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TMI BlogBudget at a glance - Income TaxX X X X Extracts X X X X X X X X Extracts X X X X ..... Budget at a glance - Income Tax - By: - Swati Dodhi - Income Tax - Dated:- 21-3-2012 - - Budget at a glance- Income-tax Basic exemption limit for individuals (other than senior citizens) increased to Rs. 200,000. Income slab limits for individuals have been enhanced. Rates of corporate tax (including surcharge and cess) remain unchanged for both domestic and foreign companies. GAAR introduced for the first time in the Income-tax Act to address aggressive tax planning and codify the doctrine of substance over form . Under these provisions, the Revenue authorities can declare an arrangement entered into by a taxpayer as an impermissible avoidance arrangement and determine tax consequences ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as deemed appropriate. Receipts under a life insurance policy issued on or after 1 April 2012 will be exempt from tax if the premium is not in excess of 10% of actual capital sum assured. Income earned by SEBI registered VCF/ VCC will be exempt from tax without any sector restrictions. It is explained that a charitable organization engaged in commercial activities beyond the prescribed limit in a particular year is not entitled to a tax exemption even if its approval is not withdrawn. Income received by a foreign company in India in rupee on sale of crude oil to any person in India exempt, subject to fulfillment of certain specified conditions. Tax payer to pay advance tax on the income on w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich tax has not been actually deducted or collected. Threshold for audit of accounts for persons carrying on business or profession enhanced. It is clarified that the presumptive tax regime for small businesses is not applicable to specified professionals and businesses. Further, the threshold limit of turnover or gross receipts has been increased from Rs. 6 million to 10 million. Enhanced depreciation of 20% extended to new machinery or plant acquired by a taxpayer engaged in the business of generation or generation and distribution of power. Weighted deduction for in house research and development expenses extended from 31 March 2012 to 31 March 2017. Weighted deduction at the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rate of 150% available on expenditure incurred on agriculture extension projects and on specified sum expended on any skill development projects. 100% deduction of capital expenditure (other than land, goodwill or financial instruments) extended to other specified business. Deduction for capital expenditure (other than land, goodwill, or financial instruments) enhanced from 100% to 150% for certain specified business. Sunset clause for commencement of business for power sector extended from 31 March 2012 to 31 March 2013. Relief from capital gains tax on sale of residential property, if sale consideration is used for subscription to equity of a manufacturing SME for purchase of new plant and machinery ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . FMV deemed to be consideration if consideration is not ascertainable or cannot be determined. Revenue authority enabled to make a reference to the valuation officer for determining the FMV of a capital asset, if in its opinion the value declared by taxpayer is at variance to FMV. Consideration for issue of shares received by a company (in which public are not substantially interested) from a resident, in excess of FMV of shares will be taxable as income from other sources. Deduction up to Rs.10,000 available for individuals or HUF in respect of interest income on deposits in a savings account (other than time deposits) with a banking company, specified co-operative society or post office. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No deduction allowed for donations in excess of Rs. 10,000 made in cash. Payments made by individuals for preventive health check up eligible for deduction up to a maximum of Rs. 5,000. Deduction of premium or other payments available in respect of life insurance policies issued on or after 1 April 2012 to the extent such payment is not in excess of 10% of actual capital sum assured. Companies such as insurance, banking, electricity to prepare profit and loss accounts as per applicable regulatory provisions, to compute MAT book profits. For MAT computation, book profits will also be increased by revaluation reserve relating to retirement or disposal of the revalued assets, where the revaluation reserv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e is not credited to the profit and loss account. Ambit of AMT widened to include all persons other than company claiming specified income linked incentive. Threshold of Rs. 2 million provided for specified tax payers. Return of income to be furnished by a resident who has any asset (including financial interest in any entity) or signing authority in any account, located outside India. Income chargeable to tax will be deemed to have escaped assessment where a person is found to have any asset (including financial interest in any entity) located outside India. The time limit for reopening cases where income chargeable to tax in respect of such assets has escaped assessment has been increased to 16 years. