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Sinha announces tax relief, moves Finance Bill

Union Finance Minister Yashwant Sinha on Wednesday announced modifications in the budget proposals in direct and indirect taxes, including enhancing the limit of standard deduction and tax on interest income.

Moving the Finance Bill, Sinha said that he had proposed a reduction in the income limit of deduction of interest income under section 80l from Rs 15,000 to Rs 9,000.

To provide relief to the taxpayers, he revised the limit to Rs 12,000, Sinha said, adding that the additional deduction will be with regard to interest on government securities.

At present, for salaried taxpayers, standard deduction up to Rs 25,000 is available for persons having income up to rs 100,000 and Rs 20,000 for persons having income from Rs 100,000 to Rs 500,000 per annum.

In order to give relief to salary earners, Sinha raised the limit of Rs 25,000 to Rs 30,000, which will now be available for income up to Rs 1,50,000. For persons having income from Rs 1,50,000 to Rs 3,00,000, the limit has ben raised fvrom Rs 20,000 to Rs 25,000.

Those having income of Rs 300,000 to Rs 500,000 will continue to enjoy the existing deduction of Rs 20,000. These modifications would result in revenue loss of about Rs 10 billion.

Sinha also modified his proposal for tax deduction at source on interest payments. The limit for TDS has been raised from Rs 2,500 earlier to Rs 5,000.

To facilitate de-mutualisation and corporatisation of stock exchanges, Sinha said that transfer of assets in such an arrangement will not be liable for capital gains taxes.

He proposed modifications in transfer pricing provisions to clarify that these regulations will also apply to transactions between the head office and its branch.

Besides, the adjustment made to the transfer price in the case of one enterprise will not by itself form the basis of a consequential adjustment in the case of the other enterprise.

Sinha extends 16% excise duty to other garments

Finance minister Yashwant Sinha said the 16 per cent excise duty on branded readymade garments and accessories was being extended to other garments excluding clothing accessories raincoats and undergarments for removing distortions and manipulations.

Moving amendments to the Finance Bill in Lok Sabha today, Sinha said the small-scale excise exemption scheme would also be extended to the garment sector, adding that the changes would be effective from May 1, 2001.

The finance minister announced direct tax concessions for exporters. They are required to pay tax on 40 per cent of their income for the current year, with the percentage increasing to 60 per cent, 80 per cent and 100 per cent for the next three years.

Keeping in view the difficulties of these taxpayers, Sinha proposed re-phasing of the withdrawal provisions through backloading.

For the current financial year, they will now be taxed to the extent of 30 per cent of their profits and the percentage of their taxable income will increase to 50 per cent, 70 per cent and 100 per cent, respectively, for the next three years.

While introducing the Finance Bill, Sinha had proposed two dates for filing of returns -- July 31 for non-corporates and October 31 for corporates.

He has now proposed that the due dates for filing of returns in respect of non-corporate tax payers whose accounts are to be statutorily audited will also be October 31, in line with the due date for corporates.

Charitable trusts and funds will be required to publish their accounts only if their annual receipts exceed Rs 10 million, as against the limit of Rs 1 million proposed in the bill.

Sinha proposed that all garments, branded or unbranded would be subjected to excise duty at 16 per cent. However, clothing accessories, raincoats and undergarments will be exempt from the new levy. The small-scale excise duty exemptions scheme would be applicable to garments also. The modified scheme will be effective from May 1,2001.

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The Union Budget 2001-2002

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