Amendments to Finance Bill 2009
Service Tax
Amendment: Under the Service Tax Act the new services and the changes made in the earlier services will not be effective from the day of enactment of Finance Bill 2009 but from 01.09.2009.
Clarification: The trade bodies, associations demand time to adjust the accounting and software hence it will be applicable from 01.09.2009.
Amendment: Exemption of repairs and maintenance of roads from service tax with immediate effect.
Clarification: On the tax front, construction or laying of new roads is excluded from service tax. However, repairs and maintenance of roads are chargeable to service tax. Several requests have been received to exempt repairs and maintenance of roads from service tax. Therefore to remove this anomaly exemption from service tax for repairs and maintenance with immediate effect is provided.
Income Tax
Amendment: Deduction u/s80E is allowed in respect of interest paid on education loans for pursuing higher education in any field including vocational education. This deduction was available to the parents, spouse and the individual himself but now has been extended to Legal Guardian as well.
Clarification: Representations have been received that the scope of the benefit should be expanded so as to also allow other persons responsible for the student to avail of the deduction. Therefore, amendment to clause 32 of the Bill is proposed so as to provide that the deduction will also be available to the legal guardian of the student.
Amendment: Section 80-IA (4)(iii) of the Income Tax Act provides for tax holiday in respect of profits derived by an undertaking from development, operation or maintenance of an industrial park if the development is completed on or before 31st March, 2009. The tax holiday period for the Industrial Park Scheme has been extended by a further period of two years that is, up to 31st March, 2011.
Clarification: With a view to providing stimulus to infrastructure sector to generate incomes in the wake of economic slowdown, proposition is made to extend the sunset clause for the Industrial Park Scheme by a further period of two years that is, up to 31st March, 2011.
Amendment: Section 80-IB (9)(xxxvii) of the Income Tax Act provides for tax holiday in respect of an undertaking engaged in commercial production of natural gas in blocks licensed under the NELP-VMI Round. This benefit is extended to commercial production of natural gas in blocks licensed under the IV Round of bidding for exploration of coal bed methane. This benefit will be available prospectively from assessment year 2010-11 and subsequent assessment years.
Clarification: Representations have been received that this benefit should also be extended for commercial production of natural gas in blocks licensed under the IV Round of bidding for exploration of coal bed methane. Accordingly, proposition is made to carry out necessary amendments to sub-section (9) of section 80-1B of the Income Tax Act. This benefit will be available prospectively from assessment year 2010-11 and subsequent assessment years.
Amendment: Housing loans up to Rs. 10 lakhs to individuals; provided the cost of the house does not exceed Rs.20 lakhs will get an interest subvention of 1%. This interest subsidy will be available for a period of 1 year, proposition to provide a provision of Rupees 1,000 crores towards this end.
Clarification: Housing, particularly lower and middle income housing, deserves to be supported. In order to stimulate this segment of house owners, proposition to provide support to borrowers by way of interest subvention of 1% on all housing loans up to Rs. 10 lakhs to individuals, provided the cost of the house does not exceed Rs.20 lakhs. The interest subsidy will be routed through the scheduled commercial banks and the housing finance companies registered with the National Housing Bank. This interest subsidy will be available for a period of 1 year, proposition to provide Rupees 1,000 crores towards this end.
Amendment: Tax relief u/s 80 IB(10) of the Income Tax Act in respect of profits derived from projects approved between the 1st April 2007 to 31st March, 2008 if such projects are completed on or before 31st March, 2012.
Clarification: To provide further stimulus to the housing sector some tax relief is proposed. Accordingly, amendment to section 80 IB{10) of the Income Tax Act is proposed so as to allow the tax holiday in respect of profits derived from projects approved between the 1st April 2007 to 31st March, 2008 if such projects are completed on or before 31st March, 2012. The developers are expected to pass on the benefit of the tax holiday to the home buyers by appropriately reducing their prices- its sure that both the expenditure and tax foregone initiatives would provide relief to a large segment of prospective home owners and help revive the real estate sector.
Amendment: Section 80-IB (11 A) of the Income Tax Act provides for tax holiday in respect of profits derived from the business of processing, preservation and packaging of fruits and vegetables. Amendment has been made to sub-section (11A) of section 80-IB to also provide tax holiday in respect of the business of processing, preserving and packaging of meat and meat products and poultry, marine and dairy products.
Clarification: Representations have been received requesting that this tax holiday be extended to all food processing units, particularly, those based on perishable items like milk, poultry and meat etc. With a view to preserving perishable food items like milk poultry and meat, proposition to amend sub-section (11A) of section 80IB to also provide tax holiday in respect of the business of processing, preserving and packaging of meat and meat products and poultry, marine and dairy products.
Amendment: Section 80-U of the Income Tax Act provides that an assessee, being a person with disability or with severe disability, is eligible for deduction of Rs.50,000 or Rs.75,000 respectively. These limits were fixed in the financial year 2003-04. Increase in the deduction from the existing level of Rs.75,000 to Rs.1 lakh in the case of a person with severe disability is proposed.
Clarification: Keeping in view the sharp increase in the threshold limit and the inflation since 2003-04, proposition is made to amend section 80-U of the Income Tax Act so as to increase the deduction from the existing level of Rs.75,000 to Rs.1 lakh in the case of a person with severe disability.
Amendment: Direct Tax Code will be released for discussion by 20.08.09
Clarification: Many of the suggestions made in this House, especially regarding simplification, will find reflection in the preparation of the Code, hence Direct Tax Code will be released for discussion by 20.08.09.
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