THE INDIA BUDGET 2012: Tax Proposals, Personal Taxes, Service Tax, Corporate Taxes

Personal Tax exemptions increased and top slab increased so an Income of INR 1.1 mln now worth INR 163k in Taxes except surcharge with INR 200k-500k taxed at 10% , and above 1 mln at 30%

Addl INR 5000 for Health Insurance. Int on SB Accounts exempt up to 10k of interest.
Part A also mentioned subsidies just to complete the picture. fiscal Deficit achieved is 5.9% and target for FY13 is 5.1% with a 2% cap being considered on subsidies..unlikely) Comprehensive analysis to follow after the weekend.

Corporate Expenditure on Specified list incl Cold Chains etc increased to 150% deduction on basis of expenditure

Corporate R&D Expenditure exempted to 200% till 2017, International Income exempted for one year so it can be declared ( incl incident Indirect Taxes like Service Tax)

Service Tax based on negative list that includes copyright revenue to bollywood ( incl music) Service Tax rate increased to 12%

Share of Services in GDP is 59%

Indirect Taxes:

Diesel Cars – Advalorem rate of 27% from 22%

Excise slab 12% instead of 10%

TAX Collections lower by INR 330 bln in FY12 despite Service Tax collections

Customs: Overall gross increased b y INR 270 bln, INR 50 bln reduced thru exemptions. Net Indirect Tax collections target up INR 420 bln ( so excise up INR 170 bln), and Net Overall Tax target up INR 411 bln


Coffee Plantation machinery 10% to 5%

Greenhouses and many other agri and storage machinery from 7.5% to 5% and 5% to 2.5%

SECURITY TRANSACTION TAX incidence reduced to 0.1% for Delivery trades from 0.25%

To encourage Capex  machinery list – Customs decreased by 67%(2 in 3) from 7.5% to 2.5%

BCD on Plant &Machinery for Iron ore also included, Steel Industry on Coating material (7.5% to 2.5%)

Weaving – P&M to 2.5%   and all Textile Machinery to special rate of 5% and many other customs duty reductions in Textiles industry

Part B remains announcer of broad policy stresses thru rate tweaking e.g. Textiles, investment rate

Service tax target increased by 50% (INR 187 bln)

CVD(5%) exemption to life saving drugs

Exemptions on Hybrid Cars ( not even 1000 units sold) extended to battery packs

(iPads and TVs) LCDs and LEDs exempt from customs. Customs on bicycles increased to punitive 30%

(Aviation)Aircraft parts Basic Customs duty exempted

(Cars >1600cc) Duties hiked

(Gold) Customs duty increased. Unbranded jewelry also included in 30% rate on imports

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