants having licence to serve liquor; and
    2. short term accommodation hotels / inns / clubs / guest houses etc.

 

  1. The monetary limit for adjustment of excess service tax paid is increased from Rs. 1.00 lacs to Rs.2.00 lacs.
  2. The penalty for delayed payment of service tax u/s 76 has been reduced from 2% to 1% per month or Rs.100 per day whichever is higher.
  3. The maximum penalty reduced to 50% of the tax.
  4. The rate of interest is reduced by 3% for assesses with turnover of upto 60 lacs.
  5. The maximum penalty for delay in filing of return increased from Rs.2,000 to Rs.20,000

Courtesy: CA. Naveen ND Gupta

 

Delhi VAT Budget 2010 Proposals

Ca. Vinay Bhushan

VAT rates of various commodities in Delhi, which are less than the rates suggested by the Empowered Committee of State Finance Ministers, are termed as deviations. A number of deviations have been done in the past. On account of these deviations Delhi Government have incurred losses in revenue collection as well as reduced compensation from the Central government. It has been proposed to remove such deviations on items / commodities and levy VAT as follows:-

From exempted 0% to 5%

1. Compressed natural gas (CNG) for use in transport sector

2. Rassi, Ban & Newar

3. Bio inputs like Fertilizers and Micro-nutrients and plant growth promotors

4. Kerosene stoves, lanterns and petromax and their spares

5. Embroidery and zari items

From exempted (0%) to 12.5%.

1. Motion Picture distribution when treated as right to use goods

2. Plastic scrap/ glass scrap.

From 5% to 12.5%

1. All other scraps

2. Dry fruits and kesar and magaj of all kind

3. Desi Ghee

4. Household plastic items

5. Plastic and tin containers including barrels

6. Wood and timber and plywood and laminated boards

7. Fitting for doors and windows and furniture

8. Wire mesh and metal mesh

9. Paintbrushes

10. Tractor tyres and tubes

11. Cocoa and coffee including coffee beans

12. Invertors

13. All Utensils and cutlery items (including Pressure cookers / Pans) except those made of precious metals

14. Fertilizers, pesticides, weedicides, insecticides, herbicides, rodentecides and plant growth regulators (other than those covered in First Schedule)

15. Glucose D

16. Locks

17. Weights and Measures

18. Fibre Board and particle board

19. Tea

Diesel From 12.5% to 20%

Concessions continue on following items :

1. Kirana Items except dry fruits, kesar and magaj of all kind

2. Foodgrains, Atta, Maida, Suji

3. Amla, Harad, Bahera, Shikakai, Supari, Ratanjot, Khusak, Pudina

4. Hawan Samagri and Incense Sticks

5. Unbranded goli and toffee

6. Midday Meal supplied by agencies approved by the Delhi Govt. and Local Bodies to schools

7. Jute and all kind of jute products including natural dyes and bleached, diversified, plain and laminated jute products

8. School Bags with MRP upto Rs.300/-

9. Tricycles meant for use by persons with disability

10. Blood filters

11. Compact Fluorescent Lamp and electronic Choke

12. Natural Gas and R-LNG (Re-gassified Liquid Natural Gas) sold to power generation companies owned by Government of NCT of Delhi for generation of power meant for sale in Delhi)

13. Piped Natural Gas

Luxury Items :- It is proposed to increase VAT on writing instruments costing above Rs.1,000/- from present 5% to 12.5%, watches above Rs.5,000/- from 12.5% to 20%, Mobile Phones and all mobile accessories above Rs.10,000/- from 5% to 12.5%, readymade garments above Rs.5,000/- from 5% to 12.5%. This measure is likely to generate approximately Rs.100 crores as additional revenue.

It is proposed to enhance VAT on aerated drinks from 12.5% to 20% as a measure to generate additional revenue to the tune of Rs.10 crores.

To give relief to Thalesemia patients we have already exempted “Desferrioxamine” “Deferiprone” and Blood Filters (Lucocites Filter) used for treatment of Thalassemix. I also propose to exempt new Oral Iron Chelator Defarasirox by including it in the First Schedule of the Act.

Government of Delhi has constituted the Delhi Dispute Resolution Society with the objective to establish institutionalized mechanism of alternate dispute resolution. I propose to frame a mechanism of mediation to resolve disputes of Sales Tax / Value Added Tax cases by appropriately amending the DVAT Act, 2004.

Subsidy on Domestic LPG:-

Due to subsidy of Rs.40/- on domestic LPG cylinder (14.2 Kg.), Government of Delhi is bearing a burden of approximately Rs.160/- to Rs.170 crores per annum. It is proposed to withdraw this subsidy.

