TaxTMI 
TaxTMI 
Memorandums
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....n of certain provisions and provide for a revised settlement scheme. (iii) Amendment of Wealth-tax Act, 1957, inter-alia, to provide for a revised settlement scheme. (iv) Amendment of Finance Act, 2005 to rationalize the provisions of Banking Cash Transaction Tax. 2. The substance of the main provisions in the Bill relating to direct taxes is explained in the following paragraphs :- INCOME-TAX RATES OF INCOME-TAX - Rates of income-tax in respect of income liable to tax for the assessment year 2007-08. In respect of income of all categories of tax payers (corporate as well as non-corporate) liable to tax for the assessment year 2007-2008, the rates of income-tax have been specified in Part I of the First Schedule to the Bill. These are the same as those laid down in Part III of the First Schedule to the Finance Act, 2006, for the purposes of computation of "advance tax", deduction of tax at source from "Salaries" and charging of tax payable in certain cases. It has also been specified that in the case of individuals, Hindu undivided families, association of persons and body of individuals having total income exceeding Rs. 10,00,000/-, the tax so computed after reba....
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....shall be levied in the case of any cooperative society or local authority. The additional surcharge, called the "Education Cess on income-tax" for purposes of the Union, shall continue to be levied at the rate of two per cent. of income-tax and surcharge in all cases so as to fulfil the commitment of the Government to provide and finance universalised quality basic education. It is proposed to levy an additional surcharge, called the "Secondary and Higher Education Cess on income-tax", at the rate of one per cent. of income-tax and surcharge (not including the "Education Cess on income-tax") in all cases so as to fulfil the commitment of the Government to provide and finance secondary and higher education. website : http//indiabudget.nic.in 2 III. Rates for deduction of income-tax at source from "Salaries", computation of "advance tax" and charging of income-tax in certain cases during the financial year 2007-2008. The rates for deduction of income-tax at source from "Salaries" during the financial year 2007-2008 and also for computation of "advance tax" payable during that year in the case of all categories of taxpayers have been specified in Part III of the Firs....
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..... The amount of income-tax computed shall, in the case of every individual or Hindu undivided family or association of persons or body of individuals, whether incorporated or not, having total income exceeding ten lakh rupees, be reduced by the amount of rebate of income-tax calculated under Chapter VIII-A. The income-tax as so reduced shall be increased by a surcharge for purposes of the Union calculated at the rate of ten percent of such income-tax. However, marginal relief shall be available and the total amount payable as income-tax and surcharge on total income exceeding ten lakh rupees shall not exceed the total amount payable as income-tax on a total income of ten lakh rupees by more than the amount of income that exceeds ten lakh rupees. In the case of every artificial juridical person referred to in sub-clause (vii) of clause (31) of section 2 of the Income-tax Act, the amount of income-tax computed shall be increased by a surcharge for purposes of the Union calculated at the rate of ten per cent. of such income-tax. B. Co-operative Societies In the case of co-operative societies, the rates of income-tax have been specified in Paragraph B of Part III of the Fir....
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....come exceeding one crore rupees shall not exceed the total amount payable as income-tax on a total income of one crore rupees by more than the amount of income that exceeds one crore rupees. No surcharge shall be levied in the case of companies having total income of one crore rupees or less. Surcharge shall be levied at the existing rates on tax on fringe benefits, irrespective of the amount of fringe benefits. The additional surcharge, called the "Education Cess on income-tax" for the purposes of the Union, shall continue to be levied at the rate of two per cent. of income-tax and surcharge in all cases so as to fulfil the commitment of the Government to provide and finance universalised quality basic education. It is proposed to levy an additional surcharge, called the "Secondary and Higher Education Cess on income-tax", at the rate of one per cent. of income-tax and surcharge (not including the "Education Cess on income-tax") in all cases so as to fulfil the commitment of the Government to provide and finance secondary and higher education. [Clause 2] WIDENING OF TAX BASE Widening the scope of capital assets Under the existing provisions of clause (14) o....
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....ory corporation or a body corporate for the purposes of deduction under section 36(1)(xii) Under the existing provisions of clause (xii) of sub-section (1) of section 36, any expenditure (not being in the nature of capital expenditure) incurred by a corporation or a body corporate, by whatever name called, constituted or established by a Central, State or Provincial Act, for the objects and purposes authorised by the said Acts, is allowed as deduction in the computation of its income. website : http//indiabudget.nic.in 4 The objects and purposes as listed in the Act may authorise any kind of expenditure, the allowability of which cannot be questioned in terms of the existing provisions. There is, therefore, a need to vest the Central Government with the power to notify the statutory corporations or bodies after examination of objects and purposes enshrined in the Acts under which these statutory corporations or bodies are set up. Accordingly, the amendment provides that the deduction shall be allowed if such corporation or body corporate is notified by the Central Government in the Official Gazette under the said clause, having regard to the objects and purposes of t....
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....mean any bond redeemable after three years and issued on or after 1st day of April, 2007 by the National Highways Authority of India constituted under section 3 of the National Highways Authority of India Act, 1988 or by the Rural Electrification Corporation limited, a company formed and registered under the Companies Act, 1956. This amendment will take effect from 1st April, 2007. It is also proposed to amend the said section so as to provide for a ceiling on investment by an assessee in such long-term specified assets. Investments in such specified assets to avail exemption under section 54EC, on or after 1st day of April, 2007 will not exceed fifty lakh rupees in a financial year. This amendment shall take effect from 1st April, 2007. [Clause 15] Widening the scope of Minimum Alternate Tax Section 115JB provides that in case of a company, if the tax payable on the total income as computed under the Income- tax Act in respect of any previous year relevant to the assessment year commencing on or after the 1st April, 2007, is less than ten per cent of its book profit, such book profit shall be deemed to be the total income of the assessee and the tax payable for t....
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....x to any amount received or receivable from the Central Government or a State Government or a local authority by an individual or his legal heir by way of compensation on account of any disaster. The exemption is not allowable in respect of amount received or receivable to the extent such individual or his legal heir has been allowed a deduction under the Income-tax Act on account of any loss or damage caused by such disaster. It is also proposed to provide that for the purposes of the new clause, 'disaster' shall have the meaning as assigned to it under section 2(d) of the Disaster Management Act, 2005. This amendment will take effect retrospectively from 1st April, 2005 and will, accordingly, apply in relation to the assessment year 2005-2006 and subsequent years. [Clause 6] Extension of tax benefits under section 80CCD to employees of "other employers" Under the existing provisions contained in section 80CCD, in the case of an individual, employed by the Central Government on or after 1st January, 2004, who has paid or deposited any amount in a previous year in his account under a pension scheme notified or as may be notified by the Central Government, a deduction of su....
