Budget Highlights

DIRECT TAXES

New Tax Slab Rates

• Threshold limit of exemption from personal income tax in the case of all assesses increased to Rs.150,000. The slabs and rates of tax are :

• Up to Rs.150,000 NIL
• Rs.150,001 to Rs.300,000 10 per cent
• Rs.300,001 to Rs.500,000 20 per cent
• Rs.500,001 and above 30 per cent

• In case of a woman assessee, the  limit increased from Rs.145,000 to Rs.180,000;
• For a senior citizens, the threshold limit increased from Rs.195,000 to Rs.225,000.
• No change in the corporate income tax rates.
• No change in the rate of surcharge.

Short Term Capital gain tax on Shares @ 15%

• Rate of tax on short term capital gains under Section 111A & Section 115AD increased to 15 per cent.

Income from Nursery is now Agricultrual Income

• Tax income arising from saplings or seedlings grown in a nursery exempted.

Section 80-D: Mediclaim

• Additional deduction of Rs.15,000 allowed under Section 80D to an individual paying medical insurance premium for his/her parent or parents.

Section 80-IB

• Hospitals : Insert a new sub-section (11C) in Section 80-IB to grant a five year tax holiday to hospitals located in any place outside the urban agglomerations especially in tier-2 and tier-3 towns; this window will be open for the period April 1, 2008 to March 31, 2013.

• Hotels: Five year holiday from income tax being granted to two, three or four star hotels established in specified districts having UNESCO-declared 'World Heritage Sites'; the hotel should be constructed and start functioning during the period April 1, 2008 to March 31, 2013.

Divident Distribution Tax U/s 115-O

• Parent company allowed to set off the dividend received from its subsidiary company against dividend distributed by the parent company; provided that the dividend received has suffered DDT and the parent company is not a subsidiary of another company.

MAT U/s 115JB

• Dividend Distribution Tax & Deferred Tax allowed as deduction U/s 115JB to calculate Book Profits  U/s 115JB or MAT with retrospective effect  from  01-4-2001

Due Date of filing of Income Tax returns

• Due date for Companies, Firms and Individuals requiring Audit changed from 31^st October to 30^th September.

Period of service of Notice U/s 143(2) for Scrutiny Assessment.

• Time limit for issue of scrutiny notice reduced to 6 months from 12 months from the month of filing of ITR.
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STT allowable expenditure

• STT paid to be treated like any other deductible expenditure against business income; Levy of STT, in the case of options to be only on premium, where the option is not exercised; liability to be on the seller; where the option is exercised, levy to be on the settlement price and the liability on the buyer; no change in the present rates.

CTT (New Tax)

• Commodities Transaction Tax (CTT) to be introduced on the same lines as STT on options and futures.

FBT

• Crèche facilities, sponsorship of an employee-sportsperson, organising sports events for employees and guest houses excluded from the purview of FBT.

BCTT withdrawn wef 1-4-2009

• Banking Cash Transaction Tax (BCTT) being withdrawn with effect from April 1, 2009.

SERVICE TAX

• Threshold limit of exemption for small service providers increased from Rs.8 lakhs per year to Rs.10 lakh per year;

• Four services brought under service tax net namely,
• Asset management service provided under ULIP
• Services provided by stock/commodity exchanges and clearing houses;
• Right to use goods, in cases where VAT is not payable;
• Information Technology Software Service.

• Service Tax Return Preparer Scheme Launched.

• Service Tax Dispute Resolution Scheme Lauched.

• Penalty of Rs.5,000/- is Service Tax not deposited electronically, where it is mandatory.

EXCISE DUTY

• Basic Cenvat  rate of excise duty reduced to 14% from 16%

CST

·          Central Sales Tax rate being reduced from 3 per cent to 2 per cent from April 1, 2008.

Regards,

Rajan Kapoor

CA Final Yr. Student