Union

Budget Analysis 2011‐2012 

 
 
Contents
Contents .............................................................................................................. 2 
1.  Economic Survey 2010-2011 : Highlights ....................................................... 3 
Key Economic Indicators ............................................................ 3 
Stock Market Indicators ............................................................. 4 
Foreign Exchange Reserves of some major countries .................... 4 
Tax Collections : Comparative Figures ......................................... 4 
Statewise Exports of Top 15 States ............................................. 5 
SEZS Exports and India’s Total Exports ......................................... 5 
2.  Budget 2011-2012 : Statistical Information .................................................... 6 
3.  Budget 2011-2012 : Highlights ..................................................................... 7 
4.  Direct Taxes ............................................................................................. 10 
Income Tax : Slab and Rates ..................................................... 10 
TDS Rates Chart as Applicable for the Financial Year 2011-2012 ..... 12 
Charitable Trust – Increase in Monetary Limits for Commercial Income13 
Transfer Prcing – Allowable Fixed Variation Rate Made Unfixed ....... 13 
Transfer Pricing Officer’s Powers Widened .................................... 13 
Dividends received from Foreign Subsidiary – Concessional Tax Rate 13 
SEZ Units – Dividend Distribution Tax Introduced ......................... 13 
Introduction of a Powerful Weapon thru new Section 94A ............... 14 
Scope of Sec. 131 and 133 widened to cover DTAA parties ............. 14 
Submission of annual statement by a NR having Liaison Office ........ 14 
Deletion of Document Identification Number (DIN) related provision 14 
 Analysis
s of the
Union Budget
B
20111-2012

1. EC C SURVEY
CONOMIC Y 2010- 2011 : HIGHLIG
GHTS

Key Eco
onomic Indicato
I rs

Pa
articulars 2007-0
08 2008
8-09 20
009-10 2010-1
11
Grow
wth in %
- GDP / Econ
nomy Grow
wth 9.3
9 6.8 8.0 8.6
- Agricultura
al Growth 5.8
5 -0.1 0.4 5.4
- Manufacturring Growth
h 10
0.3 4.2 8.8 8.8
- Savings Ra
ate 36
6.9 32.2 33.7 NA
Expo
orts (in USD
D billion) 163.1
132 185.295 178.751 1 164.707
Imports (in USD billion) 251.6
654 303
3.696 288.373 1 246.724

Economic Survey 2010-2011 : Highlights

Expo
ort Growth (% ) 29
9.0 13.6 -3.5 1 2
29.5
Import Growth (%) 35
5.5 20.7 -5.0 1 1
19.0
Fore
ex reserves (in USD biillion) 309
9.7 252 279.1 2 29
97.3
Averrage Exchange rate (U
USD 1 = `) 40..26 45.99
4 47.42 1 45
5.68
Infla
ation (in terrms of WPI) in % 4.8
4 8.0 3.6 1 9.4
Infla
ation (in terrms of CPI)) in % 6.2
6 9.1 12.4 1 1
11.0
Popu
ulation (Billlion) 1.1
138 1.154 1.170 1..186
Per C
Capita Inco
ome (`) 35,8
820 40
0,605 46,492 54,,527
Gold
d price (` per Gram) 1,201..11 1,49
92.17 1,609.94 3 2,043
3.54
Silve
er price (` per Gram) 23..15 21.34
2 25.26 3 47
7.41
Crud
de Oil Price (Brent Eurrope) 102..33 46.13
4 80.37 4 109
9.77
(USD
D per Barreel)

1 April – Decembe
er
st
2 As at 3
31 Decemmber, 20100
th
3 As at 2
25 Februaary, 2011
rd
4 As at 2
23 Februaary, 2011

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 Analysis
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20111-2012

