Bulletin Details

Restructuring of I.T. Department, Notified index cost price for financial year 2001-2002 is 

BUDGET HIGHLIGHTS

Major clauses are:

• All surcharges payable by corporate and non corporate removed except the surcharge of 2 % for relief to earthquake hit areas of Gujarat.

• Individuals and HUFs having an income of upto Rs. 60000/- will not subject to any surcharge.

• Value of perquisites, benefits or amenities shall be determined on the basis of their cost to the employer, except in respect of houses and cars where different criteria will be adopted for simplicity.

• Salaried persons having income upto Rs. 1,00,000/- to get an enhanced tax rebate at the rate of 30% in respect of eligible investments under section 88 of Income - tax Act, as against 20% at present provided the gross salary income forms 90% of Gross Total Income.

• Interest income exemption under section 80L reduced to Rs. 9,000/- in place of present limit of Rs. 15, 000/-, (Rs. 12,000/- + Rs. 3,000/- from Government Securities).
  
• Tax payable on distribution of dividends of domestic companies and income in respect of Units of Mutual Funds and UTI reduced from 20% to 10%.
  
• Long -term capital gains arising from the sale of securities and Units shall be exempt if such gains are reinvested in primary issue of shares of public companies. However if the newly acquired shares are sold within a period of one year from the date of acquisition then the cost of newly acquired shares will be charged to tax in the year of Sale or Transfer.
  
• Accelerated depreciation at the rate of 50% on new commercial vehicles for one year.
  
• Deduction available for the interest payable on housing loans for self occupied houses increased from rupees one lakh to rupees one and a half lakhs.
  
• Deduction of 25% of annual value for repairs, etc. from income from house property increased to 30%. No other deduction except interest on loan will be allowed.
  
• Deduction or rebate on payments of LIC premium extended to all insurance companies that have been approved by the Insurance Regulatory and Development Authority.
  
• One -by- six Schemes extended to all urban areas in the country as defined by the 1991 Census. Change arising out of the 2001 Census will be incorporated subsequently.
  
• All companies should file their returns even if they incur a loss.
  
• TDS at the rate of 10% on income by way of commission or brokerage exceeding Rs. 2,500/- except on transactions relating to shares and securities.
  
• Winnings from lotteries, crossword puzzles, etc. to be taxes at 30% instead of 40%.
  
• TDS from winnings of TV game shows and similar game show at 30%., w.e.f. 01.06.2001.
  
• TDS from income from interest on time deposits reduced to Rs. 2,500/- from Rs. 10,000/- in respect of deposits with a Bank or Housing Finance Company and Rs. 5,000/- in other cases.
  
• Requirement to obtain a Tax Clearance Certificate under section 230A from the Assessing Officer before transfer of immovable property being done away with.
  
• Under Section 54EC, exemption on long - term capital gains can be claimed by investments made in bonds issued by Rural Electrification Corporation.
  
• The tax planning usually resorted by large corporate houses and termed " dividend stripping" is now taken care of by the Finance Bill. Any loss made in dealing with securities within a period of three months after the record date for payment of dividends, specifically where the securities were acquired within the period of 3 months preceding the record date, the amount of loss shall be ignored to the extent of dividend or income earned from such securities.
  
• A time limit of 1 year from the end of the Financial Year in which the return is filed has been set for issue of intimation alongwith refund / demand notice, instead of 2 years earlier. Similarly for re-opening of Returns U/s. 148 a time limit has been set as 4 or 6 years depending on the authority instead of 4, 6 or 10 years earlier.
• For the rectification assessment time limit has been set of 6 months in stead of 4 years earlier w.e.f. 01.06.2001 from the end of the month in which application has been filed. Similar reduction in time limits has been proposed in respect of Wealth Tax Act also.
  
• The Assessing Officer shall not have powers for withholding of refunds.
  
• Amendment have been proposed to reduce the rate of interest chargeable to the Assessee under various Sections of the Act to 15% per annum e.g. 234A, 234B etc.
  
• Interest payable to the Assessee shall now be calculated under section 244A at 9% per annum.
  
• Print Out or Data stored in floppy disc has also been recognized as books or books of accounts.
  