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....n relation to the assessment year 2008-2009 and subsequent years. [Clause 21] RATIONALISATION AND SIMPLIFICATION MEASURES Income deemed to accrue or arise in India Section 9 provides for situations where income is deemed to accrue or arise in India. Vide Finance Act, 1976, a source rule was provided in the said section through insertion of clauses (v), (vi), and (vii) for income from interest, royalty or fees for technical services. It was provided, inter alia, that in case of payments of interest, royalty or fees for technical services received from a resident payer, income would be deemed to accrue or arise in India, except where the interest or royalty or fees for technical services are relatable to a business or profession carried on by the resident payer outside India or for making or earning any income from any source outside India. The intent of the amendments was elaborated in the Explanatory notes on provisions relating to direct taxes for the Finance Act, 1976 issued vide Circular No.202 dated 5.7.1976. With respect to source rule for royalty income, it was stated as follows: "In view of the aforesaid amendment, royalty income consisting of lump sum conside....
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....tion (1) of section 9, such income shall be included in the total income of the non- resident, regardless of whether the non-resident has a residence or place of business or business connection in India. In such cases, it is not necessary to establish the territorial nexus between the income deemed to accrue or arise to the non-resident under the said clauses and the territory of India. This amendment will take effect retrospectively from 1st June, 1976. [Clause 5] Clarification regarding concession in the matter of rent Section 15 of the Income-tax Act provides that any salary due or paid or allowed or any arrears of salary paid or allowed to the assessee in the previous year by an employer or a former employer is chargeable to tax under the head 'salaries'. The term 'salary' has been defined in section 17 of the IT Act and it, inter-alia, includes perquisites or profits in lieu of or in addition to any salary or wages. The term 'perquisite' as defined in sub-section (2) of section 17 of the Income-tax Act, 1961,inter-alia, includes - (i) the value of rent-free accommodation provided to the assessee by his employer; (ii) the value of any concession in the matter of ....
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....ment or any State Government and accommodation is owned by the employer, the value of unfurnished accommodation as increased by the value of the furniture and fixtures in respect of the period during which the said accommodation was occupied by the assessee during the previous year, exceeds the rent recoverable from or payable by the assessee. It is also proposed to provide that in a case where a furnished accommodation is provided by an employer other than Central Government or any State Government and accommodation is taken on lease or rent by the employer, the value of unfurnished accommodation as increased by the value of the furniture and fixtures in respect of the period during which the said accommodation was occupied by the assessee during the previous year, exceeds the rent recoverable from or payable by the assessee. It is also proposed to provide that the value of furniture and fixture shall be ten per cent. of the cost of furniture (including television sets, radio sets, refrigerators, other household appliances, air-conditioning plant or equipment or other similar appliances or gadgets) or if such furniture is hired from a third party, be the actual hire charges ....
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....1st April, 2006 and will, accordingly, apply in relation to the assessment year 2006-07 and subsequent years. [Clause 10] Deduction in respect of any provision for bad and doubtful debts to be allowed in the case of co-operative banks under section 36(1)(viia) Under the existing provisions of clause (viia) of sub-section (1) of section 36, deduction of an amount not exceeding seven and one-half per cent. of the total income (computed before making any deduction under the said clause and Chapter VIA) and an amount not exceeding ten per cent. of the aggregate average advances made by the rural branches of a scheduled bank or a non-scheduled bank computed in the prescribed manner is allowed as deduction in the computation of income of such banks. "Scheduled bank", as defined in the Explanation to clause (viia) of sub-section (1) of the section 36, does not include a co-operative bank. The deduction earlier allowable under section 80P in the case of a co-operative society engaged in carrying on the business of banking (co-operative banks) has been withdrawn from assessment year 2007-2008 barring in the case of a primary agricultural credit society or a primary co-operative agr....
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....The existing provisions of clause (viii) of sub-section (1) of section 36 of the Income-tax Act, 1961 provide for a deduction in respect of any special reserve created and maintained by,- section 36(1)(viii) (i) a financial corporation engaged in providing long-term finance for industrial or agricultural development or development of infrastructure facility in India; or (ii) a public company formed and registered in India with the main object of carrying on the business of providing long-tem finance for construction or purchase of houses in India for residential purposes. The deduction allowable under the aforesaid clause cannot exceed forty per cent. of the profits derived from the business of providing long-term finance. The provisions regarding this special deduction also existed in the Income-tax Act, 1922 and were retained in the Income-tax Act, 1961. The objective of this deduction originally was to stimulate industrial development of the country. The scope of the provisions of the said clause was later on widened by the Finance (No.2) Bill, 1971 to include in its ambit the approved financial corporations engaged in providing long-term finance for agricultural dev....
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....d (iii) any other financial corporation including a public company, has to be engaged in the business of providing long-term finance for development of infrastructure facility in India. It may be clarified that a financial corporation specified in section 4A of the Companies Act shall include such corporations specified under sub-section (1) and under sub-section (2) of section 4A of the Companies Act. The amendment also provides definitions of the expressions "banking company", "co-operative bank", "primary agricultural credit society", "primary co-operative agricultural and rural development bank", "housing finance company", "public company", "infrastructure facility" and "long-term finance". These amendments will take effect from 1st April, 2008 and will, accordingly, apply in relation to the assessment year 2008- 2009 and subsequent years. [Clause 12] Withdrawal of deduction under section 36(1)(x) in respect of contribution by public financial institutions towards ERAF Under the existing provisions of clause (x) of sub-section (1) of section 36, any sum paid by a public financial institution by way of contribution towards any Exchange Risk Administration Fund (ER....
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....ual or a Hindu undivided family from any person on or after the 1st day of September, 2004, but before the 1st day of April, 2006, the whole of such sum shall be chargeable to income-tax under the head 'income from other sources'. Exception has been provided in the proviso to the said clause in respect of any sum of money received from certain persons and under certain circumstances as specified therein. The Taxation Laws (Amendment) Act, 2006, which was enacted on the 13th day of July, 2006, inserted new clauses (e), (f) and (g) in the said proviso so as to provide such exception in respect of any sum of money received from a local authority, or an entity referred to in section 10(23C) or a trust or institution registered under section 12AA with effect from 13th July, 2006. website : http//indiabudget.nic.in 9 It is proposed to give retrospective effect to the said clauses (e), (f) and (g) from 1st April, 2005, which is the date from which clause (v) of sub-section (2) of section 56 became effective. This amendment will apply in relation to the assessment years 2005-2006 and 2006-2007. Through the Taxation Laws (Amendment) Act, 2006, a new clause (vi) was inserted i....
