TaxTMI 
TaxTMI 
Memorandums
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....equity capital by lowering the cascading effect of dividend distribution tax; (vii) rationalising the capital gains tax regime for equity so as to reduce the tax induced bias against distribution of corporate profit; and (viii) encouraging the growth of the corporate debt market by eliminating TDS on interest on corporate bonds so as to facilitate seamless transactions. 2. The Finance Bill, 2008 seeks to prescribe the rates of income-tax on incomes liable to tax for the assessment year 2008-09, the rates at which tax will be deductible at source during the financial year 2008-09 from interest (including interest on securities), winnings from lotteries or cross-word puzzles, winnings from horse races, card games and other categories of income liable to deduction or collection of tax at source under the Income-tax Act; rates for computation of "advance tax", deduction of income-tax from or payment of tax on 'Salaries' and charging of income-tax on current incomes in certain cases for the financial year 2008-09. 3. Subject to certain exceptions, which have been indicated while dealing with the relevant provisions, changes in the provisions of the tax laws are ordinarily pr....
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....d body of individuals, at the rate of ten per cent .of the amount of tax, where the fringe benefits exceed ten lakh rupees. (b) in the case of every firm, artificial juridical person and domestic company, at the rate of ten per cent. of the amount of tax, irrespective of the amount of fringe benefits. (c) in the case of every company, other than a domestic company, at the rate of two and one-half per cent. of the amount of tax, irrespective of the amount of fringe benefits. (3) Education cess- Additional surcharge called the "Education Cess on Income-tax" shall continue to be levied at the rate of two per cent. on the amount of tax and surcharge, if any, in all cases. In addition, the additional surcharge called "Secondary and Higher Education Cess on income-tax" shall also continue to be levied at the rate of one per cent. on the amount of tax and surcharge, if any, in all cases. No marginal relief shall be available in respect of such Cess. Il. Rates for deduction of income-tax at source during the financial year 2008-09 from certain incomes other than "Salaries". The rates for deduction of income-tax at source during the financial year 2008-09 from certain inco....
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....tation of "advance tax" and charging of income-tax in special cases during the financial year 2008-09. The rates for deduction of income-tax at source from "Salaries" during the financial year 2008-09 and also for computation of "advance tax" payable during the said year in the case of all categories of assessees have been specified in Part III of the First Schedule to the Bill. These rates are also applicable for charging income-tax during the financial year 2008-09 on current incomes in cases where accelerated assessments have to be made. For instance, provisional assessment of shipping profits arising in India to non- residents, assessment of persons leaving India for good during that financial year, assessment of persons who are likely to transfer property to avoid tax, assessment of bodies formed for a short duration etc. The salient features of the rates specified in the said Part III are indicated in the following paragraphs- A. Individual, Hindu undivided family, association of persons, body of individuals, artificial juridical person The rates of income-tax in the case of every individual or Hindu undivided family or every association of persons or body of i....
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....a surcharge for purposes of the Union calculated at the rate of ten per cent. of such income-tax. Further, in the case of every association of persons and body of individuals, surcharge will be levied at the existing rates on tax on fringe benefits, where the fringe benefits exceed ten lakh rupees. 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 First Schedule to the Bill. These rates will continue to be the same as those specified for assessment year 2008-09. No surcharge shall be levied. C. Firms In the case of firms, the rate of income-tax has been specified in Paragraph C of Part III of the First Schedule to the Bill. This rate will continue to be the same as that specified for assessment year 2008-09. Further, the amount of income-tax computed shall, in the case of every firm having total income exceeding one crore rupees, be increased by a surcharge for purposes of the Union calculated at the rate of ten per cent. of such income tax. However, marginal relief has also been provided to ensure that the total amount payable as income-tax and surcharge on total income e....
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....tion of profits and gains derived from commercial production or refining of mineral oil. For the purpose of this section, the term 'mineral oil' does not include petroleum and natural gas, unlike in other sections of the Act. The deduction under this sub-section is available to an undertaking for a period of seven consecutive assessment years including the initial assessment year - (i) in which the commercial production under a production sharing contract has first started; or (ii) in which the refining of mineral oil has begun. It is proposed to insert a new proviso in sub-section (9) of section 80-IB so as to provide that no deduction under this sub-section shall be allowed to an undertaking engaged in refining of mineral oil if it begins refining on or after the 1st day of April, 2009. This amendment will take effect from the 1st day of April, 2008. [Clause 15 ] Commodities Transaction Tax A new tax called Commodities Transaction Tax (CTT) is proposed to be levied on taxable commodities transactions entered in a recognized association. It is proposed to define 'Taxable commodities transaction' to mean a transaction of purchase or sale in a recognised a....
