Budget 2012 - Draconian Customs Provisions Withdrawn
NORMALLY, the Finance Minister announces rollback of some of his budget proposals, while replying to the Budget Debate in Parliament. The FM this year broke the tradition and announced several concessions even while initiating the debate. This saves a lot of time of Parliament, as these issues need not be discussed now.
The FM has proposed several amendments in the Finance Bill 2012:
GAAR: - General Anti-Avoidance Rules :
1. Onus of proof now on the Department and not on the assessee.
2. One Member of the GAAR approving panel to be an officer of the level of Joint Secretary or above from the Ministry of Law.
3. Any taxpayer (resident or non-resident) can approach the Authority for Advance Ruling (AAR) for a ruling as to whether an arrangement to be undertaken by her is permissible or not under the GAAR provisions.
4. Applicability of GAAR provisions deferred by one year. They will apply from Financial Year 2013-14.
Retrospective Amendment in Income Tax: Clarificatory amendments relating to capital gains on sale of assets located in India through indirect transfers abroad, do not override the provisions of Double Taxation Avoidance Agreement (DTAA) which India has with 82 countries. It would impact those cases where the transaction has been routed through low tax or no tax countries with whom India does not have a DTAA . [Also known as the Vodafone amendment – the FM was in a ‘give away' mood; he should have withdrawn this provision also]
No TDS on Transfer of Immovable property: The Finance Bill proposes that every transferee of immovable property (other than agricultural land), at the time of making payment for transfer of the property, shall deduct tax at the rate of 1% of such sum. Please see our article TDS on purchase of immovable properties could lead to all around confusion. Now the FM has decided to withdraw this provision.
Excise Duty on unbranded jewellery - Country Not ready for GST? The 1% duty on unbranded precious metal jewellery was well intentioned and introduced not so much for raising revenue as for rationalization and movement towards GST. However, the outpouring of sentiment indicates that we are not ready for it. So, the FM has withdrawn this duty.
Draconian Customs Provisions withdrawn – but remain in Central Excise? Offences to be Bailable: There was a lot of protest against the provision introduced in the Finance Bill that bail can be granted only after hearing the Public Prosecutor. This provision is now to be deleted. Further, all offences under the Customs Act are now declared to be bailable. Now, only serious offences under the customs law involving prohibited goods or duty evasion exceeding Rs. 50 lakh, shall be cognizable. But the amendments proposed in Central Excise Act are not deleted as per the Amendment to the Finance Bill. We hope the Board will take care of this while the amendments are moved.
Service not to include deemed sale: Definition of “service” will exclude the activities specified in the Constitution as “deemed sale of goods”. The definition of “works contract” has also been enlarged to include movable properties.
Let us wait for the final amendments.