BUDGET HIGHLIGHTS (2002-2003)

 GENERAL:

 Ø     Surcharge at 5% on all categories of taxpayers, except Individuals & Hindu Undivided Families having total income upto Rs. 60,000 introduced.

Ø     Penalty of Rs. 10,000 in all cases where a false P.A.N. is quoted in documents relating to specified transactions.

Ø     Rate of T.D.S against payment of commission or brokerage reduced to 5% instead of 10% (With effect from 01/06/2002 ).

Ø     Interest paid to partner under Sub-Clause IV of Clause (b) of Section 40 reduced to 12% instead of earlier 18% (With effect from 01/06/2002 ).

Ø     Long Term Capital Loss can be adjusted against Long Term Capital Gain only.

Ø     Value adopted for stamp duty purposes to be deemed as full value of consideration for capital gain purposes in certain cases.

Ø     Authorisation to assessing officer for issue of notice in respect of payment of Advance Tax (With effect from 01/06/2002 ).

Ø     Introduction of Limited Scrutiny System vis-à-vis Conversion into Comprehensive Scrutiny if required (With effect from 01/06/2002 ).

Ø     Impounding & retaining Books of accounts & other documents inspected during survey U/s 133A for 15 days by Inspector.

Ø     Restrictions of deductions upto 90% of profit for units in FTZ, HTP, SEZ, etc  U/s 10A instead of 100% previously.

Ø     Restrictions of deductions upto 90% of 100% E.O.U for Assessment year 2003-04 instead of 100% earlier.

Ø     Additional depreciation at the rate of 15 per cent allowed on new plant and machinery acquired on or after 1st April, 2002 for setting up a new industrial

Unit, or for expanding the installed capacity of existing units by at least 25 percent.

Ø     Chapter XXC regarding pre-emptive purchase of immovable properties not applicable to transfers effected after 01/07/2002 .                                                                                                      

Ø     Revised schedule of depreciation rates to be notified after taking into account public views.

Ø     Capital gains exemption under section 54EC allowed on amounts invested in bonds issued by SIDBI and NHB.

Ø     Expenditure Tax on hotels to apply only to room charges exceeding Rs. 3,000 per day.

Ø     Interest paid to assesses in refund cases reduced to 8% instead of  9% (With effect from 01/06/2002 ).

   

INDIVIDUAL/H.U.F.

 Ø     Taxable income between Rs. 1,50,000 and Rs. 5lakhs to get a rebate of only 10% under Section88 of the amount invested. No rebate where taxable income exceeds Rs. 5lakhs.

Ø     For the Assessment year 2002-2003 no perquisites will be assessed in   the case of employees whose taxable salary, excluding perquisites is upto    Rs. 1,00,000. For subsequent years, option given to the employer to pay the    tax on perquisites provided to employees. However such tax paid by the      employer will not be allowed as expenditure in the hands of employer U/s 40   under I.T. ACT.

Ø     Introductions of almost all provisions relating to T.D.S by an individual and H.U.F whose accounts are audited U/s. 44AB (With effect from 01/06/2002 ).

Ø     Income from U.T.I/Mutual funds/Dividends received from companies taxable (With effect from Assessment year 2003-2004).

 

CORPORATE:

 Ø     No income tax on distribution of dividends. However T.D.S at the rate of 10% to be deducted from dividend.

Ø     Re-introduction of Section 80M – dividend income exempt upto dividend distributed subject to certain conditions.

Ø     Separate audit for claiming deductions U/s 80IA/80IB.

Ø     Rate applicable to foreign companies reduced from 48 percent to 40 percent.

Ø     Deduction against provisions for bad and doubtful debts by banks increased to7.5 % of the total income. Optional deduction of 5% of NPAs falling in the category of loss or doubtful assets enhanced to 10 %. Similar option given to public financial institutions.

Ø     Deduction of 50% of the profits earned by units constructing and operating multiplex theatres in non-metropolitan towns allowed for the next five years.                                                                                                                                                  

SERVICE TAX:

 Ø    Service Tax @ 5% imposed on following services:-

i). Life-insurance, including insurance auxiliary service relating to life                                     insurance.

   ii). Cargo handling (only inland cargo).

  iii). Storage and warehousing services (except for agriculture produce and cold  storage).    

  iv). Event Management.

   v). Rail travel agents.

  vi). Health Club & Fitness Centres.

 vii). Beauty parlours.

viii). Fashion Designers.

  ix). Cable Operators. 

   x). Dry cleaning services.