Sunday, March 11, 2007

BUDGET 2007-08 HIGHLIGHTS

Direct tax proposals


  • Income Tax Exemption limit increased by Rs. 10,000/- for individuals across the board

  • Individuals (Men) Limit Rs. 1,10,000/-

  • Individuals (Ladies) Limit Rs. 1,45,000/-

  • Senior Citizens Limit Rs. 1,95,000/-

  • Section 80 D limit raised to Rs. 20,000/- for Senior Citizens and Rs. 15,000/- for others.

  • Dividend distribution tax on Companies raised to 15 per cent.

  • Dividend Distributon Tax on Money Market Mutual Funds raised to 25%

  • ESOPs to be brought under FBT.

  • Expenditure on samples and free distribution items to be exempted from fringe benefit tax.

  • Additional revenue from direct taxes to yield Rs 3000 crore and indirect taxes revenue neutral.

  • Tax exemption on aviation turbine fuel sold to turbo prop aircraft extended to all small aircraft less than 40,000 kg.

  • Withdrawals by central and state governments exempted from Banking Cash Transaction Tax. The limit for individuals and HUF raised from Rs 25,000 to Rs 50,000.

  • 1% Additional Secondary Education Cess introduced across the board

  • Corporate Tax Rates Unchanged

  • No surcharge for SMEs (firms and Companies with a taxable income of Rs 1 crore or less).

  • Tax free bonds to be issued by state-owned urban local bodies.

  • Five year tax holiday for two, three, four star hotels and convention centres with a seating capacity of 3,000 in NCT of Delhi, Gurgaon, Ghaziabad, Faridabad and Gautam

  • Minimum Alternate Tax being extended to I-T companies.

  • Benefits of investment in venture capital funds confined to IT, bio-technology, nano-technology, seed research, dairy among some others.

Service Tax Proposals


  • No change in service Tax Rates

  • Exemption limit for small service providers from Rs 4 lakh to Rs 8 lakh. Two lakh people to benefit out of service tax exemption. Govt to lose Rs 800 crore as a result.

  • Service tax on Residents Welfare Associations whose members contribute more than Rs 3,000.

  • New Services under Service Tax Net

  • Services outsourced for mining of mineral, oil or gas;
    Renting of immovable property for use in commerce or business; however, residential properties, vacant land used for agriculture and similar purposes, land for sports, entertainment and parking purposes, and immovable property for educational or religious purposes will be excluded;

    Development and supply of content for use in telecom and advertising purposes;

    Asset management services provided by individuals; and

    Design services.


Indirect Tax Proposals


  • Peak Rate For Non Agricultural Products From 12.5% to 10%

  • Second and defective steel from 20% to 10%

  • No Duty on Coking Coal

  • Customs duty on Polyster Fibre and Yarns down to 7.5%

  • Duty on Cut and Polished diamonds from 5 to 3%

  • Dredgers to be exempt from import duty

  • Duty on Drip Irrigation, Agricultural Sprinklers and Food processing machinery from 7.5% to 5%

  • General rate on medical equipment to 7.5%

  • Duty on Sunflower Oil down 15 percentage points

  • Duty on pet foods down from 30 to 20%

  • Excise No change in Excise Rates

  • Ad-valorem component on petrol and diesel down from 8% to 6%

  • Excise & Service Tax:Relief for deserving cases in job creating sectors

  • SSIs exemption from Rs 1 crore to Rs 1.5 crore

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