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....essary to resolve the tax issues arising therefrom. The first issue is whether mortgage of property for obtaining a loan under the reverse mortgage scheme is transfer within the meaning of the Income-tax Act thereby giving rise to capital gains. Section 2(47) of the Income-tax Act provides an inclusive definition of 'transfer'. Further, 'transfer' within the meaning of the Transfer of Properties Act includes some types of mortgage. Therefore, a mortgage of property, in certain cases, is a transfer within the meaning of section 2(47) of the Income-tax Act. Consequently, any gain arising upon mortgage of a property may give rise to capital gains under section 45 of the Income-tax Act. However, in the context of a reverse mortgage, the intention is to secure a stream of cash flow against the mortgage of a residential house and not to alienate the property. It is therefore proposed to insert a new clause (xa) in section 47 of the Income-tax Act to provide that any transfer of a capital asset in a transaction of reverse mortgage under a scheme made and notified by the Central Government shall not be regarded as a transfer and therefore shall not attract capital gains tax. The second ....
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....nterest) has suffered taxation in any of the earlier years, such amount shall not be taxed again. The proposed amendment shall apply to investments, as above, made during the financial year 2007-08 and subsequent years. [Clause 13] Additional deduction for health insurance premium paid for parents Section 80D of the Income-tax Act provides for a deduction of up to fifteen thousand rupees to an assessee, being an individual or a Hindu undivided family. The deduction is allowed for making a payment to effect or keep in force an insurance on,- (a) the health of the assessee or on the health of the wife or husband, dependent parents or dependent children of the assessee where the assessee is an individual; (b) the health of any member of the family where the assessee is a Hindu undivided family. In case the assessee or any other member of the family, on whose health the insurance has been effected or kept in force, is a senior citizen, the deduction allowed is up to twenty thousand rupees. The existing provisions also have the requirements that the payment must be through a mode other than cash and should be out of the taxable income of the assessee. Since healt....
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.... the Act defines "charitable purpose" to include relief of the poor, education, medical relief, and the advancement of any other object of general public utility. It has been noticed that a number of entities operating on commercial lines are claiming exemption on their income either under section 10(23C) or section 11 of the Act on the ground that they are charitable institutions. This is based on the argument that they are engaged in the "advancement of an object of general public utility" as is included in the fourth limb of the current definition of "charitable purpose". Such a claim, when made in respect of an activity carried out on commercial lines, is contrary to the intention of the provision. With a view to limiting the scope of the phrase "advancement of any other object of general public utility", it is proposed to amend section 2 (15) so as to provide that "the advancement of any other object of general public utility" shall not be a charitable purpose if it involves the carrying on of - http://indiabudget.nic.in 7 (a) any activity in the nature of trade, commerce or business or, (b) any activity of rendering of any service in relation to any trade, c....
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....uch dividend, and (b) the domestic company is not a subsidiary of any other company. It is also provided that the same amount of dividend shall not be taken into account for such reduction, more than once. For the purpose of the section, a company shall be a subsidiary of another company, if such other company holds more than half in nominal value of the equity share capital of the company. This amendment will take effect from the 1st day of April, 2008. [Clause 21] RATIONALISATION OF PROVISION OF TAX DEDUCTION AND COLLECTION AT SOURCE Enlargement of scope of TDS under section 194C to cover association of persons and body of individuals Sub-section (1) of section 194C of the Income-tax Act inserted by the Finance Act, 1972 provides for deduction of income-tax at source from any sum credited or paid to a resident contractor for carrying out any work (including supply of labour for carrying out any work) in pursuance of a contract between the contractor and the Government, local authorities, statutory corporations, companies, co-operative societies, statutory authorities engaged in providing housing accommodation, registered societies, trusts, universities, firms....
