Finance Bill passed, no questions asked

Income-Tax exemption limit raised for people with annual income up to Rs 111,240.

Finance Minister P Chidambaram exempted income up to Rs 111,250 from tax and deferred till April 1 next year the proposal to tax aircraft leasing payments and the interest on non-resident Indian deposits.

A total of 55 amendments to the Finance Bill were passed by the Lok Sabha without debate amid an Opposition boycott.

In the Budget for 2004-05, Chidambaram had exempted those with annual incomes of up to Rs 100,000 from tax. But this meant that those with a slightly higher income of Rs 101,000 would have had to fork out a tax of Rs 9,200, reducing their income to less than Rs 100,000.

To rectify the situation, the amendment has provided a "marginal relief to ensure that an individual having total income exceeding Rs 100,000 is not left with a post-tax income below it," an official release said.

Accordingly after the amendment, an individual with an annual income of Rs 101,000 will have his liability lowered by Rs 1,000. Similarly, for an annual income of Rs 111,200, the tax liability according to the original proposal would have been Rs 11,240, which has now been clipped by Rs 40.

Chidambaram also clarified that the sale of equity in a company or mutual fund without actual delivery of shares would attract a transaction tax of 0.015 per cent. The tax would have to be paid by the seller.

The relief to income-tax payers is expected to cost the exchequer Rs 300 crore in a full year. Ministry officials said the total revenue loss on account of the giveaways on aircraft leasing and NRI deposits was less than Rs 500 crore.

Chidambaram also restricted the scope of prosecution for furnishing false accounts by removing an explanation that said tax officials only needed to prove there was a general intent to evade tax. Chartered accountants had said the clause gave sweeping powers to tax officials, which could be misused.

The finance ministry has also simplified the scope of gift tax. It said there would be no tax on employee benefits. Only cash gifts above Rs 25,000 received from an unrelated person without any consideration will now be taxed.

In addition, the ministry stated that the annual information return for tracking high-value transactions would have to be furnished only by agencies required by law to maintain books of accounts.

Chidambaram said the threshold would be at least Rs 50,000 for a single transaction, and could even be higher. He said this would clear the misconception that individuals would have to maintain records of such transactions.

The minister pointed out the decision to defer the tax on aircraft acquisition leases, which was to come into effect from September, 1, 2004, had been done away with on the request of Civil Aviation Minister Praful Patel. All domestic airlines had represented against the measure.

A ministry release said the tax on Non-Resident External and Foreign Currency Non-Repatriable accounts had been deferred to allow non-resident Indians to re-arrange their affairs in the wake of these changes.