As the Budget speech comes to an end, we list down the quick takeaways for Non Resident Indians (NRIs). We will continue to bring you detailed analyses as finer aspects of the Finance Bill trickle in.
Budget 2012: Income tax ready reckoner after tax slab changes
In order to bring the provisions of the Finance Bill closer to those of the Direct Taxes Code ( DTC), the finance minister has done away with the distinction between "men" and "women" in so far the income exempt from tax is concerned. Both men and women have now be brought under "General" category with income upto Rs 2,00,000 exempt from taxes. In the 2011-12 budget, the finance minister had reduced the exemption gap between men and women when he had raised the limit for income exempt from taxes for men from Rs 1,60,000 to Rs 1,80,000 keeping the income exempt from taxes for women untouched at Rs 1,90,000. The table illustrates the impact on the taxable income of three broad categories--General, Senior Citizens (60-80 years) and Very Senior Citizens (80 years plus)....
Union Budget 2012-13: Higher customs duty on gold may not curb demand
Newdelhi,march16,2012: The doubling of customs duty to 4% on gold is unlikely to curb demand and consequently imports, which have aggravated the current account deficit. According to Madan Sabnavis, chief economist, CARE Ratings, domestic households traditionally consume gold to meet wedding season and festival demand and so a 2% hike in customs duty is unlikely to deter imports.But, if gold imports increase, the government would gain by higher revenues and if imports do drop because of the higher duty it would reduce downside pressure on the rupee, a win-win for the government on both counts, pointed out Sabnavis.
"Also, people tend to invest in alternate asset classes such as gold, when equities and real interest rates are under pressure,"" added Sabnavis. Finance minister Pranab Mukherjee said, ""One of the primary drivers of the current account deficit has been the growth of almost 50 per cent in imports of gold and other precious metals in the first three quarters of this year. I have been advised to strengthen the steps already taken to check this trend for better results.""I propose to increase basic customs duty on standard gold bars; gold coins of purity exceeding 99.5 per cent and platinum from 2 per cent to 4 per cent and on non-standard gold from 5 per cent to 10 per cent. In sync with these, basic duty on gold ore, concentrate and dore bars for refining is being enhanced from 1 per cent to 2 per cent. On the excise side, duty on refined gold is being increased in the same proportion from 1.5 per cent to 3 per cent.Rajesh Mehta, chairman, Rajesh Exports, said higher duty would not impact demand as people normally buy an asset whose price is on the rise rather than one which is falling.
Budget 2012: Cars will become more expensive tonight
MUMBAI: The finance minister Pranab Mukherjee hit a body blow on the struggling passenger car industry with a 2% increase in excise duty. The increased tax is likely to be passed on to the common man tonight and it will dent an already weakening sentiment. The government has increased the excise duty on large cars from 22 to 24%. However in what is a major reprieve for the auto industry, the finance minister did not slap any additional tax on the diesel cars. Car manufacturers, already reeling under the higher interest rates and fuel prices which has risen by almost Rs 14 over the last 12-24 months, saw sales of passenger vehicles grow by a mere 2.95% from April to February this year, after a heady growth of 29% in 2010-12. The increase in duties will impact demand, say experts. The excise duty increase will impact two wheeler industry and trucks have off late started showing signs of slowdown. After starting the day in red, the share price of Maruti Suzuki returned to green. The share price of Maruti Suzuki was up 0.26%, Tata Motors up 0.55% and M&M shot up over 2%, with the finance minister not slapping an additional tax on the diesel cars.
Measure: The government of India will now allow qualified foreign investors access to the Indian corporate debt market. Qualified foreign investors, or QFIs, can be individuals, groups or associations based abroad.
Impact: This proposal, when implemented will deepen the country's shallow bond market and also open up a lucrative avenue for foreign individual investors who are keen to participate in India's growth story. But, NRIs will hope for something more. On paper, NRIs were always permitted to invest in Indian corporate bonds. However, it required the issuing companies to enable the option for NRI investors with specific permission with the Reserve Bank of India. Often, companies chose not to do so, restricting access to NRIs. It is hoped that this move will also improve access for NRIs in the corporate bond market.
Impact: This proposal, when implemented will deepen the country's shallow bond market and also open up a lucrative avenue for foreign individual investors who are keen to participate in India's growth story. But, NRIs will hope for something more. On paper, NRIs were always permitted to invest in Indian corporate bonds. However, it required the issuing companies to enable the option for NRI investors with specific permission with the Reserve Bank of India. Often, companies chose not to do so, restricting access to NRIs. It is hoped that this move will also improve access for NRIs in the corporate bond market.
Measure: To introduce mandatory foreign asset reporting; income tax body to have powers to open previous returns of up to 16 years to check for tax evasion
Impact: While the intention of this proposal is to bring to book all those who have been evading taxes by stashing their money abroad, one fears that it will create unnecessary reporting requirements and needless harassment for NRIs who have returned to India after a long stint abroad.
Measure: Tax slabs have been changed to the following:
Up to Rs 2 lakh: NIL (earlier Rs 1.8 lakh)
Rs 2-5 lakh: 10%
Rs 5-10 lakh: 20% (earlier Rs 5-8 lakh)
Above Rs 10 lakh: 30% (earlier above 8 lakh)
Impact: For NRIs, as for all resident Indians, the tax liability will come down. A tax reduction of up to Rs
22,000 is likely on income of Rs 10 lakh.