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.... non-resident or to a foreign company in a form and manner to be prescribed by the Board. This amendment will take effect from the 1st day of April, 2008. [Clauses 41,54] Amendments to the provisions of Dematerialisation of TDS and TCS certificates A scheme for dematerialisation of Tax Deducted at Source (TDS)/ Tax Collected at Source (TCS) certificates was introduced through the Finance (No. 2) Act, 2004, with effect from 01-04-2005 for any deduction or collection of tax at source made on or after 1-04-2005. The commencement of this scheme was postponed to 1-4-2006 by the Finance Act, 2005 and later to 1-4-2008 by the Finance Act, 2006. Since the national level information technology infrastructure of the Income-tax Department is not yet operational, it is proposed to extend the commencement of the scheme to 1-04-2010. The system of allowing credit to the assessee for TDS/TCS needs a certain degree of flexibility considering the ongoing technological and business process changes. Providing rigorous conditions regarding the method of giving credit for TDS/TCS in the Act itself, makes the system difficult to restructure and implement according to the changing technolo....
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.... http://indiabudget.nic.in 9 However, with a view to avoid multiple claims for deduction, it is also proposed to provide that a company approved under the provisions of section 35(1)(iia) will not be entitled to claim weighted deduction of 150% under section 35(2AB). However, deduction to the extent of 100% of the sum spent as revenue expenditure on scientific research which is available under section 35(1)(i) will continue to be allowed. These amendments will take effect from the 1st day of April, 2009 and will accordingly apply in relation to assessment year 2009-10 and subsequent assessment years. [Clause 5] MEASURES TO PROMOTE SOCIO-ECONOMIC DEVELOPMENT Widening the scope of "agricultural income" "Agricultural income" is defined in section 2(1A) of the Act to mean, inter-alia, income derived from land which is situated in India and is used for agricultural purposes. Such agricultural income is exempt from tax under section 10(1) of the Income-tax Act, 1961 ('Act'). It has been held by judicial authorities that whether income from nursery operations constitutes agricultural income or not, will depend on the facts of each case. If the nursery is maintained ....
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....ake effect from the 1st day of April, 2009 and will accordingly apply in relation to the assessment year 2009-10 and subsequent assessment years. [Clause 4] Extension of income tax exemption to Special Undertaking of Unit Trust of India (SUUTI) The Special Undertaking of Unit Trust of India (SUUTI) was created vide The Unit Trust of India (Transfer of Undertaking and Repeal) Act, 2002. SUUTI is the successor of UTI. The mandate of SUUTI is to liquidate government liabilities on account of the erstwhile UTI. Vide section 13 (1) of the Repeal Act, SUUTI is exempt from income-tax or any other tax on any income, profits or gains derived, or any amount received in relation to the specified undertaking for a period of five years, computed from the appointed day, i.e. 1st day of February, 2003. This exemption has come to an end on 31st January, 2008. http://indiabudget.nic.in 10 Since two schemes of SUUTI, namely, US 64 bonds and 6.6% ARS bonds, are still pending closure, it is proposed to amend section 13 (1) so as to extend the exemption upto 31st March, 2009. This amendment will take effect retrospectively from 1st February, 2008. [Clause 118] Five year tax holi....
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.... functioning at any time during the period beginning on the 1st day of April, 2007 and ending on the 31st day of March, 2010. Further, such convention centre must be constructed at any time during the above specified period. The tax holiday is available to profits derived from the business of hotels or convention centres for five consecutive assessment years beginning from the initial assessment year. For availing the above benefit, the hotel or convention centre should be located in the specified area. The specified area has been defined as the National Capital Territory of Delhi and the districts of Faridabad, Gurgaon, Gautam Budh Nagar and Ghaziabad. With a view to promoting tourism and to attract tourists to certain World Heritage Sites in India, it is proposed to extend the scope of tax benefits available in this section also to new two-star, three-star or four-star category hotels located in specified districts having a World Heritage Site. Such hotels are required to be constructed and start functioning at any time during the period beginning on the 1st day of April, 2008 and ending on the 31st day of March, 2013. Specified districts having a World Heritage Site are propo....
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....the provisions of section 40A(3) are being circumvented by splitting a particular high value payment to a person into several cash payments, each below Rs. 20,000/ -. This splitting is also resorted to for payments made in the course of a single day. Courts have also held that the statutory limit in section 40A(3) applies to payment made to a party at one time and not to the aggregate of the payments made to a party in the course of the day as recorded in the cash book. According to the judicial opinion, the words used are 'in a sum', i.e., single sum. Therefore, irrespective of any number of transactions, where the amount does not exceed the prescribed amount in each transaction, the rigours of section 40A(3) will not apply. To overcome the splitting of payments to the same person made during a day as referred above and to increase the efficacy of the provision, the amendment seeks to substitute the present provision to provide that where a payment or aggregate of payments made to a person in a day, otherwise than by an account payee cheque drawn on a bank or account payee bank draft, exceeds twenty thousand rupees, the disallowance of such expenditure shall be made under the p....
