Budget 2012 OVERVIEW: No tax till Rs 2L; 20% slab raised to Rs 10L

Budget 2012 OVERVIEW: No tax till Rs 2L; 20% slab raised to Rs 10L

Budget 2012 OVERVIEW: No tax till Rs 2L; 20% slab raised to Rs 10L Zeebiz Bureau

New Delhi: Finance Minister Pranab Mukherjee on Friday announced marginal tax reliefs for individual tax payers.

Presenting Union Budget 2012-13 in Lok Sabha, Mukherjee said income upto Rs 2 lakh would be tax free; income from Rs 2 to 5 lakh would be taxed at 10%; from Rs 5 to 10 lakh at 20%; and income above Rs 10 lakh would attract tax of 30%.

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In other tax measures, Mukherjee announced that interest from savings account up to Rs 10,000 would be tax free. Also, apart from medical insurance, an additional Rs 5,000 would be exempted for preventive health check-ups.

Senior Citizens have been exempted from filing advance tax.

Meanwhile, Service Tax has been hiked from 10% to 12%. Also, its net has been widened and all services barring 17 would now be taxed. Corporate Tax structure has been left unchanged.

Mukherjee said India continues to remain among front-runners in economic growth. Mukherjee however said the economic growth is estimated at 6.9 percent during the current fiscal year which was "disappointing". The Finance Minister also exuded confidence that headline inflation would moderate in the next few months and remain stable.

Income TaxCorporate TaxService Tax
Indirect TaxOther Tax provisions Tax Reforms
Growth & Divestment Black MoneyFiscal Health & Estimates
Farm & Food InflationFinancial Sector & Banks
InfrastructureSubsidyChildren & Education
Rural DevelopmentHealthEmployment & Skill Development
Defence & Security


Income Tax
  • Tax collection up 15%

  • Income Tax proposals:

  • Personal Income Tax slabs for individuals relaxed

  • Exemption limit enhanced from Rs 1.8 lakh to Rs 2 lakh

  • Upper limit of 20% tax raised from Rs 8 lakh to Rs 10 lakh

    New Slabs as follows:

  • Upto Rs 2 lakh - Nil

  • Rs 2-5 lakh - 10%

  • Rs 5–10 lakh – 20%

  • Above Rs 10 lakh – 30%

  • Interest from savings account up to Rs 10,000 to be exempt from tax

  • In addition to medical insurance, an additional Rs 5000 to be exempted for preventive health check-ups

  • Senior Citizens exempted from filing advance tax

  • Age limit for senior citizens reduced from 65 to 60 for several tax benefits

  • Deduction of of 50% for investments up to Rs 50,000 in equity by new investors with an annual income up to Rs 10 lakh

  • Compulsory reporting of assets sold abroad


Corporate Tax
  • Corporate Tax structure left unchanged

  • Withholding tax on certain overseas borrowings reduced to 5% from 20%

  • Securities Transaction Tax cut by 20% for stock market orders


Service Tax
  • Service Tax rate up from 10% to 12%

  • Higher Service Tax to add Rs 186.6 bn in revenue

  • Duty-free baggage allowance for Indians increased to Rs 35,000

  • Duty-free baggage allowance for children increased to Rs 15,000

    Proposal to tax all services except negative list

    Exempted services include:

  • Government services

  • Pre-school, school education, recognised education at higher levels and approved vocational education

  • Renting of residential dwellings, entertainment and amusement services to be exempt

  • Public transportation to be exempt from service tax

  • Agricultural activities and animal husbandry to be exempt from service tax

  • Health care

  • Charities, religious persons

  • Sportspersons

  • Performing artists in folk and classical arts

  • Individual advocates providing services to non-business entities

  • Independent journalists

  • Services related with animal care and car parking

  • Services of business facilitators and correspondents to banks and insurance companies

  • Construction services relating to specified infrastructure, canals, irrigation works, post-harvest infrastructure, residential dwelling, and low-cost mass housing up

    to an area of 60 sq. mtr.

