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Home > Business > Business Headline > Report
The new tax structure
May 03, 2005 09:31 IST
Finance Minister P Chidambaram on Monday retained both his controversial tax proposal -- the fringe benefit tax and the cash withdrawal tax -- but made modifications to offer some relief to individuals as well as corporates. While retaining the fringe benefit tax rate at 30 per cent, Chidambaram reduced the taxable value under six categories including entertainment and hospitality from 50 per cent to 20 per cent. Let's take look at the new tax structure. 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 |
For women and senior citizens Tax exemption limit for women enhanced by another Rs 10,000 to Rs 135,000. Now, women earning Rs 1.35 lakh-1.50 lakh would be required to pay 10 per cent income tax while those with an annual taxable income of Rs 1.5 lakh-2.5 lakh would have to pay tax at 20 per cent. Women earning above Rs 2.5 lakh would be liable to pay 30 per cent income tax. Tax exemption limit for senior citizens increased to Rs 185,000 from Rs 150,000. For senior citizens, income between Rs 1.85-2.5 lakh will attract 20 per cent tax and beyond Rs 2,50,000, it would be 30 per cent.
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. Cash Withdrawal Tax No cash withdrawal tax on savings bank accounts Over Rs 25,000 withdrawn by individuals or HUF in a day from current account to be subjected to 0.1 % tax; for others on Rs 1 lakh withdrawn during a day. Tax to be levied on withdrawals from all banks instead of only scheduled banks proposed earlier. Other tax changes Income tax exemption limit for women raised to Rs 1.35 lakh for senior citizens to Rs 1.85 lakh. Molasses: excise duty cut to Rs 750 per tonne. No countervailing Customs duty on components for mobile phone manufacturing. Optional excise duty on nylon tyres cut to 8 per cent. All parts of computers, including laptops and central processing units, to be subjected to 7 per cent import duty. Countervailing duty on nets for tuna fishing halved to 8 per cent.
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Number of User Comments: 8
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Sub: doubt about EET
I am a government employee. I would like to know details about EET,especialy about the withdrawal from PF account. is it taxable? If so what ...
Posted by jaitulhaque
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Sub: FBT
Confusion is the word in Tax circles! FBT is definitely going to upset may companies, firstly with different slabs & different applicablity to various companies. ...
Posted by Sudheendra Rao
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Sub: Senior Citizen
Honourable Finace Minister, One would like to know your defination of Senior Citizen? We would be very happy if this is defined as 60 years ...
Posted by A N Rao
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Sub: Excessive tax exemption to women
I fail to see reason in giving so much tax exemptions to women, although it should have been the otherway round. Afterall in most of ...
Posted by Rajesh Thakur
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Sub: Clarifications on TDS on interest from post office deposit. MIS.
Dear Sir, I would like have clarifications for the following points. My father is a senior citizen and he wants to deposit his earned money ...
Posted by udayappan
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