The Hindu Business Line : Changes galore for individual taxpayers

Rate of Sec 88 rebate can no longer be taken for granted. Currently, there are two rates - 20 and the accelerated 30 - for low-income assessees. While there is no change in the latter case, the former is going to be hit if the gross total income exceeds Rs 1,50,000.

Rebate falls to 10 per cent in such cases, and beyond Rs 5 lakh, rebate is nil - a hard fact to digest. There is more:

Special rate of 25 per cent for authors, playwrights, musicians, actors, sportspersons, etc., withdrawn.

Condition for investment to be made out of `income chargeable to tax' withdrawn.

Rebate allowable only if taxable income is greater than amount of investment.

Casual casualty

The exemption for Casual and Non-recurring receipts up to Rs 5,000 has been withdrawn. That means, if you win a lottery or a card-game, you have to pay an additional Rs 1,500 plus Rs 75 surcharge.

Perk without profit

The employer can now pay tax on non-monetary perks on behalf of the employee. Tax so paid will be exempt from tax in the employee's hands [Section 10(10CC)]. But there is a catch: tax so paid is not allowable as business expenditure in computing the employer's income under the head Profits and Gains of Business or Profession. So, you need a selfless employer!

Partners' interest

Maximum rate of interest allowable on Partner's Capital in the hands of the firm has been restricted to 12 per cent per annum (earlier 18 per cent per annum).

On transfer

If you transfer property and receive consideration less than the guideline value, then the capital gain should be computed as per that value, and not consideration specified in the document (Section 50C). Thus, guideline value becomes the sacred benchmark.

Set off changes

Currently, any capital loss can be set off against any capital gain and the same may be carried forward to eight years and set off only against capital gain. The change now is to differentiate between short and long term.

Accordingly, short-term capital loss can be set off against any capital gain and long-term capital loss can be set off only against long-term capital gain. Unabsorbed short-term capital loss can be set off against any capital gain of subsequent year.

Unabsorbed long-term capital loss can be set off only against long-term capital gain of the subsequent year. Loss remaining to be set off can be carried forward to unlimited period. This is a benefit to investors who suffer losses in the stock market.

More depreciation

If you are an entrepreneur, there is good news. A new clause has been inserted in Section 32. Additional depreciation of 15 per cent on Plant and Machinery is allowable if following conditions are satisfied: assessee is engaged in manufacture or production; Plant and Machinery is acquired and installed after 31-03-2002; it is a new industrial undertaking or expansion of existing capacity by 25 per cent or more.

Arrears scope

Arrears of Family Pension received is to be eligible for relief u/s 89(1) - that could save some tax as in the case of salary arrears.

Less interest

Interest Payable by Government on refunds u/s 244A reduced from nine per cent to eight per cent per annum. So, waiting is less beneficial.

Property clearance

Chapter XXC clearance (from Appropriate Authority) for transfer of property is to be abolished with effect from July 1, 2002. Will that see a boom in real estate market?

Return to employer

Employees can file their I-T returns with their employers who will have to forward the same to the Department within the due date.

Transport operator

If you own, ply, hire or lease cargo trucks, there is a provision that calculates your income on presumptive basis (Sec. 44AE). It was at Rs 2,000 per month for heavy goods vehicle and Rs 1,800 for other goods vehicles. These amounts have been hiked to Rs 3,500 and Rs 3,150 respectively. That could mean a higher tariff for the users.

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Changes galore for individual taxpayers