India: 2012-13 Budget

March 30, 2012

India’s 2012 Budget was announced by the Finance Minister on March 16. Among the highlights of amendments which will be effective April 1:

  • No change to corporate tax rates
  • No real advance on last year’s GST proposals
  • Hike in Service Tax from 10% to 12%
  • Significant changes to international tax and cross border transactions which will, in sum, make it more difficult for nonresidents to do business in India.
  • Controversial retrospective amendments which would overrule several existing judgments. (Note: these are in proposal stage as of 3/19.)
  • The introduction of general anti-avoidance rules (GAAR) provisions
  • Measures to prevent generation and circulation of unaccounted money
  • Several Transfer Pricing-related amendments, including the introduction of Advance Pricing Arrangements, clarifications regarding applicability of the Arm’s Length Principle, and extension of certain filing deadlines.
  • New incentive regimes
  • Proposed 10% tax on income of company directors

Please see this helpful overview from Deloitte for more detailed information. Contact us with any questions regarding the impact on your operations in India.

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