Finance Minister Yashwant Sinha has removed all surcharges on corporate andnon-corporate tax payers in his Budget '01-02. Tax on distribution ofdividends of domestic companies and income from units of mutual funds andUTI has also been scaled down to 10 per cent from 20 per cent.However, for relief of quake hit areas of Gujarat, the finance ministerdecided to retain the surcharge of 2 per cent levied on all tax payers.
There have been no changes in direct tax rates as the earlier efforts forimproving tax collection had borne fruit and resulted in increased revenueflow, Mr Sinha said. Direct tax revenue increased from Rs 46,428 crore in1998-99 to an estimated Rs 74,467 crore in the current year.
In a move which is going to displease many, threshold limits for exemptionon interest income on time deposits with banks or Housing Finance Companyhas been reduced from Rs 10,000 to Rs 2,500. Maximum limit of deduction oncertain interest income up to a limit of Rs 12,000 under section 80L hasbeen brought down to Rs 9,000.
Income tax at source will now be deductible at the rate of 10 per cent onincome by way of commission or brokerage exceeding Rs 2,500 except ontransactions relating to shares and securities.
In a move to widen tax base, the finance minister has decided to expand theservice tax net to include a wide range of services.
Foreign TV channels will also be taxed under the Income Tax Act. Tax onwinnings from lotteries has been reduced from 40 per cent to 30 per cent andan income tax of 30 per cent will be deducted at source from the prize moneyof similar game shows.
Mr Sinha said that to give relief to salaried persons in lower income range,incomes between Rs 40,000 and Rs 1 lakh will get 30 per cent exemptioninstead of the existing 20 per cent.
However, those having high pay packages but paying relatively low taxesowing to various components in the package, will now have to shell out moreas taxation will be computed on total income of the employees based on thecost to the company, except on cars and house rent.
To help revive investor-interest in primary issues, it has been decided toexempt long-term capital gains arising from sale of securities and units ifsuch gains are reinvested in primary issues of shares of public companies.
Tax deduction on interests on housing loans on self-occupied property hasbeen raised from Rs 1 lakh to Rs 1.5 lakh. For persons having income fromproperty, the present deduction of 25 per cent of annual value for repairs,will be enhanced to 30 per cent.
Copyright © 2001 Indian Express Newspapers (Bombay) Ltd.
