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
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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
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• 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• Sectoral Cap u/s Sec.88 withdrawn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
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• 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• 10% increase in installed capacity withdrawn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%
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• 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
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TRANSACTIONS RELATING TO SECURITIES
• Nominal increase in STT• Trading in derivatives in specified
stock exchanges will not be treated as speculative transaction
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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
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• 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)
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PROCEDURAL ASPECTS OF (FBT)PROCEDURAL ASPECTS OF (FBT)
• Payment of tax & interest• Filing of return• Assessment / reassessment• Rectification • Revision• Appeal• Penalty
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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
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FM ASKS:
“ Why are you guys so worried about cash withdrawals?
I am becoming increasingly interested in that.”
BANKING CASH TAX
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• Constitutional validity?• Practical examples
Withdrawal for Purchase of property Medical expenses on an emergency Meeting deadlines to comply with tender requirements
BANKING CASH TAX
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• Administrative Difficulties• Increase in bank transactions • Increase in work load of banks• Procedural compliance to collect and
pay tax
BANKING CASH TAX
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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
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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?
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Required Action
Steps to be taken to widen tax base
Changes required in FBT and BCTT
Action taken report
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