Stock M
Market In
ndicator
rs

(` Crore)
C
Yeaar Æ 2007-008 2008-09 2009-10 2010--11
Number off IPOs 85 21 39
9 40
NSE Spot 35,51,,038 27,52,023 41,38,024
4 27,877,862
BSE Spot 15,78,,670 11,00,074 13,78,809
9 8,933,839
NSE Derivaatives 1,30,90,,478 1,10,10,482 1,76,63,665
1 5 2,05,999,192
BSE Derivaatives 2,42,,308 12,268 234
4 35
FII Net Inv
vestment -- (45,811) 1,42,658
8 1,377,461
Number off FIIs -- 1,635 1,713
3 1,718
(at the
e year end))

Foreign
n Exchan
nge Rese
erves of some major
m cou
untries

Sr. No
o. Country USD Billio
on US
SD Billion

Economic Survey 2010-2011 : Highlights

(2009) (2010)
1 China
a 2,399.2 2,454.3
2 Japan
n 1,049.4 1,118.8
3 Russia
a 439.0 479.4
4 India 283.5 297.3
5 Korea
a 270.0 293.5
6 Brazil 238.5 285.5
7 China
a P R Hong Kong 256.3 268.8
8 Singa
apore 188.9 225.8
9 Germany 189.5 216.6
10 Franc
ce 139.1 188.3
11 Italy 140.5 157.4

Tax Collections
s : Compa
arative F
Figures
(` Crorre)

Particu
ulars Actual Actual Actu
ual Exxpected Budgeted
2007-2008
2 2008-20009 2009-22010 20100 – 2011 2011-20122
Corporrate Income
e Tax 1,92,911 2,13,39
95 2,44
4,725 22,96,377 3,59,990
0 P
a
Excise 1,23,611 1,08,61
13 1,02,991 1,37,263 1,63,550
0
g
Income
e Tax (Others) 1,02,644 1,06,04
43 1,22,370 1,41,566 1,64,526
6 e

Custom
ms 1,04,119 99,87
79 83,324 1,31,800 1,51,700
0 4
Service
e Tax 51,301 60,94
41 58,422 69,400 82,000
0
Securitty Transacttion Tax 8,576 7,97
77 7,394 7,500 7,500
0
Wealth
h Tax 340 38
89 505 557 635
5

Analysis
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 Analysis
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Union Budget
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20111-2012

Statewiise Expo
orts of To
op 15 Sttates
(U
US $ MILLIION)

Srr. No. State 2008

8-09 200
09-10 April
A - Sep
ptember Share (%
%)
20
009-10 2 2010-11 2009-100
1 Maharashtra 44
4,661 43,351
4 20,275 23,405 24.30
2 Gujjarat 40,,268 38,771
3 16,341 24,593 21.770
3 Tammil Nadu 18
8,538 16,083 7,899 8,404 9.00
4 Karrnataka 12
2,295 9,092 4,206 5,011 5.10
5 And dhra Pradessh 9
9,896 8,558 4,594 6,620 4.80
6 Kerrala 4
4,752 5,842 2,783 2,647 3.30
7 Harryana 4
4,791 5,678 2,653 3,575 3.20
8 Uttar Pradesh 7
7,570 5,523 2,762 3,848 3.10
9 Dellhi 8
8,466 5,187 2,575 2,933 2.90
10 We est Bengal 5
5,582 4,197 1,826 2,821 2.30
11 Rajjasthan 3
3,313 3,338 1,434 1,853 1.90
12 Orissa 3
3,351 3,230 1,233 2,736 1.80

Economic Survey 2010-2011 : Highlights

13 Punnjab 3
3,015 2,732 1,260 1,904 1.50
14 Goa a 1
1,781 2,481 557 1,074 1.4
40
15 Mad dhya Pradeesh 2
2,945 2,357 916 1,147 1.30
Total Exports
E 1,85,,295 1,7
78,751 80,950 1,05,352 100.000

