Budget 2012: Gains and pains

NEW DELHI: The finance minister has taken a pragmatic approach in this year's Union Budget, which, while not taking its eye off the inclusive growth agenda, has taken steps to urgently address the need to fix stretched government finances. Analysts said the changes on the indirect taxes front unveiled on Friday suggested that it is clear that progress was being made on launching the most ambitious tax reform.

Here is a look at what taxpayers, consumers, investors and businesmen are likely to gain and lose from this Budget.

GAIN FOR TAXPAYERS

• I-T exemption limit raised to Rs 2 lakh, 30% tax bracket now at Rs 10L
• Interest up to Rs 10,000 on saving bank account to be exempt from tax
• Deduction of 50% for investments up to Rs 50,000 in equity by new investors with an annual income up to Rs 10 lakh
• Age limit for senior citizens reduced from 65 to 60 for several tax benefits
• Deduction of Rs 5,000 for preventive check-up expenses allowed within health insurance benefit

PAIN FOR TAXPAYERS

• Additional deduction for infra bonds of Rs 20,000 removed
• Income tax officers can now reopen assessments pertaining to foreign assets for up to 16 years instead of the current six years

GAIN FOR CONSUMERS 

• Threshold for payment of service tax on apartment maintenance raised from Rs 3,000/month to Rs 5,000
• No excise on branded silver jewellery
• Duty-free baggage allowance at airports raised by Rs 10,000 to Rs 35,000
• Excise duty on branded readymade garments reduced from 4.6% to 3.7%

PAIN FOR CONSUMERS

• Service tax (cess included) up from 10.3% to 12.36%; excise hiked from 10.3% to 12.36%, from 5.15% to 6.18%, and 1.03% to 2.06%
• Excise duty on cars of 1500cc and above raised to 27%.
• Basic customs duty on imported SUVs worth over $40,000 (3,000cc or more for petrol, 2,500cc or more for diesel) raised from 60% to 75%
• Customs duty on high-purity gold in various forms doubled

GAIN FOR INVESTORS 

• Securities transaction tax on delivery-based deals reduced to 0.1%
• More options for investing in tax-free bonds (like NHAI and Hudco)

PAIN FOR INVESTORS 

• TDS mandatory for sale of immovable property of over Rs 50L in urban areas and Rs 20L in rural areas
• 1% tax to be collected at source by seller for any sale in cash valued over Rs 2L of jewellery, bullion, etc
• TDS for interest from debentures if amount exceeds Rs 5,000
• No tax sops for new life insurance policies with annual premium over 10% of sum assured (currently 20%) excluding loyalty bonus

GAIN FOR BUSINESSMEN 

• Withholding tax on interest on ECBs reduced from 20% to 5% for power, airlines, roads etc for 3 years
• A year's extension for exemption under section 80IA for power firms; also for lower tax on overseas dividend
• Small service provider exemption increased from Rs 10L to Rs 50L

PAIN FOR BUSINESSMEN 

• Alternate Minimum Tax now on partnerships, sole proprietorships too
• All foreign assets must be declared
• Penalty up to 90% on undisclosed income found during search
• I-T Act amended retrospectively to tax 'offshore M&A deals' involing transfer of assets in India. Example: Hutch-Vodafone transaction