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....ober of the assessment year to 30th day of September of the assessment year in the following categories of assessees :- (i) a company; or http://indiabudget.nic.in 12 (ii) a person (other than a company) whose accounts are required to be audited under this Act or under any other law for the time being in force. There is no change in the due date of filing of returns in the case of all other categories of taxpayers. [Clauses 24, 27] These amendments will take effect from 1st April, 2008. Correction of arithmetical mistakes and adjustment of incorrect claim under section 143(1) through Centralised Processing of Returns Generally, tax administrations across countries adopt a two-stage procedure of assessment as part of risk management strategy. In the first stage, all tax returns are processed to correct arithmetical mistakes, internal inconsistency, tax calculation and verification of tax payment. At this stage, no verification of the income is undertaken. In the second stage, a certain percentage of the tax returns are selected for scrutiny/audit on the basis of the probability of detecting tax evasion. At this stage, the tax administration is concerned....
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....as may be specified in the notification. However, such direction shall not be issued after 31st March 2009. (c) every notification shall be laid before each House of Parliament as soon as such notification is issued. Along with the notification, the scheme referred above is also required to be laid before each House of Parliament. Similar amendment has also been proposed in section 115WE of the Income-tax Act, relating to fringe benefits. These amendments will take effect from 1st April, 2008. [Clauses 25, 29] Provision for assessment in the case of annulment of the proceeding under section 153A Under the Income-tax Act, whenever a search is conducted under section 132 or books of account or other documents or any assets are requisitioned under section 132A, provision of section 153A comes into operation. This section, inter-alia, provides for assessment or reassessment of total income in respect of each assessment year falling within a period of six assessment years immediately preceding the assessment year relevant to the previous year in which search is conducted or books of account, etc are requisitioned. Time limit for completion of such assessment or reasses....
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....n,- . the assessment with respect to any of the six assessment year (from assessment year 2002-03 to assessment year 2007-08), if already completed under first proviso to renumbered sub-section (1) of section 153A, shall automatically become annulled due to this order; . no order of assessment or reassessment with respect to any of the six assessment year (from assessment year 2002-03 to assessment year 2007-08) can be made under first proviso to renumbered sub-section (1) of section 153A as the proceeding under section 153A has been annulled; . the proceeding for assessment year 2005-06 which has been abated under second proviso to renumbered sub-section (1) of section 153A, shall revive under new sub-section (2); and . the order in respect of this assessment can be made at any time before 31st December, 2007 (normal time limit under section 153) or 31st August, 2008 [new time limit under sub-section (4) of section 153], whichever is later. Let us now assume that this order of annulment has been set aside and such order has been received by the Commissioner on 3rd February, 2008. In such a situation,- · the assessment with respect to any of the six assessment ....
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....nd the said proviso so as to also allow the Assessing Officer to extend this period of furnishing of audit report suo motu. Hence, while the Assessing Officer shall continue to have power to grant extension on an application made in this behalf by the assessee and when there are good and sufficient reasons for such extension, he can also grant such extension on his own. The amendment will take effect from 1st April, 2008. [Cause 28] 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 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. Rule 3 of Part A of the Fourth Schedule provides that the Chief Commissioner or the Commissioner of Income-tax may accord recognition to any provident fund which satisfies the conditions prescribed in rule 4 and the rules made by the Board in this behalf. The proviso to sub-rule (1) of the said rule 3, inter-alia, specifies that in a case where recognition has been ac....
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....mit for issuance of notice under section 143 (2) of the Income-tax Act Sub-section (2) of section 143 of the Income-tax Act provides that the notice under this sub-section shall be served on the assessee within a period of twelve months from the end of the month in which the return is furnished. Further, the service of such notice must be affected in a manner laid down in sections 282, 283 and 284 of the Income-tax Act, read with General Clauses Act. http://indiabudget.nic.in 15 Instances have come to the notice of the department, where notices under sub-section (2) of section 143, though issued by registered post within twelve months from the end of the month in which the return was furnished, have been held 'invalid' on the ground that the notice was actually received by the assessee after the limitation date and there was no 'service' as postulated under the section. This is notwithstanding the fact that the assessee has attended the assessment proceedings in response to the notice served on him. Instances have also come to notice where the orders of the assessing officer is being quashed on the consideration that there is no evidence of issue or service of notice, e....
