Budget 2012

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New budget is on.. and it has disappointed me.

Lets have a summary :

Gold buffs heres your comeuppance. Basic customs up on gold doubled. Also on platinum. Sin taxes also up on big bang some cigarettes and bidis. Small customes cuts on cigarettes, too.

Its becoming clearer that budget will do nothing to change the course of the economy. It is all incremental stuff so far nothing to set the Hooghly on fire (Mamata di, please note), or the Jamuna, for that matter, or the Mithi (Mumbaikars, please note).

No change in peak customs duty of 10 percent but in customs the exceptions are the rule. So dont worry about this number.

Overall service taxes raised to 12 percent. This will surely push up inflation since services account for 59 percent of the GDP. General excise also up to 12 percent. Big cars to cost more excise up from 22 to 24 percent. Market should know fiscal consolidation means some pain.

Bollywood exempted from service tax in some copyrighted stuff.

Here comes the big blow. Service tax to have negative list only 17 services exempt.

A bit more for markets. Securities transaction tax (STT) the stock exchange toll fee for buying and selling share is cut by 20 percent. Just crumbs for traders. STT is now 0.1 percent for delivery trades.

Finally, taxes. Rs 2 lakh zero tax, Rs 2-5 lakh 10 percent, Rs 5-10 lakh 20 percent and above Rs 10 lakh 30 percent. Interest income from banks tax-free upto Rs 10,000. No change in corporate taxes.

The big number, fiscal deficit at 5.9 percent thats 1.3 percent higher than 2011-12 budget estimate. Next years figure is 5.1 percent.

black money. He plans a white paper on black money. That sounds like tough action. FM says taxman can reopen your foreign accounts for 15 years. Except more bribe calls if you have opened than Swiss account.

Money for National Rural Health Mission (NRHM) increased to Rs 20,820 crore. Thought Mayas henchmen had already had their fill of this cash? Kushwaha, saab, whats going on?

He is going to recapitalise banks with over Rs 15,000 crore so that they can bail out Vijay Mallya and other aviation and other losers.

Source : firstpost

What you guys think about this budget, plz share !!!!!

 

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Budget 2012: Retrospective tax rule reopens raw wounds

India's proposal to back-date tax claims on overseas deals involving local assets throws foreign investment into fresh uncertainty, experts and industry figures said, potentially reopening old legal battles and clouding business sentiment.

Vodafone prevailed in a January Supreme Court ruling that found it did not have to pay tax in India on its $11 billion deal to enter the country.

Business groups hailed the decision as bringing clarity to the country's investment climate after a year of government scandals, slumping economic growth and policy paralysis eroded investor confidence.
But in his budget on Friday, Finance Minister Pranab Mukherjee sought to bypass that ruling with a retrospective amendment to 50-year-old tax laws, stirring a legal hornet’s nest and resurrecting a dispute that many hoped had been put to bed.

“People are indeed very, very worried about the tendency for India to make retrospective amendments,” said Dinesh Kanabar, chief executive officer and chairman, tax, at KPMG India.

“You litigate for years, go all the way to the highest court for clarification, only for the government to say: ‘This is what we meant’...The finance minister ought to be far more pragmatic than look for a few billion dollars here or there,” he said.

India had sought $2.2 billion from London-listed Vodafone in tax after its purchase of Indian assets from Hong Kong-listed Hutchinson Whampoa Ltd. Vodafone said the deal was between two overseas entities, and India had no right. The Supreme Court agreed.

Mukherjee had other plans.

On Friday, the Union Budget included a proposal that, if passed by Parliament, will allow the country to retrospectively tax cross-border transactions in which the underlying assets are located in India.

The amendment would change India's 1962 Income Tax Act, but will only seek to investigate deals done in the past six years, Finance Minister Pranab Mukherjee was quoted by local media as saying at an industry event on Sunday.

“Retrospective fiscal legislation should normally not be done...(but) every finance minister will have to protect the interests of the government from a revenue point of view,” Mukherjee was quoted as saying by the Financial Express newspaper.

MUDDIED WATER

Vodafone is the largest overseas corporate investor in India, but its long-running dispute has come to symbolise the perils foreign firms face doing business in the country.

Clarity on its tax liability was applauded by investors, who saw it as a rare piece of sunshine in a clouded climate that had reduced investments in India to a five-year low in 2011, according to the Centre for Monitoring Indian Economy.

Business figures have criticized the amendment, which the head of the Confederation of Indian Industries said would “create an impression of India being an investor unfriendly country especially at a time when we need urgent investment.”

“This is most retrograde. Our policymakers should realize we do not live in isolation. We need FDI, foreign technology and capital,” said Deepak Parekh, chairman of Housing Development Finance Corp, India's largest mortgage lender.

Mukherjee has sought to allay industry worries by asserting that the new amendment would not duplicate tax paid in other jurisdictions, and only seeks to ensure tax is paid on deals involving the transfer of Indian assets.

Even the head of the planning commission, Montek Singh Ahluwalia, a powerful policymaker outside of the finance ministry with close links to the prime minister, said he was uncomfortable with the proposal.

“I am personally uncomfortable with retrospective things,” Ahluwalia told CNN-IBN news channel. “Now you know when ministries do that they usually have some very good reason and I just don't know enough what the reasoning is.”

Vodafone's deal is not unique. Various other acquisitions involving overseas deals that appeared closed after the Supreme Court ruling could be affected by the proposal.

Kraft Foods Inc’s 2010 acquisition of Cadbury's Indian business and deals involving Indian assets sold by AT&T Inc and SABMiller Plc's purchase of Fosters would be at risk under the new amendment.

“The proposal...raises a question as to whether foreign investments are protected in India,” wrote Nitish Desai Associates, a legal and tax advisory firm, in a research report.

Legal and tax experts say that while the amendment will see foreign investors act more cautiously in future deals involving Indian assets, the government's decision to throw past deals back into turmoil will only sour overseas investment appetite.

“The government is saying it is clarifying its position,” said Amrish Shah, national leader, transaction tax, Ernst & Young India. “But on past deals, it has muddied the water.”

 

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The newly appointed Railway Minister Mukul Roy on Thursday announced a rollback of some of the fare hikes his ousted predecessor Dinesh Trivedi had proposed in Railway Budget.

 

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Oil & Natural Gas Corporation's (ONGC) profit before tax will take a hit of Rs5,000 crore in 2012-13 due to budget proposals to raise duties on oil production, and an increase in service and other taxes, its chairman said.

The budget for the fiscal year beginning in April proposed to raise cess on crude oil to Rs4,500 per tonne from Rs2,500 per tonne.

The state-run company has asked the government to adjust the extra burden from the budget against oil subsidies, Sudhir Vasudeva said.

The government subsidizes prices of diesel, kerosene and cooking gas to protect the poor from the impact of inflation pressures. This means producers such as ONGC must share the shortfall by selling crude to refiners at a discount.

Because of the subsidies, the total revenue losses of India's state-run oil companies are expected to rise to $28.5 billion in the fiscal year ending March, nearly double the amount in the previous year.