| Income slab |
Tax rate (%) |
Surcharge (%) |
Effective tax rate (%) |
| Upto Rs 50,000 |
Nil |
Nil |
Nil |
| Between Rs 50,000-60,000 |
10 |
Nil |
10 |
| Between Rs 60,000-150,000 |
20 |
10 |
22 |
| Above Rs 150,000 |
30 |
15 |
34.5 |
2. Sugar-not-sweet to Income Tax asseessees
Sugar under Public Distribution System (Ration) will not be available to Income Tax asseessees.
3. PAN: Fast delivery
The speed of allotment of Permanent Account Number (PAN) will be expedited. PAN would be allotted within 30 days of filing the application from July 1, 2000.
4. One-by-six ventures in newer areas
The One-by-six scheme has been extended to most cities with population above 200,000 as per 1991 census. Presently, only 54 cities are covered.
5. Provident fund interest waning
The interest on General Provident Fund rates has been reduced by 1 per cent, from 12% to 11%.
6. Seniors get their due share
The rebate on income tax available to senior citizens under section 88B has been enhanced to Rs 15,000 from Rs 10,000. Thus income upto approximately Rs 1,23,000 (which was earlier Rs 1,00,000) would not attract any income tax.
7. A salute to the courage of jawans
Under section 10(18) of the Income Tax Act, 1961, pension and family pension of gallantry award winners are exempted from Income Tax. Earlier, this exemption was available only to members of defence forces. This has been extended to members of para-military forces.
8. Jai Jawan! Jai Kissan!!
Section 10 (1) of Income Tax Act, 1961 grants exemption from any income earned from agricultural activity. However, any income derived from the use of any land or any building for any purpose other than agriculture has been brought within the ambit of taxation.
9. Tinkering with capital gains
Section 54 EA and 54 EB which were available for claiming exemption from long term capital gains have been deleted. A new section 54 EC has been introduced. Investments qualifying for exemption under this section will have to be in bonds issued by National Highway Authority of India and NABARD. These investments can be low yielding as against the alternatives, which were available earlier.
10. Build a house and get rebate
Rebate from Income Tax under section 88 available towards principal repayment of loan taken for purchase of house property was restricted to Rs 10,000 earlier. This has been enhanced to Rs 20,000. However, the overall limit available under this section remains at Rs 70,000.
11. Individuals' interest guarded
Under section 24 (2), the interest paid on housing loan taken or house purchased/constructed after April 1, 1999 but before April 1, 2001 was eligible for enhanced deduction of Rs 75,000 (which is otherwise Rs 30,000) under the head "Income from House Property". This provision has been extended upto April 1, 2003.
12. Have one more flat for your getaway
Under Section 54 F of the Income Tax Act 1961, exemption from capital gains is allowed on transfer of any long term capital assets and the consideration is invested in any residential house property. This was subject to the condition that the assessee does not own any other residential house property other than the one being so acquired by him. The section has been amended to provide that the assessee can now own an additional property other than the one being newly acquired.
13. Education helps
Under section 80 E, deduction is available from income earned for repayment of loan and interest taken for higher education upto Rs 25,000. The amount has now been enhanced to Rs 40,000.
14. Rich dividends
Corporates are liable to pay tax on dividend distributed at the rate of 10 per cent. This has been doubled and they will now have to pay at tax on dividend distributed at the rate of 20 per cent. A surcharge of 10 per cent will also be payable taking the effective tax rate to 22 per cent. This will certainly influence the dividend payout decisions by corporates.
15. Empowering women
A new section 88 C has been introduced to grant rebate of Rs 5,000 or the tax payable whichever is less from the total tax liability of an assessee being a woman resident in India and below the age of 65 years.
16. Refund, if any
Refund of income tax can now be credited directly to an assessee's bank account at his option. This can probably expedite the release of refund by Income Tax department.
17. Payment gateways
Tax can now be paid in any branch of a nationalised bank.
Disclaimer
An attempt has been made to bring out certain salient features in the recently announced Budget 2000 related to personal taxation. The objective is to summarise the tax changes and highlight the implications. However, the above should not be purported as being an expression of opinion or interpretation of the same. The above is issued to assist the reader to understand the changes in a nutshell.
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