BUDGET 2008-09

Direct Taxes

Personal Income Tax ( PIT )

• The PIT rates have not been changed, however the basic exemption (i.e income
upto which no tax is payable) has been increased to Rs1,10,000/-from the existing level of Rs.1,00,000/-. The basic exemption for woman assessee has gone upto Rs1,45,000/- from the existing level of Rs.1,35,000/ and for senior citizens it has gone upto Rs.1,95,000/- from the existing level of Rs.1,85,000/-. This would result in a tax saving of Rs1,000/- per annum and Rs. 2,000/- for senior citizens.

• The Comparison of existing and proposed slabs are as follows:
Existing Slabs Proposed Slabs

0 to 1,00,000 : 0% 0 to 1,10,000 : 0%
1,00,001 to 1,50,000 : 10% 1,10,001 to 1,50,000 : 10%
1,50,001 to 2,50,000 : 20% 1,50,001 to 2,50,000 : 20%
2,50,001 and above : 30% 2,50,001 and above : 30%
Surcharge of 10% for income Surcharge of 10% for income above above Rs10 lacs Rs10 lacs
Education cess of 2% Education cess of 2% plus 1%

• Deduction u/s 80D for expenses incurred for payment of Medical Insurance premium is increased to Rs. 15,000/- per annum from the existing limit of Rs. 10,000/- per annum. In case the premium is paid in respect of a senior citizen the limit is increased to Rs. 20,000/- from the existing Rs.15,000/-.

• Deduction u/s 80E in respect of interest on education loan is now extended even for interest on education loan taken for the purpose of higher study of the spouse and children. Earlier it was restricted only to the interest on self higher education loan.

• Capital gains tax would be liable to be taxed on profits realized on sale of work of art, drawings, paintings and sculptures. This has been brought in by excluding the above from the definition of personal effects which is not liable to capital gains.

• Capital gains exemption u/s 54EC that can be availed by a person by investing in NHAI/ REC Bonds will henceforth be restricted to a maximum investment of Rs.50 lacs per annum. Earlier there was no such limits in the statute. Thus the maximum exemption that can be availed in a year u/s 54EC will be restricted to Rs.50 lacs only.


• The dividends to be received on equity shares would marginally go down as the companies now need to pay higher dividend distribution tax (DDT). This has been made by amending Sec 115-O. The DDT on dividend from equity shares have gone upto 15% from the existing 12.5%.

• The income to be received on mutual fund units would marginally go down as the mutual funds now need to pay higher dividend distribution tax (DDT). This has been made by amending Sec 115-R. The DDT payble by mutual funds will now be :
- 25% on income distributed by money market or liquid funds.
- 12.5% on income distributed to individuals and HUF’s by a fund other
than money market or liquid funds.
- 20% on income distributed to others by a fund other than money market
or liquid fund.
The exemption of DDT on income distribution from equity oriented funds would
continue.

• The threshold limit for not levying Banking Cash Transaction Tax for individuals has gone upto to Rs. 50,000/- per withdrawal from the existing Rs. 25,000/- per withdrawal.


Corporate Income Tax (CIT)

• Tax rates have not been changed, it continues to be at 30%.

• Small & Medium enterprises, i.e companies or firms having taxable income less than Rs 1 crore will not be liable to surcharge. For those whose taxable income is more than Rs 1 crore the surcharge will continue to be at 10%.

• Additional educational cess for secondary and higher education at 1% is introduced on both basic tax and surcharge. This overall takes the education cess payable from existing 2% to 3%.

• Companies that are enjoying tax holiday u/s10A or 10B will now be liable for Minimum Alternate Tax. Thus STPI Units and EOU units will now have to pay MAT of 11.33% of their book profits. This can be taken credit as per prescribed guidelines when they start paying normal tax. This move in effect has partly preponed the end of 100% tax holiday regime from year 2009 to 2007.


INDIRECT TAXES
Service Tax

• Exemption limit for small service providers to be raised from Rs.400,000 to Rs.800,000 ;
• Extension of service tax to: services outsourced for mining of mineral, oil or gas; renting of immovable property for use in commerce or business (residential properties, vacant land used for agriculture and similar purposes, and land for sports, entertainment and parking purposes & immovable property for educational or religious purposes to be excluded); development and supply of content for use in telecom and advertising purposes; asset management services provided by individuals; design services; services involved in execution of a works contract with an optional composition scheme under which tax will be levied at only 2% of the total value of works contract;
• Exemption to: Services provided by Resident Welfare Associations to their members who contribute Rs.3000 or less per month for services rendered, services provided by technology business incubators, their incubates whose annual business turnover does not exceed Rs.50 lakhs to be exempt for first three years; clinical trial of new drugs to make India a preferred destination for drug testing;
• Department of Telecommunications to constitute a committee to study the
present structure of levies on telecom industry

Sales Tax

• 1 % reduction in Central Sales Tax. (from 4% to 3%).

