Amendment to Finance Bill, 2005
By Ved Jain
Following are the major amendments carried out by the Finance Minister at the time of the passage of the Finance Bill, 2005 in the Lok Sabha.
1. Tax Rates
a) Exemption limit increased from Rs. 1,50,000 to Rs.1,85,000 for senior citizens.
b) Exemption limit for resident women taxpayers raised from Rs.1,25,000 to Rs.1,35,000.
c) Condition to pay contribution towards life insurance premium, provident fund etc., out of the income chargeable to tax for claiming deduction under Section 80C has been deleted.
d) The sunset clause proposed to be inserted in respect of exemption under Section 10A for special economic zones has been deleted. However, a new condition has been put that the exemption under Section 10A(1A) shall not be allowed to an assessee who does not furnish the return of income on or before the due date specified under Section 139(1) of the Act.
e) Banking cash transaction tax
i. No cash withdrawal tax on saving bank account.
ii. Over Rs.25,000 withdrawn in a day by individuals or HUF from current account to be subjected to 0.1% tax. For others over Rs.1,00,000 withdrawn in a day to be subjected to 0.1% tax.
iii. Repayment of term deposit if credited to any account with the bank not to be liable for banking cash transaction tax,.
II. Fringe Benefit Tax
i. All individuals and HUF exempted from levy of fringe benefit tax.
ii. All trusts or institutions registered under Section 12AA exempted from levy of fringe benefit tax.
iii. All trusts or institutions eligible for exemption under Section 10(23C) exempted from levy of fringe benefit tax.
iv. No change in the procedure of payment of the fringe benefit tax and filing of return as per the amendment proposed by the Finance Minister.
As per the announcement made by the Finance Minister in the Lok Sabha every person liable for FBT shall be required to file a certificate from the Chartered Accountant certifying the value of the FBT. The AO will not have any power to disturb the figure certified by the CA. The changes made in the value of FBT are as under:
| The New Tax Order |
|
% of expense under the fringe benefit tax |
|
|
Earlier |
Now |
| Use of telephone (other than leased lines) |
10% |
20% |
| Entertainment |
50% |
20% |
| Scholarship to children of employees |
Actual |
50% |
| Hospitality |
50% |
20% |
| Maintenance of accommodation like guest houses |
50% |
20% |
| Conference |
50% |
20% |
| Employee welfare |
50% |
20% |
| Sales promotion, including publicity |
50% |
20% |
| Free or concessional tickets |
Actual |
Actual |
| Contribution to superannuation fund |
Actual |
Actual |
| Festival celebration |
50% |
50% |
| Gifts |
50% |
50% |
| Use of club facilities |
50% |
50% |
| Use of health clubs, sports and similar facilities |
50% |
50% |
Conveyance, tour and travel,
including foreign travel |
20% |
20% |
| Hotel, boarding and lodging |
20% |
20% |
| Repair, running (including fuel), maintenance of motorcars and depreciation thereon |
20% |
20% |
| Repair, running (including fuel), maintenance of aircraft and depreciation thereon |
20% |
20% |
| Tax of 30% will be levied on the value of the fringe benefit calculated at the above rates |
|
SECTORAL BENEFITS |
|
|
|
Hotels to calculate fringe benefit on hospitality at 5% instead of 20% for other sectors
Construction companies liable to pay fringe benefit tax on 5% conveyance, tours and travel spending instead of 20% for the others
Drug and software companies to pay concessional FBT on 5% of the spending on conveyance, tours and travel, use of hotel, boarding and lodging as against 20% for other sectors
Companies engaged in carriage of goods and passengers by motor cars to pay FBT on 5% of the spending on repairs, maintenance, running (including fuel) and the depreciation thereon
Airlines not required to pay FBT on repairs, maintenance, running (including fuel) and the depreciation thereon |
The Finance Minister makes a mention of the contribution of the Institute of Chartered Accountants of India and reposes confidence in the profession by making an announcement that the certificate issued by a Chartered Accountant shall be final and accepted as it is.
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