Tax Proposals - Direct Taxes
DSIJ Intelligence / 28 Feb 2011
Tax Proposals & Direct Taxes Recommendations in the 2011-2012 Budget. Highlights of Budget 2011-2012 presented by The Finance Minister
BASIC EXEMPTION:-
- Exemption limit for the general category of individual taxpayers enhanced from ` 1,60,000 to ` 1,80,000.
- Exemption limit enhanced for the category of senior citizens taxpayers from ` 2,40,000 to ` 2,50,000
- Exemption limit for the category of woman assesses (below the age of 65 years) taxpayers has been unchanged and kept at ` 1,90,000
- The qualifying age for senior citizens reduced from 65 years to 60 years.
- New category of specified individuals created, namely, “Very Senior Citizens”, being persons who have attained the age of 80 years. Exemption limit for the category of very senior citizens taxpayers is 5,00,000
EXEMPTIONS:-
PROCEDURAL CHANGES:-
- Three new Exemptions proposed t be introduced:
- Any allowance or perquisite paid to Chairman / Member of Union Public Service Commission or retired Chairman / Member thereof as may be notified.
- Any specified income to a body or authority by whatever name called, which has been established or constituted with the object of regulating or administering any activity for the benefit of general public subject to conditions.
- Any income of an infrastructure debt fund set up in accordance with the prescribed guidelines and as notified.
- Current surcharge of 7.5 per cent on domestic companies proposed to be reduced to 5 per cent
- Rate of Minimum Alternative Tax proposed to be increased from 18 per cent to 18.5 per cent of book profits.
- Special Provisions of Minimum Alternate Tax (MAT) proposed to be applicable to Limited Liability partnerships on the similar basis as companies.
- Lower rate of 15 per cent tax on dividends received by an Indian company from its foreign subsidiary
- Tax rate on specified interest earned by non-residents is fixed at 5%.
- Additional income tax on distributed income u/s 115R increased to 30% in case of persons other than individuals and HUF.
- Additional deduction of ` 20,000 u/s 80CCF for investments in long-term infrastructure bonds is proposed to be extended for one more year
- Deduction u/s 80IA (4)(iv) in respect of specified businesses therein, extended for one more year upto March 31, 2012.
- Deduction u/s 80IB(9)(ii) in respect of commercial production of mineral oil discontinued in respect of contracts awarded after March 31, 2011.
- Tax incentives extended to attract foreign funds for financing of infrastructure
- Benefit of investment linked deduction extended to businesses engaged in the production of fertilizers
- Investment linked deduction to businesses developing affordable housing
- Weighted deduction on payments made to National Laboratories, Universities and Institutes of Technology to be enhanced from 175% to 200 per cent
PROCEDURAL CHANGES:-
- Due date for filing return of income by assessees to whom transfer Pricing audit is applicable is proposed to be November 30 every year instead of September 30 every year.
- System of collection of information from foreign tax jurisdictions to be strengthened.
- The permissible variation between arm’s length price and the actual price in an international transaction should not exceed the prescribed percentage. Hitherto the percentage was fixed at 5%.
- Certain period excluded from for the purpose of calculating time limit for completion of assessment u/s 153 and 153B.
- Deduction of tax @ 5% in respect of interest paid to a non-resident by an infrastructure debt fund.
- Amendments are proposed in the procedure on receipt of applications for settlement cases or to Settlement Commission u/s 245C and 245D respectively. Corresponding amendments made in Wealth Tax.
- Every person having liaison office in India under FEMA, 1999 to file returns in prescribed forms within 60 days of the end of the financial year.
- Extension of period to comply to certain provident funds upto March 31, 2012.
- A net revenue loss of ` 11,500 crore estimated as a result of proposals in respect of Direct Taxes.
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