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....ection 80D, from rupees ten thousand to rupees fifteen thousand. In the case of senior citizens, it is proposed to increase the limit from rupees fifteen thousand to rupees twenty thousand. These amendments will take effect from 1st April, 2008 and will, accordingly, apply in relation to the assessment year 2008-09 and subsequent years. [Clauses 12 and 20] Clarification regarding developer with reference to infrastructure facility, industrial park, etc. for the purposes of section 80-IA Section 80-IA, inter-alia, provides for a ten-year tax benefit to an enterprise or an undertaking engaged in development of infrastructure facilities, Industrial Parks and Special Economic Zones. The tax benefit was introduced for the reason that industrial modernization requires a massive expansion of, and qualitative improvement in, infrastructure (viz., expressways, highways, airports, ports and rapid urban rail transport systems) which was lacking in our country. The purpose of the tax benefit has all along been for encouraging private sector participation by way of investment in development of the infrastructure sector and not for the persons who merely execute the civil constructio....
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....ent will take effect from 1st April, 2008 and will, accordingly, apply in relation to the assessment year 2008-2009 and subsequent years. [Clause 22] Extension of time limit set out in Rule 3 for complying with the condition laid down in Clause (ea) of Rule 4 of Part A of the Fourth Schedule to the Income-tax Act. Rule 4 of Part of A of the Fourth Schedule to the Income-tax Act provides for the conditions which are required to be satisfied by a provident fund for receiving or retaining recognition under the Income-tax Act. Clause (ea) of the said rule provides that the fund shall be of an establishment to which the provisions of sub-section (3) or sub-section (4) of section 1 of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 are applicable and such establishment has been exempted under section 17 of the said Act from the operation of all or any of the provisions of any scheme referred to in that section. With a view to set out the conditions given in clause (ea) in unambiguous terms, it is proposed to substitute clause (ea) so as to provide that for receiving and retaining recognition under the Income-tax Act, the fund shall be a fund of an establish....
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....Central Government or a State Government from the requirement of deduction of tax at source. Consequently, tax is not being deducted on interest payable on 8% Savings (Taxable) Bonds, 2003. The 8% Savings (Taxable) Bonds, 2003 are Central Government securities. The notification issued by the Department of Economic Affairs dated 21st March, 2003 also clarifies that the interest paid on 8% Savings (Taxable) Bonds, 2003 is taxable under the Income-tax Act. Non-deduction of tax on these bonds has been resulting in evasion of taxes. The proposed amendment provides that the person responsible for paying to a resident any interest on 8% Savings (Taxable) Bonds, 2003 shall deduct income-tax if interest payable on such Bonds exceeds ten thousand rupees during a financial year. This amendment will take effect from 1st day of June, 2007. [Clause 43 ] Increasing the threshold limit in respect of interest payable by a banking Company or a co-operative society or a Post Office under Section 194A The existing clause (i) of sub-section (3) of section 194A provides that deduction of income-tax at source shall not be made in a case where the amount of income by way of interest othe....
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....on carried on exceed the monetary limits specified under clause (a) or clause (b) of section 44AB during the financial year immediately preceding the financial year in which sum is credited or paid to the account of the contractor. The amendment also proposes that the provisions of the said sub-section (1) shall not apply in respect of payments made to a contractor by any individual or a member of a Hindu undivided family exclusively for their personal purposes. This amendment will take effect from 1st day of June, 2007. [Clause 45] Increase in the rate of TDS under section 194H to 10% and exemption from TDS thereunder from commission payable by Bharat Sanchar Nigam Limited and Mahanagar Telephone Nigam Limited to their PCO franchisees The existing provisions of section 194H require deduction of tax at source on payment of commission or brokerage, the rate for deduction of tax being five per cent. Deduction of tax at source facilitates capturing of income for tax purposes at the earliest point of time. However, deduction of tax at source in cases of payees whose income remains below taxable limit merely results in unnecessary paper work. Public Call Office (PCO) f....
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....of any income payable by way of rent for the use of any machinery or plant or equipment. This amendment will take effect from 1st day of June, 2007. [Clause 47] Enhancement of the rate of TDS under section 194J of the Income-tax Act Under the existing provisions of sub-section (1) of section 194J, a specified person is required to deduct an amount equal to five per cent. of any sum payable to a resident by way of fees for professional services or fees for technical services. The data collected on tax deduction in various cases of professionals and technical experts, showed that the tax incidence in such cases was much higher than the amount of tax collected by way of deduction of tax at source at the existing rate of five per cent. Accordingly, the amendment proposes to specify a higher rate of ten per cent. for TDS under section 194J. The increased rate for deduction of tax at source shall be applicable to payment of any sum by way of fees for professional services or fees for technical services or royalty or any sum referred to in clause (va) of section 28. This amendment will take effect from 1st June, 2007. [Clause 48] website : http//indiabudget.nic.....
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....notified by the Board, a deduction of a sum equal to one and one-half times of the expenditure incurred on scientific research (not being expenditure in the nature of cost of any land or building) on in-house research and development facility as approved by the prescribed authority. This provision is not applicable in respect of any expenditure incurred by a company after 31st March, 2007 and no weighted deduction against expenditure incurred after that date is admissible. There is a general realisation that research and development still needs some fiscal support for a few more years. The amendment to clause (5) of the said sub-section, therefore, allows weighted deduction referred to in clause (1) for a further period of five years, that is, in respect of the expenditure incurred up to 31st March, 2012. This amendment will take effect from 1st April, 2008 and will, accordingly, apply in relation to assessment year 2008-2009 and subsequent assessment years up to assessment year 2012-2013. [Clause 11] MEASURES TO PROMOTE SOCIO-ECONOMIC DEVELOPMENT Exemption for interest on notified bonds issued by State Pooled Finance Entities Under the existing provisions of clause (vi....
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....ed shall be deemed to be the income of the previous year in which the amount is so shared and shall accordingly be chargeable to income-tax. For the purposes of the new clause, it is proposed to define a "commodity exchange" to mean a "registered association" as defined in clause (jj) of section 2 of the Forward Contracts (Regulation) Act, 1952. This amendment will take effect from 1st April, 2008, and will, accordingly apply in relation to the assessment year 2008-2009 and subsequent years. [Clause 6] Exemption for certain incomes of a venture capital company or venture capital fund from specified businesses or industries Under the existing provisions of clause (23FB) of section 10, any income of a venture capital company or venture capital fund set up to raise funds for investment in a venture capital undertaking is exempt from tax. The existing definition of a "venture capital undertaking", as provided in clause (c) of Explanation 1 to clause (23FB), means a venture capital undertaking referred to in the Securities and Exchange Board of India (Venture Capital Funds) Regulations, 1996 made under the Securities and Exchange Board of India Act, 1992 and notified as such in....
