Budget Highlights – Direct Tax

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The key Direct Tax proposals are as follows:

·          Tax proposals for 2012-13 mark progress in the direction of movement towards DTC and GST.

·          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.

·          Proposal to allow deduction of upto ` 5,000 for preventive health checkup.

·          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% to 5% for 3years 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% upto 31.3.2013.

·          Investment link deduction of capital expenditure for certain businesses proposed to be provided at the enhanced rate of 150%.

·          New sectors to be added for the purposes of investment linked deduction.

·          Proposal to extend weighted deduction of 200% for R&D expenditure in an in-house facility for a further period of 5 years beyond March 31, 2012.

·          Proposal to extend the sunset date for setting up power sector undertakings by one year for claiming 100% 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% of expenditure incurred on skill development in manufacturing sector.

·          Reduction in securities transaction tax by 20% 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.

·         Upper limit of 20% tax 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.