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The time limits for completion of assessment proceedings under various situations (including reassessment, fresh assessment, search and requisition) have been extended by 3 months. The Revenue authorities will not be required to process an Income-tax return or grant a tax refund where a scrutiny assessment has been initiated in respect of such Income-tax return. Time limit to initiate reassessment proceedings on an agent of a non resident increased from two years to six years. Penalty provisions in search cases amended by inserting new section 271AAB Insertion of new sections relating to Special Courts, offences to be tried by Special Court, trial of offences as summons case and application of Code ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Criminal procedure. Revised thresholds of tax evasion amounts and term of rigorous imprisonment. Age limit of resident individual eligible to receive specified income without withholding tax upon furnishing of declaration reduced from 65 years to 60 years. Provisions introduced for withholding taxes on transfer of immovable property by residents and remuneration to directors. Where taxes are not deducted by the payer but the resident payee declares the payments in the return of income and deposits taxes on the returned income, the date of filing the return of income is deemed to be date of payment of tax and payer not regarded as assessee in default. Taxes are required to be collected at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... source by the seller on sale of coal, lignite or iron ore and sale for consideration in cash of bullion and jewelery (exceeding Rs 200,000). It has been clarified that obligation to withhold taxes from payments to non residents applies to every person including non residents irrespective of whether they have any connection with/ presence in India. Penalty introduced for furnishing inaccurate particulars in withholding tax return/ delay exceeding one year from the due date. The intimation generated after processing of the withholding tax returns shall now be subject to rectification, shall be appealable and shall also be deemed as notice of demand. Time limit for passing order for deeming a taxpayer a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s an assessee in default for withholding taxes from payments to resident payees is increased from four years to six years. Income earned by investors of VCF/ VCC will be taxable on accrual basis and be subject to withholding tax provisions. Share capital, share premium or share application money can be considered as income of the recipient, being a closely held company, unless satisfactory explanation is provided to the Revenue authorities. However, receipt of such amounts from SEBI registered VCF/ VCC will be excluded. Any term used in a DTAA, which is not defined in the relevant DTAA or in the Act and is subsequently defined by way of a notification, then the meaning of such term will relate back to the date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on which the DTAA came into force. The term international transaction has been clarified to include transactions related to tangible and intangible property, capital financing, provision of services and business restructuring. The term intangible property has been defined to include intangible assets related to marketing, technology, artistic, data processing, engineering, contract, customer, location and goodwill, methods, programmes and any other similar item that derives its value from its intellectual content rather than its physical attributes. Provisions introduced to bring SDTs under the purview of TP regulations. New provisions relating to APAs introduced to provide certainty to taxpayers. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Revenue authorities now have the right to file an appeal before the ITAT against an order passed in pursuance of direction of the DRP. Penalty for failing to report international transactions/ furnishing incorrect information would be 2% of the value of the international transaction. Non reporting of international transactions would be considered as a case of deemed escapement of income. Provisions introduced with retrospective effect for empowering the TPOs to examine transactions not specifically referred by the AO, which were not reported by the taxpayer. Due date for filing transfer pricing certificate/ return of income has been extended from 30 September to 30 November of the assessment ye ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar, for non corporate taxpayers to whom transfer pricing provisions apply. Upper ceiling of 3% prescribed for allowable variation between ALP and transfer price, effective financial year 2012-13. Actual allowable percentage to be notified. Previously allowed variation of 5% not to be considered as a standard deduction. Removal of cascading effect of DDT. The condition stating that the holding company receiving dividend should not be a subsidiary of any other company, omitted. Transfer of shares/ interest in overseas company/ entity to be taxable in India, where such shares/ interest derive their value substantially from India. The rates of daily tonnage income for a company registered under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TTS increased. Interest received by non resident from Indian companies engaged in specified business taxable at a concessional rate of 5% (plus applicable surcharge and cess). Rate of STT reduced on delivery based transactions in respect of equity shares and units of equity oriented mutual funds. Obtaining a TRC with prescribed particulars will be mandatory for claiming relief under DTAA provisions. Taxability of Dividend received by an Indian company from a specified foreign company to continue at the rate of 15% (plus applicable surcharge and education cess), up to 31 March 2013. - - Scholarly articles for knowledge sharing authors experts professionals Tax Management India - taxmanagemen ..... 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