SEZS Exp
ports and India’s To
otal Exporrts

Year Exportss From SE Zs Expports From

m India Share Of
Value Grow
wth Va
alue Growth
G SEZs
s
(` Crore
e) (%)) (` Crore) (%) Exports
In Tottal
Exports
2
2003-04 13,85
54 3 9.0 2,9
93,367 - 4.7
2
2004-05 18,314 3 2.2 3,75,340 27.9 4.9
2
2005-06 22,84
40 2 4.7 4,56,418 21.6 5.0
2
2006-07 34,615 5 1.6 5,71,779 25.3 6.1
2
2007-08 66,63
38 9 2.5 6,55,863 14.7 10.2
2
2008-09 99,68
89 4 9.6 8,4
40,755 28.2 11.9
2
2009-10 2,20,711 12 1.4 8,4
45,534 0.6 26.1
2
2010-11 2,23,13
32 - 7,51,633 23.4 29.7
(
(Apr-Dec)
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Analysis
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Union Budget
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20111-2012

2. BU
UDGET 20
011-2012 : STA AL INFOR
ATISTICA RMATION

(` IN CROR
RES)
Sr. No. Pa
articulars Actual Budge
et R
Revised Budgett
(2009-10) Estimat
tes Esstimates Estimate
es
(2010-1
11) (2
2010-11) (2011-122)

1 Re
evenue Rece
eipts (2+3) 5,72,811 6,82
2,212 7,83,833 7,89,,892

2 Ta
ax Revenue (n
net to centre) 4,56,536 5,34,094 5,63,685 6,64
4,457

3 No
on-Tax Reven
nue 1,16,275 1,48,118 2,20,148 1,25
5,435

4 Ca
apital Receip
pts(5+6+7) 4,51,676 4,26
6,537 4,32,743 4,49,,836

5 Re
ecoveries of Loan&
L advance
es 8,613 5,129 9,001 15
5,020

Budget 2011-2012 : Statistical Information

6 Otther Receipts 24,581 40,000 22,744 40
0,000

7 Bo
orrowings & Other
O Liabilities 4,18,482 3,81,408 4,00,998 4,12
2,816

8 To
otal Receipts
s(1+4) 10,24,487 11,08
8,749 12,16,576 12,57,,728

9 Non-Plan Expenditure(10+12) 7,21,096 7,35,657 8,21,552 8,16

6,182

10 On Revenue Ac
ccount of whic
ch, 6,57,925 6,43,599 7,26,749 7,33
3,558

11 In
nterest Payme
ents 2,13,093 2,48,664 2,40,757 2,67
7,986

12 On Capital Acco
ount 63,171 92,058 94,803 82
2,624

13 Pllan Expenditture (14+15)

) 3,03,391 3,73
3,092 3,95,024 4,41,,547

14 On Revenue Ac
ccount 2,53,884 3,15,125 3,26,928 3,63
3,604

15 On Capital Acco
ount 49,507 57,967 68,096 77
7,943

16 To
otal Expenditure (9+13) 10,24,487 11,08
8,749 12,16,576 12,57,,729

17 Re
evenue Expen
nditure (10+14
4) 9,11,809 9,58,724 10,53,677 10,97
7,162

Off which, Grantts for creation

n of
18 -- 31,317 90,792 1,46
6,853
ca
apital asset

19 Ca
apital Expenditure (12+15)) 1,12,678 1,50,025 1,62,899 1,60
0,567 P
a
20 Re
evenue Defic
cit (17-1) 3,38,998 2,76
6,512 2,69,844 3,07,,270 g
e
(5.20%) (4.00%) (3.40%) (3.4
40%)

21 Efffective Reve
enue Deficit (17-18) -- 2,45
5,195 1,79,052 1,60,,417
6

-- (3.50)
( (2.3) (
(1.8)

20 Fiiscal Deficit {16-(1+5+6

6)} 4,18,482 3,81
1,408 4,00,998 4,12,,817

(6.40%) (5.50%) (5.10%) (4.6

60%)

21 Prrimary Defic
cit (20-11) 2,05,389 1,32
2,744 1,60,241 1,44,,831

(3.10%) (1.90%) (2.00%) (1.6

60%)

Analysis
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 Analysis
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Union Budget
B
20111-2012

3. BU
UDGET 20
011-2012 : HIG
GHLIGHT
TS

Genera
al

¾ Direct Tax Code (DTC) to implementt w.e.f. 1st April, 2012

2.

