Council For Fair Business Practices

Important Information :

Recent Events Held :

Reportof Seminar on “CONSUMER AND THE UNION BUDGET” held on 4th March 2005.

CFBP had organized a seminar on “ Consumer and the Union Budget ” on 4th March 2005 in the Babubhai Chinai Committee Room of IMC.

Shri V.B.Haribhakti, President , welcomed the gathering and gave a brief account on the activities of the CFBP. He then introduced the speakers Mr. Anil Harish , Mr.Dadi Engineer and Mr. Anand Patwardhan. The President requested Shri Anil Harish to elaborate on the direct tax changes in the Union Budget of 2005-06.

Shri Anil Harish gave a brief account on the changes in Direct taxes as detailed below:

DIRECT TAXES

Income tax brackets and rates revised as follows:

Upto Rs. 1 lakh - nil
Rs. 1 lakh to Rs. 1.5 lakh 10%
Rs. 1.5 lakh to Rs.2.5 lakh 20%
Above Rs.2.5 lakh 30%
Ten Percent surcharge to be levied on income beyond Rs.10 lakhs
Exemption level for women raised from Rs.1 lakh to 1.25 lakh and for Senior Citizens to 1.5 lakhs
Standard deduction is abolished
All tax payers allowed a consolidated savings limit of Rs.1 lakh, which will be reduced from the income tax before calculation.
All other sectoral caps removed. Rebates under Section 88 and 80L eliminated.
Deductions to continue on housing loan interest, medical insurance premia, specified expenditure on dependent, expenses for medical treatment, interest on loans for higher studies and deduction for a person with disability
Experts committee to work out the road map for moving towards an exempt exempt tax (EET) system for all savings.
Exemption on interest earned on accounts of non-resident Indians to continue.
Benefits enjoyed collectively by the employees, not attributable to individuals, to be taxed in the hands of the employer. New tax at 30% to be called fringe benefit tax (FBT) .
Transport services for staff and canteen services to be out of the FBT net.

CORPORATE TAXES

Corporate income tax for domestic companies at 30% plus 10% surcharge
No change in the tax regime for foreign companies.
General machinery and plant to attract depreciation at 15%, but the initial depreciation rate hiked to 20%.
The requirement of 10% increase in installed capacity for availing the benefit of initial depreciation removed.
Withholding tax on technical services reduced from 20% to 10%
Credit to be allowed for Minimum Alternate Tax (MAT) paid under Section 115 JB of the Income Tax
Terminal date for exemptions given for specific purposes extended from 31st March 2005 to 31st March 2007. These include weighed deduction of 150% of expenditure on in house research and development in notified sectors like biotech, pharma and electronics; deduction of profits of new undertakings in Jammu and Kashmir and 100% deduction of profits of companies carrying on research approved by the department of scientific and industrial research.
Extension of tax exemption on agreements to acquire aircraft or aircraft engines on lease up to September 30, 2005.
Securities transaction tax (STT) raised from 0.015% to 0.02% for all categories of transactions.
Trading in derivatives in specified stock exchanges not to be treated as speculative transactions for income tax purpose.

TAX OF 0.1% ON CASE WITHDRAWALS FROM BANKS OF OVER RS.10000/- IN A SINGLE DAY

ANTI-TAX EVASION MEASURES

Mobile telephones removed from the on-in-six criterion for filing income tax returns. Instead, payment of electricity charges of over Rs.50000/- per year included in the list.
Tax of 0.1% on cash withdrawals from banks of over Rs.10000/- in a single day.
Banks to report all deposits exempt from TDS on interest.
Large tax payer units (LTUs) to be set up in major cities. Help centers also to be set up for small tax payers.

Mr. Dadi Engineer, then gave a detailed account on INDIRECT TAXES –

Changes as detailed below :

Customs

Peak rate for non-agricultural products down from 20 percent to 15 percent. Other slabs put at 10%, 5% and 0.
Duty on textiles machinery and refrigerated vans down from 20% to 10%
Duty on seven specified machinery used in leather and footwear industry down from 20% to 50% and that on elthyl, vinge acetate used in this industry down to 10%
Duty on nine specified machinery used in pharma and biotech sectors cut to 5%
Duty on primary and secondary matters lowered to 10% and on industrial raw materials like catalysts, refractory raw materials, basic plastic, molasses and industrial elthyl alcohol down to 10%. Duty on lead and cooking local with high ash cut to 5%
Duty on polyester and nylon chips, textile fibres yarns and intermediates, fabrics and garments cut to 15%
Duty removed on capital goods and inputs for information technology agreement bound items but a countervailing duty of four percent levied on those items that attract nil duty
No change in duty on agricultural goods, except a hike in duty on cut flowers to 60% and reduction in duty on cloves to 3.5%
Duty on atmosphere drinking water down to 5%

Excise

For small scale industry (SSI), the annual turnover ceiling for claiming exemption from excise duty raised from Rs.3 crore to Rs. 4 crore
More goods brought under the cenvate rate of 16%
These include polyester filament yarn, tyres and air conditioners
Duty on motor cars and aerated drinks to continue to 24%
In the textiles sector, independent texturises given option to avail of the exemption route or pay 8% excise duty with cenvat credit
Surcharge of Rs. 1/- per kg on tea abolished
Duty of Rs.1/- per kg on refined edible oils and Rs.1.25 a kg on vanaspati abolished
Duty on industry cut to 16 percent
Duty on molasses raised from Rs.500/- per tonne to Rs.1000/- and on cement dinkers from 250 per tonne to Rs.350 per tonn
Duty rates on cigarettes raised by 10%
10% surcharge on ad valorem duties on other tobacco products including gutka, chowing tobacco, smuff and pan masala
Bills continue to be exempted from duty

TAXES ON PETROLEUM PRODUCTS

Cess on petrol and diesel raised by 50 paise a litre to fund the National Highways Development Project

DUTIES ON MOTOR CARS TO CONTINUE AT 24%

Customs duty on crude petroleum reduced from 10% to 5 %
No excise or customs duty on LPG for domestic consumption and subidised kerosene.
Customs duty on other petroleum products, including motor spirit and diesel, down from 20% and 15% to 10 %
Excise duty and diesel to be fixed as a combination of ad valorem and specified duties
Duty drawback rates for exported goods to be reviewed and modified by April 30.

SERVICE TAX

Tax rate maintained at 10% but new services added to the list and small service providers spared of tax.
Service Providers with goods turnover not exceeding Rs.4 lakh a year exempted from tax.
New services brought under tax net include pipeline transport of goods, site formation, dmolition and reated services, membership fees of clubs and associations, packaging and specialized mailing services, survey and map-making, bredgeing in rivers and harbours, cleaning services for commercial buildings and construction of planned residential complexes with over 12 dwelling units.

Finally, Mr. Anand Patwardhan expressed that overall the budget seems to be a balanced one but however the tax imposed on withdrawal and imposition of additional excise and custom duties on some items will lead to increase in prices on essential commodities. Shri Dinesh Parekh proposed a vote of thanks and concluded the seminar.

A series of Budget Analysis Meeting was held in Association with Forum of Free Enteprise, Institute of Chartered Accountant of India and other organizations was held at various places in Mumbai City & Suburbs.