The key points in the speech of the Hon’ble Finance Minister, Mr. Pranab Mukherjee in relation to Direct Taxes are highlighted hereunder:
Ø Direct Taxes Code proposed to be effective from April 1, 2012
Ø The tirade against black-money continued with a 5 fold strategy being proposed by the Govt. viz.
o Joining the global crusade against 'black money';
o Creating an appropriate legislative framework;
o Setting up institutions for dealing with illicit funds;
o Developing systems for implementation;
o and Imparting skills to the manpower for effective action.
Ø 11 new Tax Information Exchange Agreements and 13 Double Taxation Avoidance Agreements’s entered into.
Ø E-filing of Income Tax Returns and e-filing of Tax Deducted at Source.
Ø New Centralized Processing Centers proposed in Manesar, Pune and Kolkala, besides the existing one in Bengaluru.
Ø Notified salaried persons not to file returns since their tax liability discharged by the employer.
Ø New simplified tax return form titled ‘Sugam’ to be introduced.
Ø 3 more benches of the Settlement Commission to be set-up.
Ø Gross Tax Receipts are estimated at ` 9,32,440 crore.
Ø Exemption limit for individuals raised to ` 1,80,000
Ø Qualifying age for senior citizens reduced to 60 years; exemption limit enhanced to ` 2,50,000
Ø New category of ‘Very Senior Citizens’ – qualifying limit 80 years and exemption limit ` 5,00,000
Ø Corporates: Surcharge reduced to 5% from 7.5%
Ø Minimum Alternate Tax (MAT) increased to 18.5% from 18%
Ø MAT to be levied on developers of the Special Economic Zones and units operating in SEZ’s
Ø In financing of infrastructure:
o special vehicles in the form of notified infrastructure debt funds to be created;
o interest payment on the borrowings of these funds to a reduced withholding tax rate of 5%, down from 20%;
o exemption of the income of the fund from tax.
Ø Additional deduction of ` 20,000 for investment in long-term infrastructure bonds.
Ø A much lower rate of 15% of tax on dividends received by an Indian company from its foreign subsidiary.
Ø Investment linked deduction to businesses engaged in the production of fertilizers.
Ø Investment linked deduction to businesses which develop affordable housing under a notified scheme.
Ø Weighted deduction on payments made to National Laboratories, universities and Institutes of technology, for scientific research to be increased to 200%.
Ø Disincentives in dealing with Non-cooperative Tax Jurisdictions.
Ø Net revenue loss to the exchequer to be ` 11,500 Crore.
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