¾ No ttarget date e for imple ementation of GST. As A a step towards th he roll-out of GST, itt is
prop
posed to inttroduce the e Constitutiion Amendment Bill in n the budge et session of Parliameent.
The National Securities Depository
D L
Limited (NSSDL) has been selecte ed as techn nology parttner
for incubating the Natio onal Informmation Utility that willw establissh and op perate the IT
backkbone for GST.
G By Junne 2011, NS et up a Pilott portal in ccollaboratio
SDL will se on with elevven
Stattes prior to its roll out across the
e country.

¾ To mmove beyon nd the formmal R&D pa aradigm, a National Innovation

I Council un
nder Shri Sam
S
Pitro
oda has be een set up to preparre a roadm map for inn
novations i n India. The process s of
settiing up Statte innovatioon Councilss in each State and Sectoral Inn
novation Coouncils align
ned
to Central Minisstries is underway.

¾ Uniq
que Identification (UID
D) Number mission haas so far giv
ven 20 lakh
h Aadhaar numbers
n an
nd
m 1st Octobe
from er 2011, ten lakh num
mbers will be
b generate ed per day.

Budget 2011-2012 : Highlights

¾ A billl to introdu
uce shortly to amend Indian Stam
mp Act, 1899.

¾ For reducing littigation and

d focusing attention on
o high reve
enue casess. Instructio
ons have be
een
ed raising limit of tax
issue t effectss below which, tax disputes wwill not be e pursued by
Goveernment in higher Cou urts of Apppeal.

¾ The Standards
s of Weigh hts and Meeasures Ac ct, 1976 is
s being rep
pealed with effect frrom
01.0
03.2011 and replaced by the Leg
gal Metrolog
gy Act, 200
09.

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20111-2012

Direct Taxes

¾ Intro
oduction off Powerful Weapon
W thrrough a ne
ew Sec. 94A
A to track, trail and unearth mon
ney
laun
ndering andd black monney.

¾ The basic exemption lim mit in the ca

ase of all in
ndividual, HUF,
H AOI an
nd BOI is in
ncreased frrom
1,60
0,000 to 1,880,000. Hoowever, Inccome Tax slabs rates will
w be conttinued to bee the samee as
thos
se specified in assessm
ment 2011--12.

¾ Qualifying age for senior citizen pro oposed to be

b reducedd from 65 yyears to 60
0 years. Ba
asic
mption limit for seniorr citizen inccreased from 2,40,000
Exem 0 to 2,50,0 00.

¾ Neww category of
o Very Sen
nior Citizen is propose
ed to be cre
eated. Basicc exemption limit for this
t
cate
egory will be
e 5,00,000.

¾ A ne
ew simplifie
ed return fo
orm 'Sugam m' to be introduced to
o reduce th
he compliance burden
n of
small taxpayers who fall within
w the sscope of pre
esumptive taxation.

¾ The CBDT shall soon notiffy a catego ry of salaried taxpaye

ers who willl not be req
quired to fille a
return of incom
me as their tax liability
y has been discharged
d by their e mployer through TDS S.

¾ No changes in n Corporatte Tax or Firm basic

c Tax Rate
es. Howev
ver, MAT for
f compan
nies

Budget 2011-2012 : Highlights

eased from 18% to 18
incre 8.5%.
¾ Com
mpany Surcharge decre
eased from
m 7.5% to 5%.
5 No change in Edu
ucation Cess
s.