  • Exemption for the monthly charges payable by a member to a housing societyup from Rs 3,000 to Rs 5,000

  • Industry related with cinematographic films

  • To set up a Study Team to examine the possibility of a common tax code for service tax and central excise

  • New scheme to simplify refunds


Indirect Taxes

  • Standard Excise duty raised from 10% to 12 %

  • Merit Excise duty raised from 5% to 6 %

  • Lower merit rate raised from 1% to 2 %

  • Lower merit rate for coal, fertilisers, mobile phones and precious metal jewellery retained at 1%

  • Excise duty on large cars up from 22% to 24%

  • Customs duty cut to 2.5% on sugarcane planter, root or tuber crop harvesting machine and rotary tiller and weeder

  • Customs duty cut to 5% on specified coffee plantation and processing machinery

  • To extend project import benefit to green house and protected cultivation for horticulture and floriculture

  • Customs duty cut to 5% on some water soluble fertilisers and liquid fertilisers

  • Customs duty cut to 2.5% on urea

  • To extend concessional import duty for Mechanised Handling Systems and Pallet Racking Systems in mandis or warehouses for horticultural produce

  • Imports of equipment for initial setting up or expansion of fertiliser projects fully exempt for three years

  • Steam coal fully exempt, concessional CVD of 1% for two years

  • Natural Gas and Liquified Natural Gas exempt

  • Uranium concentrate, Sintered Uranium Dioxide in natural and pellet form exempt

  • Customs Duty on Mining machinery cut to 2.5%

  • Customs Duty on Railways safety equipment cut to 7.5%

  • Import Duty on road, tunnel boring equipment fully exempt

  • Parts of aircraft, testing equipment and tyres exempt

  • Customs Duty on coating material for manufacture of electrical steel cut to 5 %

  • Nickel ore and concentrate and nickel oxide/ hydroxide fully exempt

  • Customs Duty on non-alloy, flat-rolled up at 7.5%

  • Automatic shuttle-less looms fully exempt

  • Automatic silk reeling and processing machinery fully exempt

  • Second-hand textile machinery to attract basic duty of 7.5 %

  • Duty on wool waste and wool tops cut to 5%

  • Duty on Titanium dioxide cut to 7.5%

  • Aramid yarn and fabric used for the manufacture of bullet proof helmets fully exempt

  • Duty on branded ready-made garments up at 12 %

  • Waste Paper fully exempt

  • LCD and LED TV panels fully exempt

  • Memory card for mobile phones fully exempt

  • Duty on Adult diapers cut to 5%

  • Duty on bicycles increased to 30%

  • Duty on bicycle parts increased to 20%

  • Excise Duty on hand-made matches cut to 6%

  • Six specified life-saving drugs/ vaccines for HIV-AIDS, renal cancer etc fully exempt

  • Customs Duty on Soya protein concentrate and isolated soya protein cut to 15% and 10% respectively

  • Iodised salt to have concessional basic customs duty of 2.5%

  • Customs Duty on Probiotics cut to 5%

  • Solar energy equipment to be fully exempt

  • Excise duty on LED lamps cut to 6 %

  • Hybrid vehicle batteries to be fully exempt

  • Customs duty on gold bars, gold coins increased to 4%

  • Customs duty on non-standard gold increased to 10%

  • Customs duty on platinum increased to 4%

  • Basic duty on gold ore, concentrate and dore bars increased to 2%

  • Excise duty on refined gold increased to 3 %

  • Polished, coloured gem stones to attract 2% duty

  • Excise duty on cigarettes to attract ad valorem component of 10% on existing rates

  • Excise duty on hand-rolled beedis increased to Rs 10 per thousand

  • Excise duty on machine-rolled beedis increased to Rs 21 per thousand

  • Duty increased on pan masala, gutkha, chewing tobacco, unmanufactured tobacco and zarda scented tobacco in pouches