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....d to expand the scope of the expression "infrastructure facility" so as to include a navigational channel in the sea within its ambit for the purposes of ten year tax benefit under section 80-IA. This amendment will take effect from 1st April, 2008 and will, accordingly, apply in relation to the assessment year 2008-2009 and subsequent years. [Clause 22] Extension of time limit for generation or transmission or distribution of power by an undertaking of an Indian company set up for reconstruction or revival of a power generating plant Section 80-IA of the Income-tax Act, 1961 provides for a ten-year tax benefit to an enterprise engaged in development of infrastructure facilities, Industrial Parks and Special Economic Zones, generation and distribution of power, etc. Under the existing provisions contained in clause (v) of sub-section (4) of section 80-IA, an undertaking owned by an Indian company and set up for reconstruction or revival of a power generating plant is eligible for ten year tax benefit under the said section if it fulfils the following conditions :- (a) such company is formed before 30.11.2005 with majority equity participation by public sector compani....
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.... such other condition as may be prescribed. It is further proposed to define the expression "associated person" for the purposes of the proposed clause (vi). It is also proposed to provide that the deduction shall be allowed for ten consecutive assessment years out of fifteen years beginning from the year in which an undertaking lays and begins to operate the cross-country natural gas distribution network. It is also proposed to provide that any undertaking formed by way of reconstruction or splitting up or by transfer to a new business of old plant and machinery (subject to certain exceptions) shall not be eligible for the above deduction under section 80-IA. These amendments will take effect from 1st April, 2008 and will, accordingly, apply in relation to the assessment year 2008-2009 and subsequent years. [Clause 22] Extension of time-limit for setting up of industrial undertakings in the State of Jammu and Kashmir for the purposes of tax benefit under section 80-IB(4). Under the existing provisions contained in sub-section (4) of section 80-IB, industrial undertakings engaged in manufacture or production of articles or things or operation of a cold storage pla....
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.... 2007 and ending on 31st March, 2010. It is also proposed to specify the conditions to be fulfilled by the undertaking for the purpose of deduction under the proposed new section. It is also proposed to provide that in computing the total income of the assessee, no deduction shall be allowed under any other section contained in Chapter VIA or in section 10AA, in relation to the profits and gains of the undertaking. It is also proposed to provide that the provisions contained in sub-section (5) and sub-sections (8) to (11) of section 80-IA shall, so far as may be, apply to the eligible business under this section. It is also proposed to define the expressions "convention centre", "hotel", "initial assessment year" and "specified area" for the purposes of the proposed new section. For the purposes of the proposed section hotel shall mean a hotel of two-star, three-star and four-star category as classified by the Central Government and specified area shall mean the National Capital Territory of Delhi and districts of Faridabad, Gurgaon, Gautam Budh Nagar and Ghaziabad. It is also proposed to amend section 80-AC so as to provide that no deduction under the proposed secti....
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....nes Sections 10AA of the Income-tax Act provides that in computing the total income of an entrepreneur, from his unit in the special economic zone, the following deduction shall be allowed :- (i) hundred per cent. of profits and gains derived from the export made in eligible business for a period of five consecutive assessment years beginning from the year in which such business commences; (ii) fifty per cent. of such profits and gains for further five assessment years and thereafter; (iii) an amount not exceeding fifty per cent of the profit debited to the profit and loss account of the previous year in respect of which the deduction is to be allowed and credited to a reserve account to be created and utilized for the purposes of the business in the specified manner, for the next five consecutive assessment years Under the existing provisions contained in sub-section (4) of the said section, it is provided that section 10AA is applicable to any undertaking being the unit, which has begun or begins to manufacture or produce articles or things or provide services during the previous year relevant to the assessment year commencing on or after the 1st day of April, 2006....
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....disallowance of hundred per cent. by twenty per cent. has diluted the deterrence potential of the provisions. Therefore, to re-strengthen website : http//indiabudget.nic.in 16 the deterrence potential, it is proposed to amend sub-section (3) of section 40A to provide for hundred per cent disallowance of payments which are made in violation of its provisions. There are occasions when deduction of expenditure is claimed in one year and the payment against such expenditure is made in any subsequent year in violation of the provisions of the said sub-section. In such cases, the existing first proviso to the said sub- section provides for re-computation of the total income of the previous year in which the liability to pay against the expenditure was incurred. Such re-computation is allowed to be made under the provisions in section 154 and the limitation of four years in respect of such re-computation is reckoned from the end of the assessment year next following the previous year in which the payment in contravention of provisions of sub-section (3) of section 40A was made. In many cases, violation is noticed after expiry of four years when no remedy is available. Rectific....
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....ded that where in the course of a search under section 132, the assessee is found to be the owner of any money, bullion, jewellery or other valuable article or thing (referred to as assets in this Explanation) and the assessee claims that such assets have been acquired by him by utilising (wholly or in part) his income - (i) for any previous year which has ended before the date of the search, but the return of income for such year has not been furnished before the said date or, where such return has been furnished before the said date, such income has not been declared therein; or (ii) for any previous year which is to end on after the date of the search, 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 section 271, be deemed to have concealed the particulars of his income or furnished inaccurate particulars of such income. However, penalty shall not be levied if certain conditions prescribed therein are fulfilled. It has been proposed to amend said Explanation 5 so as to provide that provisions of said Explan....
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....that no penalty under the provisions of clause (c) of sub-section (1) of section 271 shall be levied or imposed website : http//indiabudget.nic.in 17 upon the assessee in respect of the undisclosed income referred to in proposed new section. It is also proposed to provide that the provisions of section 274 and section 275 shall, so far as may be, apply in relation to the penalty leviable under the proposed new section. For the purposes of this section it has been proposed to define undisclosed income so as to mean- (i) any income of the specified previous years represented, either wholly or partly, by any money, bullion, jewellery or other valuable article or thing or any entry in the books of account or other documents or transactions found in the course of a search under section 132, which has not been recorded on or before the date of search in the books of account or other documents maintained in the normal course relating to such previous year; or which has otherwise not been disclosed to the Chief Commissioner or Commissioner before the date of the search; or (ii) any income of the specified previous year represented, either wholly or partly, by any entry in respe....
