Recent Amendments Finance Act 2007
Highlights at a Glance of Taxation Laws Act,2006 & Finance Act, 2007
- Gifts/other sums received without consideration from non-relatives, on or after 1.4.2006 will be taxable as income of recipient, if the aggregate of such sums exceed Rs. 50,000 during a financial year.
- Deduction of expenditure not allowed for rent or royalty on which tax is not deducted at source.
- Disallowance of expenditure exceeding Rs.20,000 if not paid by account payee cheque or account payee draft.
- Tax at source to be deducted on royalty and sums referred u/s 28(va) exceeding Rs.20, 000.
- Tax at source to be deducted on rent for use of machinery, plant, equipment, furniture or fittings, whether separately or together, with land, building or land appurtenant to building.
- Tax payable and refund due would be rounded off to the nearest multiple of ten rupees.
- The basic limit for exemption fro income tax has been raised to Rs. 1,10,000 from 1,00,000 in case of individuals, HUF, AOP/BOI, Rs. 1,45,000 from 1,35,000 in case of resident women (below 65 years) and Rs. 1,95,000 from Rs. 1,85,000 in case of resident senior citizens.
- 1% Secondary and Higher Education Cess also leviable for A.Y. 2008-09. Education Cess @ 2% continues.
- Incase of firms and companies (including foreign companies) surcharge to be levied if total income exceeds Rs. 1 crore.
- Archaeological collections, drawings, paintings, sculpture, and works of art, along with jewellery also excluded from the definition of ‘personal effects’ so that they can be taxed under the head, ‘Income from Capital Gains’.
- Exemption given in respect of compensation from the Central/State Government or a local authority, on account of any disaster.
- Exemption given in respect of interest on bonds issued by a State Pooled Finance Entity.
- Accommodation shall be deemed to be provided at a concessional rent, if the perquisite value of the accommodation exceeds the amount recovered from the employee by the way of rent or charges for furniture.
- Revision in perquisite value of unfurnished accommodation (in case of non-govt. employees) and furnished accommodation, based on 2001 census.
- Insurance premium for health of employees permitted to be paid by any mode other than cash (including by credit card, internet banking etc.)
- Full disallowance of expenditure exceeding Rs.20,000 paid otherwise than by account payee cheque or account payee bank draft.
- In case of shares /securities acquired under Employee Stock Option Plan (ESOP), their value for fringe benefits shall be deemed as their cost of acquisition.
- W.e.f. 1.4.2007, investment in long term specified assets for claiming capital gains exemption not to exceed Rs. 50 lakhs.
- For claiming deduction u/s 80ID filing of return before due date to be mandatory.
- Deduction for employee’s contribution to notified Pension scheme, extended to all employees.
- Quantum of amount for deduction for health insurance premium (mediclaim) increased to Rs. 15,000 in general and Rs. 20,000 for a senior citizen.
- Deduction of expenditure for interest on loan taken for higher education may be claimed in relation to a relative (i.e. spouse or children) as well.
- Dividend Distribution Tax Rate increased to15%.
- Securities/equity shares allotted to employees under Employee Stock Option Plan (ESOP) to be taxed as fringe benefit in the hands of employer at their fair market value.
- No FBT in case of free samples of medicines, etc. to doctors, extended to samples (free or at concessional rate) of all items.
- FBT to be payable in advance installments, as in case of advance tax.
- Non – payment / short –payment and deferment of advance FBT installments liable to payment of interest in the same manner as in case of advance income tax.
- FBT payable by employer on ESOP may be recovered from employees.
- Tax shall be deductible at source W.e.f. 1.6.2007, on
(A) interest on 8% Taxable Savings Bonds ,orInterest on notified deposit schemes of Post Office if interest (B) payable exceeds Rs.10,000 during a financial year.
- Ceiling for TDS on interest on term deposits with banks and co-operative banks raised to Rs.10, 000 from Rs.5, 000.
- Individuals /HUF’s liable to get their accounts audited u/s 44AB, required to deduct TDS on payments to contractors W.e.f. 1.6.2007 except when payments are made exclusively for personal purposes.
- Rate of TDS on Commission /brokerage increased to10% from 5% W.e.f. 1.6.2007.
- BSNL /MTNL exempt from TDS on payment of commission/brokerage to their PCO franchisees, W.e.f.1.6.2007.
- Rate of TDS on professional/technical services, royalty, etc. raised to10% from 5% w.e.f.1.6.2007.
- Ceiling on cash withdrawl /encashment of term deposit by an individual / HUF, for exemption from Banking Cash Transaction Tax, raised to Rs. 50,000 from Rs. 25,000.
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