Interest on the immensely popular RBI 8% savings bonds was taxable but free from TDS. Effective July 1, 2007, any interest over Rs 10,000 from such bonds would be subject to a TDS of 10%. Similarly, professional fees were subject to a TDS of 5% which has now been increased to 10%.
What are the changes as far as MAT is concerned in Budget 2007
MAT which stands for minimum alternate tax is 10% of 'book profits'. Which means this is the least amount a company has to pay as tax. The Income Tax Act lays down the way to compute such 'book profits'. Till last year, the book profit could be adjusted for incomes and expenses related to Sec 10A and 10B. However, Budget 2007 intends to take Sec 10A and 10B out of the purview of MAT benefit thereby increasing the computed book profit to that extent.
Therefore, those companies (especially the SMEs in the IT sector) whose effective tax rate was less than 11.33% (including cess and surcharge) would be directly affected.
I have taken a loan for my son for his Masters degree. Does Budget 2007 grant me any benefit in this regard
Deduction of interest payable on loan taken for higher education under Sec 80E was available only to the individual taking the loan. This was a problem since students who themselves availed of a loan rarely had taxable income and parents who took the loan for their child did not get the deduction. Now, the issue has been resolved by Budget 2007 making the deduction applicable even in case the loan is taken for the higher education of the individual's spouse and children.
Note that the deduction is only available for interest and not for the main principal component. Also the loan has to be taken from a financial or charitable institution. Loans from employer or from private sources are not allowed any benefit.
What are the changes as far as tax deducted at source is concerned in Budget 2007 Also, could you elaborate on the provisions in the Budget regarding medical insurance
Bank and Post Office interest was subject to TDS over Rs 5,000. This limit has been doubled to Rs 10,000. Deduction in respect of medical insurance premium under section 80D has been increased to Rs 15,000 from Rs 10,000 for non-senior taxpayers whereas for senior citizens, the limit has been enhanced from Rs 15,000 to Rs 20,000. Also, premium payments made by electronic mode, credit card, etc will be allowed.
The authors may be contacted at [email protected]