Presented by

Sanjay Kadel
Chartered Accountant
B.com, ACA, DISA(ICA), DIRM(ICAI)

And Team
Rinku
Saravanan
Ajith
Anoop
Gopi True colors of
this budget ...

Flash

[email protected]
Budget 2008
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Economy Income Tax Customs Excise Service Tax Others

“ The economy has moved decisively to a higher

growth phase… Confident of achieving 9%
growth… I believe that boldness pays. I also be-
lieve that trust will beget trust, moderation will
beget revenues and fairness will beget compli-
ance. Income tax payers have made out a per-
suasive case for some relief.

1 ECONOMY
”
• Projected economic growth rate of 8.7%

• During FY 2007-08 GDP increased from Rs.37.90 Lakh

Crores to estimated 42.83 Laksh Crores - An increase of
13% over last year.

• There is a slight slow down in exports growth - From

22.6% growth last year, the estimated growth is 21.6%

• Foreign currency assets have increased 1.5 times than last year - standing at whooping 281 Billion US Dollars.

• The growth in the services sector continued to be broad based. Among the subsectors of services, “transport and
communication” has been the fastest growing with growth averaging 15.3 percent per annum during the Tenth Five
Year Plan period followed by “construction”.

• The growth of “financial services” comprising banking, insurance and business services is at peak at 13.9 per cent in
2006-07.

• Overall inflation, as measured by the aggregate deflator for GDP MP, is projected to decline from 5.6 per cent in
2006-07 to 4.1 per cent in 2007-08.

• The consumer durable goods sector in particular has shown a distinct slowdown. This is linked to the hardening of
interest rates and therefore to the conditions prevailing in the domestic credit sector. However, the picture with re-
gard to forward-looking variables such as investment, particularly in the corporate sector, has been encouraging.

Disclaimer: While extra care has been taken to maintain the accuracy of the contents, some unwarranted errors or discrepancies may have crept
in. The authors of this document do not accept any responsibility for the acts done on the basis of the subject matter mentioned herein.
 Economy Income Tax Customs Excise Service Tax Others

2 INCOME TAX

New Income Tax Slabs proposed in the Budget 2008

Income Slab (Rs.) Tax (Rs.)

Women Senior Citizen Others

Upto 150000 Nil Nil Nil

150001 to 180000 Nil Nil 10% of amount exceeding
150000
180001 to 225000 10% of amount exceeding Nil 10% of amount exceeding
180000 180000
225001 to 300000 10% of amount exceeding 10% of amount exceeding 10% of amount exceeding
225000 225000 225000
300001 to 500000 20% of amount exceeding 20% of amount exceeding 20% of amount exceeding
300000 300000 300000
Above 500000 30% of amount exceeding 30% of amount exceeding 30% of amount exceeding
500000 500000 500000

• No Change in Corporate Income Tax rates

Special points of interest:
• No Change in Surcharge ☺ Women assessees enjoy exemption upto
180000 (Earlier - 145000)
• New proposal for obedient children. ☺ Senior Citizens enjoy exemption utpo
Additional Deduction of Rs.15000 proposed u/s 80D on 225000 (Earlier - 195000)
mediclaim insurance premium paid for parents.
☺ Others enjoy exemption upto 150000 (Earlier
• FBT: - 110000)
Crèche facilities, sponsorship of an employee-sportsperson,
organising sports events for employees and guest houses excluded from the purview of FBT.

• Hotel Industry SOPs

Five year holiday from income tax being granted to two, three or four star hotels established in specified districts
having UNESCO-declared 'World Heritage Sites'; the hotel should be constructed and start functioning during the
period April 1, 2008 to March 31, 2013.

• 80C deduction basket enlarged: payment under the Senior Citizens Savings Scheme Rules, 2004 and as five year
time deposit in an account under the Post Office Time Deposit Rules, 1981 now eligible for deduction.

Disclaimer: While extra care has been taken to maintain the accuracy of the contents, some unwarranted errors or discrepancies may have crept
in. The authors of this document do not accept any responsibility for the acts done on the basis of the subject matter mentioned herein.
 Economy Income Tax Customs Excise Service Tax Others

2 INCOME TAX continued...

• FOR THOSE INTO STOCK MARKET……………...

Tax on Capital Gains

Rate of tax on Short Term Capital Gains arising from sale of securities suffereing STT will be taxed at 15% in-
stead of earlier rate of 10%. Short Term Capital Gains means - Gains arising from securities / shares held for not
more than 12 months before the date of its transfer. However, Long Term Capital Gains on these are still exempt.

STT - STT paid to be treated like any other deductible expenditure against business income;

Levy of STT, in the case of options to be only on premium, where the option is not exercised; liability to be on the
seller; where the option is exercised, levy to be on the settlement price and the liability on the buyer; no change in
the present rates.

CTT - Commodities Transaction Tax (CTT) to be introduced on the same lines as STT on options and futures.
See the end of document for further details.
CTT paid to be also treated like any other deductible expenditure against business income.

PAN requirement to be extended to all transactions in capital market.

• Banking Cash Transaction Tax (BCTT) being withdrawn with effect from April 1, 2009.

• Businessmen / Business women Beware: w.e.f. April 1, 2009, Where the assessee incurs any expenditure in re-
spect of which, payment in a day to a person is made in cash or non-account-payee cheques or draft, exceeding
20,000, no deduction shall be allowed in respect of such expenditure.

