Direct tax proposals:
1. The basic general exemption limit hiked from INR 1.80 lakhs to INR 2.00 lakhs.
2. The upper limit for the 20% slab increased from INR 8 lakhs to INR 10 lakhs.
3. The proposed general slab for taxation would to Nil% for income up to INR 2 lakhs, 10% for income between INR 2 lakhs to INR 5 lakhs, 20% for income between INR 5 lakhs and INR 10 lakhs and 30% for income above INR 10 lakhs.
4. A deduction of up to INR 10,000 proposed for interest on SB account.
5. No requirement of filing IT returns for salaried employees having salary upt o INR 5 lakhs.
6. A deduction of INR 50,000 introduced under the Income tax act for investment in equity shares for retail investors having income below INR 10 lakhs. These investments will have a lock-in period of 3 years.
7. An additional deduction of INR 5,000 proposed for preventive health check up u/s 80D.
8. Senior citizens not having business income not required to pay any advance tax – thus reducing their compliance requirement.
9. No change in the corporate tax rates.
10. Withholding tax on ECBs reduced from 20% to 5%.
11. Remove the cascading effect of dividend distribution tax.
12. The turnover limit for income tax audit u/s 44AB increased from INR 60 lakhs to INR 100 lakhs (INR 1 crore).
13. The capital gain on sale of residential immovable property exempted if the gains are invested in subscription to equity of certain infra projects.
14. Weighted tax deduction available for R&D extended to another 5 years.
15. The STT rate reduced by 20% from 0.125% to 0.10% on delivery transactions.
16. Unexplained income and cash credits to be taxed at 30% irrespective of the tax slab of the assessee.
17. Allow reopening of tax assessments up to 15 years for overseas assets.
18. The direct tax proposals are estimated to leave a revenue loss of INR 4,500 crores.
Indirect tax proposals:
1. Seeking to widen the service tax net, introduced the negative list scheme whereby all services apart from those listed in the negative list to be subject to service tax.
2. Seventeen services included in the negative list, including power services, school education, renting of residential buildings, entertainment and amusement services, public transport etc. – surprisingly, even individual advocates providing services to non companies included in this list.
3. Common tax code introduced for service tax and excise – with a common simplified registration form and common return form called EST-1. The common return form will be a simplified one page return as compared to the present 15 page return.
4. The service tax rate increased from 10% to 12%.
5. The service tax proposals to yield INR 18,660 crores in revenue.
Excise duty and Customs:
1. The standard rate of excise duty increased from 10% to 12%.
2. No change in peak customs duty rates.
3. Full exemption on customs duty on coal.
4. Excise duty on large cars increased from 22% to 24%.
5. The 5% customs duty for equipments for fertilizer plants now exempted.
6. Thermal power companies exempted from customs duty for 2 years.
7. Coal and LNG exempt from customs duty.
8. Excise duty on iron ore machinery parts reduced from 7.50% to 2.50%.
9. Airline parts imports exempted from basic customs duty.
10. Basic customs duty on bicycles increased to 30%.
11. LCD and LED panels exempt from customs duty.
12. Basic Customs duty reduced on cigarettes. However, advalorem duty imposed on some cigarettes of more than 65mm length.
13. Excise duty increase on pan masala, tobacco and the packing material machinery for the same.
14. Customs duty on gold bars and coins raised to 4%.
15. Customs duty on refined gold raised to 3%.
16. Automated shuttle looms exempt from customs duty.
17. Brander silver jewellery exempt from excise duty.
18. Customs duty on imported cars pegged at 75%.
19. Customs duty on some medical devices cut.
20. The customs and excise proposals are expected to result in a revenue gain of INR 27,280 crores.