FM's tax proposals, a mixed bag

It's a mix bag for individuals, corporates and those investing in the markets. While marginal relief has been given to individuals by raising the exemption limit by Rs 10,000, the corporate income tax has not been changed.

While the securities transaction tax has not been lowered, the dividend distribution tax has been hiked by 2.5%. For the professionals, the payout in the form of Fringe Benefit Tax is bound to be higher in case he or she is receiver of stock options.

For the different sectors, it is again a mixed-bag.

Following are the amended direct and indirect tax rates:
• Excise duty on Pan Masala without tobacco as mouth freshners reduced from 66 per cent to 45 per cent.
• Excise duty on cement reduced from Rs 400 per tonne to Rs.350 per tonne for cement bags sold at Rs.190 per bag at retail market. Those sold above Rs.190 will attract excise duty of Rs.600 per tonne.
• Two lakh people to benefit out of service tax exemption. Govt to lose Rs 800 crore as a result.
• Service tax on Residents Welfare Associations whose members contribute more than Rs 3,000.
• Income tax limit not to be changed. Threshold limit raised by Rs 10,000 giving every assessee a relief of Rs 1,000.
• Deduction in respect of medical insurance under Section 80 (D) increased to Rs 15,000 and Rs 20,000 for senior citizens.
• Surcharge on Corporate income tax on companies below Rs one crore removed.
• Tax free bonds to be issued by state-owned urban local bodies.
• Excise duty for plywood reduced from 16 per cent to eight per cent.
• Food mixes to be fully exempted from excise duty.
• Bio-diesel to be fully exempted from excise duty.
• Water purification devices, small and big, fully exempted from excise.
• Specific rates of excise duty on cigarettes increased.
• Three per cent import duty to be levied on private importers of aircraft including helicopters.
• No change in general CENVAT rate.

• Ad valorem duty on petrol and diesel to be brought down from eight to six per cent.
• Export duty on iron ore and concentrate at the rate of Rs.300 per tonne. Export duty on Chromium proposed at Rs.2000 tonne.
• Small scale industries excise duty exemption raised from Rs one crore to Rs 1.5 crore.

• Five year tax holiday for two, three, four star hotels and convention centres with a seating capacity of 3,000 in NCT of Delhi, Gurgaon, Ghaziabad, Faridabad and Gautam Buddha Nagar for Commonwealth Games. Twenty thousand more rooms required.
• Minimum Alternate Tax being extended.
• Benefits of investment in venture capital funds confined to IT, bio-technology, nano-technology, seed research, dairy among some others.
• Dividend distribution tax raised from 12.5 to 15 per cent.
• ESOPs to be brought under FBT.
• Expenditure on samples and free distribution items to be exempted from fringe benefit tax.
• Additional revenue from direct taxes to yield Rs.3000 crore and indirect taxes revenue neutral.
• Tax exemption on aviation turbine fuel sold to turbo prop aircraft extended to all small aircraft less than 40,000 kg.
• Withdrawals by central and state governments exempted from Banking Cash Transaction Tax. The limit for individuals and HUF raised from Rs 25,000 to Rs 50,000.