TAXATION
DIRECT TAXES
The direct taxes amendments have been made to bring it in line in with DTC. Major amendments made in Income Tax Act, 1961 are
PERSONAL INCOME TAX
- · Exemption limit for general category of individual tax payers is enhanced from Rs 1,80,000 to Rs 2,00,000. For Senior citizens( 60 yrs- 79 yrs) it is retained at Rs 2,50,000 and for very senior citizens( 80 yrs & above) exemption limit is Rs 5,00,000.
- · Deduction for expenditure on preventive health checkups is allowable on payments aggregating upto Rs 5,000for self, spouse, dependent parents and children.
· It is a deduction u/s 80D and is within the limits of Rs 15,000.( Rs 20,000 for senior citizens.)
· DEDUCTION IN RESPECT OF INTEREST FROM SAVINGS ACCOUNT
· It is applicable to individuals and HUF and for this purpose Sec 80TTA has been introduced.
· Deduction up to Rs 10,000 in aggregate in respect of any income by way of interest on deposits (not being time deposits) in a savings account with a banking company, a co-operative society or post office.
· Senior citizens who do not have any income from business are proposed to be exempted from the payment of advance tax. This will reduce their compliance burden.
WITHOLDING TAX
· In order to provide low cost funds to some stressed infrastructure sectors, the rate of withholding tax on interest payments on external commercial borrowings is proposed to be reduced from 20 per cent to 5 per cent for three years. These sectors are:
· power; airlines; roads and bridges; ports and shipyards; affordable housing; fertilizer; and dams.
- o Effective from AY 2012-13, u/s 209C, where a person has received any income without deduction or collection of tax, he shall be liable to pay advance tax in respect of such income.
- o Effective from 01.07.2012 u/s234E levy of fee @ Rs 200/day for late furnishing of TDS statement and a penalty u/s 272A ranging from Rs 10,000 to Rs 1,00,000 for not furnishing TDS statement within 1 year of the prescribed due date after payment of tax deducted along with applicable interest and fee is provided.
- o TDS threshold has been increased from Rs 2500 to Rs 5,000 for section 193(Payment of interest on debentures)
- o TDS threshold has been increased from Rs 1,00,000 to Rs 2,00,000 u/s 194LA (compulsory acquisition)
WIDENING OF TAX BASE
o ALTERNATE MINIMUM TAX (AMT):
o Applicable to all persons (other than companies) claiming any deduction under chapter VI A (other than deduction u/s 80P) or u/s 10AA, if the adjusted total income for the year exceeds Rs 20,00,000.
o Adjusted total income is the total income before giving effect to provisions of Chapter XII A, as increased by the deductions claimed under Chapter VIA or section 10AA as above.
o Where the income tax payable as per normal computation is less than the AMT, the adjusted total income as per the section shall be deemed to be the total income liable to tax @ 18.5%.
o Credit for AMT paid shall be allowed to the extent of the AMT paid over regular Income Tax and allowed to be carried forward to be set off in the succeeding assessment year in which tax is payable under regular provisions is in excess of AMT.
o TAX DEDUCTED AT SOURCE & TCS
o TDS @ 1% is to be deducted by the transferee at the time of making payment or crediting the consideration above Rs 50,00,000 for urban agglomeration and Rs 20 lakhs in any other area. (Immovable properties other than agricultural land).
o If the consideration is less than the value assessed by statutory authority for the payment of stamp duty, such value shall deemed to be as consideration.
o Proof of payment of TDS to be furnished without which the registering authority will not register the transaction.
o WEF from 01.07.2012 TDS is to be deducted on remuneration (not in nature of salary) paid to a director @ 105 u/s 194J.
o Tax collection at source on trading in coal, lignite and iron ore shall be collected @ 1% u/s 206C by the seller from the buyer except where the purchase is of personal consumption or for manufacturing, processing or producing articles or things.
o Tax collection at source on cash sale of bullion and jewellery @ 1% of sale consideration from every buyer irrespective of whether purchase is of personal use.
o PREVENTION OF GENERATION AND CIRUCLATION OF UNACCOUNTED MONEY
o Unexplained money, credits, investments, expenditures etc., u/s 68, 69A, 69B, 69C and 69D shall be taxed at the highest rate of 30 per cent irrespective of the slab of income. No deduction shall be allowed under any of the provisions of the act for computing total income. It is similar to Section 115BB.
o W.e.f AY 2012-13 furnishing of return of income is mandatory for every resident having asset (including financial interest in any entity) located outside India irrespective of the fact whether the resident tax payer has taxable income or not.
o Reopening of assessment u/s 149, where the income in relation to any asset located outside India, chargeable to tax, has escaped assessment shall be increased to 16 years. Corresponding amendment has also been made in Section 17 of wealth tax act.
o New Section 271AAB has been inserted for levying penalty on undisclosed income found during the course of search wef from 1st July 2012.
o Section 56(2) is amended to provide that consideration for issue of shares received by a company ( other than a company in which public are substantially interested ) from any person being a resident, exceeds the face value of shares, the excess of aggregate consideration over fair market value of the shares will be taxable under “Income from other sources”. The provision shall not apply to a venture capital company. But the big question how will fair value will be determined?
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