Tax proposals for 2012-13 mark progress in the direction of movement towards DTC and GST in the budget 2012-13
DTC rates proposed to be introduced for personal income tax.
Exemption limit for the general category of individual taxpayers proposed to be enhanced from `1,80,000 to `2,00,000 giving tax relief of `2,000.
Upper limit of 20 per cent tax slab proposed to be raised from `8 lakh to `10 lakh.
Proposal to allow individual tax payers, a deduction of upto `10,000 for interest from savings bank accounts.
Proposal to allow deduction of upto `5,000 for preventive health check up.
Senior citizens not having income from business proposed to be exempted from payment of advance tax.
To provide low cost funds 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 proposed to be removed.
Proposal to continue to allow repatriation of dividends from foreign subsidiaries of Indian companies at a lower tax rate of 15 per cent upto 31.3.2013.
Investment link deduction of capital expenditure for certain businesses proposed to be provided at the enhanced rate of 150 per cent.
New sectors to be added for the purposes of investment linked deduction.
Proposal to extend weighted deduction of 200 per cent for R&D expenditure in an in-house facility for a further period of 5 years beyond March 31, 2012.
Proposal to provide weighted deduction of 150 per cent on expenditure incurred for agri-extension services.
Proposal to extend the sunset date for setting up power sector undertakings 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 `60 lakhs to `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.
Proposal to provide weighted deduction at 150 per cent of expenditure incurred on skill development in manufacturing sector.
Reduction in securities transaction tax by 20 per cent on cash delivery transactions.
Proposal to extend the levy of Alternate Minimum Tax to all persons, other than companies, claiming profit linked deductions.
Proposal to introduce General Anti Avoidance Rule to counter aggressive tax avoidance scheme.
Measures proposed to deter the generation and use of unaccounted money.
A net revenue loss of `4,500 crore estimated as a result of Direct Tax proposals.
MACRO POINTERS
GDP is estimated to grow by 6.9 per cent in 2011-12, after having grown at 8.4 per cent in preceding two years.
India however remains front runner in economic growth in any cross-country comparison.
Monetary and fiscal policy response for better part of past 2 years aimed at taming domestic inflationary pressure.
Growth moderated and fiscal balance deteriorated due to tight monetary policy and expanded outlays.
Indicators suggest that economy is turning around as core sectors and manufacturing show signs of recovery.
At this juncture, it is necessary to take hard decision to improve macroeconomic environment and strengthen domestic growth drivers.
Twelfth Five Year Plan to be launched with the aim of “faster, sustainable and more inclusive growth”. Five objectives identified to be addressed effectively in ensuing fiscal year.
If India can build on its economic strength, it can be a source of stability for world economy and a safe destination for restless global capital.
Headline inflation expected to moderate further in next few months and remain stable thereafter.
Steps taken to bridge gaps in distribution, storage and marketing systems have helped in more effective management of inflation.
Developments in India’s external trade in the first half of current year have been encouraging. Diversification in export and import market achieved.
Current account deficit at 3.6 per cent of GDP for 2011-12 and reduced net capital inflow in the 2nd and 3rd quarters put pressure on exchange rate.
GDP growth estimated at 6.9 per cent in real terms in 2011-12. Slowdown in comparison to preceding two years is primarily due to deceleration in industrial growth.
India’s GDP growth in 2012-13 expected to be 7.6 per cent +/- 0.25 per cent.
Deterioration in fiscal balance in 2011-12 due to slippages in direct tax revenue and increased subsidies.