¾ MAT
T is propose
ed to be ma
ade applica ble to SEZ developers
s and SEZ u
units.

¾ Neww Chapter XII-BA

X is proposed to be introduc
ced and MA
AT to be ma
ade applica
able to Limited
Liability Partne
erships (LLP
Ps) @ 18.5%%.

¾ Addiitional dedu
uction of 20
0,000 u/s. 80CCF intrroduced in the
t last yea
ar for inves
stment in lo
ong
term
m infrastruccture bond is proposed
d to be exteended for one
o more yeear.

¾ Loweer Tax Ratee of 15% iss proposed,, on dividen

nds received by an Ind
dian compa
any from its
s
foreign subsidia
ary, for the
e year 2011
1-12.

¾ Weig
ghted dedu
uction limitt for scienttific research under section
s 35((2AA)(a) in
ncreased frrom
175%
% to 200%
%.

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Union Budget
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20111-2012

Indirec
ct Taxe
es

Customs
s Duty

¾ Therre is no cha
ange in the peak rate of basic customs duty
y of 10%.

¾ The introductioon of self-assessment in the Cus stoms Act, 1962 both for importted goods and
a
expoort goods. This
T would replace thhe existing legal requirement of assessmen
nt of every bill
of en
ntry or ship
pping bill by
y the Custo
oms Officerr.

¾ Time e limit for claiming

c reffund of duty
y and interrest enhanc
ced from six
x months to one year for
all ca
ategories ofo importerss.

Excise D
Duty

¾ The standard rate

r of exciise duty of 10% on non-petrole
n um produccts is mainttained as itt is.
The Merit Rate
e of Excise Duty (CEN VAT) for non-petroleu
um goods hhas been inncreased frrom
4% to 5% acrooss the board.

¾ Rate
es of duty applicable
a to cement m
manufacturred by mini-cement pla
ants have been
b reduc
ced.

¾ Excis
se duty on serially nu
umbered go old bars, otther than tola
t bars, w
when manu ufactured frrom
the o
ore/ concen
ntrate stage is being rreduced fro
om `280 pe er 10 gramss to ` 200 per
p 10 gram ms.

¾ Therre are 370 items thatt enjoy exe emption fro

om Central Excise dutty but are chargeable
e to
VAT. It is proposed to witthdraw the exemption n on 130 off these item
ms (by imposing nominal
1% Excise) that are mainly in the nature off consumerr goods. Th he remaining 240 ite
ems
would be broug ght into the
e tax net wh
hen GST is introduced
d.

Service tax

¾ Serv
vice Tax lia ability earlie
er of (i) se
ervice prov
vided or (ii)
) invoice isssued or (iii) payment is
realiised. Earlier it was later of these three.

¾ Two new servic

ces broughtt under the
e service tax net.

¾ Scop
pe of seven
nexisting se
ervices expa
anded or altered.

¾ No c
change in th
hreshold lim
mit of exem
mption. P
a
¾ No c
change in Service
S Tax Rate. g
e

Analysis
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 Analysis
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Union Budget
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20111-2012

