analysis of union budget 2005. upto rs 50,000nil rs 50k – rs 60k10% rs 60k - rs 150k20% above rs...
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ANALYSIS OF UNION BUDGET 2005
ANALYSIS OF UNION BUDGET 2005
Upto Rs 50,000 Nil
Rs 50k – Rs 60k 10%
Rs 60k - Rs 150k 20%
Above Rs 150k 30%
PERSONAL TAX – THE SLABSPERSONAL TAX – THE SLABS
Existing structure Now Proposed
Upto Rs 100,000 Nil
Rs 100k – Rs 150k 10%
Rs 150k - Rs 250k 20%
> Rs 250k 30%
For Women 125 K. Senior Citizen 150 K
• Sec 80 C: Savings Allowance
• Deduction from Gross Total Income.
• Restricted to Rs.100,000 (including Sec.80
CCC & 80 CCD)
• Sectoral Cap u/s Sec.88 withdrawn
• Withdrawal of Standard Deduction,
Rebates & deduction u/s.80L
• Sec.80E substituted for deduction only for
interest on educational loan
SAVINGS AND INVESTMENTS
• Tax rate for domestic companies: 30%
• Surcharge: 10%
• MAT credit introduced
• Depreciation on General Plant: 15%
• Initial Depreciation: 20%
• 10% increase in installed capacity withdrawn
• Deduction as regards payment under VRS
• Discount on zero coupon bonds – deductible
• TDS for technical services: 10%
• Wt deduction of 150% on in house R & D
• Industrial Undertaking in J & K
• 100% deduction of profits of companies carrying on Scientific R & D and approved by DSIR
TERMINAL DATES EXTENDED to 31st March 2007
TRANSACTIONS RELATING TO SECURITIES
• Nominal increase in STT• Trading in derivatives in specified
stock exchanges will not be treated as speculative transaction
FRINGE BENEFIT TAX (FBT)FRINGE BENEFIT TAX (FBT)• Employer to pay tax on Fringe Benefits
• Rate of Tax 30%
• Payable even if there is no IT liability
• Exemptions:• Perks taxable for employee• Travel expenses to and fro place of
work • FBT not allowed as deduction
• Constitutional validity
• Applicability to charitable trust
• Knowledge of business and changing
requirements
• Use of • Health club facilities 50% • Club facilities 50% • Telephone 10% • R & M of Motor Cars and Aircrafts 20%
FRINGE BENEFIT TAX (FBT)FRINGE BENEFIT TAX (FBT)
PROCEDURAL ASPECTS OF (FBT)PROCEDURAL ASPECTS OF (FBT)
• Payment of tax & interest• Filing of return• Assessment / reassessment• Rectification • Revision• Appeal• Penalty
BANKING CASH TAX• Why • What Cash > Rs.10 K on a single day DD > Rs.10 K on a single day Cash receipt > Rs.10 K on a single
day on encashment of term deposit
• How much @ 0.1% of transaction
• WhoBank to collect and pay the tax
FM ASKS:
“ Why are you guys so worried about cash withdrawals?
I am becoming increasingly interested in that.”
BANKING CASH TAX
• Constitutional validity?• Practical examples
Withdrawal for Purchase of property Medical expenses on an emergency Meeting deadlines to comply with tender requirements
BANKING CASH TAX
• Administrative Difficulties• Increase in bank transactions • Increase in work load of banks• Procedural compliance to collect and
pay tax
BANKING CASH TAX
Indian Inc – Most Favoured Nation
why?
Inflation under control
Comfortable Foreign exchange reserves
Proportion of Direct & Indirect Taxes
Emphasis given for manufacturing agriculture and infrastructure
Thrust for Foreign Direct Investment
Reduction in tax rates
Savings in tax - flexibility in investments
Introduction of VAT
Stock Market Reactions
India a favoured destination
Indian Inc – Most Favoured Nation
why?
Required Action
Steps to be taken to widen tax base
Changes required in FBT and BCTT
Action taken report