FM addresses tax concerns

Finance Minister P Chidambaram said he had broadly addressed the concerns expressed in various quarters regarding the tax proposals in the Finance Bill.

Chidambaram today increased the income tax exemption limit marginally above Rs 1 lakh and deferred by a year the decision to tax leasing of aircraft and non-resident Indian (NRI) deposits.

Giving details of the amendments after the passage of the Bill, the finance minister said he had also removed the "ambiguity" in the definition of "relative" and unrelated persons for benefits under the gift tax provisions.

There was also a confusion over the filing of an annual information report by income tax assessees. To address this, an amendment had been brought in, Chidambaram added.

Through another amendment, the penal provision under Section 227 (A) for falsification of books of accounts had been lifted, he added.

Chidambaram said the raising of the income tax exemption limit had been necessitated as persons with income up to Rs 1 lakh were exempted from income tax, while those with incomes beyond Rs 1 lakh had to pay tax on their income from Rs 50,000 onwards resulting in an anomalous situation wherein the real income of a person earning Rs 1.1 lakh was much less than those earning up to Rs 1 lakh.

Regarding tax on NRI and non-resident external (NRE) deposits, Chidambaram said it had been deferred till April 2005.