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....Additional Commissioner in the said clause. This amendment will take effect retrospectively from 1st June, 1994. With a view to clarify the meaning of the expression "Assessing Officer", it is further proposed to amend the said clause (7 A) so as to include Additional Director in the said clause. This amendment will take effect retrospectively from 1st October, 1996. It is also proposed to insert clause (IC) in the said section so as to provide that "Additional Commissioner" means a person appointed to be an Additional Commissioner of lncome-tax under sub-section (1) of section 117. It is further proposed to insert clause (ID) in the said section so as to provide that "Additional Director" means a person appointed 'to be an Additional Director of Income- tax under sub-section (1) of section 117. The said amendment is clarificatory in nature. This amendment will take effect retrospectively from 1st June, 1994. It is also proposed to bring similar amendments in the Wealth-tax Act so as to provide that Assessing Officer shall include Additional Commissioner and Additional Director. It is also proposed to insert clause (9B) in the said section so as to provide that "Assista....
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....se amendments will take effect from 1st June, 2007. [Clauses 6, 38 and 71] Removal of the requirement for charitable or religious trusts or institutions to file for registration within one year of creation or establishment Under the existing provisions of section 12A, in order to claim exemption under sections 11 and 12, a charitable or religious trust or institution is required to make an application for registration in the prescribed form and in the prescribed manner to the Commissioner within one year from the date of its creation or establishment and has to be registered under section 12AA. The section also provides that where such application is made after the aforesaid period, the Commissioner may condone such delay, if he is satisfied that the application was delayed for sufficient reasons. On such condonation of delay, the provisions of section 11 and 12 shall apply in respect of the income of such trust or institution from the date of creation of the trust or establishment of the institution. However, where the Commissioner is not so satisfied, the provisions of section 11 and 12 shall apply only from the 1st day of the financial year in which the application is m....
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....2CA to the Transfer Pricing Officer for determination of the Arm's length price of an international transaction. Since, the time limit for selection of cases for scrutiny is one year from the end of the month in which the return was filed, references to Transfer Pricing Officers are made mostly after one year of filing of the return. Thus, Transfer Pricing Officers are not getting adequate time to make a meaningful audit of transfer price in cases referred to them. With a view that the Transfer Pricing Officers as well as the Assessing Officers get sufficient time to make the audit of transfer price and the assessment in cases involving international transactions, it has been proposed to revise the time limits specified in sections 153 and 153B for making the assessment or reassessment in cases where a reference has been made to the Transfer Pricing Officer. The revised time limits in such cases shall be the time limits specified under the aforesaid sections, as increased by twelve months. It is further proposed to provide that the Transfer Pricing Officer shall determine the Arm's length price at least two months before the expiry of new statutory time limit for making the asse....
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....he Assessing Officer may also be exercised or performed by an Additional Commissioner. This amendment will take effect retrospectively from 1st June, 1994. It is further proposed to amend the said clause to provide that the powers and functions conferred on or assigned to the Assessing Officer may also be exercised or performed by the Additional Director. [Clause 33] This amendment will take effect retrospectively from lst October, 1996. Rules for facilitating annexure-less returns Under the existing provisions contained in explanation to sub-section (9) of section 139, it is provided that a return of income shall be regarded as defective unless, the conditions specified in clauses (a) to (f) of the explanation to the said sub-section are fulfilled. The Finance Act, 2006, amended the said section by inserting a proviso to the said sub-section (9), conferring on the central Board of Direct Taxes, to dispense with any of the conditions specified in clauses (a) to (f) of the explanation. However, apart from the conditions specified in clauses (a) to (f) of the explanation to the said sub-section, documents, statements, receipts, certificate, audited reports or any ot....
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....ation below sub-section (2) of section 288. The accountant is to be nominated by the Chief Commissioner or Commissioner in this behalf and he is to furnish a report of such audit in the prescribed form duly signed and verified by him and setting forth such particulars as may be prescribed and such other particulars as the Assessing Officer may require. Subsection (2D) section 142 provides that the expenses of, incidental to, any audit under sub- section (2A) (including the remuneration of the accountant) shall be determined by the Chief Commissioner or Commissioner (which determination shall be final) and paid by the assessee and in default of such payment, shall be recoverable from the assessee in the manner provided in Chapter XVII-D for the recovery of arrears of tax. The provisions of sub-section (2A) of section 142 of Income tax Act were reviewed by the Hon'ble Supreme Court in the case of Rajesh Kumar and Others Vs. Deputy Commissioner of Income-tax Others [287 ITR 91 (2006)]. The Hon'ble Supreme Court observed that the direction under sub- section (2A) of section 142 of Income tax Act for special aduit of the accounts of the assessee is not administrative in nature and is....
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....fficer to an assessee to get the accounts audited, the expenses of, and incidental to, such audit (including the remuneration of the Accountant) shall be determined by the Chief Commissioner or Commissioner in accordance with such guidelines as may be prescribed and the expenses so determined shall be paid by the Central Government. [Clause 37] These amendments will take effect from 1st June, 2007. Assessment of search cases-Orders of assessment and reassessment to be approved by the Joint Commissioner Under the existing provisions of making assessment and reassessment in cases where search has been conducted under section 132 or requisition is made under section 132A, no approval for assessment is required. It is proposed to insert a new section 153D to provide that no order of assessment or reassessment shall be passed by an Assessing Officer below the rank of Joint Commissioner except with the previous approval of the Joint Commissioner. Such provision is proposed to be made applicable to orders of assessment or reassessment passed under clause (b) of section 153A in respect of each assessment year falling within six assessment years immediately preceding the asse....
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....e of twelve per cent. per annum on the amount of such tax from the date on which such tax was deductible to the date on which such tax is actually paid. On the other hand, under the other provisions of the Income-tax Act which relate to charge of interest from the assessee, namely, sections 220, 234A, 234B and 234D interest chargeable from the assessee is calculated for every month or part of a month comprised in the period for which interest is to be charged. Under section 234C(1)(a)(i), simple interest is charged at the rate of one per cent. per month for the period specified in that section. Under section 244A also under which interest is paid on refunds to the assessee, interest is calculated for every month or part of a month. The difference between calculation of interest on per-annum basis and per-month basis lies in the difference in procedure followed for calculation of interest under these two methods. When interest is calculated on per annum basis, any fraction of a month is ignored and when interest is calculated for every month or part of a month basis, any fraction of a month is deemed a full month and interest is calculated for the full month. This principle ha....
