Old age homes are `eligible business' for tax holiday
May, 08th 2007
With sixty paragraphs, the speech that the Finance Minister (FM) gave last week , in reply to the debate on the Finance Bill, was a mini Budget speech; his speech on February 28 had 187 paragraphs.
"The FM has budged little on the initial Budget proposals," says Mr V. Ranganathan, a Chennai-based chartered accountant, speaking to Business Line. "The only proposal where he has admitted, albeit grudgingly, some failure, is the imposition of dual excise duty on cement. He has now come to terms with the market forces and has, for the first time, made cement excise duty, ad valorem, at 12 per cent. However, cement sold below a retail price of Rs 190 per bag will continue to attract Rs 350 as excise duty." Excerpts from the interview.
On customs duty
There is a plethora of trivial concessions on the customs duty front to pander to some lobby group or the other. These need no further analysis as the fortunes of the Indian business will be least impacted by these changes.
An affirmation that goods and services tax (GST) will see the light of the day from April 1, 2010 is indeed most gratifying, though sounding to be unduly optimistic, given the political challenges involved in making the transition.
On personal taxation
The common refrain of the BJP members for an increase in the threshold for personal taxation has been met less with substantive arguments and more by pointing out that the NDA Government did less on this than the UPA.
On tax collection
The FM has reiterated the achievement on tax collection during 2006-07 without correlating to the factors of general economic buoyancy. His admission that excise collections have failed to keep in step with industrial resurgence needs to be followed up with a detailed report of where the machinery has failed in garnering the taxes due.
On changes to direct taxes
The amendments in direct taxes are not even palliative. The house perquisite rule has been slightly moderated. The biggest disappointment is the complete stonewalling of suggestions on ESOP taxation. The budget proposals stand in entirety, and would impact even past transactions where the exercise of options took place post April 1. The IT (information technology) industry must be fuming and fretting and regretting the lack of lobby power for its industry body. This defiance to pay heed to the rational alternatives proposed to make the levy more equitable is another instance of the FM and his group of officers displaying their unwillingness to be seen as going back on their pet ideas, however irrational those may be.
The curious thing that one notices in the introduction of a new package of tax holiday for the North Eastern States (Section 80IE) is the status of `eligible business' accorded to old age homes, a frightful reminder that such homes need to be encouraged (a social phenomenon that the country scarcely needs) and equally that such institutions will have taxable surplus to be `holidayed' (a greater distress that profit shall motivate such ventures which anyway would have been sheltered as charities).