Money Tree

UNION BUDGET 2006-07

DIRECT TAXES

INCOME TAX

- There are no changes in income tax rates.
- Minimum Alternate Tax has been increased from 7.5% to 10% for companies.
- 1/6 income tax norm has been abolished.
- Bank deposits of more than 5 years to fall under ambit of section 80C of the Income Tax Act.
- Ceiling of Rs.10,000 for investment in pension funds has been removed.
- PAN will be required for more transactions.

Income tax rates are same as earlier.

Upto Rs. 1,00,000/- Nil
1,00,000 to 1,50,000 10%
1,50,000 to 2,50,000 20%
Above 2,50,000 30%

A surcharge of 10% on the income tax is levied where the total taxable income is more than 10,00,000.

For women assesses the exemption limit is Rs. 1,35,000 instead of Rs. 1,00,000.
For senior citizens the exemption limit is Rs. 1,85,000 instead of Rs. 1,00,000.

A deduction under section 80C shall be allowed up to a limit of Rs. 1,00,000 which may include investments in Insurance premium, post office instruments and other schemes which were hitherto available under section 88 of the Income Tax Act and Bank deposits for more than five years and in pension plans without any ceiling.

INDIRECT TAXES

CUSTOMS DUTY

- Non Farm imports customs peak rate has been reduced from 15% to 12.5%
- Duty on alloy steel reduced from 10% to 7.5%
- Import duty on Ores, concentrates reduced from 5% to 2%
- Customs duty on inorganic chemicals reduced from 15% to 10%
- Customs duty on mineral products reduced from 15% to 5%
- Customs duty on anti AIDS and anti cancer drugs reduced to 5%
- Customs duty on Natural gas has been reduced from 10% to 5%
- Customs duty on packaging machines reduced from 15% to 5%
- Import duty on man made fiber yarn reduced from 18% to 8%
- Customs duty on steel melting scrap increased to 5%
- Customs duty on vanaspati increased to 18%
- 15% Customs duty on Set top Boxes waived off.

EXCISE DUTY

- Excise duty on small cars reduced to 16% from 24%
- Pasta, preparations of meat, fish and poultry, Condensed milk and ice creams exempted from excise duty.
- 8% excise duty levied on packaged software.
- Excise on ready to eat packaged food and instant food mixes reduced to 8%
- Excise duty on Idly and dosa premixes cut to 16%
- Excise duty on aerated drinks reduced to 16%
- DVD, Combo drives to be exempted from excise duty
- Excise duty on printing paper and ink reduced to 12% from 16%
- Excise duty on cigarettes hiked by 5%
- Excise duty of 12% re-imposed on computers
- Excise duty of 16% imposed on Set top Boxes

SERVICE TAX

- Service tax increased from 10% to 12%
- More services brought under service tax net.

CENTRAL SALES TAX

- LPG to be included under declared goods

TRANSACTION TAXES

- Cash transaction tax on withdrawal remains unchanged
- Securities transaction tax increased by 25%
- Open and closed end equity Mutual Funds at par for dividend distribution tax.

This means that the securities transaction tax on delivery based trades shall be 0.125% and on intra-day trades shall be 0.025%