• Law being amended to exclude entities carrying on regular trade, commerce or business or providing services in
relation to any trade, commerce or business and earning incomes from claiming that their purposes also fall under
"charitable purpose"; Genuine charitable organisations not to be affected in any way.

• Parent company allowed to set off the dividend received from its subsidiary company against dividend distributed
by the parent company; provided that the dividend received has suffered DDT and the parent company is not a
subsidiary of another company.

• Income Tax Act to be amended to provide that reverse mortgage would not amount to "transfer"; and the stream
of revenue received by the senior citizen would not be "income".

• Tax income arising from saplings or seedlings grown in a nursery exempted.

• Business of production of seeds and manufacture of agricultural implements added to the list of companies al-
lowed weighted deduction of 150 per cent on any expenditure on in-house scientific research.

• Benefit of amortisation of certain preliminary expenses under Section 35D allowed to assessees in the services
sector.

Disclaimer: While extra care has been taken to maintain the accuracy of the contents, some unwarranted errors or discrepancies may have crept
in. The authors of this document do not accept any responsibility for the acts done on the basis of the subject matter mentioned herein.
 Economy Income Tax Customs Excise Service Tax Others

3 EXCISE AND CUSTOMS

General CENVAT (Central Value Added Tax) rate on all goods reduced from 16 per cent to
14 per cent to give a stimulus to the manufacturing sector.

Changes in Excise Duties

Products Description Earlier Rate New Rate
All goods produced in Pharmaceutical sector 16 8
Buses and Chasis 16 12
Small Cars 16 12
Hybrid Cars 24 14
Two Wheelers and Three Wheelers 16 12

Paper, Paper board and articles made therefrom 12 8

Paper, Paper board and articles made therefrom— 8 0
where clearances is less than 3500 MT
Writing, Printing and Packing Paper 12 8

Wireless Data Cards, Tea and Coffee mixes 16 0

Water purification devices, veneers, flush doors 16 8

Packaged Software 8 12

Changes in Customs Duties

Products Description Earlier Rate New Rate
Project Imports 7.5 5
Steel melting scrap, Aluminium scrap 5 0
Specified life saving drugs and drugs used to manu- 10 5
facture life saving drugs
Vitamin Premixes, 30 20
Phosphoric Acid 7.5 5

Bactofuges (which increases shelf life of dairy prod- 7.5 0

ucts)
Specified machinery for manufacturing sports goods 7.5 5

Disclaimer: While extra care has been taken to maintain the accuracy of the contents, some unwarranted errors or discrepancies may have crept
in. The authors of this document do not accept any responsibility for the acts done on the basis of the subject matter mentioned herein.
 Economy Income Tax Customs Excise Service Tax Others

4 SERVICE TAX

• Four services brought under service tax net namely,

1. asset management serviceprovided under ULIP,
2. services provided by stock/commodity exchanges and clearing houses;
3. right to use goods, in cases where VAT is not payable; and
4. Customized software, to bring it on par with packaged software and other IT services.

• Threshold limit of exemption for small service providers increased from Rs.8 lakhs per year to Rs.10 lakh
per year.

Renting of Immovable Property - Clarification:

For the removal of doubts, it is hereby declared that for the purposes of the clause “renting of immovable property”
includes allowing or permitting the use of space in an immovable property, irrespective of the transfer of possession or
control of the said immovable property

Like Income Tax Return Preparer scheme, Service tax return preparer scheme is proposed to be launched.

IT Software service:

Information technology software includes those for use in the course, or furtherance, of business or commerce, includ-
ing,—

(i) development of information technology software,

(ii) study, analysis, design and programming of information technology software,

(iii) adaptation, upgradation, enhancement, implementation and other similar services related to information technol-
ogy software,

(iv) providing advice, consultancy and assistance on matters related to information technology software, including
conducting feasibility studies on implementation of a system, specifications for a database design, guidance and assis-
tance during the startup phase of a new system, specifications to secure a database, advice on proprietary information
technology software,

(v) acquiring the right to use information technology software for commercial exploitation including right to repro-
duce, distribute and sell information technology software and right to use software components for the creation of and
inclusion in other information technology software products,

(vi) acquiring the right to use information technology software supplied electronically;

Disclaimer: While extra care has been taken to maintain the accuracy of the contents, some unwarranted errors or discrepancies may have crept
in. The authors of this document do not accept any responsibility for the acts done on the basis of the subject matter mentioned herein.
 Economy Income Tax Customs Excise Service Tax Others

5 OTHERS

CST

• Central Sales Tax rate being reduced from 3 per cent to 2 per cent from April 1, 2008.

• Roadmap for Goods and Service Tax being prepared for introduction of GST from April 1, 2010.

Commodity Transaction Tax - Rates

Disclaimer: While extra care has been taken to maintain the accuracy of the contents, some unwarranted errors or discrepancies may have crept
in. The authors of this document do not accept any responsibility for the acts done on the basis of the subject matter mentioned herein.
 Economy Income Tax Customs Excise Service Tax Others

5 OTHERS

india...
Disclaimer: While extra care has been taken to maintain the accuracy of the contents, some unwarranted errors or discrepancies may have crept
in. The authors of this document do not accept any responsibility for the acts done on the basis of the subject matter mentioned herein.