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Drumbeat: Ad Buzzaar
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Thursday, June 11, 1998
Finance Bill 1998: The key amendments
RN Lakhotia
(This is the concluding part of the article titled `Finance Bill 1998: The key amendments' published in Wednesday's --10/06/98--edition) Increased amortisation of preliminary expenses - Sec. 35D: The ceiling of the amount of the preliminary expenditure for amortisation purposes has been raised from 2-1/2 per cent to five per cent of the cost of the production or capital employed in the business of the company. The period of amortisation will be five years. Increased threshold for compulsory maintenance of books of account for certain profession or business - Sec. 44AA: The requirement for compulsory maintenance of certain books of account by persons carrying on legal, medical or engineering, etc., profession would be applicable only where the income from business or profession exceeds Rs 1,20,000 or total turnover, etc. exceeds Rs 10 lakhs. Exemption from capital gains tax, etc. in certain cases of business reorganisation - Secs 47 (xiii), (xiv), 37A, 72A: Certain tax benefits incases of business reorganisation where a firm is succeeded by a company in a business carried on by it or a proprietary concern is succeeded by a company are to be allowed for machinery or plant, furniture or intangible asset to the company shall not be regarded as a transfer to attract levy of capital gains subject to some reasonable condition. The successor company would also be allowed to carry forward the business loss and unabsorbed depreciation. If the conditions are not complied with, the benefit availed of by the firm or the sole proprietor would be taxed as profit and gain chargeable to tax in the hands of the successor company. Sale consideration to be taken as the value adopted by a state government for stamp duty -4th Proviso to Sec.48: Where the consideration received or accruing in respect of the transfer of a capital asset, being land or building or both, is less than the value adopted or assessed by any authority of a state government the consideration so adopted or assessed would bedeemed to be the full value of the consideration received or accruing. Carry-forward of loss from house property - Sec. 71B: Where the net result of computation under the head "income from house property" is a loss, then such loss would be adjusted against the income under other heads in the same assessment year and any balance loss remaining would be allowed to be carried forward and set off in subsequent eight assessment years against the income from house property. Deduction in respect of maintenance including medical treatment of handicapped dependant - Sec. 80DD: Both sections 80DD and 80DDA have been merged into one section. The parents or guardian could not claim deduction upto Rs 40,000 for the medical treatment, and for future needs of the handicapped dependant in the manner most suitable to his needs by making a payment under a scheme of LIC or UTI. Incentive for infrastructure and industrialisation - Sec.80-IA: The benefit of 5-year tax holiday, etc. will also be allowed toundertakings which commence generation and distribution of power on or before 31.3.2003. Likewise, the tax holiday would be extended to undertakings set up in the industrially backward states and backward districts, which start manufacture or production even after 31.3.1998 upto 31.3.2000. In the case of domestic satellite services, the tax holiday would be available to Indian companies, with conditions. Deduction in respect of employment of new workmen - Sec.80JJAA: A special deduction equal to 30 per cent of the aggregate wages or salaries paid to the new workers would be allowed as business expenditure to the company where the number of workers should be atleast 100, subject to certain other conditions. Increased deduction for cooperative societies - Sec.80-P: The exemption limit of co-operative societies which are not otherwise exempt would be raised from Rs 20,000 to Rs 50,000 and in the case of consumer cooperative societies from Rs 40,000 to Rs 1 lakh. Penalty for failure tofurnish return of income - Sec. 271F: The penalty for not filing a return of income by the due date would be Rs 1,000 and for persons in "1 by 6" scheme, Rs 500.Amendments effective from other dates are as follows: p With retrospective effect, i.e. the A.Y. 1962-63, it has been clarified that no allowance would be made in respect of expenditure incurred by an assessees for any purpose which is an offence or which is prohibited by law -- Expln.to Sec. 37 (1). The excess of the sale proceeds or other receipts of depreciable assets over the W.D.V. upto actual cost would become liable to income-tax from the A.Y. 1998-99 - Sec. 41 (2). Any expenditure incurred by an assesses in excess of 10 per cent of his total income towards payment of any rent in respect of any residential accommodation to the extent of Rs. 2,000 per month or 25 per of his total income, whichever is less, would be allowed as deduction from the AY 1998-99 - Sec 80GG. To the existing four economic indicators for voluntaryfiling of IT return, two more indicators, namely, (1) holding a credit card &(2) Membership of a club where the entrance fee charged is Rs 25,000 or more are added any any one of the six economic indicators need to be fulfilled i.e., for the AY 1998-99 - Sec. 139(1). p Adjustment of loss from house property against income from salary for the purpose of determining the TDS from salary from 1.8.98 would be permitted - Sec. 192 (2B). From 1.10.1998 all appeals shall be heard by the commissioner (appeals), after payment of new filing fees. From 1.10.1998 an appeal shall lie against the order of the tribunal directly to the HC - Sec.260A.Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
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