• Due dates filling of I.T. Return has been changed w.e.f. Asst. Yr. 2001-2002.

  Corporate Assessee - 31st October of Asst. Yr.

  Other Assessee - 31st July of Asst. Yr.

  A penalty of Rs. 5,000/- has been imposed for non-filing of return within due date for return filed under 1/6 criteria and within assessment year for others. Which was Rs. 500/- and Rs. 1000/- earlier.

  Tax Audit Report is also required to be filed by the due date as above.

• Fixed amounts have been suggested under the recommendations of the current Finance Bill of penalties which are as follows :-

  Penalty of Rs. 10,000/- for failure to comply with certain notices and directives in course of certain proceedings;

  Penalty of Rs. 25,000/- for failure of persons carrying on professions or businesses to keep and maintain books of accounts and documents U/S. 271A.

  Penalty of Rs. 10,000/- for failure to answer questions, produce books of accounts, etc. as required U/S. 272A.

  Penalty of Rs. 10,000/- for failure to apply for tax deduction account number or quote the same. U/S. 272BB.

• Maximum tax on Co-operative Societies reduced from 35% to 30%.
  
• 100% deduction for donations to the National Trust for welfare of persons with autism, cerebral palsy, mental retardation and multiple disabilities.
  
• Power to approve educational and medical institutions for claiming tax exemption delegated by CBDT to CCITs.
  
• Tax on profit from domestic sales in case of Export Oriented Units, and units located in Export Processing Zones, Free Trade Zones and Software Technology Parks.
  
• Profit derived by the units located in the Software Technology Parks from the export of "on-site" service will be eligible for deduction like their other export income. Units located out side these zones will also get the benefit of tax exemption on such export earnings.
  
• Condition relating to transfer of ownership of companies in sections 10A and 10B of the Income -tax Act shall not apply in respect to companies in which public are substantially Interested.
  
• Tax exemption available to the Income of NABARD, National Housing Bank and Small Industries Development Bank of India (SIDBI) withdrawn.
  
• Tax exemption in respect of interest paid on certain External Commercial Borrowings will not be available for such borrowings made on or after the first day of June, 2001.
  
• 10-year tax holiday for the core sectors of infrastructure namely, roads highway, rail system, water treatment and supply, irrigation, sanitation and solid waste management system may be availed of during the initial twenty years.
  
• In the case of airports, ports inland ports and waterways, industrial parks and generation and distribution of power, tax holiday of 10years may be availed of during the initial fifteen years. The period of commencement of business for power and industrial parks is also being extended up to 31 March 2001.
  
• Five years tax holiday and 30% deduction for next 5years available to telecommunications reintroduced retrospectively from 1st April, 2000 for the units commencing their operations on or before 31st march, 2003.These concessions extended to internet service providers and broadband networks.
  
• Tax exemptions to guarantee commissions and credit enhancement fees earned by financial institutions from infrastructure enterprises. Co-operatives Banks will also be eligible for exemption of their income from investments in approved infrastructure facilities.
  
• Weighted deduction of 150% for investment and expenditure on biotechnology as well as for clinical trials, filing patents and obtaining regulatory approvals.
  

• The entire amount paid to specify projects under the India Millennium Mission, 2020 will be eligible for125% weighted deduction.

• The concessions available for infrastructure by way of ten year tax holiday will be available to the developers of Special Economic Zones on the same lines as developers of industrial parks. The Income of investors making long-term investment for development of SEZs will also be exempt.
  
• Tax holiday for five years and 30% deduction of profits for next five years to the enterprises engaged in integrated business of handling, transportation and storage of food-grains.
  
• Development allowance available for tea increased from 20% to 40%. The additional allowance will be used only for re-plantation, rejuvenation and modernization of tea plantations and processing facilities.
  
• Depreciation in respect of ships and inland water vessels increased to 25%.
  
• Acceleration depreciation at the rate of 50% on plants and machinery in weaving, processing and garment sectors of textile industry purchased under the Technology Upgradation Fund Scheme.
  
• Foreign telecasting channels to be taxed in India, on their income computed in accordance with the provisions of the Income-tax Act.
  

 

 

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