1. Discipline : DIRECT TAXATION
Union Budget
Discipline : DIRECT TAXATION
Presentation by: Govind Rai Garg

2. Procedure for budget speech
Firstly, Finance Minister visits Finance Ministry to carry budget papers
Then he moves to Rashtrapati Bhawan and submits them to cabinet for their acceptance
After this, budget speech is given by Finance Minister in two parts-A & B at exactly 11a.m.
TAX PROPOSALS are contained in part `B` of his speech
In 2001, the time of speech was 5p.m. which is London standard of budget speech but NDA after 54 years of independence changed it to 11 a.m.
P. Chidambaram presented union budget for the 8th time

3. Theme of Chidambaram’s proposal
“Clarity in tax laws, a stable tax regime, a non-adversarial tax administration, a fair mechanism for dispute resolution, and an independent judiciary will provide great assurance”

4. Perception of P Chidambaram
There will be no less money for security of nation
Agricultural needs more investment
Appreciation of FDI is necessary
Many states are developing but few section of people like women and SC ST are lacking behind
Only China and Indonesia are better than India in present scenario but as per forecasters, only China will remain
In order to finance Current Account Deficit, India needs 75 billion USD
Personal savings have declined constantly
Indian share market is the most regulated share market in the whole world

5. What are Direct Taxes?
Direct tax generally means tax paid directly to the government by the persons on whom it is imposed
A direct tax is one which cannot be shifted by the taxpayer to someone else
Direct taxes are progressive in nature i.e. richer the assessee; higher is the tax
Example- Income Tax, Wealth Tax etc.

6. Relief to Tax Payers
Rates of personal income tax survived 4 Finance Ministers & 4 governments
Current slabs introduced only last year
No case to revise either rates or slabs
Moderate increase in level of threshold exemption will mean hundreds of thousands of taxpayers going out of tax net
Some relief to tax payers in first bracket of 2L to 5L i.e. tax credit of 2,000-section 87A.
1.8 crore tax payers expected to benefit to value of 3,600 crores

7. How much you`ll shell out
Income Slab
Tax Rate
Upto Rs2 lakh
NIL
Rs2 Lakh to 5 Lakh
10% minus Rs2,000*
Rs5 Lakh to 10 Lakh
20.60%
Rs10Lakh to 1 cr
30.90%
Rs 1cr and above
33.99%
*With additional surcharge of 2% of tax liability as education cess and 1% as SHE cess

8. Surcharge on Super Rich
Fiscal consolidation cannot be effected only by cutting expenditure
Wherever possible, revenues must be augmented
Source: Those well placed in society
Only 42,800 people having taxable income exceeding 1 crore per year
Surcharge of 10% imposed on such persons
Persons include individuals, HUFs, firms & entities with similar status

9. Shockwaves on the RICHter scale
Income
Old Tax Liability
New Tax Liablity
Gain/(Loss)
Upto 2 lakh -
2.2 lakh
2,060
3 lakh
10,300
8,240
5 lakh
30,900
28,840
10 lakh
133,900
50 lakh
1,369,900
1 crore
2,914,900
1.5 crores
4,459,900
4,905,890
(445,990)
2 crores
6,004,900
6,605,390
(600,490)
5 crores
15,274,900
16,802,390
(1,527,490)
CROREPATIS clubbed with a 10% surcharge blow; Tax credit for those in LOWER SLAB
CROREPATIS clubbed with a 10% surcharge blow; Tax credit for those in LOWER SLAB
REPATIS clubbed with a 10% surcharge blow; Tax credit for those in LOWER SLAB

10. Changes in surcharge
Increase from 5% to 10% on domestic companies having taxable income exceeding 10 crores per year
Increase from 2% to 5% on foreign companies paying higher rate of corporate tax
Increase from 5% to 10% in case of dividend distribution tax
Additional surcharges will be in force only for 1 year
“I believe there is a little bit of the spirit of Mr. Azim Premji in every affluent tax payer. I am confident that when I ask the relatively prosperous to bear a small burden for one year, just one year, they will do so cheerfully”

11. YOUR TAX BURDEN OVER THE YEARS
MIN. INCOME FOR TAX
TAX RATE(%)
Income at which highest tax rate starts
Highest tax rate
Income which attracts surcharge
Surcharge rate(%)
Highest tax rate including surcharge & edu. cess
50,000 10
1,50,000 30
60,000 2
30.6 5
31.5
8,50,000
33.0
33.6
1,10,000
2,50,000
1,000,000
33.9
1,60,000
5,00,000
No surcharge -
30.9
1,80,000
8,00,000
2,00,000
2,20,000
10*
10,000,000
33.99
*For income higher than Rs5L, Exemption limit is Rs 2L