Customs

• Peak customs duty rate on non-agricultural items reduced from 12.5 to ten per cent;
• All coking coal fully exempted from duty;
• Duties on seconds and defective reduced from 20 to ten per cent;
• Customs duty on polyester to be reduced from ten per cent to 7.5 per cent;
• Three per cent import duty to be levied on private importers of aircraft including helicopters;
• Export duty on iron ore and concentrate at the rate of Rs.300 per tonne. Export duty on Chromium proposed at Rs. 2000 tonne;
• Import duty of 15 specified machinery to be reduced from 7.5 per cent to five per cent;
• Import duty on medical equipment cut to 7.5 per cent;
• Import duty of 3 per cent on private aircraft.


Central Excise

• Excise duty on cement reduced from Rs.400 per tonne to Rs.350 per tonne for cement bags sold at Rs.190 per bag at retail market. Those sold above Rs.190 will attract excise duty of Rs.600 per tonne;
• Duty on pet food reduced from 30 per cent to 20 per cent;
• Duty on sunflower oil to be reduced by 15 per cent;
• Duty reduced on watch dials and movements and umbrella parts from 12.5 to five per cent;
• No change in general CENVAT rate;
• Ad volarem duty on petrol and diesel to be brought down from 8% to 6%;
• Small-scale industries excise duty exemption raised from Rs one crore to Rs 1.5 crore;
• Excise duty for plywood reduced from 16 per cent to eight per cent;
• Food mixes to be fully exempted from excise duty;
• Excise duty for plywood reduced from 16 per cent to eight per cent;
• Bio-diesel to be fully exempted from excise duty;
• Water purification devices, small and big, fully exempted from excise;
• Additional CVD duty on crude and refined edible oils eliminated;
• Duty on farm sprinklers cut to 5 % from 7.5%;
• Excise duty on cigarettes increased by 5%;
• Excise duty on Pan Masala without tobacco as mouth fresheners reduced from 66 per cent to 45 per cent;

Today's NEWS

The Centre has increased the excise duty on sugar by Rs 9 a quintal. The levy will come into effect from March 1 and has nothing to do with the Budget being presented in Parliament on Friday.

LIC Housing Finance is looking to combine its reverse mortgage plan with a whole-life annuity provided by a life insurer

National Thermal Power Corporation Ltd (NTPC) has informed the BSE that it has signed a joint venture agreement with UPRVUNL, on Thursday for implementation of 2x660 MW coal based thermal power project at Meja in Allahabad in Uttar Pradesh.
The project would be implemented by the proposed joint venture company on build, own and operate basis

Parsvnath Developers Ltd on February 28 announced the start of construction of 'Parsvnath Preston' a high-end group housing residential project, in Sonepat, Haryana. The expected realization from the project is over Rs 500 crore in next 3 years. The project is spread over a saleable area of 2.2 million sq. ft.

NIIT Technologies has signed a share purchase agreement for acquisition of 100 per cent share capital of Softec GmbH, Germany.
NIIT Technologies Ltd has informed BSE that the Company has signed such a share purchase agreement with shareholders of Softec GmbH.

American car-maker Ford is expected to finalise the deal with Indian conglomerate Tata for the sale of luxury brands, Jaguar and Land Rover, by next week.

Essar Oil on Thursday said it would raise $2 billion through issue of securities in domestic and international markets.
The firm would issue equity shares, convertible debentures, American Depository Receipts (ADRs) and Foreign Currency Convertible Bonds (FCCBs), among others, it said in a filing to the Bombay Stock Exchange.

Indiabulls Real Estate (IBREL), the real estate arm of the Indiabulls group, has decided to take majority stake in Dev Property Developers, (DPD) the London-listed property fund, in order to gain majority control over two of its prized properties in Mumbai. IBREL has bought over 90% in DPD for about Rs 1,100 crore. The stake has been purchased from three FIIs — Government of Singapore, Fidelity and HSBC.

US car-maker Ford is expected to finalize the deal with the Tatas for the sale of the luxury brands, Jaguar and Land Rover, by next week, reports agency source.
The two sides are expected to sign a deal worth around USD 2 billion next Wednesday or shortly afterwards.

CitiFinancial, its consumer finance unit, which is also reeling under the burden of rising bad loans, is considering closing about 100 of its 450 branches in India.

In terms of cost-cutting, the bank is relocating ATMs. Citibank is relocating around 30 ATMs from high-cost locations to low-cost areas,” said banking sources.

The Department of Telecommunications, Ministry of Communications & Information Technology, Government of India has granted licences to 4 subsidiaries of Unitech for providing Unified Access Services (UAS) in respect of 12 telecom circles.

Autoline Industries announced that `Autoline Industries, Pune` and `Sharjah Cement & Industrial Development Co. (SCIDC), (UAE)`, have entered into shareholders` agreement on Feb. 28, 2008 with Autoline Industrial Parks, Pune a subsidiary company of the company. This joint venture has been formed for the purpose of setting up and development of industrial parks relating mainly to auto ancillary units, design engineering units, etc.

MARKET TODAY.....

GLOBAL CUE IS RED AND CONSIDERING BUDGET MARKET WOULD BE VOLATILE,IT WOULD BE PRUDENT BE CAUTIOUS,CRUCIAL LEVEL OF NIFTY IS 5200-5250-5300-5400 ABOVE FROM 5400 LEVEL COULD EXPECT 5550 LEVEL, SECTOR TO BE WATCH OUT FOR HIGHER ROLL OVER METAL AND POWER EQUIPMENT..........