Thursday, March 8, 2007

BUDGET HIGHLIGHTS - Sectionwise


INCOME TAX



































































Section

Subject

Effective Date

Changes

Tax Rates

Income Tax Slabs for Individuals increased By Rs. 10000/- for each Class

Surcharge on Income Tax for Firms and domestic Companies to be applicable if total income exceeds 1 Crore


2(14)(ii)

Personal Effects

01-04-2008

Apart from jewellery, archaeological collections, drawings, paintings, sculptures and any work of art are also excluded from the definition of personal effect

9

Income deemed to accrue or arise in India

01-06-1976

Income payable i.e., royalty, interest and fees for technical services shall be included in the total income of the non-resident, whether or not the non-resident has a residence or place of business or business connection in India.?.

10

Compensation received by  individual or his legal heir for Disasters

01-04-2005

Exempted from Tax on the condition that no deduction has been allowed under IT Act.


Disaster has been defined in clause (d) of section 2 of the Disaster Management Act, 2005 as under


"disaster" means a catastrophe, mishap, calamity or grave occurrence in any area, arising from natural or man made causes, or by accident or negligence which results in substantial loss of life or human suffering or damage to, and destruction of, property, or damage to, or degradation of, environment, and is of such a nature or magnitude as to be beyond the coping capacity of the community of the affected area?


10(23C)

Income of Funds and Trusts etc.

01-06-2007

Requirement of notification by Central Govt. replaced by approval from Prescribed Authority for charitable and/or religious institutions. 

10(23FB)

Venture capital

01-04-2008

Venture Capital Undertaking has been defined in the Act it self. Hitherto they were defined by Securities and Exchange Board of India (Venture Capital Funds) Regulations, 1996. The requirement of notification removed.

10AA

Newly established Units in Special Economic Zones

10-02-2006

Splitting up, or the reconstruction of a business already in existence except in accordance with section 33B  or business formed by transfer of machinery or plant previously used shall not qualify  for this section.


12A


01-06-2007

Section has been reorganized including marginal heading which now stands as ?Conditions for applicability of sections 11 and 12.?;


17(2)(ii)

Perquisites

01-04-2004

Explanation added to define deemed concession in the matter of rent for accommodation provided by employer

35(5)

Expenditure on scientific research

01-04-2008

Benefit extended to expenditure incurred till 31.03.2012

36 (ib)

Insurance premium paid by employer

01-04-2008

Requirement of payment by cheque replaced by ?paid by any mode of payment other than cash?


36 (viia)

Provision for bad and doubtful debts

01-04-2008

Co-operative bank other than a primary agricultural credit society or a primary co-operative agricultural and rural development bank covered for deduction for provisions.




































































36(viii)

Deduction for special reserve created and maintained


01-04-2008

New section substituted for the older one. Now in respect of any special reserve created and maintained by a specified entity, up to 20% of the profits are allowed as deduction

Specified Entity  would mean financial corporation specified in section 4A of the Companies Act, 1956, financial corporation which is a public sector company, banking company, co-operative bank other than a primary agricultural credit society or a primary cooperative

agricultural and rural development bank, housing finance company and other financial corporation including a public company

?Eligible business? would mean providing long term finance for industrial or agricultural development or development of infrastructure facility, or construction or purchase of houses for residential purposes, depending upon the entity.

36(xii)

Expenditure incurred by a corporation

or a body corporate


01-04-2008

Requirements of the corporation or body corporate being notified by the Central Government is added

40A(3)

Payment by account payee cheque/draft

01-04-2008

Whole of the expenditure have been made disallowable

49(2AB)

cost of acquisition


01-04-2008

For capital gain purpose, cost of sweat equity shares shall be the value under clause (ba) of sub-section (1) of section 115WC


54EC

Capital Gain Bonds

01-04-2007

Total Investment in a year not to exceed Rs. 50 Lakhs

72A

Carry Forward or Set off in Amalgamation/Demerger


01-04-2008

Public sector company or companies engaged in the business of operation of aircraft with one or more public sector company now covered under the section.



80CCD


01-04-2008

Employer other than central Govt now covered

80D


01-04-2008

Limit Increased to Rs. 15000

80E

Deduction in respect of interest on loan taken for higher education

01-04-2008

Now deduction is available even for the higher education of spouse and children.