  • Cess on Crude petroleum oil increased to Rs 4,500 per metric tonne

  • Customs Duty on large cars/ MUVs/ SUVs with value exceeding USD 40,000 enhanced from 60 per cent to 75 per cent ad valorem

  • Packaged cement to have unified rate of 12 % + Rs 120 PMT for non-mini cement plants and 6 % + Rs 120 PMT for mini-cement plants

  • Non-branded jewellery to attract excise duty of 1%

  • Branded silver jewellery fully exempt

  • Building of commercial vehicle bodies to attract an ad valorem rate of 3%


Other Tax provisions
    Rate of withholding tax on interest payments on ECBs to be cut to 5 % for 3 years in following sectors:

    -Roads and Bridges
    -Ports and Shipyards
    -Affordable Housing

  • Restriction on Venture Capital Funds to invest only in nine specified sectors to be removed

  • To remove cascading effect of Dividend Distribution Tax in a multi-tier corporate structure

  • Continue to allow repatriation of dividends from foreign subsidiaries of Indian companies to India at a lower tax rate of 15 % for one more year

  • Investment linked deduction of capital expenditure incurred to be provided at 150 % for:

  • -Cold chain facility
    -Warehouses for storage of food grains
    -Affordable housing

  • New sectors to be added for investment linked deduction:

  • -Bee keeping and production of honey and beeswax
    -Container freight station and inland container depots
    -Warehousing for storage of sugar

  • To extend the weighted deduction of 200% for R&D expenditure for further five years

  • Weighted deduction of 150% on expenditure incurred for agri-extension services

  • Turnover limit for compulsory tax audit of accounts as well as for presumptive taxation is proposed to be raised from Rs 6 mn to 10 mn for SMEs

  • Exemption of capital gains tax on sale of a residential property, if the sale consideration used for subscription in equity of a manufacturing SME company

  • Weighted deduction at the rate of 150% of expenditure incurred on skill development in manufacturing sector

  • Securities Transaction Tax cut by by 20 per cent (from 0.125 per cent to 0.1 per cent) on cash delivery transactions

  • To extend the levy of Alternate Minimum Tax on all persons other than companies, claiming profit linked deductions

  • To introduce a General Anti Avoidance Rule in order to counter aggressive tax avoidance schemes


Tax Reforms
  • Advanced pricing agreement in DTC to be in Financial Bill

  • New tax exemption on individual share invest with lock-in

  • GST network to become operational from Aug

  • GST under progress, talks on with states for drafting law

  • To examine Parliamentary panel report on Direct Tax Code

  • Rajiv Gandhi Equity Saving Scheme launched

  • Rajiv plan equity invest lock-in period to be 3 years

  • Rs 50,000 tax exempt for share invest in new Rajiv plan

  • Tax exemption on individual share invest below a million rupees

  • Tax free infra bonds Rs 600 bn to be issued in FY 13

  • To allow Rs 100 bn NHAI tax free bonds in FY 13

  • To allow Rs 100 bn IRFC tax free bonds in FY 13

  • To allow Rs 50 bn HUDCO tax free bonds in FY 13

  • To allow Rs 50 bn SIDBI tax free bonds in FY 13

  • To allow Rs 100 bn power sector tax free bonds in FY 13

  • To okay Rs 50 bn National Housing Bank tax free bonds

  • 1% loan sop plan for home loans up to Rs 2.5 mn

  • Interest subvention on low cost homes extended by a year


Growth and Divestment
  • Past year was supposed to be year of recovery

  • This year’s performance turned out to be disappointing

  • We were facing several challenges; global situation a dampener

  • GDP estimated to grow 6.9% in 2011-12

  • FY 13 GDP seen 7.6%, plus or minus 0.25%

  • Proposes Mid-term fiscal goals

  • Aim to raise Rs 300 bn through sales of stakes in state run companies next fiscal