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....of the Assessing Officer deeming him as an assessee in default. Provisions for appeal already exist against similar order passed by the Assessing Officer under sub-section (1) of section 201 whereby a person is deemed as an assessee in default if he fails to deduct or after deducting fails to pay the tax to the Government account. The amendment, therefore, provides for insertion of a new clause (hb) in sub-section (1) of section 246 to provide that a person deemed as an assessee in default may appeal before the Commissioner (Appeals). The amendment also proposes to insert a new sub-section (1B) in section 246 to provide that an appeal filed by an assessee in default against an order made under sub-section (6A) of section 206C on or after 1st day of April, 2007 but before 1st day of June, 2007 shall be deemed to have been filed before the Commissioner (Appeals) under new clause (hb) of sub-section (1) of section 246. [Clause 62] These amendments will take effect from 1st June, 2007. Provision of appeal by a person denying liability to deduct tax Under the existing provisions of section 248, it is provided that where any person has deducted and paid tax in accordanc....
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....unal against the order of rejection of approval by the Commissioner under section 80G (5) (vi). It is, therefore, proposed to amend section 253 so as to allow an appeal to be filed against such orders of the Commissioner before the Appellate Tribunal. This amendment will take effect from 1st June, 2007. [Clause 65] website : http//indiabudget.nic.in 22 Prescribing time-limit for grant of stay by the Appellate Tribunal Under the existing provisions of section 254, the Appellate Tribunal may pass an order of stay in any proceeding relating to an appeal filed before it. In such cases, the Appellate Tribunal shall dispose of the appeal within a period of one hundred and eighty days from the date of such order. If the appeal is not decided within the period for which the stay was granted, the stay order shall be vacated after the expiry of the stay period. It is proposed to amend section 254, so as to provide that the Appellate Tribunal, after considering the merits of the application made by the assessee, may pass an order of stay in any proceeding relating to an appeal filed under sub-section (1) of section 253, for a period not exceeding one hundred and eighty da....
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....resumptions provided in sub-section (4A) of section 132 can be made in any proceedings under this Act. It is also proposed to provide similar amendment in the Wealth-tax Act by insertion of a new section 42D. [Clauses 69 and 84] This amendment will take effect retrospectively from the 1st day of October, 1975. REVISED SETTLEMENT SCHEME Chapter XIX-A of the Income-tax Act contains provisions relating to settlement of cases by the Settlement Commission. With a view to avoid delay in determining the tax liability of an assessee which is caused because of factors like duplication of proceedings, absence of statutory time frame for settling the case, and also with a view to streamline the proceedings before the Settlement Commission, it is proposed to amend the provisions of said Chapter XIX-A of the Income-tax Act. The important changes proposed to be made are- (i) Under the existing provisions, an assessee may make an application to the Commission at any stage of the proceedings in his case pending before any Income-tax Authorities. It is proposed to provide that after 31st May, 2007, an assessee can make an application to the Commission only during the pendency of t....
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....in such report and having regard to the nature and circumstances of the case or the complexity of the investigation involved, the Commission passes an order to reject the application or to allow the application to be further proceeded with. Under the existing provisions, there is no statutory time limit for passing the order for rejecting or allowing the application to be proceeded with. However, a suggestive time limit of one year from the end of the month in which such application was made has been provided. It is proposed to provide that the Settlement Commission, within 7 days of receipt of the application shall issue a notice to the applicant to explain as to why his application be admitted. Thereafter, within 14 days from the date of receipt of the application, the Settlement Commission shall pass an order for rejecting the application or allowing the application to be proceeded with. Complexity of the investigation involved in a case shall not be the criteria for admitting or rejecting the application. Further,where no order or rejection or admission of an application is passed within the aforesaid period, the application shall be deemed to have been allowed to be proceeded ....
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....) In respect of applications made before 1.7.2007 and referred to in (iv)(a) or (iv)(b), above which are not declared invalid or as the case may be, allowed to be further proceeded with, the Settlement Commission, if, is of the opinion to do so, may direct the Commissioner to make or cause to be made such further inquiry or investigation as it deems fit. The Commissioner shall submit his report within 90 days from the date on which the communication from the Settlement Commission is received by him; (viii) The Commission shall, after giving an opportunity to the Commissioner and to the applicant and considering the reports of the Commissioner and other material available with it, pass the settlement order. Under the existing provisions, there is no time limitation for making the order of settlement. It is proposed that the Commission shall pass such order within 9 months from the end of the month in which the application was received. In respect of applications referred to in (iv)(a) or (iv)(b) above, the Settlement Commission shall pass the order on or before 31st March, 2008; (ix) Under the existing provisions, it is provided that the Commission may grant immunity from pros....
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....auses 53,54,55,56,57,58,59,60,61] and [Clauses 75,76,77,78,79,80,81,82,83] MISCELLANEOUS Exemption for income of ASOSAI-SECRETARIAT Clause (23BBD) of section 10 provides that any income of the Secretariat of the Asian Organisation of the Supreme Audit Institutions registered as "ASOSAI-SECRETARIAT" under the Societies Registration Act, 1860 for seven previous years relevant to the assessment years beginning on the 1st day of April, 2001 and ending on the 31st day of March, 2008, shall not be included in the total income. The Comptroller and Auditor General of India is the Secretary General of ASOSAI and its Secretariat functions from his office. Since the term of the Comptroller and Auditor General of India as the Secretary General of ASOSAI has been extended by another three years, it is proposed to amend the said clause so as to extend the said exemption for a further period of three assessment years beginning on the 1st day of April, 2008 and ending on the 31st day of March, 2011. This amendment will take effect from 1st April, 2008 and will apply in relation to the assessment years 2008-2009, 2009-2010 and 2010-2011. [Clause 6] Exemption for income of Centr....
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....rate to his employees (including former employee or employees), within the ambit of "fringe benefits". It is also proposed to define the expressions "specified security" and "sweat equity shares" for the purposes of the proposed clause (d). Sub-section (2) of the said section 115WB provides that the fringe benefits shall be deemed to have been provided by the employer to his employees, if the employer has in the course of his business or profession, incurred any expense on or made any payment for the purposes of entertainment, hospitality, conference, sales promotion (including publicity), etc. Proviso to clause (D) of sub- section (2) of section 115WB excludes certain expenditure on advertisement from sales promotion including publicity. Clause (v) of the proviso refers to expenditure on advertisement by way of signs, art work, painting, banner, etc. Clause (vii) of the proviso refers to the expenditure on distribution of free samples of medicines or of medical equipment to doctors. To expand the domain of such exceptions to provide relief to employers, it is proposed to amend clause (v) and to substitute clause (vii) of the proviso to clause (D) of sub-section (2) of sec....