Stamp & Registration

The registration fee charged on various documents under Indian Registration Act, as applicable to Delhi, is meager. The maximum registration fees is Rs.100/- in NCT of Delhi. It is proposed to bring it at more realistic level by raising maximum registration fee to Rs.500/- and registration fees in other slabs will also be enhanced proportionately. It is likely to generate additional revenue of Rs.6 crores.

(Please note that these are only proposals and will be effected only after passing of the budget and notification)

Budget-2010- Direct Tax Proposals

TAX PROPOSALS:

  • The Centralized Processing Centre at Bengaluru is now fully functional and is processing around 20,000 returns daily. Two more Centres will also be established during the year.
  • The Income Tax department has introduced “Sevottam”, a pilot project at Pune, Kochi and Chandigarh through Aayakar Seva Kendras, which provide a single window system for registration of all applications including those for redressal of grievances as well as paper returns.
  • The income tax department to notify SARAL-II form for individual salaried taxpayers for the coming assessment year.
  • Scope of cases which may be admitted by the Settlement Commission expanded to include proceedings related to search and seizure cases pending for assessment.
  • Scope of Settlement Commission also expanded in respect of Central Excise and Customs to include certain categories of cases that hitherto fell outside its jurisdiction.
  • Bi-lateral discussions commenced to enhance the exchange of bank related and other information to effectively track tax evasion and identify undisclosed assets of resident Indians lying abroad.

Direct Taxes

•  Income tax slabs for individual taxpayers to be as follows :

Income upto Rs 1.6 lakh NIL
Income above Rs 1.6 lakh and upto 10 per cent
Rs. 5 lakh
Income above Rs.5 lakh and upto Rs. 20 per cent
8 lakh
Income above Rs. 8 lakh 30 per cent

•  Taxability on Taxable income of Rs. 10 Lakhs :

OLD NEW SAVING
MALE 210,120.00 158,620.00 51,500.00
FEMALE 207,030.00 155,530.00 51,500.00
SENIOR
CITIZEN 201,880.00 150,380.00 51,500.00
  • Deduction of an additional amount of Rs. 20,000 allowed, over and above the existing limit of Rs.1 lakh on tax savings, for investment in long-term infrastructure bonds as notified by the Central Government.
  • Besides contributions to health insurance schemes which is currently allowed as a deduction under the Income-tax Act, contributions to the Central Government Health Scheme also allowed as a deduction under the same provision.
  • Current surcharge of 10 per cent on domestic companies reduced to 7.5 per cent.
  • Rate of Minimum Alternate Tax (MAT) increased from the current rate of 15 per cent to 18 per cent of book profits.
  • Weighted deduction on expenditure incurred on in-house R&D enhanced from 150 per cent to 200 percent. Weighted deduction on payments made to National Laboratories, research associations, colleges, universities and other institutions, for scientific research enhanced from 125 per cent to 175 per cent.
  • Payment made to an approved association engaged in research in social sciences or statistical research to be allowed as a weighted deduction of 125 per cent. The income of such approved research association shall be exempt from tax.
  • Benefit of investment linked deduction under the Act extended to new hotels of two-star category.
  • Allow pending projects to be completed within a period of five years instead of four years for claiming a deduction of their profits, as a one time interim relief to the housing and real estate sector.
  • Limits for turnover over which accounts need to be audited enhanced to Rs. 60 lakh for businesses and to Rs. 15 lakh for professions.
  • Limit of turnover for the purpose of presumptive taxation of small businesses enhanced to Rs. 60 lakh.
  • If tax has been deducted on payment by way of any expense and is paid before the due date of filing the return, such expenditure to be allowed for deduction.
  • Interest charged on tax deducted but not deposited by the specified date to be increased from 12 per cent to 18 per cent per annum.
  • Increase in threshold limit for tax deduction at source :
Section Nature of Payment Existing Revised Applicability
threshold limit of threshold
Payment limit of
(Rupees) Payment
(Rupees)
194B Winnings from lottery 5,000 10,000 Ist July,
or crossword puzzle 2010
194BB Winnings from horse 2,500 5,000 Ist July,
race 2010
194C Payment to 20,000* 30,000* Ist July,
contractors 2010
50,000** 75,000** Ist July,
2010
194D Insurance 5,000 20,000 Ist July,
commission 2010
194H Commission or 2,500 5,000 Ist July,
Brokerage 2010
194-I Rent 1,20,000 1,80,000 Ist July,
2010
194J Fees for professional 20,000 30,000 Ist July,
or technical services 2010
  • No Capital gain transfer of assets as a result of conversion of small companies into Limited Liability Partnerships.
  • The advancement of any other object of general public utility” to be considered as “charitable purpose” even if it involves carrying on of any activity in the nature of trade, commerce or business provided that the receipts from such activities do not exceed Rs.10 lakh in the year .
  • Proposals on direct taxes estimated to result in a revenue loss of Rs. 26,000 crore for the year.