Finance Act 2007 Union Budget Highlights

IMPORTANT AMENDMENTS AT A GLANCE - (As passed by the Lok Sabha)

INCOME TAX LAW (A.Y.-2007-2008)

(A) Important Amendments :

• Change in Tax Rates -

• For Individual, HUF, AOP, & BOI exemption limit has been raised from Rs.1,00,000 to Rs. 1,10,000
  
  
• For Women ( below 65 years of age) exemption limit has been raised from Rs.1,35,000 to Rs.1.45,000
  
• For Senior Citizen ( both Male and Females and above 65 years of age) exemption limit has been raised from Rs. 1,85,000 to Rs.1,95,000
  
• Surcharges of 10% on all items, Domestic Companies and other than Domestic Companies 2.5% shall now be levied only when taxable income exceeds Rs.1 crore.
  
  
• Dividend Distribution Tax has been raised from 12.5% to 15% on dividend distribution by companies.
  
• Banking Cash Transaction Tax has been raised the exemption limit for Individual and HUF’ from Rs.25,000 to Rs.50,000
• Additional Secondary & Higher Education Cess @1% on Income Tax and Surcharges shall be levied on all assesses.
• Medical Insurance Premium u/s 80D has been raised from Rs.10,000 to Rs.15,000 and from Rs.15,000 to Rs.20,000 for Senior Citizen.
• Service Tax Exemption rebate for small service provider has been raised from Rs.4,00,000 to Rs.8,00,000.
• Service Tax net has been extended to the following services :-

• Mining of mineral oil or Gas
• Renting of Immovable property for use in commerce or business.
• Development and supply of content for use in telecom and advertising purposes.
• Asset management services provided by individuals.
• Design Services.
• Services involved in execution of a works contract.
• Optional composition scheme under which service tax will be levied at only 2% of the total value of the Works contract.
• Exemption from Service Tax :
• Services provided by resident welfare association to their members who contribute Rs.3,000/- or less per month.
• Services provided by technology business incubators.
• Incubators whose annual business turnover does not exceeds Rs.50 Lakh will be exempt from service tax for the first 3 years.
• Charges for clinical trial on new drugs.

• Section 36(1)(viii) will be available to special entity in respect of bad & doubtful debts.

• 5 Years holiday from Income Tax for 2,3, or 4 stat hotels. If they are completed and become operational in National Capital Territory of Delhi or in Faridabad , Gurgaon, Ghaziabad , or Goutambudhnagar. During the period 1 st April,2007 to March 31 st.2010

• Present tax Holiday for undertaking in Jammu & Kashmir extended from March 31 st. 2007 tp March 31 st.2012.

• Capital Gain bonds issued by NHAI & REC. u/s 40EC of Income Tax Act further continue.

• Dividend by mutual funds attracting Dividend Tax raised to 15%

(B) Other Important Amendments :

• Inserted Explanation in Section 2(42A) : - Tow new explanation in clause 42A inserted which explaining the kind of capital asset by sub-clause (hb) in Explanation-1 and after Explanation-2, new explanation i.e. Explanation-3 assigned the meaning of specified security and sweat security.

• Further Amendment in Section 17 :- Amendment Section 17 substituting explanations explaining rent for unfurnished accommodation and their rental value.

• If accommodation is owned by the employer, value of accommodation determined at the specified rate.
• If accommodation is taken on lease by the employer, the value of accommodation being the actual amount of lease or 15% of salary, whichever, is lower specified rate shall be :-
• 15% of salary, cities having population exceeding 25 lakh as per 2001 census;
• Cities having population exceeding 10 lakh, 10% of Salary;
• In any other case, 7.5% of salary.

• Insertion of new section 44DB : Inserted new section 44DB regarding the provision for computing deductions in the case of business re-organization of co-operative banks. [ For details, kindly refer Income Tax Act. 2007]  

• Amendment in Section 47 : In Section 47 after clause (vic), the new caluse (vica) and (vicb) in respect of transfer of business reorganization of co-operative Banks shall be inserted w.e.f. 01.04.2008 [ For details, kindly refer Income Tax Act. 2007]

• Amendment in Section 49 : In Section 49, after sub-section (2AA), new sub-section shall be inserted i.e. (2AB) in respect of valuation of Capital gain arises from the transfer of specified security or equity share and the fair market value. [ For details, kindly refer Income Tax Act. 2007]

• Insertion of new Section 80IE : After Section 80ID, new section 80IE has been inserted for “ special provisions in respect of certain North-Eastern States.” [ For details, kindly refer Income Tax Act. 2007]

• Further substituted Section 115WJ : In Section 115WJ, sub-section 3 has been amended specifying simple interest @1% per month where advance tax has not been fully paid by the due date. [ For details, kindly refer Income Tax Act. 2007]

• Insertion of New Section 115WKA : After Section 115WK of the income Tax Act, new section 115WKA has been inserted regarding “ Recovery of Fringe benefit tax by the employer from the employee.

FINANCE ACT 2007- Union Budget Highlights

There is no change in Income Tax Rates.

Basic I-T exemption limit remains at Rs. 1.10 lakh.

Exemption limit remains at Rs. 1,45,000/- for women (below 65 years)

Exemption limit remains at Rs. 1,95,000/- for all Senior Citizens
( for men / women of age 65 and above)

INCOME TAX RATES APPLICABLE FOR FINANCIAL YEAR 2007-2008

# Slab for Women (below 65) begins from 1,45,001

* Slab for Senior Citizen begins from 1,95,001

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