• Personal effects such as artifacts or archaeological collections, drawings, paintings, sculptures, or a work of art would now be included as capital asset and their transfer will attract capital gains tax. Earlier, only jewellery was considered a personal effect and included in the definition of capital assets. The will take effect from 1st April, 2008. • Three-year bonds issued by National Highways Authority of India and Rural Electrification Corp even after March 31, 2007 would get tax exemption on capital gains provided the investment does not exceed Rs 50 lakhs. The bonds will no longer require notification by the Central Government. • Victims of natural and man-made disasters or their families will be exempted from paying income tax on the compensation they get from government authorities. Specially designed for the December 2004 tsunami victims as the effective date is April 1, 2005. • Rent concession has been redefined to include it as a perquisite if the value of accommodation exceeds 20 percent of the employee's salary in cities with population exceeding 4 lakhs and 15 percent of salary in others. If put up in a hotel for more than 15 days, the concession cannot exceed 24 percent of the employee's previous year's salary or the actual charge, whichever is lower. It would be implemented from April 1, 2002. • Deduction in income tax for creating and maintaining a special reserve for providing long-term finance for industrial or agricultural development or development of infrastructure facility in India or for providing long-term finance for construction or purchase of houses for residential purposes has been reduced to 20 percent from existing 40 percent. The norms of the recipients have been crystallized further. • The 10-year tax holiday for an enterprise engaged in development of infrastructure facilities, Industrial Parks and Special Economic Zones would be available to an entity which makes the investment and executes the development work i.e., carries out the civil construction work. In contrast to this, a person who enters into a contract with another person for executing works contract, will not be eligible for the tax benefit. This is effective April 1. The same tax holiday would not be available to an existing company which shifts to such areas through an amalgamation or demerger after March 31, 2007.