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....It is also proposed to amend section 42D of the Wealth-tax Act to extend this presumption to books of account, other documents or assets which have been delivered to the requisitioning officer in accordance with the provisions of section 37B of the Wealth-tax Act. This amendment will take effect retrospectively from 1st October, 1975. [Clauses 53, 62] Authentication of documents/notices/letters The demand on the tax administration has been growing on account of increase in the volume of work. The widening and deepening of the tax base has resulted in substantial increase in the number of taxpayers. To cope with the sheer volume of work and render timely service to the taxpayer, the Department has been increasingly using information technology in its major processes and procedures. A case in point is the scheme of 'e-filing of the returns'. There are also other important project like 'refund banker', e-payment of taxes, etc. These schemes are expected to enhance the level of taxpayers' service, which in turn is expected to result in increased voluntary compliance. Centralized processing of returns and centralized issuance of notices using information technology is critical ....
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.... other income tax authorities, fixing such monetary limits as it may deem fit. Such fixing of monetary limit is to be for the purpose of regulating filing of appeal or application for reference by any income tax authority under the provisions of this Chapter. . Where an income-tax authority has not filed any appeal or application for reference on any issue in the case of an assessee for any assessment year, due to abovementioned order/instruction/direction of the Board, such authority shall not be precluded from filing an appeal or application for reference on the same issue in the case of - (a) the same assessee for any other assessment year; or (b) any other assessee for the same or any other assessment year. . Where no appeal or application for reference has been filed by an income tax authority pursuant to the above mentioned orders/instructions/directions of the Board, it shall not be lawful for an assessee to contend that the income tax authority has acquiesced in the decision on the disputed issue by not filing an appeal or application for reference in any case. . The Appellate Tribunal or Court shall have regard to the above mentioned orders/ instructions/dir....
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....less all depreciation actually allowed to him under the Income-tax Act. http://indiabudget.nic.in 17 Some persons were exempt from tax and, therefore, not required to compute their income under the head "profits and gains of business or profession". Upon withdrawal of exemption, such persons became liable to income-tax and hence, required to compute their income for income-tax purposes. In this context, dispute has arisen on the basis for allowing depreciation under the Income- tax Act in respect of assets acquired during the years when it enjoyed exemption. The Income Tax Appellate Tribunal has held that since there was no liability to tax, there was no occasion to compute the income of such person under the provisions of the Income-tax Act. Therefore, the depreciation provided in the books in the years when the income was exempt can not be treated as the depreciation "actually allowed". Accordingly, it was held that the actual cost of the asset was the written down value for the purposes of claiming depreciation under the Income-tax Act in the previous year in which such person first ceases to enjoy the income-tax exemption. This interpretation is not in conformity wi....
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....bered so as to provide that the book profit shall be increased by the amount of deferred tax and the provision therefor, if debited to profit and loss account. Further, it is also proposed to clarify that the amount of income tax shall include,- (i) tax on distributed profits under section 115-O or distributed income under section 115R; (ii) any interest charged under this Act; (iii) surcharge, if any, as levied by the provisions of the Central Acts from time to time; (iv) Education Cess on income-tax, if any, as levied by the Central Acts from time to time; and (v) Secondary and Higher Education Cess on income-tax, if any, as levied by the Central Acts from time to time. These amendments will take effect retrospectively from 1st April, 2001 and will accordingly apply in relation to assessment year 2001-02 and subsequent assessment years. [Clause 20] Amendments in respect of reassessment proceedings to clarify correct legislative intention The Income-tax Act empowers assessing officer to reopen a case under section 148 if he has reason to believe that any income has escaped assessment. Adequate safeguards have been provided so that such power of reopen....
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....slative intent, in such a situation, has been very clear. The Joint Commissioner is only required to be satisfied on the reasons recorded by the assessing officer. There is no further requirement for him to issue the notice himself. Hence, in order to correctly reflect the legislative intention, it is proposed to - (i) amend section 148 of the Income-tax Act to provide that the assessing officer may assess or reassess an income which is chargeable to tax and has escaped assessment other than those income involving matters which are the subject matter of any appeal, reference or revision; (ii) amend section 151 of the Income-tax Act to provide that the Joint Commissioner, the Commissioner or the Chief Commissioner, as the case may be, being satisfied on the reasons recorded by the assessing officer about fitness of a case for the issue of notice under section 148, need not issue the notice himself. Similar amendments have been proposed in the Wealth-tax Act. The amendments relating to section 148 will take effect from 1st April, 2008. [Clauses 30, 31] The amendments relating to section 151 will take effect retrospectively from 1st October, 1998. Consequences ....
