Common tax code on the anvil for service tax, excise duty
On the lines of the proposed Direct Taxes Code (DTC), the government plans to come out with a Common Tax Code (CTC) for service tax and central excise duty to harmonize the two indirect levies.
"I propose to set up a study team to examine the possibility of a common tax code for Service Tax and Central Excise which could be adopted to harmonize the two legislations as much as possible at the right time," finance minister Pranab Mukherjee said in the Budget 2012-13.
The government also proposed raising the rates of service tax and excise duty to 12 per cent from the current 10 per cent level.
Pointing out that Service Tax law is complex and sometimes avoidably different from Central Excise, Mukherjee said "we need to bring the two as close as possible in the light of our eventual goal of transition to GST (Goods and Services Tax)".
While the GST Bill is currently being studied by a parliamentary standing committee, the structure of GST Network (GSTN) has been approved by the Empowered Committee of State Finance Ministers. It will be set up as a National Information Utility and become operational by August 2012.
"The GSTN will implement common PAN-based registration, returns filing and payments processing for all States on a shared platform," Mukherjee said, adding that the use of PAN as a common identifier in both direct and indirect taxes, "will enhance transparency and check tax evasion".
As a measure of harmonization between Central Excise and Service Tax, a number of alignments have been made. "These include a common simplified registration form and a common return for Central Excise and Service Tax, to be named EST-1. This common return will comprise only one page, which will be a significant reduction from the 15 pages of the two returns at present.
"I propose to set up a study team to examine the possibility of a common tax code for Service Tax and Central Excise which could be adopted to harmonize the two legislations as much as possible at the right time," finance minister Pranab Mukherjee said in the Budget 2012-13.
The government also proposed raising the rates of service tax and excise duty to 12 per cent from the current 10 per cent level.
Pointing out that Service Tax law is complex and sometimes avoidably different from Central Excise, Mukherjee said "we need to bring the two as close as possible in the light of our eventual goal of transition to GST (Goods and Services Tax)".
While the GST Bill is currently being studied by a parliamentary standing committee, the structure of GST Network (GSTN) has been approved by the Empowered Committee of State Finance Ministers. It will be set up as a National Information Utility and become operational by August 2012.
"The GSTN will implement common PAN-based registration, returns filing and payments processing for all States on a shared platform," Mukherjee said, adding that the use of PAN as a common identifier in both direct and indirect taxes, "will enhance transparency and check tax evasion".
As a measure of harmonization between Central Excise and Service Tax, a number of alignments have been made. "These include a common simplified registration form and a common return for Central Excise and Service Tax, to be named EST-1. This common return will comprise only one page, which will be a significant reduction from the 15 pages of the two returns at present.
Income tax exemption limit raised to Rs 2 lakh
Pranab Mukherjee raised the exemption limit for income tax by just Rs 20,000 from Rs 1,80000 to Rs 2 lakh.
The new tax slabs are as follows:
Up to Rs 2 lakh: No tax
From Rs 2 lakh to 5 lakh: 10%
From Rs 5 lakh to 10 lakh: 20%
Above Rs 10 lakh: 30%
The new tax slabs are as follows:
Up to Rs 2 lakh: No tax
From Rs 2 lakh to 5 lakh: 10%
From Rs 5 lakh to 10 lakh: 20%
Above Rs 10 lakh: 30%
Promise to curb black money, major push on infrastructure, capital market reforms and huge subsidy cut were among the other proposals listed by Pranab Mukherjee in the Union Budget for 2012-13.
The revision in tax slabs will give some direct tax relief to individuals, even as eating out, buying luxury cars, air travel, availing some professional services and investing in gold jewellery will become costlier.
"This will provide tax relief of Rs 2,000 to every tax payer," the finance minister said, adding: "My proposal on direct taxes will result in a revenue loss of Rs 4,500 crore."
He proposed to raise the service tax rate to 12 percent from the present 10 percent.
Assuring further liberalisation of capital markets, he announced a new equity savings scheme to extend income tax deduction of 50 percent to those who invest up to Rs 50,000 in equities and whose annual income is less than Rs 10 lakh.