4. DIRECT TAXES
A

Income Tax : Slab and Rates

R

Individua
al, HUF, AO
OP and BO
OI

Assessm
ment Rate Genera
al (Age Women
W (A
Age S
Senior Senioor
Yearr upto
o 60 upto 60
0 C
Citizen Citize
en
yea
ars) years) (Agee60 years (Age 80
8
or m
more but years or
less
s than 80 more e)
y
years)
2012-1
13 NIL Upto 1,,80,000 Upto 1,90,0
000 Uptoo 2,50,000 Uptoo
5,00,0000
10 % 1,80,0
001 to 1,90,001 to 2,5
50,001 to --
5,00
0,000 5,00,0000 5,,00,000
20 % 5,00,0
001 to 5,00,001 to 5,0
00,001 to 5,00,001
1 to
8,00
0,000 8,00,0000 8,,00,000 8,00,00
00
30 % Abo
ove Above A
Above Above
e
8,00
0,000 8,00,0000 8,,00,000 8,00,00
00
Cess @ 3%
%
2011-1
12 NIL Upto 1,,60,000 Upto 1,90,0
000 Upto
o 2,40,000 NA
10 % 1,60,0001 to 1,90,001 to 2,4
40,001 to
NA
5,000,000 5,00,0000 5,,00,000
20 % 5,00,0001 to 5,00,001 to 5,0
00,001 to
NA
8,000,000 8,00,0000 8,,00,000
30 % Aboove Above A
Above
NA
8,000,000 8,00,0000 8,,00,000
Cess @ 3%
%

Direct Taxes
Domestic C
Companies
s

Asse
essment Tottal Income
e Rate
R of Rate off Rate
e of Divideend
Y
Year Inncome MAT (%%) Disttribution Tax
T
Ta
ax (%) (%)
2012--13 Tax Rates for
Domesttic Compan nies
Upto ` 1 Crore 30.90 19.05 16.23
Exceedin
ng ` 1 Crore
e 32.45 20.00 16.23
2011--12 Tax Rates for P
Domesttic Compan nies a
g
Upto ` 1 Crore 30.90 18.54 16.61
e
Exceedin
ng ` 1 Crore
e 33.22 19.93 16.61
10

Analysis
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 Analysis
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Union Budget
B
20111-2012

Firms, LL
LPs and Lo
ocal Authorities

A
Assessmen
nt Year Tottal Income
e Rate of IIncome Rate of MAT
M
Tax ((%) (%)
2
2012-13 Tax Rates
Fiirms (No Ch
hange) 30.9
90 NA
LL
LP 30.9
90 19.055
5
Lo
ocal authorrities (No Change) 30.9
90 NA
2
2011-12 Tax Rates
Fiirms (No Ch
hange) 30.9
90 NA
LL
LP 30.9
90 NA
Lo
ocal authorrities (No Change) 30.9
90 NA

Foreign C
Companies
s

Asses
ssment Tota
al Income Ra
ate of Rate of
Ye
ear Income MAT (%) )
Tax
x (%)
2012-1
13 Tax Ratees for Foreeign
Compani es
Upto ` 1 C
Crore 41.20 19.055
Exceedingg ` 1 Crore 42.02 19.436
2011-1
12 Tax Ratees for Foreeign
Compani es
Upto ` 1 C
Crore 41.20 18.540
Exceedingg ` 1 Crore 42.23 19.000

Co-operative Socie
ety (No change)

Asse
essment Y
Year Ra
ate Slab

Direct Taxes
2011
1-12 & 20 12-13 10
0% Uptoo ` 10,000
20
0% 10,00
01 to 20,00
00
30
0% Aboove 20,000
Cess @ 3%

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Analysis
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 Analysis
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20111-2012

TDS Rate
es Chart as
s Applicab
ble for the Financial Year 2011-2012

Ass
sessment Com pany
Year Firrm
Nature of Payments made to 2012-13
2 Co--op In
ndividual
residen
nt Socciety HUF
Loc cal
Authhority
Thre
eshold Limit Ra ate Rate
Sec
ction - Des
scription
in `
194A – Ba
ank Interest 10,00
00 1
10 10

194A – Otther Interestt 5,00

00 1
10 10

194B – Wiinning from Lotteries 10,00

00 3
30 30

194C – Pa
ayment to Co
ontractors 1 30,00
00 2 1

194C - Pay
yment to Ad
dvt/Sub Conttr 1 30,00
00 2 1

194D – Insurance Com

mmission 20,00
00 1
10 10

194H – Co
ommission/B
Brokerage 5,00
00 1
10 10

194I – Rent 1,80,00

00 1
10 10

194I – Rent-Plant / Machinery 1,80,00

00 2 2

194J – Pro
ofessional Fe
ees 30,00
00 1
10 10

194 – Diviidends - 1
10 10

194BB – Winning
W from
m Horse race
e 5,00
00 3
30 30

194F – Re
epurchase Un
nits by MFs 1,00
00 2
20 20

194G – Co
ommission – Lottery 1,00,00
00 1
10 10

194LA – Im
mmovable Property
P - 1
10 10

Direct Taxes
1 30,000 ` for single payment
p & 75,000
7 ` forr aggregate Payment during a Finan
ncial Year.

