This makes it clear that gifts in kind are outside the purview of being taxed as income and further that there is no limit on the amount of gift that can be received by an individual from an unrelated person on the occasion of the marriage of the individual.

These doubts which prevailed when the Bill was first presented are now sought to be clarified.

The definition of the term relative, however, continues to be the same.

Is exemption for non-residents in respect of interest to continue?

The Finance Bill had originally proposed that interest credited or paid on or after September 1, 2004, in an NRE Account in the hands of a non-resident individual or interest credited to a non-resident or a resident but not ordinarily resident from deposits in foreign currency in a bank which is approved by the Reserve Bank of India, shall not be eligible for exemption.

The Bill, as cleared in the Lok Sabha, now only seeks to tax the same if it is credited or paid on or after April 1, 2005.

In other words, the exemption which is currently available under Sections 10(4)(ii) and 10(15)(iv)(fa) will continue to be available for the assessment year 2005-06 and will not be available from assessment year 2006-07 onwards.

How is securities transaction tax to be allowed as a credit against tax on business income?

Securities transaction tax will be applicable even in respect of transactions in equity shares and equity-oriented funds and units of an equity-oriented fund where the transaction is taxable as business income.

However, Section 88E is to be inserted so as to provide for a rebate in respect of such transaction of the tax paid against the tax if the assessee has income chargeable under the head `profits and gains of business or profession'.

This will be allowed only if proof of payment of securities transaction tax is furnished in the prescribed form.

The rebate will be allowable to the extent of the lower of the securities transaction tax or the income-tax leviable on such transactions in securities.

The income-tax leviable on such transactions in securities is to be computed by applying the average rate of income-tax on such income.

This would mean that if the assessee has a loss from such transactions, no rebate would be available.

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page