  • Aim to raise Rs 140 bn through sales of stakes in state companies this fiscal

  • Agri, Services performing well

  • Industry pulled down growth in past two years

  • Industry now showing signs of recovery

  • FY 12 Services growth at 9.4%

  • FY 12 Industry growth at 3.9%

  • FY 12 Agri growth at 2.5%

  • Need to improve supply side of economy

  • India still front runner in world in terms of growth; share of trade has increased

  • Crude oil prices to cross USD 115/barrel

  • Five main objectives:

  • Focus on domestic demand driven growth recovery

  • Create conditions for rapid revival of high growth in private investment

  • Address supply bottlenecks in agriculture, energy and transport sectors, particularly in coal, power, national highways, railways and civil aviation

  • Intervene decisively to address the problem of malnutrition especially in the 200 high-burden districts

  • Expedite coordinated implementation of decisions being taken to improve delivery systems, governance, and transparency; and address the problem of black

    money and corruption in public life


Black Money
  • 82 Double Taxation Avoidance Agreements

  • 17 Tax Information Exchange Agreements

  • Compulsory to declare sale of assets abroad

  • Dedicated exchange of information cell for speedy exchange of tax information with treaty countries

  • India 33rd signatory to the Multilateral Convention on Mutual Administrative Assistance in Tax Matters

  • Directorate of Income Tax Criminal Investigation established in CBDT

  • To lay on the table of the House a white paper on Black Money in the current session of Parliament

  • Allowing for reopening of assessment upto 16 years in relation to assets held abroad
  • Tax collection at source on purchase in cash of bullion or jewellery in excess of Rs 200,000:

  • Tax deduction at source on transfer of immovable property (other than agricultural land) above a specified threshold

  • Tax collection at source on trading in coal, lignite and iron ore

  • Increasing the onus of proof on closely held companies for funds received from shareholders as well as taxing share premium in excess of fair market value

  • Taxation of unexplained money, credits, investments, expenditures etc., at the highest rate of 30 per cent irrespective of the slab of income


Fiscal Health & Estimates
  • Aim to trim fiscal deficit

  • To make amendments to Fiscal Responsibility and Budget Management Act (FRBM Act)

