FINANCE ILL 2012

CA CHANDRASHEKHAR V. CHITALEChairman, Direct Taxation Committee

Women Entrepreneurs’

committee

CA CHANDRASHEKHAR V. CHITALE

FINANCE BILL, 2012

• INCOME TAX• GST• STT• SERVICE TAX• ECISE DUTY• CUSTOMS

CA CHANDRASHEKHAR V. CHITALE

INCOME AX

• VodafoneDecision of Hon’ble Supreme Court in the case of Vodafone negated through a retrospective Legislative amendment. Indirect transfer of shares/ assets liable to be taxed in India retrospectively with effect from April 1, 1962.

CA CHANDRASHEKHAR V. CHITALE

INCOME AX

• Software Imports• Software payments to be regarded as royalty.

Amendment in this regard introduced• Retrospectively with effect from June 1, 1976.

CA CHANDRASHEKHAR V. CHITALE

INCOME AX

• Transfer Pricing• APA introduced - fron 1 July 2012 • Ambit of transfer pricing applicability

widened• Scope of TP Enlarged to Cover Specified

Domestic Related Party Transactions - Rs 5 cr.• Shares Issue• Share premium in excess of fair market value

of the shares to be treated as incomeCA CHANDRASHEKHAR V. CHITALE

INCOME AX

• GAAR• Circumstances under which transaction is

deemed to lack ‘commercial substance’ stated• Onus of proof lies on the taxpayer• Consequences if arrangement is declared as

impermissible avoidance arrangement

CA CHANDRASHEKHAR V. CHITALE

INCOME AX

• R&D200% Weighted deduction for In-House R&D extended for 5 years (i.e. upto AY 2017-18)

• 150% Weighted deduction for Agricultural Extension Projects Skill Development Projects

CA CHANDRASHEKHAR V. CHITALE

INDIRECT TAXES

GST • Network to be active by August 2012 • GST not applicable from August 2012• Proposed to be operative from 1-4-2013• STT• STT on delivery based trades cut from 0.125%

to 0.1% CA CHANDRASHEKHAR V. CHITALE

INDIRECT TAXES - RATES

TAX GENERAL RATE

EFECTIVE DATE

Customs No Change N. A.

Excise 12.36% 17- 3- 2012

Service Tax 12.36% 01- 4- 2012

CA CHANDRASHEKHAR V. CHITALE

SERVICE TAX

• Paradigm shift from “selective tax” to “comprehensive taxation”

• “Service” :- any activity -for consideration; -carried out by a person for another; -includes declared services

CA CHANDRASHEKHAR V. CHITALE

SERVICE TAX – Négative List• Negative List to include :

services in relation to agriculture, education, trading of goods, Government or local authority, residential renting, interest on deposits, loans or advances, Entertainment

CA CHANDRASHEKHAR V. CHITALE

Exempt Services• Certain services exempted by way

of Mega Notifications :• Health care services• Health care of animals or birds;• Charitable activities by I tax regd. entity • Renting of precincts of public religious place

training in recreational activities, arts, sports;• Sponsorship of specified tournaments

CA CHANDRASHEKHAR V. CHITALE

SERVICE TAX• Adjustment of excess Service Tax

paid allowed without any monetary limit effective 1 April 2012

• Prosecution provisions rationalized where invoice not issued without intent to evade tax

CA CHANDRASHEKHAR V. CHITALE

CENTRAL EXCISE• Excise duty rate (effective 17/3/ 2012):

-standard rate up from 10 % to 12 % - merit rate increased from 5 % to 6 % - 130 items increased from 1 % to 2 %

• Cess on Crude petroleum increased per MT from Rs 2,500 to Rs 4,500 (effective 17/32012)

• Inter-unit transfer of unutilized SAD credit permitted

CA CHANDRASHEKHAR V. CHITALE

CENTRAL EXCISE• Substantial expansion in units

enjoying J&K exemption – ten year period to be computed from the expanded capacity

• Specified pharma products duty slashed from 10 % to 6 %

• Designated Central excise officers empowered to make arrests even without prior approval of the Commissioner

CA CHANDRASHEKHAR V. CHITALE

CUSTOMS DUTY• Peak rate of Basic Customs Duty

retained at 10 % but increase in effective rate from 26.85 % to 28.85 % (: increase in excise duty)

• Education cesse on CVD exempted and marginal relief provided

• •Exemption of SAD on pre–packaged goods for retail sale - Declaration of destination State of first sale and VAT reg no now requd.

CA CHANDRASHEKHAR V. CHITALE

CUSTOMS DUTY

• China Imports : Condition of ‘increased quantities’ for imposition of safeguard duty deleted

• Import against duty scrips obtained fraudulently - Powers to recover customs duty and attach property

CA CHANDRASHEKHAR V. CHITALE

Issues for Post Budget MemorandumAre welcome

CA CHANDRASHEKHAR V. CHITALE

CA CHANDRASHEKHAR V. CHITALE

Thank you!

CA CHANDRASHEKHAR V. CHITALE

any questions?