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....However, such period of stay cannot exceed 180 days from the date of such order and the ITAT shall dispose off the appeal within this period of stay. The second proviso to this sub-section provides that where the appeal has not been disposed off within this period and the delay in disposing the appeal is not attributable to the assessee, the ITAT can further extend the period of stay originally allowed. However, the aggregate of period originally allowed and the period so extended should not exceed 365 days. The ITAT is required to dispose off the appeal within this extended period. The third proviso to this sub-section provides that if such appeal is not decided within the period allowed originally or the period or periods so extended or allowed, the order of stay shall stand vacated after the expiry of such period or periods. The intention behind these provisions have been very clear that the ITAT can not grant stay either under the original order or under any subsequent order, beyond the period of 365 days in aggregate. To make this intention clear, it is proposed to amend section 254 of the Income-tax Act and further provide that the aggregate of the period original....
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....the salient features of the scheme for granting immunity from prosecution are as under :- . The application for the immunity must be made by the assessee (person whose case has been abated under section 245HA) to the Commissioner of Income-tax before institution of the prosecution proceedings after abatement. · If prosecution proceedings were instituted before or during the pendency of settlement proceedings, then the assessee can approach the commissioner for immunity any time. However if the assessee has received any notice etc. from the Income tax authority for institution of prosecution, then he must apply to the commissioner for immunity, before actual institution of prosecution. http://indiabudget.nic.in 20 · Immunity can be granted by the Commissioner on his satisfaction. · The satisfaction is required to be that the assessee has cooperated in the proceedings after abatement and has made a full and true disclosure of his income and the manner in which such income has been derived. . Where application for settlement under section 245C had been made before the 1st day of June, 2007, the Commissioner can also grant immunity from prosecution for any....
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....d or payment made to - · provide crèche facility for the children of the employee; or · sponsor a sportsman, being an employee; or · organize sports events for employees, shall not be considered as expenditure for employees' welfare for the purpose of calculation of the value of fringe benefits. (iii) Clause (K) is proposed to be omitted. Hence, any expenditure on or payment made for maintenance of any accommodation in the nature of guest house shall not be included for valuation of fringe benefits. Further, clause (c) and clause (d) of sub-section (1) of section 115WC is proposed to be amended so as to provide that the value of fringe benefits on account of expenditure on festival celebration shall be twenty per cent as against the existing rate of fifty per cent. These amendments shall take effect from 1st April, 2009 and shall accordingly apply in relation to assessment year 2009-10 and subsequent years. [Clauses 22, 23] Deemed payment of tax by the employee where FBT on securities allotted to him is recovered by the employer The Central Board of Direct Taxes (CBDT) has issued circular number 9, dated 20th December, 2007, clarifying therein....
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....ll be levied at the rate of 0.017 per cent of the option premium and shall be paid by the seller; (ii) in case of sale of an option in securities, where option is exercised, STT shall be levied at the rate of 0.125 per cent of settlement price and shall be paid by the purchaser; and (iii) in case of sale of a futures in securities, STT shall be levied at 0.017 per cent and shall be payable by the seller. This amendment will take effect from 1st June, 2008. At present, the amount of STT paid is allowed as rebate under section 88-E of the Income-tax Act. This rebate is allowed when the income from taxable securities transactions is included under the head 'profits and gains of business or profession'. It is proposed to discontinue the rebate available to such assessee under section 88-E of the Income-tax Act. Hence, no rebate under section 88E shall be allowed to the assessee in, or after, the assessment year beginning on the 1st day of April, 2009. This amendment will take effect from 1st April, 2008. Further, it is proposed that any amount of securities transaction tax paid by the assessee during the year in respect of taxable securities transactions entered in....
