Income Tax – Finance Act 2005 explained
CBDT has issued a circular explaining the salient features of the Finance Act 2005, some of which are
++ Revival of exemption of interest in Non-Resident (External) Account - Section 10(4) (ii) Revival of exemption of interest on Foreign Currency Deposits - Section 10(15)(iv)(fa) Revival of exemption on lease rentals paid while acquiring an aircraft or an aircraft engine - Section 10(15A) Filing of return mandatory for units in Special Economic Zones Elimination of Standard deduction for salaried tax payers. Enhancement of the rate of additional depreciation on new machinery and plant and withdrawal of certain conditions Reserves to be added to profits and not the sale proceeds on sale of a ship
++ Extension of weighted deduction for expenditure incurred on in-house R&D
++ Employer to be allowed entire expenses incurred on implementing VRS
++ Excluding ‘trading in derivatives’ on recognised stock exchanges from the ambit of ‘speculative transactions’
++ Providing for set off of losses of a banking company against the profits of a banking institution under a scheme of amalgamation
++ Speculation losses allowed to be carried forward for four years
++ Rationalisation of the tax treatment of savings. Deduction for entire amount of interest paid on a loan taken for pursuing higher education.
++ Extension of tax benefits for developing, operating, maintaining an infrastructure facility to authorities constituted under a Central or State Act. Elimination of tax rebate for senior citizens under section 88B and for women under section 88C
++ Elimination of tax rebate under section 88D for persons with income below rupees one lakh.
++ Rationalisation of taxation of income arising from zero coupon bonds
++ Reduction in rate of tax on royalty and fees for technical services in the case of a non-resident from 20% to 10%
++ Dredgers to be treated as qualifying ship for the purpose of Tonnage Tax Scheme
++ Truck operators owning upto two trucks exempted from TDS
CIRCULAR NO. , Dated : Feb 27, 2006