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Taxes
Customs
Duty :
The peak rate
of Customs Duty has been further reduced by 5% to 30%.
The said peak rate shall be applicable in the years
2002-2003 and 2003-2004. Thereafter, i.e. from the year
2004-2005, as per the proposals the peak rate will comprise
only of two basic rates of :-
- 10% on raw material,
intermediates and components; and
- 20% on final products.
The existing
rates will be adjusted and subsumed in these two rates
with some exception on account of WTO binding or higher
tariffs on farm products.
The zero
duty regimes for IT products have been postponed for
two years on demand of local manufacturers.
Many changes
have been made, especially to provide support to units
in steel, textile sectors, units set up in special economic
zones, imports by ports, airport authorities etc. Some
of the details are given in Annexure-I.
Excise
Duty :
- Further rationalization
of Excise Duty has been made.
- Special excise duty
has been abolished on a number of items.
- Proposal has been
made to reduce CENVAT to one rate only namely 16%
in the next two years.
Service
Tax
Service Tax has
been extended to many new services, as shown in Annexure-II.
The rate of service tax has however been not changed.
Central
Sales Tax Act
Certain important amendments have been proposed
in the Central Sales Tax Act, as shown in Annexure-III.
Income
Tax
Individual
Rates
No change has
been made in respect of taxes as applicable to individuals
including expatriates.
However,
a new surcharge @ 5% has been introduced to meet national
security costs.
A surcharge
as was applicable @ 2% towards Gujarat Relief Fund has
been withdrawn.
Accordingly, this would have a net effect of raising
tax rates approximately @ 2.94%. The position at certain
levels would be as under :
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Total
Income
(Rs.)
|
Existing
Tax Liability
(Rs.)
|
New
Tax Liability
(Rs.)
|
Additional
Tax Liability
(Rs.)
|
Additional
Tax
(%)
|
|
5,00,000
|
1,26,480
|
1,30,200
|
3,720
|
2.94
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10,00,000
|
2,79,480
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2,87,700
|
8,220
|
2.94
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25,00,000
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7,38,480
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7,60,200
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21,720
|
2.94
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1,00,00,000
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30,33,480
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31,22,700
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89,220
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2.94
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Taxation
of Perquisites
-
The
benefit of Home Leave Passage granted to an employee,
who is not a citizen of India, his spouse and other
members of the family was hitherto exempt, subject
to fulfillment of specified conditions. Any provision
of facility on this account would now be taxable.
-
The
payment of tax by any employer on behalf of a foreign
technician on his salary and allowances was hitherto
exempt in the hands of employee for a period of
4 years from the date of his employment. This would
now be taxable.
-
As per the present provisions, value of benefit,
perquisite provided by the employer is included
in the taxable income of the employee and tax thereon
is payable by the employee, excepting in the case
of a foreign technician, as referred to in (ii)
above.
As per
the proposal contained in the budget, an option has
been given to the employer to pay applicable tax arising
in respect of grant of non monetary perquisites. The
payment of tax by the employer on behalf of the employee
would not be deemed as an income of the employee and
as such exempt. This is a concession permitting shifting
of tax obligation payable on non monetary benefits,
perquisites enjoyed by the employees on the employer,
without inclusion in the income of employee. The tax
so paid by the employer shall however be not allowable
as a deduction to the employer.
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