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....ment year 2008-2009 and subsequent years. [Clauses 10,14,30 and 31] Alignment of due date for payment of advance tax on fringe benefits with that of advance tax on income. Section 115WJ provides that every assessee who is liable to pay advance tax on his current fringe benefits shall pay the same on his own accord. Sub-section (2) of section 115WJ provides that the advance tax payable in the financial year on the value of the fringe benefits referred to in section 115WC, shall be payable on or before the 15th day of the month following each quarter. However, the advance tax payable for the quarter ending on the 31st March of the financial year shall be payable on or before the 15th day of March of the said financial year. Sub-section (3) of section 115WJ provides that where an assessee has failed to pay the advance tax for any quarter or where the advance tax paid by him is less than thirty per cent. of the value of fringe benefits paid or payable in that quarter, he shall be liable to pay simple interest at the rate of one per cent. on the amount by which the advance tax paid falls short of, thirty per cent. of the value of fringe benefits for any quarter, for every....
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....ing Rs. 25,000 in the case of individuals and HUFs and Rs. 1,00,000 for other taxable entities on any single day from an account (other than a saving bank account) with any scheduled bank; and (ii) Receipt of cash exceeding a specified limit from any scheduled bank on any single day on encashment of one or more term deposits, whether on maturity or otherwise. The BCTT is also payable amongst others, by an office or establishment of the Central Government or the Government of a State. It is proposed to amend the said section, so as to exclude the offices or establishments of the Central Government and governments of the states from the purview of definition of "person". It is also proposed to amend the said section so as to enhance the existing limit of taxable banking transactions from the present twenty-five thousand to fifty thousand rupees for individuals and Hindu undivided family. This amendment will take effect from the 1st of June, 2007. [Clause 134] website : http//indiabudget.nic.in Document 3 CUSTOMS Note: (a) "Customs Duty" means the customs duty levied under the Customs Act, 1962. (b) "CVD" means the Additional Duty of Customs levied under secti....
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....% on goods falling under Chapter 28 (except Titanium Dioxide), Chapter 29 (except Mannitol, Sorbitol and Caprolactum) and Chapter 31. 2) Customs duty has been reduced on glycerol waters and glycerol lyes from 30% to 20%. 3) Customs duty has been reduced on Denatured ethyl alcohol from 10% to 7.5%. 4) Customs duty has been reduced from 12.5% to 7.5% on goods falling under headings 3201 to 3207 (except pigments and preparations based on Titanium Dioxide). 5) Customs duty has been reduced from 12.5% to 7.5% on goods falling under heading 3403. 6) Customs duty has been reduced from 12.5% to 7.5% on goods falling under headings 3801 to 3807 and 3809 (with few exceptions), 3810, 3812, 3816, 3817, 3821 and 3824 (except 3824 60). 7) Customs duty has been reduced from 12.5% to 7.5% on goods falling under headings 3901 to 3907 and 3909 to 3915. 8) Customs duty has been reduced from 12.5% to 10% on Titanium Dioxide, and pigments and preparations based on Titanium Dioxide. H. AGRICULTURE: 1) Customs duty has been reduced on food processing machinery from 7.5% to 5%. 2) Customs duty has been reduced on sprinklers and drip irrigation systems used for agricultural an....
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....orax or boric acid from 10% to 5%; 6) Customs duty has been reduced on frit from 10% to 5%; 7) Customs duty has been reduced on specified ceramic colours from 12.5% to 5%. 8) Customs duty has been reduced on watch dials and movements from 12.5% to 5%. 9) Customs duty has been reduced on parts of umbrella, including umbrella panels, from 12.5% to 5%. 10) Customs duty has been reduced on dammar batu from 30% to 20%. 11) A uniform customs duty rate of 5% has been prescribed for urea unconditionally. 12) Aramid yarns for manufacture of bulletproof jackets for supply to armed forces have been exempted from both customs duty and CVD. 13) Customs duty has been reduced on pet food from 30% to 20%. O. WITHDRAWAL OF EXEMPTIONS 1) Customs duty exemptions/concessions on following items have been withdrawn: a) Chemicals, for use in the manufacture of Centchroman; b) Codeine phosphate or Nicotine, imported by Government alkaloid factories; c) Recorded magnetic tapes for producing TV serials; d) Specified goods like TV cameras (professional grade), audio recording equipment, tabletop desk production video machine, 8 channel video mixer/switches etc .; ....
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....l research institutions registered with Department of Scientific & Industrial Research, for the purpose of research, subject to certain conditions. G. METALS: The rate of compounded levy on aluminium circles has been increased from Rs.7500/10000 per machine per month to Rs. 12000 per machine per month. website : http//indiabudget.nic.in 30 H. TOBACCO PRODUCTS: 1) Specific rates of total excise duty on cigarettes have been revised as under: S. No. Description Present rate Proposed rate Non-Filter Cigarettes (Rs. per 1000) 1 Not exceeding 60 mm in length 160 168 2 Exceeding 60 mm but not exceeding 70 mm 520 546 Filter Cigarettes 3 Not exceeding 70 mm in length 780 819 4 Exceeding 70 mm but not exceeding 75 mm 1260 1323 5 Exceeding 75 mm but not exceeding 85 mm 1675 1759 6 Other cigarettes 2060 2163 7. Cigarettes of tobacco substitutes 1150 1208 2) Specific rates of total excise duty (including cess) on biris have been revised as under: (a) Biris, other than paper rolled and manufactured without the aid of machines from Rs.12 to Rs. 16 per thousand. (b) Other biris from Rs.22 to Rs.29 per thousand. 3) The exemption limit fo....
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....ipally in an automatic data processing machine. (d) Computer key boards website : http//indiabudget.nic.in 31 (e) Scanners (f) Computer mouse (g) Computer plotter (h) Facsimile machines (i) Modems (modulator-demodulators) (j) Set top boxes for gaining access to internet (k) Set top boxes for television sets. L. WATER SUPPLY PROJECTS: At present, exemption from excise duty is available for pipes used for taking water from water treatment plant, including its reservoir, to the first storage point. This is being continued. In addition, exemption has now been extended to all pipes of outer diameter exceeding 20 centimeter, when such pipes are integral part of the water supply project. Such pipes will be eligible for the exemption irrespective of whether they are used for taking water from treatment plant to the first storage point or from one storage point to another storage point. M. WITHDRAWAL OF EXEMPTIONS: 1) Excise duty exemptions/concessions on following items have been withdrawn: a) Chemical reagents manufactured by Hindustan Antibiotics Ltd. for use in manufacture of kits for testing narcotics drugs and psychotropic substances; b)....