Measure: The Direct Tax Code (DTC) which was expected to be implemented from April 2012, has been
deferred for now
Impact: This might come as a relief for NRIs as some of the provisions of the DTC were quite harsh. For instance, under the proposed DTC, any individual (including NRIs/PIO) will become resident, if they are present in India for 60 days or more in the financial year and 365 days or more over a period of four years prior to the financial year and would be liable to pay taxes on their global income. This proposal would have impacted all those NRIs who visited India frequently for personal or business purposes.
Impact: While the intention of this proposal is to bring to book all those who have been evading taxes by stashing their money abroad, one fears that it will create unnecessary reporting requirements and needless harassment for NRIs who have returned to India after a long stint abroad.
Measure: Tax slabs have been changed to the following:
Up to Rs 2 lakh: NIL (earlier Rs 1.8 lakh)
Rs 2-5 lakh: 10%
Rs 5-10 lakh: 20% (earlier Rs 5-8 lakh)
Above Rs 10 lakh: 30% (earlier above 8 lakh)
Impact: For NRIs, as for all resident Indians, the tax liability will come down. A tax reduction of up to Rs
22,000 is likely on income of Rs 10 lakh.
Measure: The Direct Tax Code (DTC) which was expected to be implemented from April 2012, has been
deferred for now
Impact: This might come as a relief for NRIs as some of the provisions of the DTC were quite harsh. For instance, under the proposed DTC, any individual (including NRIs/PIO) will become resident, if they are present in India for 60 days or more in the financial year and 365 days or more over a period of four years prior to the financial year and would be liable to pay taxes on their global income. This proposal would have impacted all those NRIs who visited India frequently for personal or business purposes.
Budget 2012: Income tax ready reckoner after tax slab changes
In order to bring the provisions of the Finance Bill closer to those of the Direct Taxes Code ( DTC), the finance minister has done away with the distinction between "men" and "women" in so far the income exempt from tax is concerned. Both men and women have now be brought under "General" category with income upto Rs 2,00,000 exempt from taxes. In the 2011-12 budget, the finance minister had reduced the exemption gap between men and women when he had raised the limit for income exempt from taxes for men from Rs 1,60,000 to Rs 1,80,000 keeping the income exempt from taxes for women untouched at Rs 1,90,000. The table illustrates the impact on the taxable income of three broad categories--General, Senior Citizens (60-80 years) and Very Senior Citizens (80 years plus)....
Union Budget 2012-13: Higher customs duty on gold may not curb demand
Newdelhi,march16,2012: The doubling of customs duty to 4% on gold is unlikely to curb demand and consequently imports, which have aggravated the current account deficit. According to Madan Sabnavis, chief economist, CARE Ratings, domestic households traditionally consume gold to meet wedding season and festival demand and so a 2% hike in customs duty is unlikely to deter imports.But, if gold imports increase, the government would gain by higher revenues and if imports do drop because of the higher duty it would reduce downside pressure on the rupee, a win-win for the government on both counts, pointed out Sabnavis.
"Also, people tend to invest in alternate asset classes such as gold, when equities and real interest rates are under pressure,"" added Sabnavis. Finance minister Pranab Mukherjee said, ""One of the primary drivers of the current account deficit has been the growth of almost 50 per cent in imports of gold and other precious metals in the first three quarters of this year. I have been advised to strengthen the steps already taken to check this trend for better results.""I propose to increase basic customs duty on standard gold bars; gold coins of purity exceeding 99.5 per cent and platinum from 2 per cent to 4 per cent and on non-standard gold from 5 per cent to 10 per cent. In sync with these, basic duty on gold ore, concentrate and dore bars for refining is being enhanced from 1 per cent to 2 per cent. On the excise side, duty on refined gold is being increased in the same proportion from 1.5 per cent to 3 per cent.Rajesh Mehta, chairman, Rajesh Exports, said higher duty would not impact demand as people normally buy an asset whose price is on the rise rather than one which is falling.
Budget 2012: Cars will become more expensive tonight
MUMBAI: The finance minister Pranab Mukherjee hit a body blow on the struggling passenger car industry with a 2% increase in excise duty. The increased tax is likely to be passed on to the common man tonight and it will dent an already weakening sentiment. The government has increased the excise duty on large cars from 22 to 24%. However in what is a major reprieve for the auto industry, the finance minister did not slap any additional tax on the diesel cars. Car manufacturers, already reeling under the higher interest rates and fuel prices which has risen by almost Rs 14 over the last 12-24 months, saw sales of passenger vehicles grow by a mere 2.95% from April to February this year, after a heady growth of 29% in 2010-12. The increase in duties will impact demand, say experts. The excise duty increase will impact two wheeler industry and trucks have off late started showing signs of slowdown. After starting the day in red, the share price of Maruti Suzuki returned to green. The share price of Maruti Suzuki was up 0.26%, Tata Motors up 0.55% and M&M shot up over 2%, with the finance minister not slapping an additional tax on the diesel cars.