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Analysis
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 Analysis
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Union Budget
B
20111-2012

CHARITABLLE TRUST – INCREASE IN

I MONETAR
RY LIMITS FOR COMMER
RCIAL INCOM
ME

As per prooviso 1 to Section

S 2(1
15), if a cha ganisation carries on any activity in the na
aritable org ature
of trade, c
commerce or busines ss for a ce ss or fee or
o any other considerration, incoome from suchs
activity was out of purview of o Charitab ble Purpose e. The absolute restrriction on any receip pt of
commercia al nature has been creating hardship to the orrganizationss which receive r sundry
considerattions from such activities. Last year proviso 2 was introduced with retro ospective effect
from (w.r..e.f.) Asses
ssment Yea ar 2009-20 010 to effec ct that if Income fromm such acttivity is Rs. 10
Lakh or le
ess, such activity
a wouuld not be out of purrview of Ch haritable Pu
urpose hence it would d be
consideredd as Charitaable Purpos
se.

It is now p
proposed to
o increase this
t income
e amount frrom Rs. 10 Lakh to Rss. 25 Lakh.

Unlike lastt year, it is

i proposed
d to make this amen
ndment effective with
h prospective effect from
f
Assessmen nt Year 201 12-2013 an
nd onwardss.

TRANSFER PRCING – ALLOWABLE FIXED VAR

RIATION RAT
TE MADE UNFIXED
N

As per second proviiso to Sec. 92C(2), i n case of variation between

b th
he Arm’s Length Price e as
determined and the price at wh
hich interna
ational transaction bettween asso
ociated ente
erprise actu
ually
undertaken does nott exceed 5%
%, price acctually undeertaken dee
emed to bee Arm’s Len
ngth Price.

It is now p
proposed to
o amend this provision
n to have such % as may
m be not ified instea
ad of fixed 5%.
5

osed to mak
It is propo ke this ame
endment efffective with
h effect from Assessm
ment Year 2012-2013.
2

TRANSFER PRICING OFFICER’S POWERS

O WID
DENED

Under the
e existing provisions
p of section 92CA(2), Transfer Pricing Officcer (TPO) could
c comppute
Arm’s Leng
gth Price off such transactions whhich were referred
r to him by the
e Assessing Officer (AO
O) –
Sec. 92CA
A(1). Furthe
er, TPO has s powers too enquire as
s per sec. 131(1)
1 and 133(6). – Sec. 92CA((7).

osed to widen the pow

It is propo wers of TPO
O to determ
mine the Arm m’s Length Price of su
uch transac
ction

Direct Taxes
which was s even not referred to him by th e AO. Furth
her it is als
so proposed
d to give power of survey
to the TPOO also u/s. 133A.

ndment is proposed
This amen p to take effec t from 1st June, 2011
1.

DIVIDENDS
S RECEIVED FROM FOREIGN SUBSID
DIARY – CONCESSIONAL
L TAX RATE

Dividends received by an Indiann company from foreig

gn companies are tax
xable in Ind
dia at 30% plus
applicable surcharge and cess.

