Budget 2000-2001: Amendments

In the Finance Bill, 2000, new proposals have been added by the Finance Minister which appears to be Industry and market friendly amendments. In the Direct Taxes the following changes have been proposed :-

1. A 10 year tax holiday for software exports from Software Technology Parks (STPs). The cut off for the 10 year tax holiday will continue until 2010 for units in FTPs and FTZs. Units registered upto that point would be eligible for tax holiday upto 2010. The Finance Minister has proposed that this benefit would be available to Units registered upto March, 2000.
2. It is proposed that Employees Stock Option i.e. ESOP would now be taxed at the time of sale and would not be treated as perk and income tax would not be charged on it when issued to employees. The employee will have to pay Capital Gains tax only when they sell the shares. The Capital Gains tax applicable would be on the difference between the sale price earned on the issue price. The current practice is to impose income-tax on the difference between issue price and market price.
3. It is proposed to increase the deduction limit available for interest payable on capital borrowed for construction or acquisition of a self occupied house property to Rs 1,00,000/- from Rs 75,000/-.
4. Although the surcharge on non corporate assessee's having income over Rs 1.5 lacs would continue to be 15% it would be 10% for the salaried people whose tax is deducted at source.
5. Farmers from whom land is compulsorily acquired is exempted from TDS.
6. No tax on Venture Capital Funds for income distributed - Venture Capital Funds will not have to be paid tax on distributed or undistributed income of such funds. The income distributed by the Fund will only be taxed at the hands of investor at the rate applicable to the nature of the income.
7. The lock in period has been reduced from 5 to 3 years on investments of capital gains in NHAI and NABARD bonds.
8. Rebate u/s 88 on infrastructure bonds is increased from Rs 10,000/- to Rs 20,000/-. As a result tax payers would now be able to raise their tax exemption limits to Rs 80,000/-.

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