Budget 99 : New ! : Income Tax Department, Delhi, India


	Direct Tax Amendments proposed in the Finance Bill 1999

Rate of tax

Corporate and non-corporate

No change has been proposed in the rate or slab of tax for Corporate & Non-Corporate Assessees, However, it is proposed to levy surcharge @ 10% on the tax payable after rebate to all assesses except individual and HUF having income upto Rs.60,000/- , Non-residents and Foreign Companies. Hence the effective rate of tax shall be :

	INCOME BETWEEN	EXISTING	PROPOSED
CORPORATE ( DOMESTIC )		35%	35% + 10% = 38.5%
NON CORPORATE :
INDIVIDUAL ( Other than Non - Resident )	50001- 60000	10%	10%
	60001- 150000	20%	22%
	ABOVE 150000/-	30%	33%
FIRM		35%	38.5%

The proposed amendment shall be effective from Assessment Year 2000-2001.

TAX ON CAPITAL GAIN ON TRANSFER OF SHARES & SECURITIES

Under the existing provisions Long Term Capital Gain arisen on the sale of shares and securities is being taxed @ 20% after giving benefit of Cost Inflation Index, whereas, certain categories of non-residents and NRI are required to pay tax @ 10% only. However, benefit of Cost Inflation Index is not available to them.

It is proposed to put limit on the tax on long term Capital gain arisen on listed securities @ 10% of the Capital gain before allowing adjustment of Cost Inflation Index and excess of 10% shall be ignored. To illustrate it further , in case capital gain after taking benefit of cost inflation index comes to less than 10% of the capital gain before giving effect of inflation index , tax shall be paid on such capital gain by taking benefit of inflation index. However, if it exceeds 10% the excess of 10% shall be ignored.

It is pertinent to note that for to avail the benefit it is necessary that security must be such as defined in section 2(h) of Securities Contracts (Regulation) Act, 1956 and is listed in recognised stock exchanges in India.

The proposed amendment shall be effective from Assessment Year 2000-2001 and subsequent years.

Total income (Rs.)	Existing Tax liability (Rs.)	New Tax liability (Rs.)	Additional liability (Rs.)	Percentage (%)
50,000	Nil	Nil	Nil	Nil
55,000	500	500	Nil	Nil
60,000	1,000	1,000	Nil	Nil
60,100	1,020	1,100	80	7.8
60,120	1,024	1,120	96	9.37
60,130	1,026	1,129	103	10
60,150	1,030	1,133	103	10
60,200	1,040	1,144	104	10
60,500	1,050	1,155	105	10
61,000	1,200	1,320	120	10
65,000	2,000	2,220	200	10
70,000	3,000	3,330	300	10
75,000	4,000	4,400	400	10
1,00,000	9,000	9,900	900	10
1,50,000	19,000	20,900	1,900	10
1,75,000	26,500	29,150	2,650	10
2,00,000	34,000	37,400	3,400	10
2,50,000	49,000	53,900	4,900	10
3,00,000	64,000	70,400	6,400	10
4,00,000	94,000	1,03,400	9,400	10
5,00,000	1,24,000	1,36,400	12,400	10

**Marginal relief would be provided to ensure that the additional amount of income-tax payable, including surcharge, on the excess of income over Rs. 60,000/- is limited to the amount by which the income is more than Rs. 60,000/-.

B. Co-operative societies

In the case of co-operative societies the rates of income-tax are the same However, the tax payable would be enhanced by a surcharge at the rate of ten per cent. of the tax payable.

C. Firms

In the case of firms, the rate of income-tax the rate remains at 35 per cent. However, the tax payable by resident firms would be enhanced by a surcharge at the rate of ten per cent. of the tax payable.

D. Local authorities

In the case of local authorities, the rate of income-tax rate is the same. However, the tax payable would be enhanced by a surcharge at the rate of ten per cent. of the tax payable.

E. Companies

In the case of companies there is no change in the existing rates of 35 per cent for domestic companies and 48 per cent. for foreign companies. However, in the case of domestic companies, the tax payable would be enhanced by a surcharge at the rate of ten per cent. of the tax payable.

Direct Tax Amendments proposed in the Finance Bill 1999