#Income_Tax_2012_2013 FINANCE BILL, 2012-2013 – IMPORTANT INCOME-TAX AMENDMENTS The Finance Bill, 2012 has proposed various changes in the rates of Income-tax for the FY 2012-13 relevant to the Assessment Year (A.Y.) 2013-14. Thus, the exemption limit for an individual or an HUF would be Rs. 2,00,000. The rate of Income-tax (I.T.) on total income between Rs. 2,00,000 and Rs. 5,00,000 would be 10%. The rate of I.T. on total income between Rs. 5,00,001 and Rs. 10,00,000 would be 20%, while the rate of I.T. on total income above Rs. 10,00,000 would be 30%. The rates of Income-tax for individuals aged 60 years or more but less than 80 years have also been changed. Thus, the initial exemption for such persons would be Rs. 2,50,000. On a total income between Rs. 2,50,000 and Rs. 5,00,000 the rate of Income-tax would be 10% and on a total income between Rs. 5,00,000 and Rs. 10,00,000 the rate of Income-tax would be 20%. On a total income exceeding Rs. 10,00,000 the Income-tax rate would be 30%. For very senior citizens aged 80 years or more the initial exemption would be Rs. 5,00,000. The rate of Income-tax on total income between Rs. 5,00,000 and Rs. 10,00,000 would be 20%, while on a total income in excess of Rs. 10,00,000 the maximum rate of 30% would be operative. There is no change in the rates of Income-tax for firms and companies. The proposed amendments to the Income-tax Act, 1961 are briefly analysed below. These amendments are mostly operative for the income during the Financial Year 2012-13 relevant to the Assessment Year 2013-14. 1. Alternate Minimum Tax (AMT) on all tax payers (other than companies) Under Chapter XII – BA of the Income-tax Act a person who has claimed any deduction under Chapter VI – A of the Income-tax Act (except section 80P) would be required to pay income-tax at 18.5% on the total income if the regular income-tax is lower than that. However, no AMT would be applicable if the adjusted total income does not exceed Rs. 20,00,000. 2. TDS on transfer of immovable properties – Sec. 194LAA Under this new provision a transferee of an immovable property (other than agricultural land) while making any payment or crediting any sum in respect of sale consideration for transfer of an immovable property in certain areas would be required to deduct 1% of the consideration paid or payable as income-tax and pay to the credit of Central Government. This provision would be applicable only where the value of the property exceeds Rs. 50,00,000 and which is in the specified towns and areas like Greater Mumbai, Delhi, Kolkata, Chennai, Hyderabad, Bangalore, Ahmedabad, Districts of Faridabad, Gurgaon, Gautam Budh Nagar, Ghaziabad and Gandhinagar and the City of Secunderabad. In respect of other areas this provision would be applicable in respect of properties having consideration of more than Rs. 20,00,000. This would be applicable from 1.10.2012. 3. Funding of certain Infrastructure Sectors – Sec. 194LC In respect of interest payable by a specified company in respect of certain infrastructure sectors like building, dam, port, power, shipyard and affordable housing during 1.7.2012 to 1.7.2015 a specified company would be required to deduct tax at source (plus surcharge and cess as applicable). 4. TDS on remuneration to a Director – Sec. 194J Where a Director is not in receipt of salary but is paid some remuneration, tax will be required to be deducted at source at 10% effective from 1.7.2012. 5. Tax Collection at Source on cash sale of bullion and jewellery – Sec. 206C Every person being a seller who receives any amount in cash as consideration for sale of bullion or jewellery shall at the time of receipt of such amount in cash collect from the buyer a sum equal to 1% of the sale consideration as income-tax if the sale consideration exceeds Rs. 2,00,000. 6. TCS on sale of certain minerals – 206C The seller of certain minerals like coal or lignite or iron ore would be required to collect tax @ 1% of the sale consideration from 1..7.2012. 7. Cash credited as Share Capital etc. of a closely held company taxable as income – Sec. 68 Where any sum is credited by a company (not being a company in which the public are substantially interested) and the sum so credited consists of share application money, share capital, share programme or any such amount by whatever name called any explanation offered by such assessee-company would be deemed to be not satisfactory unless – (a) The person if a resident in whose name such credit is recorded in the books of such company also offers an explanation about the nature and source of such sum so recorded, and (b) Such explanation in the opinion of the Assessing Officer aforesaid has been found to be satisfactory. The above provision will not apply if the person in whose name the aforesaid sum is recorded is a Venture Capital Fund or a Venture Capital Company. 8. Unexplained credits and investment etc. to be taxed at maximum rate The amount of unexplained credits, investment, expenses etc. under sections 68, 69, 69A, 69B, 69C and 69D would be liable to income-tax at 30%. Besides, no expenses would be allowed in respect of such addition. This would be applicable for the Assessment Year 2013-14 onwards. 