Budget 2012 – Impact on Professionals

Proposed budget has laid various positive and negative impacts on the income of the professionals. We will provide you with the changes in budget which will have impact on professionals.

Tax Slab Amended

Amended tax slab will now save more money in the pocket of the professionals. The basic exemption limit has been raised from Rs.1.8 lacs to Rs.2 lacs. Those professionals falling in 20 percent tax slab are more benefited as rate has been increased from 5 to 8 lacs.

Changes in Indirect Taxes

Indirect taxes like Service taxes and Excise duty has been increased in the new budget. Both service tax and excise duty has been increased to 12 per cent which will have a negative impact on professionals.

  • Service Tax – The rate of service tax have increased from 10 to 12 per cent. Due to increase in service tax now eating out, shopping, traveling, accommodation in hotels will become more costly. Savings will thus be curtailed.
  • Excise duty – Increase in the rate of excise duty will also have negative impact on the professionals. Due to increase in excise duty cigarettes, computers, mobile phones, diesel cars will become more costlier.

Audit Limit increased

Limit for getting books audited has been increased from Rs.15 lacs to Rs.25 lacs for professionals. Every person carrying on a profession is required to get his accounts audited, if the total sales or the gross receipts exceed Rs.25 lacs in the previous year. This amendment will be effective from 1st April, 2013.

No More Presumptive Taxation Scheme u/s 44AD

In budget, professionals are excluded from the presumptive taxation scheme u/s 44AD. The impact on professionals is that they will no longer enjoy this scheme under this Section as per the new budget proposal. This amendment is to take effect retrospectively from 1st April, 2011 and will, accordingly, apply in relation to the assessment year 2011-12 and subsequent assessment years.

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