12. Shelter for Aam Admi
Tax benefit to first home buyer who takes loan for an amount not exceeding 25,00,000
Additional deduction of 1,00,000 allowed to such home buyers
If limit not exhausted, balance may be claimed in AY
This deduction over & above deduction of 1,50,000 allowed for self occupied houses allowed under section 24 of the Income-tax Act

13. PROPOSED SECTIONS IN INCOME TAX ACT, 1961
SECTION 194IA (earlier proposed as 194LAA)
APPLIES TO ALL BUYERS OF IMMOVABLE PROPOERTY OF VALUE MORE THAN 50 LAKH
BUYER HAS TO DO DEDUCT TAX AT 1% OF ACTUAL TRANSACTION VALUE AT THE TIME OF PAYMENT OR CREDIT; WHICHEVER IS EARLIER
PROVISIONS OF SECTION 206AA ALSO APPLICABLE ON THIS SECTION

14. SECTION 32AC-INVESTMENT ALLOWANCE
15% INVESTMENT ALLOWANCE ON FRESH P&M OTHER THAN AIRCRAFTS
VALUE SHOULD BE MRE THAN 100 CR
ALLOWED ONLY TO MANUFACTURING SECTOR
INVESTMENT VALID BETWEEN TO
SECTION 90(4)
INDIAN REVENUE AUTHORITY WILL NOT BE BOUND BY TAX RESIDENCE CERTIFICATE WHILE DOING ASSESSMENT OF NON RESIDENTS

15. SECTION 40
ANY FEES GIVEN TO STATE GOVERNMENT BY PUBLIC SECTOR UNDERTAKING WILL NOT BE ALLOWED AS AN EXPENSE WHILE COMPUTING PROFIT & GAINS OF BUSSINESS & PROFESSION
SECTION 10(10D)
AMOUNT RECEIVED ON MATURITY OF KEYMAN INSURANCE POLICY WILL BE TAXABLE IN HIS HANDS ALSO

16. OTHER PROVISIONS SPECIAL AUDIT CAN BE ORDERED BY ASSESSING OFFICER IF:
VOLUME OF TRANSACTIONS IS LARGE
MULTIPLICITY OF TRANSACTIONS
DOUBT ON CORRECTNESS OF ACCOUNTING ENTRIES
INTERPRETATION OF ACCOUNTS IS COMPLEX
FILLING OF RETURN WITHOUT PAYMENT OF SELF ASSESSMENT TAX WILL LEAD TO A DEFECTIVE RETURN U/S 139(9) OF INCOME TAX ACT, 1961
GAAR ARE POSTPONED TO ASSESSMENT YEAR

17. FOR CLASSIFYING A LAND AS URBAN OR RURAL
OLD PROVISION: LAND IS URBAN IF IT FALLS IN
8KM FROM THE URBAN MUNICIPALITY BY ROAD
NEW PROVISION:IT DEPENDS ON THE POPULATION OF THE AREA DURING LAST PREVIOUS YEAR` CENSUS AND THE DISTANCE WILL BE MEASURED ARIALLY
POPULATION AS PER RECENT CENSUS OF LAST PREVIOUS YEAR
DISTANCE TO BE TAKEN INTO CONSIDERATION
LESS THAN ONE LAKH
TWO KMS
ONE LAKH OR MORE THAN ONE LAKH BUT LESS THAN TEN LAKH
SIX KMS
TEN LAKH OR MORE THAN TEN LAKH
EIGHT KMS

18. Budget impact on certain deductions
Eligibility conditions for Life insurance policies relaxed
Increase in permissible premium rate from 10% to 15% of sum assured
Contributionn made to Central Government Health Scheme eligible for deduction under Section 80D
Same benefit extended to similar schemes of Central & State Governments
Donations made to National Children’s Fund now eligible for 100% deduction
Investment allowance of 15 % to manufacturing companies investing more than 100 cr in plant and machinery during to
Eligibility date to avail benefit u/s 80-IA extended from to

19. Long term infrastructure bonds
To attract investment in long term infrastructure bonds in foreign currency, the rate of tax on interest paid to non-resident investors reduced from 20% to 5 % last year
Same benefit extended to investment made through designated bank account in a rupee denominated long term infrastructure bond
50,000 crores long term infrastructure bonds to be issued in FY %

20. Direct Tax Code Direct tax code is work in progress
It is not intended to be amended version of Income Tax Act, 1961 but a new code based on best international practices that will be compatible with needs of fast developing nation
Standing committee has submitted its report on introduction of direct taxes

21. Conclusion
Budget might be favourable keeping in mind the political attempt to win the ensuing elections
The provisions within the scope of my knowledge have been explained

22. THANK YOU SIR
I would like to thank CA Gaurav Garg Sir for giving me this opportunity to understand the union budget and present it