FBT and CTT abolished
The two most welcome proposals are the abolition of fringe benefit tax and the commodities transaction tax. These proposals would also considerably reduce the administrative burden of the tax department and increase the plough back of the corporates.
Minimum Alternate Tax
However, for the corporates, the benefit by way of abolition of these taxes has been offset by increase in the rate of MAT from 10% to 15%. This is likely to affect the plough back of profits by companies. The increase in the time-limit for set-off of MAT Credit from 7 to 10 years would only provide a marginal relief to companies.
Scope of deduction for in-house research expanded
However, on the positive front, the weighted deduction for in-house research is proposed to be extended to all manufacturing industries, with the exception of a negative list.
Exemption under section 10A and 10B to continue for one more year
The sunset clause for exemptions under section 10A and section 10B have been extended by one more year.
Investment linked tax incentives
Introduction of investment linked tax incentives to certain businesses like –
* setting-up and operating ‘cold chain’ facilities for specified products;
* setting-up and operating warehousing facilities for storing agricultural produce;
* laying and operating a cross-country natural gas or crude or petroleum oil pipeline network for distribution, including storage facilities being an integral part of such network.
The above is a step in the right direction.
TDS
The provisions relating to tax deduction at source have been considerably rationalized. There would no surcharge or cess in respect of any TDS provision, with the exception of section 192, for which cess would be applicable. The reduction of rate of TDS under section 194-I from 10% to 2% in respect of rent for plant, machinery or equipment is welcome. The consequence of non-furnishing of PAN by the deductee would result in tax being deducted at a steeply enhanced rate of 20% or more. This would ensure better compliance.
Indirect Taxes proposals
Regarding refund of services tax to the exporter of goods, Hon’ble Finance Minister has given a welcome relief to the exporter of goods from the administrative difficulties. Now, the Department has to grant refund on the basis of certificate issued by chartered accountants.
It is a welcome step to include chartered accountants for the purpose of conducting audit under sections 14A and 14AA of the Central Excise Act, 1944.
Root: www.icai.org
The two most welcome proposals are the abolition of fringe benefit tax and the commodities transaction tax. These proposals would also considerably reduce the administrative burden of the tax department and increase the plough back of the corporates.
Minimum Alternate Tax
However, for the corporates, the benefit by way of abolition of these taxes has been offset by increase in the rate of MAT from 10% to 15%. This is likely to affect the plough back of profits by companies. The increase in the time-limit for set-off of MAT Credit from 7 to 10 years would only provide a marginal relief to companies.
Scope of deduction for in-house research expanded
However, on the positive front, the weighted deduction for in-house research is proposed to be extended to all manufacturing industries, with the exception of a negative list.
Exemption under section 10A and 10B to continue for one more year
The sunset clause for exemptions under section 10A and section 10B have been extended by one more year.
Investment linked tax incentives
Introduction of investment linked tax incentives to certain businesses like –
* setting-up and operating ‘cold chain’ facilities for specified products;
* setting-up and operating warehousing facilities for storing agricultural produce;
* laying and operating a cross-country natural gas or crude or petroleum oil pipeline network for distribution, including storage facilities being an integral part of such network.
The above is a step in the right direction.
TDS
The provisions relating to tax deduction at source have been considerably rationalized. There would no surcharge or cess in respect of any TDS provision, with the exception of section 192, for which cess would be applicable. The reduction of rate of TDS under section 194-I from 10% to 2% in respect of rent for plant, machinery or equipment is welcome. The consequence of non-furnishing of PAN by the deductee would result in tax being deducted at a steeply enhanced rate of 20% or more. This would ensure better compliance.
Indirect Taxes proposals
Regarding refund of services tax to the exporter of goods, Hon’ble Finance Minister has given a welcome relief to the exporter of goods from the administrative difficulties. Now, the Department has to grant refund on the basis of certificate issued by chartered accountants.
It is a welcome step to include chartered accountants for the purpose of conducting audit under sections 14A and 14AA of the Central Excise Act, 1944.
Root: www.icai.org
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