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Journalism of Courage
NEW DELHI, MAY 3: Finance Minister Yashwant Sinha on Wednesday announced a number of changes in direct and indirect tax proposals, including taxing the shares alloted to employees under ESOP scheme only at the time of sale, doubling rebate for investment in infrastructure bonds to Rs 20,000 and hiking customs duty on various products like tea and coffee to protect the domestic industry.
Moving the Finance Bill 2000 for consideration in the Lok Sabha, Sinha announced that venture capital funds would enjoy a complete pass through status and there would be no tax on their income, which would be taxed at the hands of the investors at the rates applicable to the nature of income.
In a bid to boost the capital market and infrastructure sectors, he proposed to double the investment limit in infrastructure bonds to Rs 20,000 for rebate under Section 88 and the exemption limit of tax at source on non-bank deposits to Rs 5,000.
He also reduced the lock-in period from five years to three years for investment of capital gains in bonds of NHAI and NABARD.
To promote housing activity, Finance Minister also raised the limit of deduction of interest payable in acquiring in self-occupied properties from Rs 75,000 to Rs one lakh.
Sinha exempted Silicon, E-Mal and intravenous fluids, tapioca starch and heeng from CENVAT and biscuits priced below Rs five and weighing less than 100 grams from 50 per cent of CENVAT.
Sinha increased the basic customs duty on tea and coffee from 15 to 35 per cent, on poultry meat and their preparations from 35 per cent to 100 per cent and on non-cooking coal from 15 to 25 per cent.
Income tax surcharge on incomes above Rs 1.5 lakh would continue to be at 15 per cent, but for tax deduction at source it would be only at 10 per cent to avoid operational complications, he said.
Sinha also said shares allotted to employees would not be treated as perquisites and would be subject to capital gain tax only at the time of sale and there would be no tax on distributed or undistributed income of venture capital funds.
Moving the Finance Bill for 2000-01 in the Lok Sabha, Sinha also announced a number of custom measures to protect the domestic industry along with changes in direct tax proposals to promote investment in housing and research and development activities in knowledge-based industries.
Announcing the changes, Sinha said his approach was essentially to consider changes in tax structure that were "in public interest or where they remove certain anomalies or provide essential support or protection to the domestic industry."
On the direct tax front, Sinha announced setting up of a Rs 150 crore fund for Research and Development in knowledge-based industries, especially in pharma and bio-technology and said weighted deduction for expenses by these companies would be raised from 125 per cent to 150 per cent. "These R & D Companies will also enjoy a tax holiday for ten years," he said.
He also exempted non-profitable charitable companies from the Minimum Alternate Tax (MAT) and proposed to discontinue tax deduction at source on compulsory acquisition of agriculture land in a bid to provide relief to farmers.
Meanwhile, Opposition members charged the Government with ignoring ground realities while shaping its economic policies and programmes and said the country was witnessing rising poverty and unemployment due to faulty plans.
Participating in the discussion on the Bill, they asked Finance Minister Yashwant Sinha to improve resource mobilisation by strengthening tax collection machinery and ensuring effective fiscal discipline.