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....MOTION 1) Customs duty on unworked or simply prepared corals has been reduced from 10% to 5%. 2) Customs duty on rough cubic zirconia has been reduced from 5% to Nil. 3) Customs duty on cubic zirconia (polished) has been reduced from 10% to 5%. 4) Customs duty on tuna bait has been reduced from 30% to Nil. 5) Customs duty on specified machinery for manufacture of sports goods has been reduced from 7.5% to 5%. 6) Customs duty on specified raw materials for manufacture of sports goods for export has been reduced from 10% to Nil, upto 3% of FOB value of exports in the preceding year. D. DAIRY/POULTRY 1) Customs duty on bactofuges has been reduced from 7.5% to Nil. 2) Customs duty on feed additives/pre-mixes has been reduced from 30% to 20%. E. INFORMATION TECHNOLOGY/ELECTRONIC INDUSTRY 1) Customs duty on specified convergence products has been reduced from 10% to 5%. 2) Customs duty on specified raw materials and inputs for use in IT/electronic hardware industry has been reduced from 10%/ 7.5% to Nil, on end-use basis. 3) Customs duty on specified parts of set-top boxes has been reduced from 7.5% to Nil on end-use basis. F. DRUGS AND KITS: ....
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....s to 18 months. 3) Concessional customs duty of 5% provided on polymer long rod insulators has been restricted to polymer long rod insulators of 765 KV rating only. 4) Customs duty and CVD on 0.177 calibre airguns have been exempted. Consequently, 4% additional duty of customs shall also be exempted on these airguns. 5) Tariff rate of Rs.2000 per 1000 kWh has been prescribed on 'electrical energy'. However, the effective rate will continue to be Nil. http://indiabudget.nic.in CENTRAL EXCISE Note: Changes come into effect immediately unless otherwise specified. Major proposals about central excise duty are the following: A. GENERAL CENVAT RATE: General rate of excise duty (CENVAT) has been reduced from 16% to 14%. The other ad valorem rates of 24%, 12% and 8% remain unchanged. B. SECTOR SPECIFIC RELIEF MEASURES: I. Drugs and Pharmaceuticals: (a) Excise duty has been reduced from 16% to 8% on all drugs (formulations). (b) Excise duty has been reduced from 16% to 8% on: (i) instant sterile dressing pads, burn therapy pads, corn removers etc. (ii) sterile surgical catgut, sterile absorbable surgical and sterile tissue adhesive for wounds clo....
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....enthol Flakes (b) Excise duty has been reduced from 16% to 8% on: (i) Water filtration and purification devices (ii) Veneers & Flush doors (iii) Heat resistant rubber tension tape (iv) Inks for marker pens, highlighters etc. (c) Excise duty on pan masala, not containing tobacco, with betel nut content not more than 15%, has been reduced from 16% to 8%. It has also been exempted from National Calamity Contingent Duty. D. CEMENT: (a) Excise duty has been revised on Bulk cement from "Rs.400 per tonne" to " 14% or Rs. 400 per tonne, whichever is higher" (b) Excise duty has been increased on Cement clinkers from Rs.350 per tonne to Rs. 450 per tonne. E. Cigarettes At present, cigarettes attract duty at varying rates depending upon whether they are filter or non-filter and their length. Excise duty rates on non-filter cigarettes have been enhanced to bring them at par with filter cigarettes of corresponding length. The revised rates of excise duty (basic + NCCD + health cess) on non-filter cigarettes are as under: S. No. Description From To (Rs per 1000) Non-filter cigarettes 1. Not exceeding 60 mm in length 168 819 2. Exceeding 60 mm but....
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....e procedure for the same. 3) Section 11B of the Central Excise Act, 1944 is being amended to provide for the refund of interest paid on any duty of excise. 4) Section 11D the Central Excise Act, 1944 is being amended to enable the Central Government to recover any amount collected by any person as representing duty of excise in excess of the duty assessed or determined and paid on any excisable goods or any amount collected by any person as representing duty of excise on any excisable goods, which are wholly exempt or are chargeable to Nil rate of duty. 5) Section 11DD of the Central Excise Act, 1944 is being amended to provide for recovery of interest on amounts collected under section 11D. 6) Section 35B of the Central Excise Act, 1944 is being amended to provide for referring the matter to the jurisdictional Chief Commissioner where the Committee of Commissioners of Central Excise differs in its opinion on the legality and propriety of the order passed in an appeal by the Commissioner (Appeals). 7) Section 35E of the Central Excise Act, 1944 is being amended to provide for referring the matter to the Board where the Committee of Chief Commissioners of Central Exci....