9. Compulsory filing of Income-tax Return in relation to assets located outside India From the Assessment Year 2012-13 even if there is no taxable income in relation to assets located outside India, the filing of the Income-tax Return would be compulsory. 10. Re-assessment of income in relation to any asset located outside India – Sections 147 & 149 The time limit for issuing a notice for re-assessment of income in relation to any asset located outside India would be 16 years. This would be applicable from 1.7.2012. 11. Penalty for undisclosed income found in search – Sections 271AAA & 271AAB In respect of undisclosed income which is admitted during the course of an Income-tax search, the minimum penalty leviable would be 10%. If the income is disclosed in a Return filed after search, the penalty would be 20%. In other cases the penalty would be equal to 30% to 90% of the undisclosed income. This provision would be applicable from 1.7.2012. 12. Expeditious prosecution by special court and appointment of Public Prosecutor Minimum three months imprisonment would be awarded if the evaded sum is Rs. 25,000 or more. This would be applicable from 1.7.2012. 13. Share Premium in excess of fair market value as income – Sec. 56(2) For a company, not being a company in which the public are substantially interested, the amount of share premium in excess of the fair market value would be treated as income. 14. Tax incentives for funding of certain infrastructure sectors – Sec. 115 0 Interest paid by a specified company to a non-resident on borrowing in foreign currency from outside India between 1.7.2012 and 1.7.2015 would be liable to income-tax at 5% (surcharge and cess would be extra). A specified company would be one engaged in the business of construction of dam, aircraft, fertilizers, road, road-bridge, power, ships and affordable housing projects. It would be required to deduct income-tax at 5% of interest. This would be applicable from 1.7.2012. 15. Lower rate of tax on dividend from foreign companies – Sec. 115BBD The lower rate of 15% income-tax on dividend from certain foreign companies would be applicable for one more year. 16. Removal of casading effect of DDT – Sec. 115 0 In respect of corporate structure no DDT would be applicable on fulfillment of certain conditions, applicable from 1.7.2012. 17. Exemption of income-tax of some foreign companies – Sec. 10(48) The income-tax of some foreign companies from crude oil, etc. would be exempt from the Assessment Year 2012-13. 18. Initial depreciation to the Power Sector - Sec. 32(1)(iia) The amount of initial depreciation to the Power Sector from the Assessment Year 2013-14 would be 20%. 19. Weighted deduction for Scientific Research and Development - Sec. 35(2AB) The weighted deduction at 200% for the expenses of Scientific Research and Development will be allowed for five more years till 31.3.2017. 20. Weighted deduction for expenses on Primary Extension Project – Sec. 35CCC Weighted deduction at the rate of 150% of the expenses on Primary Extension Project notified by CBDT would be alloewed from the Assessment Year 2013-14. 21. Weighted deduction for expenses on Skilled Development – New Sec. 35CCD The deduction equal to 1½ times for expenses on Primary Extension Project notified by CBDT would be allowed. 150 % deduction would be allowed from 1..4.2013 in respect of setting up an operating and Inland Container Depot or a Container Freight Station notified or transferred under the Customs Act, bee keeping and provision of honey and bee wax and setting up an operating warehousing facility for storage of sugar. 22. Increased turnover for Compulsory Audit – Sec. 44AB The increased turnover for compulsory audit for business would be Rs. 1 crore and for profession Rs. 25 lakhs. 23. Increased limit for deduction under Sec. 44AD From 1.4.2011 the provisions of Section 44AD would not apply to a person carrying on a specified profession or having income in the nature of commission or brokerage or a person carrying on any agency business. 24. Exemption of Senior Citizens from payment of Advance Tax – Sec. 207 If a senior citizen has no business income, he would be exempt from payment of Advance Tax from the Financial Year 2012-13. 25. Wealth Tax exemption for a residential house allotted to an employee The Wealth tax exemption limit for a residential house allotted to an employee of a company would be increased to Rs. 10 lakhs. 26. Relief from long-term Capital Gains tax on transfer of a residential house – Sec. 54GB An individual or an HUF would be allowed relief from long-term Capital Gains tax on transfer of a residential property if the net consideration is invested in Equity Shares. 27. Deduction regarding Capital Expenses on a specified business – Sec. 35AD 150 % deduction would be allowed from 1..4.2013 in respect of setting up and operating Inland Container Depot or a Container Freight Station notified under the Customs Act, bee keeping and provision of honey and bee wax and setting up and operating warehousing facility for storage of sugar.
Posted on: Wed, 31 Jul 2013 07:50:01 +0000
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