The revision in tax slabs will give some direct tax relief to individuals, even as eating out, buying luxury cars, air travel, availing some professional services and investing in gold jewellery will become costlier.
"This will provide tax relief of Rs 2,000 to every tax payer," the finance minister said, adding: "My proposal on direct taxes will result in a revenue loss of Rs 4,500 crore."
He proposed to raise the service tax rate to 12 percent from the present 10 percent.
Assuring further liberalisation of capital markets, he announced a new equity savings scheme to extend income tax deduction of 50 percent to those who invest up to Rs 50,000 in equities and whose annual income is less than Rs 10 lakh.
US threatens sanctions against India over Iran oil
The Obama administration is threatening to impose sanctions on India over its continued economic ties with Iran amid disagreements between Washington and New Delhi over how much and how soon the latter is reducing oil imports from the (in US eyes) pariah nation.
India has "failed" to reduce its purchase of Iranian oil and if it doesn't do so, President Barack Obama may be "forced" to impose sanction, unnamed administration officials were cited as telling Bloomberg wire service. A decision in this regard could come as early as June 28, they added, implicitly offering New Delhi a ten- week window to show a decline in Iranian oil imports.
Indian officials have contested the US assessment by insisting New Delhi is scaling down Iranian oil imports with more reduction in the pipeline, but that concession has been offset by India's commerce ministry's well-publicized efforts to ramp up trade with Iran in other areas, a move that has not gone unnoticed by the powerful pro-Israeli lobby in US.
The anti-Iran lobby in US has been galvanized by a report on Wednesday from the International Energy Agency (IEA), showing that India and South Korea "sharply" increased their oil imports from Iran in January.
India has enough time to show compliance since the US law relating to sanctions vis-a-vis Iran kicks in only if countries don't make a "significant" cuts in their Iranian crude oil purchases during the first half of this year. The law does not specify by what percentage a nation must reduce its imports to qualify for an exemption from sanctions, so countries like South Korea and Japan have been negotiating with Washington the quantum of cuts they can live with. India is also believed to be in discussion with U.S in this matter.
The Obama administration itself is in a bind over squeezing too hard and tightening oil supplies across the world. While Washington has offered to wean India and other countries from Iranian oil by arranging supplies from Saudi Arabia and Iraq, that could come at its own expense and rising oil prices. Already, gas prices are close to $ 4 a gallon at US pumps, and it is a well-acknowledged fact that the fortunes of US politicians running for high office is linked to pain (or otherwise) at the pump.
India has "failed" to reduce its purchase of Iranian oil and if it doesn't do so, President Barack Obama may be "forced" to impose sanction, unnamed administration officials were cited as telling Bloomberg wire service. A decision in this regard could come as early as June 28, they added, implicitly offering New Delhi a ten- week window to show a decline in Iranian oil imports.
Indian officials have contested the US assessment by insisting New Delhi is scaling down Iranian oil imports with more reduction in the pipeline, but that concession has been offset by India's commerce ministry's well-publicized efforts to ramp up trade with Iran in other areas, a move that has not gone unnoticed by the powerful pro-Israeli lobby in US.
The anti-Iran lobby in US has been galvanized by a report on Wednesday from the International Energy Agency (IEA), showing that India and South Korea "sharply" increased their oil imports from Iran in January.
India has enough time to show compliance since the US law relating to sanctions vis-a-vis Iran kicks in only if countries don't make a "significant" cuts in their Iranian crude oil purchases during the first half of this year. The law does not specify by what percentage a nation must reduce its imports to qualify for an exemption from sanctions, so countries like South Korea and Japan have been negotiating with Washington the quantum of cuts they can live with. India is also believed to be in discussion with U.S in this matter.
The Obama administration itself is in a bind over squeezing too hard and tightening oil supplies across the world. While Washington has offered to wean India and other countries from Iranian oil by arranging supplies from Saudi Arabia and Iraq, that could come at its own expense and rising oil prices. Already, gas prices are close to $ 4 a gallon at US pumps, and it is a well-acknowledged fact that the fortunes of US politicians running for high office is linked to pain (or otherwise) at the pump.
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