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....Section 129D is also being amended to provide that the order passed under section 129D of the Act shall be made within a period of three months from the date of communication of the decision or order of the adjudicating authority. 16) Section 129EE is being inserted in the Customs Act, 1962 to provide for payment of interest on pre-deposit made by an appellant who succeeds in appeal if the amount of pre-deposit is not refunded within three months from the date of communication of the order of the appellate authority to the adjudicating authority. 17) Section 141 of the Customs Act, 1962 is being amended to regulate the manner in which the imported or export goods may be received, stored, delivered, dispatched or otherwise handled in a customs area by any person and to specify by regulations the responsibilities of person engaged in the aforesaid activities. 18) Section 158 of the Customs Act, 1962 is being amended to increase the maximum amount of penalty from five hundred rupees to fifty thousand rupees for contravention of any of the rules, and from two hundred rupees to fifty thousand rupees for contravention of regulations. J. AMENDMENT IN RULES: 1) Rule 18 of th....
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....ovide that in case of National Calamity Contingent duty (NCCD) payable on mobile phones, credit of any duty of excise other than NCCD will not be utilized for payment of the said NCCD. This change shall come into effect from 1st March, 2008. (b) Rule 6 is being amended to provide following options to a manufacturer, using common inputs or input services for manufacture of dutiable as well as exempted goods and opting not to maintain separate accounts. Such manufacturers can,- (i) either reverse the credit attributable (to be worked out in a manner prescribed in the rule) to the inputs and input services used in the manufacture of exempted goods; or (ii) pay 10% amount of the value (to be determined in accordance with the provision of section 4/4A of the Central Excise Act, 1944) of the exempted goods. This change shall come into effect from 1st April, 2008. (c) A new rule 15A is being inserted to provide for general penalty upto Rs.5000/- in case of contravention of any of the provisions of the CENVAT Rules, 2004, for which no specific penal provision exists. This change shall come into effect from 1st March, 2008. 5) The Central Excise (Determination of Retail Sa....
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....tion and certification of information technology software under technical inspection and certification service; (vi) services provided in relation to a journey from one place to another in a contract carriage vehicle, under tour operator service. However, such services provided for use by an educational body, other than a commercial training or coaching centre, imparting skill or knowledge or lessons on any subject or field shall be excluded. Services provided in relation to a journey from one place to another in a tourist vehicle is already leviable to service tax under tour operator service; (2) To omit,- (i) from business auxiliary service, reference to information technology service consequent upon notifying information technology software service as a separate taxable service; (ii) from consulting engineer service, exclusion of computer software engineering consultancy consequent upon notifying information technology software service as a separate taxable service; (iii) from 39 specified taxable services, reference to service recipient as "client" or "customer" and replace with the words "any person"; The above changes will come into effect from a date to be ....
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....be, to any account, in the books of account of a person liable to pay service tax under "gross amount charged" where the transaction of taxable service is with any associated enterprise [section 67]; (iv) insert section 71 so as to empower the Board to frame a Scheme by notification in the Official Gazette to enable preparation and filing of service tax returns through a person or class of persons known as Service Tax Return Preparer authorized to act for the said purpose; (v) insert section 72 so as to authorize the Central Excise Officer to make assessment on the basis of best judgement after allowing assessee to represent his case where assessee has failed to make service tax returns or failed to assess the tax; (vi) substitute section 77 so as to provide specific penalty for specific contraventions; (vii) provide that where penalty for suppressing value of taxable service under section 78 is payable, penalty for failure to pay service tax under section 76 shall not apply [section 78]; (viii) provide that in case the Committee of Chief Commissioners of Central Excise differs in its opinion regarding the legality and propriety of the order of the Commissioner of Ce....
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....nput services for providing taxable as well as exempted services and opting not to maintain separate accounts. Such provider of output services can,- (i) either reverse the credit attributable (to be worked out in a manner prescribed in the rule) to the inputs and input services used for providing exempted service; or http://indiabudget.nic.in 30 (ii) pay 8% amount of the value (determined in terms of section 67 of the Finance Act, 1994) of the exempted services [Rule 6]; This change shall come into effect from 1st April, 2008. (d) Insert a new rule 7A to prescribe a procedure to enable the provider of output services to take credit on inputs and capital goods on the basis of an invoice/challan/bill issued by its other office. This change shall come into effect from 1st April, 2008. (4) Export of Services Rules, 2005 are being amended so as to treat the following services provided remotely through internet or any electronic network including a computer network, or any means in relation to goods or material or any immovable property situated outside India at the time of provision of service as export of services, namely,- (a) management, maintenance or rep....