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TIMES GUIDE TO PERSONAL TAX WILL HE EXPLODE IN YOUR FACE, OR WILL YOU GET LUCKY?
India Budget March 1 : Proposal:
No change in personal income-tax rates or slabs and rates for surcharge and education cess
Impact:
The threshold limit for tax trigger continues to be Rs 1 lakh. In respect of women and senior citizens, the minimum limit continues to be at Rs 1.35 lakh and Rs 1.85 lakh respectively. The tax rates and slabs also remain unchanged, the maximum marginal rate for individuals with income over Rs 10 lakh continues to be 33.66%.
P:
The One-by-six scheme for filing income-tax returns abolished
I:
Tax return filing required only in case the income exceeds the minimum threshold as has been mentioned above
P:
Rationalisation of FBT in respect of superannuation contributions
I:
Employer contributions to approved Superannuation funds up to Rs 100000 per employee not to attract FBT. eg Company X’s (Indian company) annual contribution to approved superannuation fund is as under:
Employee A Rs. 50,000 Employee B Rs. 1,00,000 Employee C Rs. 1,50,000 Total contribution Rs. 3,00,000
FBT on the above as per existing law would be Rs one lakh ( 33.66% of Rs 300,000).
Consequent to the proposed amendment, Company X will not have to pay any FBT on the contributions made for Employee A and B.
Company X will have to pay FBT only in respect of the contribution for Employee C in excess of Rs one lakh, ie: on Rs. 50,000. Thus the FBT borne by it will be, 16,667 (33.66% of Rs. 50,000).
P:
Securities Transaction Tax (‘STT’) hiked by 25%
I:
Capital market transactions including transactions of equity oriented mutual funds to attract additional STT. For example, STT on purchase or sale of delivery-based equity shares will now attract an STT of 0.125%. The impact presumably will be marginal.
P:
Investments in scheduled banks in fixed deposits for 5 years or more qualify for tax deduction
I:
Investments in fixed deposits for a period of 5 years or more in scheduled banks by individuals and HUFs will now qualify for tax deduction, up to the maximum cap of Rs 1,00,000 along with payment for life insurance premia, investments in PPF, equity linked savings plan, etc.
P:
Exemption from long-term capital gains for investment in bonds now restricted to only two investments - NHAI and REC bonds
I:
Investments in NABARD, SIDBI and NHB bonds no longer qualify for long-term capital gains tax exemption.
P:
Tax authorities now have the power to issue PAN suo motu and to direct any other person to obtain a PAN. Mandatory requirements to quote PAN to be extended to specified transactions that will be notified
I:
Requirements to obtain and quote PAN amplified. This has been introduced as a devise to widen the tax net. As the one-by-six scheme stands abolished, this mechanism will receive more attention from the tax authorities.
P:
Closed-ended equity oriented mutual fund brought at par with open-ended equity oriented mutual fund for DDT
I:
Hopefully, this will translate into increased returns from investments in such funds.
P:
Rationalisation of FBT for expenditure on travelling, hotel lodging boarding and hospitality. Certain expenditure exempted from the purview of FBT
I:
Beneficial rate of valuation of the fringe benefit at 5% for travelling expenditure is now extended to all industries, this was earlier applicable only to pharma, computer software and construction sectors. Further, expenditure on hotel lodging boarding and hospitality incurred by shipping and airline companies will also now be valued at 5%. Additionally, free samples of medicine / medical equipments to doctors and payments to brand ambassadors will not be subject to FBT
P:
Anonymous donations received by certain charitable institutions to be taxed at maximum marginal rate
I:
To tax unaccounted money, anonymous donations received by certain charities will be taxed at maximum marginal rate. However, anonymous donations to wholly religious trusts and institutions not covered.
P:
New scheme to facilitate submission of tax returns through tax return preparers
I:
It is proposed that tax payers other than companies or persons whose accounts are not required to be audited will now be required to furnish tax returns through authorized tax return preparers. Such tax return preparers need not necessarily be ‘accountants’ specified. The scheme will provide for various details in this regard that will include educational qualifications of the preparer, training required by him, code of conduct, etc
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| Source: Economic Times |
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