Budget Highlights

Rajan Kapoor (CA FINAL STUDENT) (58 Points)

01 March 2008  

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 31st October to 30th 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.
  •  

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