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Savings accounts exempted from tax
Govt exempted savings accounts from the 0.1 banking cash transaction tax.
Faced with criticism from within and outside the ruling coalition, Finance Minister P Chidambaram has diluted his two crucial budget proposals on cash transaction tax and fringe benefits tax.
He has also provided additional tax benefits to women and senior citizens to blunt the BJP-led opposition’s tirade that the two vulnerable sections were “given a raw deal”. While the exemption limit for senior citizens has been raised to Rs 185,000, it has been set at Rs 135,000 for women assesses.
Lok Sabha adopted the Finance Bill by a voice vote on Monday after the House rejected two amendments proposed by BJP Deputy Leader Vijay Kumar Malhotra, seeking retention of standard deductions for women and senior citizens.
Earlier, replying to the debate on the Finance Bill, the finance minister exempted all savings-accounts cash transactions from the levy of 0.1 per cent cash transaction tax (CTT). Withdrawals worth Rs 25,000 and above by current account holders in a single day will attract the CTT. This limit has been raised from the earlier budget proposal of Rs 10,000 cash withdrawal per day.
The finance minister gave some relief to small businessmen and traders by exempting their daily cash withdrawals up to Rs 100,000 from the levy of CTT.
On fringe benefits, Chidambaram made an attempt to placate corporates by diluting his original proposal. But he refused to withdraw the levy.
Both employees and employers will share the burden, as companies will have to rejig fringe benefits provided to their personnel.
Incidence of FBT on perks like entertainment allowances, hospitality, sales promotion and publicity, employees welfare, conveyance, tour and travel, hotel, boarding and lodging has been reduced. Earlier, 50 per cent of such allowances/expenses were to come under the tax net. Now, only 20 per cent of the value of such perks will be taxed.
The biggest relief came on advertisement spend by companies. Advertisements in journals, catalogues, price lists, the electronic media or transport system will not attract FBT.
