The Hon′ble Finance Minister of India, Mr. Pranab Mukherjee presenting the Union Budget 2012-13 quoted from Shakespeare’s Hamlet – “I must be cruel only to be kind”. However time and the endless notifications that have been issued and will eventually unfold during the year will tell the truth. But as of now the myriad changes in the direct and indirect taxes, some prospective and some retrospective / retroactive sure seem to be “the unkindest cut of all”……(Shakespeare′s Julius Ceaser) !!
Less said the better. The issue is fully loaded with relevant budget notifications and explanations including highlights of the Karnataka State Budget.
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Lex Valorem Team
Taking into consideration the ground realities of the global economy and its impact on India, Finance Minister Mr. Pranab Mukherjee presented the Union Budget 2012-13 on 16th March, 2012. Highlights of Direct and Indirect Tax proposals are listed below.
While the threshold limit for income tax exemption under various slabs has been raised for individuals, the tax rates per se for individuals as well as corporates has remained untouched. Alternate Minimum Tax has been extended to non-LLPs, domestic transactions are also subject to Transfer Pricing Regulations, certain amendments having long term impact have been made retrospectively
Finance Minister has proposed significant amendments in Indirect Tax with the objective of generating more revenue. Service Tax and Excise Duty rates have been increased to 12% from the existing 10%. Instead of adding new categories of service, a Negative List of services has been introduced to indicate what kind of services will not attract service tax. All other activities coming under the definition of “service” will consequently attract service tax thus increasing the taxable assessee base. The existing service tax provision have been completely revamped.
Standard rate for non-petroleum products has been enhanced from 10% to 12% and Merit rate for non-petroleum goods from 5% to 6%. Also Rate of duty imposed on 130 items in the last budget increased from 1% to 2%.
Rationalization of excise duty rates for Automobiles, Ready-made garments, Footwear etc.
Amendment to CENVAT Credit Rules, 2004.
Do read D.O Letter issued by Ministry of Finance for explanations.
Select changes relating to Customs are summarised. Do read D.O Letter issued by Ministry of Finance for explanations (Para 18 to 28).
Select changes relating to Service Tax are summarised. Do read D.O Letter issued by Ministry of Finance for explanations.
Highlight is the “Negative List of Services”.
The State Budget for 2012-2013 was presented by the Chief Minister on 21st March, 2012. Certain changes in procedural aspects, tax rates as well as Stamp Duty payable under the Karnataka Stamps and Registration Act, have been captured as highlights.
Note: The contents of this Newsletter are only a summary and has not dealt with any issue in detail. Any action taken or proposed to be taken must be in consultation with professionals and not merely based on the articles / news updates. Lex Valorem disclaims all liability on action taken without professional advice.