DIRECT TAX CHANGES IN BUDGET 2012

SUMMARY OF BUDGET 2012

PERSONAL INCOME TAX

Rate of Personal Income Tax

Upto Rs. 2 Lakh                               NIL

Between Rs 2 Lakh to 5 Lakh       10%

Between Rs. 5 Lakh to 10 Lakh    20%

Above Rs. 10 Lakh                          30%

No separate rate for Women now

Person age above 60 no tax upto Rs. 2,50,000/-

Person age above 80 no tax upto Rs. 5,00,000/-

Net saving is Rs. 22,000/- 

·         TDS on sale on immovable Property – 1% (Rs. 50 Lakhsin urban ara and others 25 Lakhs)  - w.e.f – 1-10-2012 – no need to obtain TAN.

·         TCS on purchase of Jewellary – 1% - exceeds Rs. 2 Lakhs in Cash . – 1-7-2012.

·         Compulsory filing of return of income in case assets located outside India sold.

·         Reassessment period extends upto 15 Years for assets relocated outside India.

·         Additional Penalty @ 10% for undisclosed income found during the search.

·         Senior Citizen now not require to pay advance tax.

·         Wealth Tax – Residential house allotted to employees  - Now gross salary increased to Rs. 10 Lakh.

·         Relief from long term capital gains on transfer of residential property if invested in manufacturing small or medium enterprise – with certain condition.

·         Deduction for expenditure on preventive health check up – Rs. 5,000/-

·         No tax on interest received from Banks  - Rs. 10,000/-

·         Fair market value to be full value of consideration in certain cases.

·         Exemption of any sum or property received by an HUF from its members.

·         Processing of return now not necessary when case selected for scrutiny.

·         No Donation in cash excess of Rs. 10,000/-.

·         Rajiv Gandhi Investor Scheme have started having tax benefit of 50% max income of Rs. 10 Lakh.

CORPORATE INCOME TAX

·         No Change in Tax rates

·         Sec 194LC – TDS on interest to Non resident by infrastructure companies – 5% (surcharge and education cess applicable)

·         AMT is now applicable on all entities where profit incentives deductions are there. 

·         TDS on Director Remuneration – 194J – 10% - 1-7-2012.  

·         TCS @ 1% on purchase of Coal, Lignite and Iron Ore.

·         Share Premium in excess of FMV is to be treated as income.  W.e.f 1-4-2013.

·         Dividend received from foreign companies – 15%

·         Removal of cascading effect of DDT – w.e.f  - 1-7-2012.

·         Additional depreciation @ 20% to power sector companies.

·         Turnover for the tax audit purpose extended upto Rs. 1 Crore.

·         Reduction in STT – new rate is 0.1%

·         Extension of sunset date for tax holiday for power sector.

·         Number of weighted deduction for specified capital expenditure

·         Decision of Hindustan Coco-Cola now become act. Now in case of default of TDS deduction, the payer discharge his tax, then not require to pay tax again. Only interest is require to pay.  W.e.f 1-7-2012.

·          Further, if the assessee proves that payer had paid tax, then same is now not to be disallowed under section 40(a)(i).

·         Penalty of Rs. 200/- per day for late furnishing of E TDS return  plus Rs. 10,000/- to Rs. 100,000/-.  This also applicable for providing incorrect information in E TDS return.  W.e.f – 1-7-2012.

·         Now intimation issued under section 200A can be subject to rectification and appeal . It is now also a demand notice – w.e.f 1-7-2012.

·         Time limit for passing order under section 201 increased to 6 years.

·         TDS on compulsory acquisition  - 10% - amount exceeds Rs. 2 Lakhs. – w.e.f 1-7-2012.

·         TDS on debentures – 10% - amounts not exceeding Rs. 5,000/-. – w.e.f 1-7-2012.

·         Vodafone SC judgments reversed by making number of amendments in definition.

·         Software is now covered under Royalty. Necessary changes made in section 9.

·         Tax @ 20% on non – resident entertainer, sports persons etc. – w.e.f 1-7-2012.

·         Tax Residence Certificate for claiming relief under DTAA.

·         Introduction of Advance Pricing Agreement  - determine ALP in advance -

·         Examination by the TPO of international transaction not reported by the assessee.

·         TP Regulation is now applicable to domestic transactions also.

·         5% safe harbor is not taken as standard deduction .

·         Due date of TAR for TP cases is now November 30,

·         Intangible assets are now covered under International transactions.

·         3% is new tolerance range for TP 

·         Penalty @ 2% of international transactions for failure in TP compliance  - – w.e.f 1-7-2012.

·         Now AO can file appeal at ITAT against the order passed by DRP.

·         Power of DRP extended to enhance the variation.

·         Introduction of General Anti – Avoidance Rule (GAAR)

·         Time limits to complete the assessment and reassessment increased by 3 Months.  - – w.e.f 1-7-2012.

·         Presumptive taxation is not applicable in the case of profession etc.

·         Book Profit under section 115JB now include revaluation reserve relating to the revalued assets.

·         Fee for AAR increased to Rs. 10,000/- – w.e.f 1-7-2012.