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Our Bureau

New Delhi , Sept. 9

THE Government has substantially diluted the provisions made in the 2003-04 Budget relating to collection of tax at source from buyers of Indian Made Foreign Liquor (IMFL) and scrap.

Sellers of both IMFL and non-IMFL (i.e. country liquor) would henceforth be required to collect tax from buyers under Section 206C of the Income-Tax Act only at the rate of one per cent. The same rate applies to scrap too, while amounting to 2.5 per cent for timber and other forest produce and five per cent in respect of tendu leaves.

The new rates would be effective from September 8, coinciding with the date of the promulgation of the Taxation Laws (Amendment) Ordinance, 2003.

The Budget had earlier specified a 10 per cent rate at which sellers of IMFL were to collect at source, which was the same rate already applicable for country liquor. But now the rate will be a uniform one per cent in respect of `alcoholic liquor', covering both IMFL and country liquor (`alcoholic liquor for human consumption other than IMFL').

Similarly, the rate was fixed at 10 per cent each for scrap and tendu leaves, 15 per cent for timber obtained under a forest lease, five per cent for timber obtained by any mode other than under a forest lease and 15 per cent on other forest produce. These rates were incorporated under the Finance Act, 2003, and under Section 206C of the IT Act, which have now been substantially reduced through the latest Ordinance.

The Ordinance has also diluted the provisions relating to the definition of the `buyer', from whom the sellers of the said goods were to collect tax. While the Finance Act had extended the definition to include even cases where the buyers had not obtained the goods through auctions and where the sale price of the goods to be sold by the buyers were fixed by State legislations, the latest Ordinance has exempted the Central and State Governments, public sector companies, clubs and embassies from the definition of `buyer'.

In other words, liquor companies selling their product to State beverage corporations or foreign embassies will not have to collect tax from these buyers even at the lower one per cent rate.

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