80IA

profits and gains from industrial undertakings

01-04-2008

cross-country natural gas distribution network activity now covered


navigational channel in the sea covered in infrastructure


date for generating or transmitting or distributing power extended to 31.03.2008


undertaking carrying on the business of laying and operating a cross-country natural gas distribution network, including pipelines and storage facilities covered on fulfilling certain conditions


deduction to be available to enterprise or undertaking which

is transferred in a scheme of amalgamation or demerger on or after the 1st day of April, 2007


section not to apply to a person who executes a works contract entered into with the undertaking or enterprise.


80IB

industrial undertakings other than infrastructure development undertakings

01-04-2008

Period to begin manufacture or produce articles or things or to operate its cold storage plant or plants by industrial undertaking in the State of Jammu and Kashmir extended till 31.03.2012






































































80 ID

New Section inserted

01-04-2008

Hundred per cent deductions for business of hotel, business of building, owning and operating a convention centre .



92CA

Reference to pricing Officer

01-06-2007

Time limit for making order specified

115JB

MAT

01-04-2008

Book Profit not to include expenditure /income relatable to section 10A or 10B

115O

Tax on distributed profits of domestic companies

01-04-2008

Tax rate increased to 15% from 12.50%

115R

Tax on distributed income to unit holders

01-04-2008

25% tax on Money Market Mutual Fund

115WB

Fringe Benefits

01-04-2008

-specified security including ESOP and sweat equity shares covered

- display of products excluded from sales promotion

- free samples of any kind excluded from sales promotion

115WJ

Advance FBT

01-06-2007

Differentiation is done for Advance Tax payable for companies and non companies

For Companies

On or before the 15th June          Not less than fifteen per cent. of                                             such advance tax.

On or before the 15th September             Not less than forty-five per cent.

                                                Of such advance tax as

                                                reduced by the amount, if any,

                                                paid in the earlier instalment.

On or before the 15th December  Not less than seventy-five per

                                                cent. Of such advance tax as                                                 reduced by the amount or

                                                amounts, if any, paid in the

                                                earlier instalment or

                                                instalments.

On or before the 15th March        The whole amount of such

                                                advance tax as reduced by the                                                 amount or amounts,if any, paid

                                                in the earlier instalment or

                                                instalments;


Assessees -other than companies

On or before the 15th September             Not less than thirty per cent. of

                                                Such advance tax.

On or before the 15th December Not less than sixty per cent. of

                                                Such advance tax as reduced

                                                by the amount, if any, paid in                                                 the earlier instalment.

On or before the 15th March        The whole amount of such

                                                advance tax as reduced by the                                                 amount or amounts, if any, paid                                         &nbs! p; in the earlier instalment or

                                                instalments.

Interest for delayed payments to be paid accordingly

132B

Interest payable by Govt on money siezed

01-04-2006

Interest rate modified to .50% per month from 6% p.a.

139(9)

Defective Return

01-06-2006

Power of condone they delay taken away.

139C

&

139D

New section inserted

01-06-2006

Conseque nt  to e-filing scheme

142

Special Audit

01-06-2007

Reasonable opportunity of being heard to be provided to assessee

Expenses and cost of  the Audit to be paid by  Central Govt.

153, 153B

Time limit for completion of assessments

01-06-2007

Consequent to amendment in section 92CA



























































172

Shipping Business


Time limit for making order specified.

193


01-06-2007

8% Savings (Taxable) Bonds, 2003 exempted


194A

TDS-Interest

01-06-2007

Limit increased to Rs. 10000/- for deposits with:

-Banks

-co-operative society engaged in the business of banking;

-post office under any scheme framed by the Central Government

 and notified by it in this behalf;


194C

TDS-Contactors

01-06-2007

Now even Individuals and HUF covered under section 44AB are liable to deducted TDS on payments to contractor except where such sum is credited or paid exclusively for personal purposes of such individual or any member of Hindu undivided family.?.


194H

TDS-Commission or Brokerage

01-06-2007

-Rate increased to 10%

- BSNL and MTNL exempted to deduct on commission or brokerage

   Payable to their public call office franchisees

194I

TDS - Rent

01-06-2007

New rates Specified

- ten per cent. for the use of any machinery or plant or equipment;

- fifteen per cent. for the use of any land or building (including 

   factory building) or land appurtenant to a building (including

   factory building) or furniture or fittings where the payee is an

    individual or a Hindu undivided family; and

-  twenty per cent. for the use of any land or building (including

   factory building) or land appurtenant to a building (including

   factory building) or furniture or fittings where the payee is a  

   person  other than an individual or a Hindu undivided family:?.

