Tax Awareness Program 2007

What Budget Means To A Common Man In India? The ratio of tax paying population- Less Agricultural sector outside Tax Common Man’s concern is about price rise. Domestic needs and items of foodgrain:- What budget can do with it? Growing inflation- Whether a good trend?

The Process Of Enacting The Law: - In India, Suggestions are invited Bill is proposed before House of Parliament Budget - Action plan of Union Finance Minister is presented Debate takes place over provisions Bill is then passed Bill is sent to President for his ascent It becomes Law.

Operative Date Of The Finance Bill: - The Budget is generally laid before house on 28th February every year, and the provisions contained therein generally apply from the 1st of April of the subsequent year unless otherwise stated. The financial year beginning from 1st April and concluding on 31st March is taken as previous year and the period beginning from 1st April after conclusion of the financial year is taken as assessment year. e.g. for the previous year ending on 31/03/2007. The assessment year would be

The Type Of Assesses The Type Of Assesses In India the broad category of Taxpayers is divided into two major groups viz. Resident and non resident. The Taxpayers are assessed according to the constitution of the entity and the recognized entities are: Individual Hindu undivided family Firm Company Association of persons Body of individuals

Important enactments proposed in the bill presented on 28/02/2007: - Important enactments proposed in the bill presented on 28/02/2007: - Basic Exemption Limit :- The basic exemption limit is increased by Rs.10000/- AssesseePresentProposed IndividualRs Rs Women AssesseeRs Rs Senior CitizenRs Rs Upto Rs110000Nil Rs % Rs % Above Rs % Rates of Taxes:-

Thus the individuals will get a Tax concession of Rs.1000/- and senior citizens will enjoy it to the extent of Rs.2000/- It is proposed to levy additional educational cess of 1%, which is applicable to all the Taxpayers. Surcharge of 10% to continue for individual/HUF etc having total income exceeding Rs.10lacs For firms and companies the present Tax rate is 30%. Presently there is a surcharge payable for firms + companies for every rupee of their income. This finance bill proposes that these firms and companies having income upto Rs.1crore will not be liable for payment of surcharge.

INDIA30% PAKISTAN/PHILIPPENS35% THAILAND/UK/AUSTRALIA30% INDONESIA30% MALASIA28% TAIWAN25% SINGAPORE20% HONGKONG17.5% CHINA25% (proposed) Worldwide Corporate Tax Rates:

The following table will clarify as to how this will work out. The following table will clarify as to how this will work out. In case of INDIVIDUALS Particulars Income of Rs.1,30,000 Income of Rs.1,70,000 Income of Rs.2,70,000 Income of Rs.11,70,000 Pre sent Tax Pro posed Tax Pre sent Tax Pro posed Tax Pre sent Tax Pro posed Tax Pre sent Tax Pro posed Tax Income Tax Add Surcharg e Add Educationa l cess Total Tax Payable

In case of FIRMS and COMPANIES ParticularsPresentPropos ed PresentProposedPresentProposed Income upto IncomeTax Add Surcharge Add Educational cess Total Tax Paid

Amendments Applicable to all Assessees Rationalization of provisions relating to deduction of health insurance premium. The payment of premium made by any mode other than cash shall be eligible for deduction Disallowance u/s 40A(3) increased to 100% from 20%

Amendments relating to Individual Assessees Exemption for compensation received or receivable on account of any disaster. Rationalization of provisions relating to deduction of health insurance premium. The payment of premium made by any mode other than cash shall be eligible for deduction U/s 80D, the maximum amount allowable is increased from Rs.10000/- to Rs.15000/- and for senior citizens from Rs.15000/- to Rs.20000/-

Amendments relating to Individual Assessees Deduction for entire amount of interest paid on loan taken for higher education of a ‘relative’ u/s 80E. ‘Relative’ for this purpose means spouse and children of the individual Benefit from ESOP not to be perquisite as coming into ambit of FBT.

Amendments Applicable to Corporate Assessees Weighted Deduction u/s 35(2AB)(1) for R&D expenses to be allowed for 5 more years. The same was available only upto I T companies brought under MAT Dividend Distribution Tax increased to 15%

Amendments relating to Capital Gains Scope of Capital Asset widened. Personal effects shall now exclude archaeological collections, drawings, paintings, sculptures, or any work of art. Gains on above mentioned items shall be liable to capital gain tax from A.Y onwards.

Amendments relating to TDS provisions  Section 194A It is proposed to bring the 8% Savings (Taxable) Bonds 2003 within the ambit of TDS if interest payable exceeds Rs10000/- during the financial year. The threshold limit of interest is raised to Rs.10000/- where payer is a banking company or co-operative society engaged in carrying on business of banking or a post office in respect of notified schemes. Other case limit continues to be Rs.5000/-

 Section 194C An individual or a HUF who are liable for tax audits, any sum paid or credited by them to the account of the contractor now come within the ambit of Section 194C This amendment will take effect from 1 st day of June, Section 194H Commission payable by BSNL and MTNL to their PCO franchisees shall be exempt from TDS provisions. Rate on payment of commission or brokerage enhanced to 10% from existing 5%

 Section 194I Rate of TDS on rent for use of any plant, machinery or equipment is reduced from 15% or 20% depending upon payee to 10%  Section 194J Rate of TDS in respect of professional or technical fees is enhanced to 10% from existing 5%

Amendments relating to FBT provisions Any specified security or sweat equity shares allotted or transferred by employer free of cost or at concessional rate to his employees now within ambit of FBT. Value of such Fringe Benefit shall beValue of such Fringe Benefit shall be FMV (Fair Market Value) XXX (as on date of exercise of option by the employee ) Less: Amount actually paid or recovered from the employee XXX Value of Fringe BenefitXXX

Other Important Enactments  Excise Limit raised to Rs.1.5 crores  Service Tax raised to Rs.8,00,000/-

Other points EET(Exempt Exempt Tax) not introduced No mention of Limited Liability Partnership for which bill is introduced in Rajya Sabha Tax Administration: Refund should be processed within 30 days.

Other Points FBT dates equated with Income Tax Dates PAN to be considered as UNIQUE identification number Commercial premises given on rent under Service Tax Net