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....the date of such judgement, decree, order or direction. 3) Section 28E (c) (ii) of the Customs Act, 1962 defines an "applicant" who is entitled to seek Advance Ruling. Under this section 'applicant' includes a joint venture in India. This section is being amended by inserting an Explanation in clause (c) so as to clarify that 'joint venture in India' means a venture in which at least one of the participants, partners or equity holders shall be a non-resident having substantial interest in the joint venture and exercising joint control over it. website : http//indiabudget.nic.in 32 4) Section 75A of the Customs Act, 1962 deals with payment of interest on drawback paid to a claimant erroneously. It provides that in addition to payment of said amount of drawback, the claimant shall pay interest at the rate fixed under section 28AA, within a period of two months from the date of demand. Sub-section (2) of Section 75A is being amended to provide that in case of erroneous refund, the interest shall be charged at the rate fixed under section 28AB, from the date of payment of drawback till the date of recovery of such drawback. 5) Prior to operationalisation of Special Econo....
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....s amount shall be granted by the Commission; 9) Section 127E of the Customs Act, 1962 is being amended with a view to debar the Settlement Commission from re-opening the completed proceedings in respect of applications received on or after 1st June, 2007; 10) Section 127F of the Customs Act, 1962 is being amended so as to make consequential changes in view of the amendments made in section 127C; 11) Section 127H of the Customs Act, 1962 is being amended so as to debar the Settlement Commission from granting immunity from prosecution for any offence under Indian Penal Code or any Central Act for the time being in force other than Customs Act. It also provides that the Settlement Commission shall not have power to grant immunity from payment of interest as provided under this Act. It further provides that applications pending before the Settlement Commission on 31st May, 2007 shall be decided in accordance with the existing provisions; 12) Section 127J and 127K of the Customs Act, 1962 are being amended so as to make consequential changes in view of the amendments made in section 127C; 13) Section 127L of the Customs Act, 1962 is being amended so as to provide that an ....
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.... who is entitled to seek Advance Ruling. Under section 32A(c) (ii), applicant includes a joint venture in India. This section is being amended by inserting an Explanation in clause (c) so as to clarify that 'joint venture in India' means a venture in which at least one of the participants, partners or equity holders shall be a non-resident having substantial interest in the joint venture and exercising joint control over it. 20) Section 31 of the Central Excise Act, 1944 is being amended so as to provide that an applicant can file an application before the Settlement Commission only in respect of cases pending before the adjudicating authority. It further provides that in respect of cases referred back by the Appellate Tribunal, Court or any other authority to the adjudicating authority for fresh adjudication, the applicant shall not be entitled to file an application; 21) Section 32A of the Central Excise Act, 1944 is being amended so as to empower the Chairman, Settlement Commission to constitute a Bench consisting of three Members and the senior among the Members shall act as the presiding officer of the Bench, if the Vice-Chairman is not one of the Members; 22) Section....
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.... under this Act. It further provides that the applications pending before the Settlement Commission on 31st May, 2007 shall be decided in accordance with the existing provisions; 27) Section 32M and Section 32N of the Central Excise Act, 1944 are being amended so as to make consequential changes in view of the amendments made in section 32F; 28) Section 32 O of the Central Excise Act, 1944 is being amended so as to provide that an applicant can apply for settlement only once during his lifetime so that the scheme of settlement is not treated as a permanent amnesty scheme by the tax evaders. It also provides that in respect of cases involving identical recurring issue, the applicant can file application for settlement provided that his earlier application is pending before the Settlement Commission; 29) Section 32PA of the Central Excise Act, 1944 is being omitted as it has outlived its utility; 30) Section 35E of the Central Excise Act, 1944 is being amended so as to provide that the Committee of Chief Commissioners or the Commissioners shall review the orders of the Commissioner or adjudicating authorities below the rank of Commissioner within a period of three months ....
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....ke payment under rule 6 (3) of the CENVAT Credit Rules, 2004 etc., can be paid along with duty payable by 5th or 15th of the next month; b) Rule 8 has been further amended to make e-payment mandatory for payment of duty by all assessees who have paid excise duty of rupees 50 lakh or more in cash during the preceding financial year. This provision would come into effect from 01.04.2007; c) Sub-rule (2) of rule 11 has been amended to provide that the invoice shall also contain address of the jurisdictional Central Excise Division. This change will come into force from 01.04.2007; d) Rule 21 has been amended to increase the power of remission given to various officers of central excise. e) Rules 25 & 26 are being amended to reduce the minimum penalty from the present level of rupees ten thousand to rupees two thousand. This change will be effective on enactment of Finance Act, 2007. f) A new sub-rule (2) has been inserted in rule 26 to provide for penal action against the person who issues CENVAT invoices without delivery of goods mentioned therein and also against the person who is involved in fabricating Central Excise documents or any other document like shipping bil....
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....ing amended with a view to rationalize this provision and to have a more precise definition, so as to cover all similarly placed aircrafts, irrespective of whether they are Turbo-Prop or otherwise, with the objective of improving air-connectivity to remote parts of the country by restricting the rate of Sales Tax/VAT on Aviation Turbine Fuel sold to such small aircrafts. In addition, the term 'scheduled airlines' has also been defined. website : http//indiabudget.nic.in 35 SERVICE TAX (I) SECONDARY AND HIGHER EDUCATION CESS: A cess @ 1% is being imposed on services liable to service tax. It shall be levied on the service tax payable on such services. The cess paid on inputs services shall be available as credit for payment of cess on output services. It will come into force from the date of enactment of the Finance Bill, 2007. (II) FOLLOWING SERVICES ARE INDIVIDUALLY SPECIFIED AS TAXABLE SERVICES: (1) Telecommunication service (includes various telecommunication related services which are presently specified as separate taxable services) ; (2) Services outsourced for mining of mineral, oil or gas; (3) Services provided in relation to renting of immovable ....
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....henticity of documents submitted by the candidates; (ii) "goods" referred to in management, maintenance or repair service includes computer software. The above changes will come into effect from a date to be notified after the enactment of the Finance Bill, 2007. (IV) EXEMPTION FROM SERVICE TAX: (1) The threshold limit of service tax exemption for small service providers is being increased from the present level of Rs.4 lakh to Rs.8 lakh; (2) Exemption from service tax is being provided to,- (i) all taxable services provided by Technology Business Incubators (TBI)/Science and Technology Entrepreneurship Parks (STEP) recognized by National Science and Technology Entrepreneurship Board of Department of Science & Technology also known as "incubators"; website : http//indiabudget.nic.in 36 (ii) taxable services provided by an incubatee (entrepreneur) whose total business turnover in a year does not exceed Rs. 50 lakh and is located within the premises of an incubator, subject to specified conditions; (iii) services provided by resident welfare associations to their members, where the monthly contribution of a member does not exceed Rs. 3000/- per month; ....