194J

TDS-Professional/ Technical Fee

01-06-2007

Rate increased to 10% from 05%

245A-245M

Settlement of Cases

01-06-2007

Miscellaneous Amendments

254

Orders of Appellate Tribunal

01-06-2007

Various amendments relating to period for disposal.

271 (1)(c)

Penalty

01-04-2003

Taxes paid to be deducted to arrive at maximum penalty in certain cases.

01-06-2007

New Explanation 5,

Where in the course of a search initiated under section 132 on or after the 1st day of June, 2007, the assessee is found to be the owner of,?

(i) any money, bullion, jewellery or other valuable article or thing (hereinafter in this Explanation

referred to as assets) and the assessee claims that such assets have been acquired by him by

utilizing (wholly or in part) his income for any previous year; or

(ii) any income based on any entry in any books of account or other documents or transactions

and claims that such entry in the books of account or other documents or transactions represents

his income (wholly or in part) for any previous year,

which has ended before the date of the search and the due date for filing the return of income for

such year has expired and the assessee has not filed the return, then, notwithstanding that such

income is declared by him in any return of income furnished on or after the date of the search, he

shall, for the purposes of imposition of a penalty under clause (c) of sub-section (1) of this section,

be deemed to have concealed the particulars of his income or furnished inaccurate particulars of

such income.?.













292C

New Secion- Presumption

as to assets, books of

account, etc.


01-10-1975

Where any books of account, other documents, money, bullion, jewellery or other valuable article or thing are or is found in the possession or control of any person in the course of a search,

it may, in any proceeding under this Act, be presumed?

(i) that such books of account, other documents, money, bullion, jewellery or other valuable article or thing belong or belongs to such person;

(ii) that the contents of such books of account and other documents are true; and

(iii) that the signature and every other part of such books of account and other documents which purport to be in the handwriting of any particular person or which may reasonably be assumed to have been signed by, or to be in the handwriting of, any particular person, are in that person?s handwriting, and in the case of a document stamped, executed or attested, that it was duly stamped and executed or attested by the person by whom it purports to have been so executed or attested.?.



SERVICE TAX












































Section

Subject

Effective Date

Changes

Basic exemption limit enhanced to Rs. 8 lakhs

65(20)

Definition

As Per Notification

Cab Redefined to mean:

(i) a motorcab, or

(ii) a maxicab, or

(iii) any motor vehicle constructed or adapted to carry more than twelve passengers, excluding the driver, for hire or reward:

 However maxicab or motor vehicle for use by an educational body

other than a commercial training or coaching centre,Not included in above

Marriage included in event management

maintenance or repair to include maintenance of computer software

Management or business consultant redefined to cover financial management, human resources management, marketing management, production management, logistics management, procurement and management of information technology resources or other similar areas of management

Social function to includes marriage

New definitions :

design services

development and supply of content

renting of immovable property

telecommunication service

105

Taxable Services


Services to subscribers by telegraph authority excluded.

Services by consulting engineer relating to computer hardware engineering included

recruitment or supply of manpower includes services in relation to prerecruitment screening, verification of the credentials and antecedents of the candidate and authenticity of documents submitted by the candidate


New Services covered


Services by the telegraph authority in relation to telecommunication service

Services by any other person in relation to mining of mineral, oil or gas

execution of a works contract, excluding works contract in respect of roads, airports, railways, transport terminals, bridges, tunnels and dams.


























development and supply of content for use in telecommunication services, advertising agency services and on-line information and database access or retrieval services

asset management including portfolio management and all forms of fund management; except by a banking company or a financial institution including a non-banking financial company or any other body corporate or commercial.

Design services excluding interior decorator &fashion designer

70

Late fee for Delayed return


late fee not exceeding two thousand rupees, for delayed furnishing of return.


SECONDARY AND HIGHER EDUCATION CESS,







Secondary and Higher Education Cess at the rate of one per cent., to be charged in addition to education cess









BANKING CASH TRANSACTION TAX


For individuals limit extended to Rs. 50000/-