From the Professional Desk of Gulab A. Singh

May 7, 2011

Indian Budget for Financial Year 2011-2012 (Asst. Year 2012-2013)

Filed under: Judiciary, Law & Order — Gulab A. Singh @ 17:03

1. Introduction of Direct Tax Code (DTC) proposed from 01st April 2012 as against 01st April 2011 announced in the previous budget;

2. Introduction of Goods & Service Tax (GST) proposed from 01st April 2012 as against 01st April 2011 announced in the previous budget. This is due to the fact that there are still some issues which needs to be resolved between the state and the centre;

3. Income Tax Rates

(i) Tax rates for Individuals, Hindu Undivided Family (HUF), Association of Persons (AOP), Body of Individuals (BOI), Artificial Judicial Person EXCEPT Co-operative Society

a. Upto Rs. 180,000/- – Nil

b. Rs. 1.80 lacs to Rs. 5.00 lacs – 10%

c. Rs. 5.00 lacs to Rs. 8.00 lacs – 20%

d. Rs. 8.00 lacs and above – 30%

(ii) In respect of women resident in India below the age of 60 years, the basic exemption limit would continue to be Rs. 190,000/-. The age for senior citizens was taken at 65 years for the purpose of granting benefits however this age has been reduced from 65 years to 60 years during this budget;

a. Upto Rs. 190,000/- – Nil

b. Rs. 1.90 lacs to Rs. 5.00 lacs – 10%

c. Rs. 5.00 lacs to Rs. 8.00 lacs – 20%

d. Rs. 8.00 lacs and above – 30%

(iii) In respect of Senior citizens (man and woman below the age of 60 years) resident inIndia, the basic exemption limit would be Rs. 250,000/-;

a. Upto Rs. 250,000/- – Nil

b. Rs. 2.50 lacs to Rs. 5.00 lacs – 10%

c. Rs. 5.00 lacs to Rs. 8.00 lacs – 20%

d. Rs. 8.00 lacs and above – 30%

(iv) This budget announced a new class of citizens who would be classified under the head “Very Senior Citizens”. These citizens would be man and woman above the age of 80 years. The basic exemption limit for such class of citizens would be Rs. 5,00,000/-. The rates would thus be as under:

a. Upto Rs. 500,000/- – Nil

b. Rs. 5.00 lacs to Rs. 8.00 lacs – 20%

c. Rs. 8.00 lacs and above – 30%

(iv) Education Cess (EC) would continue to be levied @ 2% of Income Tax & surcharge;

(v) Secondary & Higher Education Cess (SHE) would continue to be levied @ 1% of Income Tax & surcharge (not including Education Cess);

(vi) No surcharge on individual assessees;

(vii) No change in corporate tax rates. Domestic companies would continue to be taxed at 30%. The Surcharge for domestic companies which was reduced from 10% to 7.5% in the last budget has further been reduced to 5% for taxable income exceeding Rs. 1.00 crore. No surcharge on taxable income less than Rs. 1.00 crore. EC and SHE would continue to be at 2% and 1% respectively;

(viii) For Foreign Companies, the tax rate would stay at 40%. The Surcharge rate would be 2% where total income of the company exceeds Rs. 1.00 crore. EC and SHE would continue to be at 2% and 1% respectively;

(ix) Concept of ‘Marginal’ relief is available for companies due to the levy of surcharge;

(x) Minimum Alternate Tax (MAT) which was hiked from 15% to 18% of the book profit during the previous budget has been further enhanced to 18.5% of the book profit. Surcharge would be as applicable;

4. Minimum Alternate Tax (MAT) & Dividend Distribution Tax (DDT) on Special Economic Zones (SEZ):

(i)                             MAT U/s. 115JB would be applicable from 01.04.2011;

(ii)                           Whereas, DDT would be applicable from 01.06.2011.

5. Alternate Minimum Tax (ALT) for the Limited Liability Partnerships (LLPs) would be levied at 18.5% on the adjusted total incomes, where regular income is lower than the ALT. LLPs are permitted to take advantage of ALT paid over and above the regular income tax which is to be carried forward upto next 10 assessment years as in the case of MAT credits;

6. No Return of Income to be filed by employee, where:

          – Entire tax liability has already been discharged by this employer through Tax Deducted at Source (TDS);

          – If the said income from salary does not exceed Rs. 5.00 Lacs; &

          – If the complete details are already reported by his employer through TDS statements or TDS returns

7. Corporate Dividend Tax would stay at 15% plus surcharge.

8. Income tax on short term capital gains U/s. 111A and 115AD would remain at 15%.

9. Partnership firms would continue to be taxed @ 30%.

10. No change in tax rate structure incase of co-operative society and local authority.

11. The Limited Liability Partnership (LLP) would continue to be taxed @ 30%. There will be no change in the tax rate.

12. Service Tax

-         On domestic travel in economy class increased from Rs. 100/- to Rs. 150/-, whereas for executive class, it would be 10% of standard rate;

-         On international travel in economy class increased from Rs. 500/- to Rs. 750/-

-         Penalty for delayed payment of Service Tax (U/s. 76) reduced from 2% per month to 1% per month or Rs. 100/- per day, whichever is higher however the maximum penalty would be restricted to 50% of the tax amount involved instead of the 100% till the introduction of this budget;

-         Penalty for delay in submission of Service Tax Returns hiked from Rs. 2,000/- to Rs. 20,000/-

13. The following would remain unchanged further (which was effected during the previous budget and not changed during the current budget):

(i)                             Interest chargeable on tax deducted but not deposited within the specified due date to remain at 1.5% per month which was enhanced in the previous budget from 1%;

(ii)                           Threshold limits for Tax Deduction at Source (TDS) enhanced which has taken effect from 01st July 2010, which includes raising Insurance Commission from Rs. 5,000/- to Rs. 20,000/-, Insurance from Rs. 2,500/- to Rs. 5,000/-, Rent from Rs. 1.20 lacs to Rs. 1.80 lacs, professional fees from Rs. 20,000/- to Rs. 30,000/-;

(iii)                          Turnover Limits (i) Threshold turnover limit in relation to presumptive taxation for small businesses increased from Rs. 40.00 lacs to Rs. 60.00 lacs in the previous budget;

(iv)                         Threshold turnover / gross receipts limits for compulsory audit (Sec 44AB) of accounts increased from Rs. 40.00 lacs to Rs. 60.00 lacs and from Rs. 10.00 lacs to Rs. 15.00 lacs for profession;

(v)                          Penalty on failure to get the accounts audited increased from the present Rs. 1.00 lacs to Rs. 1.50 lacs

2 Comments »

  1. Gud Information about Indian Budget….gud to read that..and the way u publish this its really nice..i really likes yur post and saving to my bookmark list….I would also like you to visit my site and give valuable suggestions about my website… CCH India

    Comment by Accounting india — May 24, 2011 @ 12:53

  2. Thank you very much. I do not know if I deserve the appreciation. However, I am glad that an appreciation has come from such a qualified professional website management. I would definitely like to give out some of my comments. However it would be better if we communicate through email. Mine is gulab.a.singh@gmail.com.

    Comment by CA Gulab A. Singh — May 27, 2011 @ 20:23


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