There will be no change in the rates of personal income tax or corporate income tax.
Announcing this in Lok Sabha on Tuesday while presenting the Budget proposals for 2006-07, Finance Minister P Chidambaram said no new taxes are being imposed.
The minister abolished the one-by-six scheme under the Income Tax Act obliging certain categories of persons to file returns.
Responding to the demand for tax exemption on fixed deposits of certain tenure, the finance minister proposed to include investments in fixed deposits in scheduled banks for a term of not less than five years in Section 80C of the Income Tax Act.
He also proposed to remove the limit of Rs 10,000 in respect of controbution to certain pension funds in Section 80CC, subject to the overall ceiling of Rs 1 lakh. The finance minister also proposed to remove the exemption under Section 10(23G), which he said, was not relevant when interest rates are moderate.
Here are the highlights of the tax proposals:
- No changes in the rates of personal income tax, which will remain as they are currently.
- No change in corporate income tax rate.
- No new taxes on income.
- One by six scheme for filing of income tax returns has been abolished.
- Services tax net to be increased which include ATM operations, maintenance and management, share transfers, registration, international air travel excluding economy class, sponsorship other sports events, auctioneers, ship management and travel on cruise.
- 25 per cent across the board increase in securities transaction tax.
- Cooperative lending banks and rural development banks to be exempted from taxes under Section 80(B).
- Fixed deposits in scheduled commercial banks with at least five year maturity will get tax exemption for savings under section 80C of Income Tax Act.
- The Rs 10,000 exemption limit for investment in pension funds under Section 80CCC has been removed but these investments would be brought under Sec.80C subject to a ceiling of Rs 1 lakh.
- Donations to only religious institutions will be exempted from tax.
- Minimum alternative tax on corporates increased from 7.5 per cent to 10 per cent.
- More transactions to come under PAN.
- Constituency allowances of MLAs to be treated as
- constituency allowances of MPs for income tax purposes.
- Banking cash transaction tax introduced last year will
- continue. In one bank branch in Chandni Chowk, laundering to the tune of Rs 1,500 crore was detected.
- Fringe Benefit Tax modified. Threshold limits raised, but FBT will remain as it is justified for ensuring horizontal equity.
- Minimum alternative tax on corporates increased from 7.5 per cent to 10 per cent.