Similarconditions are also stipulated in the case of a sole proprietary concern being succeeded by a company. The Bill provides for carry forward of business loss and unabsorbed depreciation to successor companies fulfilling the aforesaid conditions

It is important to note that the aggregate depreciation allowable to the predecessor and successor would not exceed in any previous year the deduction calculated at the prescribed rates as if the reorganisation has not taken place

Under the existing provisions, depreciation can be allowed when building, plant, machinery or furniture is used by the assessee for the purposes of his business or profession. To widen the scope of section 32, it is provided that depreciation will also be allowed where intangible assets are owned wholly or partly by the assessee and are used by such assessee for the purposes of his business or profession

Intangible assets, such as know-how, patent rights, copyrights, trade marks, licences, franchises or any other business or commercialrights of the assessee will form a separate block of assets

As and when any capital expenditure is incurred by an assessee on acquiring such intangible assets, the amount of such expenditure would be added to the block of intangible assets and depreciation would be claimed on the written down value at the end of the financial year

Under section 80-IA, undertakings presently engaged in the commercial production of mineral oil are entitled to a seven-year tax holiday benefit. With a view to encouraging oil refining within the country in view of the increased demand, it is proposed to extend the benefit of such tax holidays to undertakings engaged in refining of oil. This benefit would be available to such undertakings which commence production on or after October 1, 1998

Under the provisions of section 80-IA, roads highways, bridges, airports, ports and rail system are regarded as infrastructure facilities and the undertakings engaged in providing or maintaining such infrastructure facilities are entitledto a tax holiday for five years and a deduction of 30 per cent of profits for the next five years. These companies have the choice of availing of such benefits in any 10 consecutive years out of the initial 12 years from the year in which they commence construction

Under the provisions of section 80-IA of the Income-tax Act, a five-year tax holiday and a deduction of 25 per cent (30 per cent in the case of companies) of profits in the subsequent five years is allowed, inter-alia, to an undertaking engaged in the business of generation, or generation and distribution, of power. The undertaking under the existing provisions should start generating power on or before March 31, 2000. The date is now extended to March 31, 2003

For encouraging industrialisation in industrially backward states, the Finance Act 1993 had provided for a five-year tax holiday for industrial undertakings set up in industrially backward states specified in the Eighth Schedule, which start manufacture or production during the periodbeginning on April 1, 1993, and ending on March 31, 1998

The Bill proposes to extend the tax holiday to undertakings set up in industrially backward states as specified in the Eighth Schedule which start manufacture/production even after March 31, 1998, up to March 31, 2000

Waste management is a major concern for planners in all countries. For effective waste management, the role of waste pickers of the informal sector -- who separate bio-degradable waste and assessees who actually collect, process and treat it -- is significant in enabling local authorities in both urban and rural areas to provide better sanitation and hygiene to the populace

The bio-degradable waste can be utilised for purposes of generating energy and also for preparing organic manure by compost, vermicompost and anaerobic digestion. With a view to providing benefits to assessees who are engaged in such activities, a deduction of 100 per cent of income derived from such activity or an amount of Rs 5 lakh whichever is less, shall beallowed

The existing provisions of the Income-tax Act provide various fiscal concessions to spur growth of business and industry. In order to encourage employers to generate more employment opportunities, it is proposed to insert a new section 80-JJAA to provide an incentive in the form of a special deduction against business profits of a company

This deduction would be over and above the expenditure on wages or salary, which is otherwise allowable as business expenditure to the company. The quantum of deduction is proposed to be 30 per cent of the aggregate wages or salary paid to the new workers provided the following conditions are satisfied

In the case of a new undertaking, the number of workers should be at least 100. In the case of an existing undertaking, having a minimum of at least 100 employees, the total number of new employees should be at least 10 per cent more than the existing number of employees

The deduction in such cases would be allowed at the rate of 30 per cent of the additionalwages paid to the new workmen

A tax holiday is provided to enterprises carrying on the business of developing, maintaining and operating any infrastructure facility under section 80-IA (4-A). It is now proposed that this deduction may be extended to housing projects approved by a prescribed authority under the scheme to be framed by the central government

The issue relating to whether the value of closing stock of the inputs, work-in-progress and finished goods must necessarily include the element for which MODVAT credit is available has been the matter of considerable litigation

In order to ensure that the value of opening and closing stock reflects the correct position, it is proposed to insert a new section 145-A to clarify that while computing the value of the assessee, the same would include the amount of any tax, duty, cess or fees paid or liability incurred for the same under any law in force

To sum up, the BJP Government’s maiden Budget proposals not only ensure continuance of all existingbenefits but also provide for several new incentives which will be a boon to entrepreneurs both Indian and foreign who propose to invest in the core sector

The finance minister’s day of triumph will come when his Budget proposals result in Indian industry once again reaching the eight per cent rate of growth, which, in turn, may lay the foundation for macro-economic stability.