UNION BUDGET 2011 - HighlightsKUMBHAT & CO.,

S.BHANSALI & ASSOCIATES

ISHITA ADVISORY SERVICES P LTD

02-03-2011 1KUMBHAT & CO.,

DIRECT TAX Increase in Limits of Basic Exemption from Rs.1.60 lacs

to Rs.1.80 lacs for Individuals (Men)

New Slabs for Asst. Year 2012-13

Upto Rs.180000 - Nil

Rs.180001 lacs to Rs.5.00 lacs – 10%

Rs. 500001 lacs to Rs.8.00 lacs – 20%

Rs. 800000 lacs and above – 30%

02-03-2011 2KUMBHAT & CO.,

DIRECT TAXFor Women Senior

Citizen > 60 years

Super Senior > 80 years

For Individuals

BasicExemption _ upto Tax NIL

Rs.190000 Rs.250000 Rs.500000 Rs.180000

Slab – Tax @ 10%

Rs.190001 –Rs.500000

Rs.250001 –Rs.500000

- Rs.190001 –Rs.500000

Slab – Tax @ 20%

Rs.500001 -800000

Rs.500001 -800000

Rs.500001-Rs.800000

Rs.500001 -800000

Slab – Tax 30% > Rs. 800000 > Rs. 800000 > Rs. 800000 > Rs. 800000

02-03-2011 3KUMBHAT & CO.,

DIRECT TAX • Surcharge on Companies @ 5% reduced from 7.5%

On Income > Rs. 1.00 crore

• Minimum Alternate Tax (MAT) increased from 18% to18.5% - LLP also liable to AMT (MAT)

• Charitable Purpose – General Public Utility limitsraised from Rs.10 lacs to Rs.25 lacs

02-03-2011 4KUMBHAT & CO.,

DIRECT TAX• Companies in SEZ to pay MAT w.e.f. A Y . 2012-13 &

DDT w.e.f. 1.6.2011

• Direct Tax Code may be brought in with effect from1.4.2012

• 80CCD – NEW PENSION SYSTEM – Contributionexempt – upto 10% of Salary or Gross Total Income –apart from Rs.1.00 lac under 80C/80CCC/80CCD

• 80CCF – Extended to A Y 2012-13

02-03-2011 5KUMBHAT & CO.,

DIRECT TAX– Transfer Pricing• Finance Bill proposes to vary the variation % based on

industry and business excigiencies – Proviso to Sec92C(2) to compute the ALP

• TPO can now compute the ALP of transactions notreferred to him by assessing officer

• TPO can conduct Survey u/s 133A

• Report of auditor u/s 92E to be filed by 30thNovember to base the comparable data of the currentyear instead of Previous year data – w.e.f 1.4.11 ( A Y2011-12)

02-03-2011 6KUMBHAT & CO.,

DIRECT TAX – Transfer Pricing• New Section 94A - effective from 1.6.2011

• Objective – to discourage transactions with personlocated in any country or jurisdiction which does noteffectively exchange information with India

• The transaction will be deemed to be with AE and noexpenditure (including depreciation) will be allowed

• Tax will have to be deducted @ 30% for any paymentmade or rates in force whichever is higher

02-03-2011 7KUMBHAT & CO.,

DIRECT TAX - Miscellaneous Liaison Office of Foreign Companies or firms or

association to file Annual Information Return within 60 days of close of financial year in prescribed form, w.e.f. 1.6.2011

Salaried persons with income < Rs.5.00 lacs need not file return if entire tax is paid by Employer and has no other source of Income

Processing of returns in Central Processing centers

Document Identification Number ( DIN) for any document filed with Income tax department - Omitted

Settlement Commission given powers to rectify its Orders

02-03-2011 8KUMBHAT & CO.,

INDIRECT TAX - Excise Central Excise duty rate maintained at 10%

Concessional rate of excise duty enhanced from 4% to 5%

Excise duty of 1% imposed on 130 specified items which wereearlier exempt or chargeable to nil rate of excise duty.

Optional levy on branded garments or made up proposed to beconverted into a mandatory levy at unified rate of 10%

Reference for Retail Sales Price (RSP) valuation changed to LegalMetrology Act, 2009

Penalty provisions revamped & waiver of show cause notice andconclusion of proceedings would be available if the duty along-with interest and specified penalty is paid before the issue ofSCN

02-03-2011 9KUMBHAT & CO.,

INDIRECT TAX - Excise Person engaging job worker for manufacture of apparel,

garments and textile made ups will be liable to pay exciseduty on such manufacture. Alternatively, the job workercan also be authorized by such person to discharge allexcise liabilities. (w.e.f. 1.4.2011)

Interest on delayed/ non-payment of duty fixed at eighteenpercent w.e.f. 1.4.2011

Capital goods to include goods used for generation ofelectricity outside the factory of manufacturer for captiveuse within the factory.

02-03-2011 10KUMBHAT & CO.,

INDIRECT TAX – Service Tax Service tax to be paid at the time of Point of Service and not on

collection basis

2 New services introduced:

- Services by air-conditioned restaurants having license to serveliquor; and

- Short-term accommodation in hotels / inns / clubs / guesthouses etc

Rate of Service Tax retained at 10% to create foundation for GST

Individual and sole proprietors provided relief from Service Tax auditby Department subject to having turnover less than INR60 lakhs

The words “activities relating to business” have been deleted from thedefinition of input service which will have major impact in terms ofrestrictive availment of CENVAT Credit

02-03-2011 11KUMBHAT & CO.,

INDIRECT TAX – Service TaxScope of following existing services expanded:

Authorized Service Station service: To cover all persons and all motorvehicles other than those meant for goods carriage or three wheelerauto rickshaw

Commercial Training or Coaching Services: Scope expanded to include all coaching and training that is not recognized by law

Club or Association Services: Services provided to non-memberscovered

Legal Consultancy Services: Service provided by a business entity to individuals in relation to advice, consultancy or assistance in any branch of law, in any manner;

(

02-03-2011 12KUMBHAT & CO.,

INDIRECT TAX – Service Tax Legal Services: representational service provided by any

person to any business entity (representational services, provided to individuals will continue to be exempt); and

Health Services: Scope of health services expanded in respect of clinical establishment having central air-conditioning facility in any part of the establishment and more than 25 beds for in-patient treatment

02-03-2011 13KUMBHAT & CO.,

INDIRECT TAX – Customs Duty Self Assessment system being introduced in Customs duty

payment and assessment

All clearances from SEZ into DTA are being exempted fromSAD provided they are not exempt from the levy of VAT/Sales in DTA

Time Limit for claiming refund of duty & interest reducedfrom one year to six months

E-filing of entry of imported goods and exported goodsintroduced and Commissioner to allow filing of entry inany other manner when it is infeasible to presentelectronically

02-03-2011 14KUMBHAT & CO.,

Capital Markets No major changes impacting Capital Markets except

for:

FII cap on investment in domestic bonds hiked by USD 20 Billion

Foreign investors can invest in domestic equity markets through mutual funds

GDP Growth rate estimate for 2010-11 at 8.6% and for 2011-12 at 8.75-9.25%

Rising commodity and fuel prices coupled with inflation continue to remain key concerns

02-03-2011 15KUMBHAT & CO.,

Have a Good day!!

Do revert to us @

contact@bhansali.in

Visit us @ www.bhansali.in

Call us @ 0422-2544338

02-03-2011 16KUMBHAT & CO.,