Highlights of budget 2006 from incometax,central excise,servicetax and custom duty perspective

DIRECT TAXES:
Income Tax Rates - No changes from last year

a. Individual, HUF, AOP

Upto Rs. 1 Lac - Nil
Rs. 1 Lac to Rs. 1.50 Lacs - 10%
Rs. 1.5 Lacs to Rs. 2.5 Lacs - 20%
Above Rs. 2.5 Lacs - 30%

For women assesses - Basic Exemption upto Rs. 1.35 Lacs.

For Senior Citizens - Basic Exemption upto Rs. 1.85 Lacs.

Surcharge - 10%, if the income is above Rs. 10 Lacs.
Education Cess 2% on tax will remain same.

Firm - The rate of tax remains the same as for the year 2005-06 (30% and surcharge 10% + Education Cess 2%).

Companies - The rate of tax remains the same as for the year 2005-06 (30% and surcharge 10% + Education Cess 2%).

DEDUCTION U/S 80 C
Individual or HUF, will be allowed a deduction from income of an amount not exceeding Rs.1 Lac with respect to sums paid or deposited in certain specified schemes.

Bank fixed deposits with a tenure of five years and above only will be included under the overall Rs.1 lakh limit.
S.80CCC - Pension Fund, existing limit Rs.10,000 extended to Rs.100,000.

FRINGE BENEFITS TAX:
FBT valuation reduced to 5% from the existing 20% in respect of the following expenses:

Tour and travel, hospitality and hotel boarding and lodging.
Upto Rs.100,000 per year on employer contribution to an approved superannuation fund will be exempted from FBT.

SECURITY TRANSACTION TAX (STT) IN RESPECT OF PURCHASE AND SALE OF SHARES:
The present rate of STT is 1% on the value of security transaction of purchase or sale. This has been increased by 25% to a net rate of 1.25% on all shares purchased or sold.

MINIMUM ALTERNATIVE TAX (Section 115 JB) FOR COPORATE ASSESSEES:
The rate of tax has been increased from 7.5% to 10%. MAT Credit period extended from 5 years to 7 years.

TAX DEDUCTED AT SOURCE:
Abolition of annual return and instead quarterly returns have been introduced for TDS/TCS.

INDIRECT TAXES:

EXCISE DUTY:
Relief Measures:
Petrol car, Diesel car brought to 16% rate of duty from present 24%.

Footwear of retail price between Rs.250 and Rs.750, LPG Gas stove value-exceeding Rs.2000 per unit brought to 8% rate of duty from present 16%.

Excise duty has been reduced from 16% to 12% on specified printing, writing and packing paper.

New Imposition of Excise Duty:
Excise duty of 8% with CENVAT Credit has been imposed on:
Articles of wood.
Registers, accounts book, order book, receipt books, letter pads, memorandum pads, diaries, folder etc. (excluding note books and exercise books).
Roofing tiles.
Excise Duty of 12% has been introduced for manufacture and assembling of computers

Textiles:

1. Excise duty on all man made like polyester, nylon, viscose and acrylic has been reduced from 16% to Nil.

2. Excise Duty on all man made fibers and a filament yarns has been reduced from 16% to 8%.

Excise duty of 16% with CENVAT Credit has been imposed on:
Parts and Components of motor vehicles transferred to sister unit for manufacturer of goods falling under chapter 87

Note: In all these cases, exemption upto Rs.1 crore would be available under the general small-scale industries (SSI) exemption scheme.

SERVICE TAX:
The rate of service tax is being increased from 10% to 12%.

Exemption of Service Tax: -
Exempt from service tax for those service providers whose gross turnover does not exceed Rs. 4 Lacs per year.

New Services brought under Service Tax Net:
Service provided by Registrar to an share issue.
Service provided by Share Transfer Agent.
Automatic Teller Machine, maintenance or management.
Service provided by recovery agent.
Sale of space or time for advertisement, other than in print media.
Sponsorship services provided to any body corporate or firm, other than sponsorship of sports events.
Transport of passengers embarking on international journey by air other than economic class passengers.
Transport of goods in containers by rail by any person.
Business support service.
Auctioneer service, other than auction of property under directions or orders of a court of law or auction by the Central Government.
Public relation service.
Ship management service.
Internet telephonic service.
Credit card.
Debit card.
Charge card or other payment cards related service.

CUSTOMS DUTIES:
Drugs for Cancer and AIDS to have 5% of duty.
Duty on packaging machines down from 15% to 5%.
Duty on basic and organic chemicals reduced from 15% to 10%; that on basic cyclic ad acyclic hydrocarbons and their derivatives to 5%; and on catalysts from 10% to 7.5%.