Financial Daily from THE HINDU group of publications
Wednesday, Mar 01, 2006


Group Sites

Opinion - Income Tax
Industry & Economy - Budget

How the tax breaks pan out

V. K. Subramani

The Finance Minister, Mr P. Chidambaram, took only 30 minutes to spell out the tax proposals for fiscal 2006-07. Prima facie there does not seem to be any major relief for the individual taxpayer, but on going through the Finance Bill, 2006, the following positives to various classes of taxpayers could be identified:

In addition to there being no fresh tax burden on the salaried class, incentive by way of deduction towards term deposits of five years or more in scheduled banks would be eligible for deduction under Section 80 C. Self-employed can claim this deduction without having to invest in insurance or other incentive avenues contained in the provision.

The contribution to pension funds eligible for deduction has been enhanced from Rs 10,000 under Section 80 CCC to Rs 1 lakh. However, there is no corresponding incentive by amending or deleting Section 80 CCE, which provides an overall cap of Rs 1 lakh as deduction in aggregate under Sections 80C, 80CCC and 80 CCD.

Contribution of the employer to superannuation fund up to Rs 1 lakh per employee is not liable for fringe benefit tax. Hence, employees have to seek benefits by way of contribution to superannuation fund which are not taxable in their hands and also not liable for FBT for the employer.

Economic criteria for filing of return of income, popularly known as the one-by-six scheme, stands abolished. Hence, for the previous year ending March 31, 2006, such return need not be filed by persons who have income below the taxable limit.

Wholly religious trusts or institutions, even if they receive anonymous donations, would continue to be exempt from tax. In contrast, other charitable trusts and institutions have to pay tax at 30 per cent on anonymous donations.

(The author is an Erode-based chartered accountant.)

More Stories on : Income Tax | Budget

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Full credit on the farm front

Big bonanza for the small car
A difficult task well done
Boost to booming economy
Not rocking the boat
Mixed impact
Encouraging competition
A `taxing' exercise
`Chai' with masala
Harnessing winds of continuity
Growth and equity
Undertone positive
Sad call for telecom
Continuity in momentum
Enhanced need for funds
Pragmatic, with few surprises
Ensuring the trickle-down
Budget hits all the right notes
No major reaction
Gathering pace
Judicious tinkering
Wiring up the nation
Taxes not recovered crossed Rs 1,11,000 cr
Services sector provides Rs 23,000 cr
Let down on CST
The wind is blowing, take cover!
A touch more than a stitch in time
Duty rationalisation for man-made textiles — More allocation for textile schemes; Rs 189 cr for textile parks
A few goodies for rural impetus, lower costs
Excise duty cut, a boon for small carmakers — `Small cars' are Maruti 800, Wagon R, Zen, Alto, Hyundai Santro, Indica diesel
No special drive: auto parts sector
`There's further scope for reducing raw material duties to Asean levels'

A positive program
Metals: Reflected lustre
A draft of demands
NBFC granted audience
Sighs of relief and dropped jaws — The FM seems content more at not ruffling many feathers
A liberal look to fringe benefit tax — FM has delivered what he had promised
Accent on digitisation — The income-tax offices will undergo business process re-engineering
How the tax breaks pan out
Tepid changes to corporate tax
Tame docile budget
Educational loans

The Hindu Group: Home | About Us | Copyright | Archives | Contacts | Subscription
Group Sites: The Hindu | Business Line | Sportstar | Frontline | The Hindu eBooks | The Hindu Images | Home |

Copyright 2006, The Hindu Business Line. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu Business Line