DIRECT TAX CHANGES IN BUDGET AT A GLANCE

In this post we will cover some important clauses of direct tax that has been proposed to be changed by Finance Minister in Budget 08.We will try to explain the changes.
Change in Income Tax rates(Covered in separate Post)TAX CALCULATOR -WITH REVISED RATES IN BUDGET
Senior Citizen Saving Scheme 2004 and the Post Office Time Deposit Account added to the basket of saving instruments under Section 80C of the Income Tax Act.This Benefit will be available from current year i.e investment made in f.y 2007-08 also eligible u/s 80c, and notification has already issued in this regard .
Additional deduction of Rs. 15,000 allowed under Section 80D to an individual paying medical insurance premium of his/her parent or parents.whether parents depended on individual or not.applicable from AY 2009-10
Income Tax Act to be amended to provide that reverse mortgage would not amount to “transfer”; and the stream of revenue received by the senior citizen would not be “income”.Reverse Mortgage scheme has been announced in last year budget but not so popular till date due to tax ambiguity which has been clarified now.applicable from AY 2008-09
Benefit of amortization of certain preliminary expenses under Section 35D allowed to assessees in the services sector.applicable from AY 2009-10
Corporate debt instruments issued in demat form and listed on recognized stock exchanges exempted from TDS.applicable from 01-06-2008
Creche facilities, sponsorship of an employee-sportsperson, organizing sports events for employees and guest houses excluded from the purview of FBT.applicable from AY 2009-10
Parent Company shall be allowed to set off the dividend received from its subsidiary company against dividend distributed by the parent company; provided that the dividend received has suffered DDT and the parent company is not a subsidiary of another company.applicable from AY 2008-09
Insert a new sub-section (11C) in Section 80-IB to grant a five year tax holiday to hospitals located in any place outside the urban agglomerations especially in tier-2 and tier-3 towns; this window will be open for the period April 1, 2008 to March 31, 2013.
Five Year holiday from the income tax being granted to two, three, or four star hotels established in specified districts having UNESCO-declared ‘World Heritage Sites’; the hotel should be constructed start functioning during the period April 1, 2008 to March 31, 2013.
Rate of Tax on short term capital gain under section 111A & Section 115AD increased to 15 percent.applicable from AY 2009-10
STT paid to be treated like any other deductible expenditure against business income; Earlier STT paid is treated as tax paid and rebate u/s 88E was available.Levy of STT, in the case of options to be only on premium, where the option is not exercised; liability to be on the seller; where the option is exercised, levy to be on the settlement price and the liability on the buyer; no change in the present rates.applicable from AY 2009-10
Commodities Transaction tax (CTT) to be introduced on the same lines as STT on options and futures.applicable from AY 2009-101. Sale of an option in goods or an option in commodity derivative @0.017 per cent on Seller on option premium.2. Sale of an option in goods or an option in commodity derivative, where option is exercised.On price of the option@0.125 per cent on the Purchaser.3. Sale of any other commodity derivative @0.017 per cent of the price at whichthe commodty derivative is sold on Seller.
Law being amended to exclude entities carrying on regular trade, commerce or business or providing services in relation to any trade, commerce or business and earning incomes from claiming that their purposes also fall under “charitable purpose”. Genuine charitable organizations not to be affected in any way.
Banking Cash Transaction Tax (BCTT) being withdrawn with effect from April 1, 2009.
Under clause (a), the due date to file the income tax return has been prescribed as 31st day of October of the assessment year for the following categories of assessees:-(i) a company;(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; or(iii) a working partner of a firm whose accounts are required to be audited under this Act or under any other law for the time being in force.It is proposed that the due date for filing of return of income for the above categories of assessees shall be 30th day of September of the assessment year.Applicable from AY 2008-09
Similarly FBT return date is also changed to 30 September for above two categories. Applicable from AY 2008-09
CST and a Roadmap towards GST
Central Sales Tax rate being reduced from 3 percent to 2 percent from April 1, 2008.
Roadmap for Goods and Service Tax being prepared for introduction of GST from April 1, 2010.