  • Current account deficit 3.6%

  • Fiscal deficit 5.9% of GDP this FY

  • Expect fiscal deficit at 5.1% of GDP next FY

  • Concept of effective revenue deficit to be fiscal parameter

  • Expect gross tax receipts at Rs 10.78 tn next FY, up 15.6%

  • As a percentage of GDP, gross taxes to be 10.6 % in FY 13

  • Total spending Rs 14.49 tn next FY

  • Non-Plan spending Rs 9.69 tn next FY, 8.7% higher than revised estimates

  • Net tax to Centre in FY 13 at Rs 7.71 tn

  • Expect non-tax revenue at Rs 1.64 tn next FY

  • Non-debt Capital Receipts at Rs 416.50 bn

  • Plan expenditure at Rs 5.21 tn, 18% higher than estimates

  • Direct tax collection fell short by Rs 320 bn

  • Total Debt stock at 45.5 % of GDP

  • Effective Revenue Deficit at Rs 1.85 tn or 1.8% of GDP


Farm & Food
  • Agri to be on govt priority list

  • To increases outlay for agriculture by 18% to Rs 202.08 bn

  • India to be self sufficient in urea manufacturing in 5 years

  • Announces 2 new handloom mega clusters

  • To set up 3 technical assistance centres for textiles

  • Allot Rs 700 mn for Maharashtra power loom cluster

  • East Indian states produced 7 mn tones more of paddy

  • Rs 5 bn pilot plan in 12th plan for geo textiles in NE

  • Allocated Rs 3 bn for FY 13 irrigation plans

  • Allot Rs 10 bn to up kharif output in NE FY 13

  • Allot Rs 4 bn to up kharif output in NE FY 12

  • Allot 5 bn for aquaculture FY 13

  • NABARD to give rural banks Rs 100 bn for short term loans

  • To move bill for NABARD Act amendment

  • 3% rate subvention for farmers repaying loans on time

  • Rs 5.75 tn farm credit target in FY 13

  • Rs 2 bn for R&D of seeds and farm research

  • Allocation to farm development plan RKVY hiked to Rs 92.17 bn

  • To set up govt owned irrigation promotion company

  • To add 5 mn tones grain storage capacity in FY 13

  • To start national food processing mission in FY 13

  • Micro-irrigation allotment up 13% to Rs 142.42 bn


  • Headline inflation was major cause of concern

  • Inflation likely to moderate in FY 13

  • Inflation largely structural in nature

  • Headline inflation is beginning to stabalize

  • Prolonged period of high inflation tends to get generalized

  • Inflation driven by farm supply constraints


Financial Sector & Banks
  • India Opportunity Venture Fund via SIDBI of Rs 50 bn

  • To issue revised norms for banks' priority sector lending

  • To set up financial holding company for recapitalization of banks

  • To move National Housing Bank Amendment Bill

  • To move Regional Rural Bank Amendment Bill

  • Rs 158.88 bn for capitalization of PSU banks in FY 13

  • Propose electronic voting to up shareholder involvement

  • IPOs of over Rs 100 mn to be in electronic form


  • 12th plan invest for infra at Rs 50 tn

  • ECBs allowed to part finance rupee debt of power projects

  • Coal India told to to sign coal supply pacts with power companies

  • Inter ministerial panel to monitor allocated coal mines

  • Targetting 8800 km projects under NHDP FY 13

  • Irrigation including dams under viability gap funding FY 13

  • Irrigation, fertilizer, terminal market under viability gap funding

  • Viability gap funding for oil, gas pipelines, storage

  • Telecom towers to get viability gap funding in FY 13

  • Inadequate infra strain on growth

  • Extend plan to capitalize regional rural banks by 2 years

  • To give Rs 40 bn FY 13 for rural housing Vs Rs 30 bn in FY 12

  • Realtors can borrow overseas for low cost home projects

  • To move bill for Public Debt Management

  • Foreign airline investment of 49% under consideration

  • Budget approves overseas borrowing of upto USD 1 bln for airlines' working capital needs

  • To allow 1 year ECBs of USD 1 bn for airline companies

  • Allowed direct import of ATF by airlines

  • Foreign borrow for capex to maintain, operate toll roads

  • Up NHDP allocation 14% to Rs 253.6 bn in FY 13


  • To keep Subsidies under 2% of GDP over next 3 years

  • Subsidy for food security to be fully provided for Some subsidies inevitable

  • Fiscal policy had to absorb subsidy payments

  • Aim to directly transfer kerosene subsidy to individuals

  • Testing kerosene subsidy transfer in Rajasthan

  • Direct transfer subsidy pilot for 50 districts

  • Aim to directly transfer subsidy on LPG to consumers

  • Direct transfer of fertilizer subsidy to retailer, farmers soon

  • Direct transfer subsidy to be rolled out gradually


Children and Education
  • Allocated Rs 255.55 bn under Right to Education

  • Integrated Child Development Services (ICDS) scheme to be re-structured

  • Allocated Rs 158.50 bn for child development in FY 13

  • Allocated Rs 119.37 bn for mid-day meal plan FY 13

  • Allocated Rs 7.5 bn for empowerment of adolescent girls

  • Credit guarantee fund proposed for poor students

  • Allocated Rs 31.24 bn for secondary education

  • Rs 250 mn for the Institute of Rural Management, Anand

  • Rs 500 mn to establish a world-class centre for water quality with focus on arsenic contamination in Kolkata