It is now proposed, by insertin

ng a new ssec. 115BB BD, that in case of a n Indian company
c w
which P
holds morre than 50 0% capital of foreign (subsidiarry) compan
ny, receive
es any dividends, the
en it a
would be ttaxed at 15
5%. g
e
osed to mak
It is propo ke the abov
ve amendm
ment effective from the
e Assessme
ent Year 20
012-13.
13
SEZ UNITS
S – DIVIDEN
ND DISTRIBUTION TAX INTRODUCE
ED

s were not rrequired to pay Divide

c. 115-O(6)) SEZ units
As per Sec end Distribu
ution Tax.

ection shall cease to have effect ffrom 1st June, 2011.

osed that prrovision of this sub-se
It is propo

Accordinglly, Dividend
d Distributiion Tax is cchargeable
e on dividen ed by SEZ units w.e.ff. 1st
nds declare
June, 20111.

Analysis
s by BRS & Associa
ates
 Analysis
s of the
Union Budget
B
20111-2012

INTRODUCT
TION OF A POWERFUL WEAPON THR
RU NEW SEC
CTION 94A

It is propo
osed to insert new se
ec. 94A to e enable the government to notify y any counntry or territory
outside India, having
g regard to the lack off effective exchange
e of informatio
on by it witth India.

Any asses ssee enters

s into a traansaction wwhere one of the parrties to the e transaction is a person
located in such notified jurisdic
ctional area
a, then all the
t parties to the tra nsaction sh
hall be deemed
to be asso
ociated ente
erprise and such transsaction shall be deeme ed to be an
n international transac
ction
within the meaning of
o Transfer Pricing Leg gislation.

No deducttion in resppect of any n located in such notified

y payment made to any financial institution
jurisdiction
nal area shall
s be alllowed unle ssesse maintains pre
ess the as escribed documents and
furnishes pprescribed information
n.

In case of any sum received

r fro
om a perso al area, the
on located in notified jurisdictiona e onus shall be
on the asssesse to sa
atisfactorily
y explain s ource of suuch money y in the ha ands of suc ch person, else
such sum deemed to be income e of an asse
esse.

Any payment made to

t a person
n located in ed jurisdictional area would attra
n the notifie act the highest
rate of TDS.

endments are
These ame a propose effect from 1st Day of June, 2011
ed to take e 1.

SCOPE OF SEC. 131 AN

ND 133 WID OVER DTAA
DENED TO CO A PARTIES

As per sec
c. 131 and 133 certain Income T Tax authorrities have same powe ers as avaiilable to a Civil
Court rega
arding disco
overy, prod
duction of e
evidence, powers to caall for inform
mation etc.

osed to wid
It is propo den such powers
p to ccover parties to Doub
ble Taxatio ce Agreements
on Avoidanc
(DTAA) irrrespective of
o no proceedings are pending beefore incom
me tax auth
horities.

Sec. 153 and 153B related to o time lim its to commplete asse essment / re-assessm
ment, are also
proposed to be am mended to exclude m maximum 6 months while cal culating th he time limits

Direct Taxes
d under these provisions in case of such inq
prescribed quiries to DTTAA partiess.

osed to mak
It is propo ke these am
mendmentss effective with
w effect from 1st Da
ay of June, 2011.

SUBMISSIO ENT BY A NR
ON OF ANNUAL STATEME R HAVING LIAISON
I OFFICE

The proposed new Seec. 285 proovides that every non-resident, having liaisson office shall
s file annual
statementt, as may be
b prescrib bed, within 60 days of o end of the financia
al year. It is proposed to
make this amendmen e with effectt from 1st Day
nt effective D of June
e, 2011.

DELETION O
OF DOCUME
ENT IDENTIF
FICATION NU
UMBER (DIN) RELATED
D PROVISION
N P
a
Sec. 282B
B was intro oduced 2 years
y ago tto introduc
ce compute er generate
ed DIN to be allotted
d for g
every correspondenc ce issued. The intro oduction off the syste
em was po ostponed once
o and now e
proposed tto be delete
ed w.e.f. 1st April, 20
011.
14

Analysis
s by BRS & Associa
ates
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