  • Rs 1 bn for Kerala Agricultural University

  • Rs 500 mn for University of Agricultural Sciences Dharwad, Karnataka

  • Rs 500 mn for Chaudhary Charan Singh Haryana Agricultural University, Hisar

  • Rs 500 mn for Orissa University of Agriculture and Technology

  • Rs 1 bn for Acharya NG Ranga Agricultural University in Hyderabad

  • Rs 150 mn for National Council for Applied Economic Research

  • Rs 100 mn for Rajiv Gandhi University, Department of Economics, Itanagar

  • Rs 100 mn for Siddharth Vihar Trust Gulbarga, to establish a Pali language Research Centre


Rural Development
  • Rs 250 mn for rural management institute Anand

  • Allocated Rs 208.22 bn under rural health plan FY 13

  • Allocated Rs 120.4 for backward region growth

  • Allocated Rs 50 bn for warehousing facility FY 13

  • Allocated Rs 200 bn for rural infra development in FY 13

  • Allocated Rs 240 bn under rural road project

  • Allocated Rs 140 bn for rural drinking water

  • Initiative proposed to strengthen Panchayats


  • No new case of polio

  • NRHM allocation up Rs 181.15 bn to Rs 208.22 bn

  • National Urban Health Mission being launched

  • National Urban Health Mission to focus on primary healthcare needs in urban areas

  • Seven government medical colleges to be upgraded


Employment and Skill Development
  • National Rural Livelihood Mission (NRLM) allocation

    increased to Rs 39 bn

  • Women’s SHG’s Development Fund corpus enlarged to Rs 30 bn

  • Interest subvention to Women SHGs to avail loans up to Rs 3 lakh at 7% p.a.

  • Women SHGs that repay loans in time to get 3% subvention more

  • Prime Minister’s Employment Generation Programme allocation at Rs 12 bn in 2012-13

  • National Skill Development Corporation (NSDC) allocated Rs 10 billion

  • To set up separate Credit Guarantee Fund


Defence and Security
  • Provision of Rs 1.93 tn for Defence Services

  • Efforts to increase availability of residential quarters to defence forces

  • To construct nearly 4,000 residential quarters for Central Armed Police Forces

  • Provision of Rs 32.80 bn for construction of office buildings including land acquisition and barracks to accommodate 27,000 personnel

First Published: Friday, March 16, 2012, 09:01
Post Your Comment
 Your comment(s) on this article
plz give me this matter l my mail id
umesh gupta - satna
sxsksasvzz - USA
i want to know , what is rate of ST & exemption limit on transportation by road
Ravindranath - MUMBAI
What is the benefit to female students with new education investment
Nandini - Rohtak
Tax structure must be simplified.All funds for health and education must be collected for cess implications on all kind of taxes,collection of cess tax should be allocation for health and education.Similarly subsidy should also be collected from cess on taxes.
mahesh chandra harsh - jodhpur
Senior citizen tax free income limit not mentioned as 2.5 Lacs in last budget. Take a chance to annonce open offer to deposit income tax at own will.
mahesh chandra harsh - jodhpur
not satisfy with tax rules
sameer - bhandup
Where is 400 lac crores hidden, get that money back............. Our government can do nothing, If we pay tax , even then the money transfer to their account, which is in Swiss....Hahahahah Bangalore/Bombay/Chennai/Calcutta/ Delhi/Hyderabad and other IT/BT Hubs (complete Big scale/Mid/Small) they pay the current bill min 1 crore and goes upto 3 crores depending on their size. 1) Govt is making money in electric/TDS/Services tax/PT/Direct & Indirect tax. 2) Liquor 3) Smoke 4) Petrol /Diesel 5) LPG 6) Mobile/BSNL bills 7) Water and others. The rough calculation would be more than 2 lacs/month dear…… (WHERE THE MONEY GOING, BUT STILL WHY OUR INDIAN GOVERNMENT BEGING FOR FORGIN CONTRIES). We have done lot to our government, but what they have given to us??? ONLY VOTE VOTE VOTE
Praveen D - Bangalore
some bad some good
roshan jha - delhi
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