Introduction
In each section of Personal Tax (income tax), Indirect taxes
(sales, excise & customs duty) and the corporate taxes there are
certain rebates given to the tax payer if he fits in the prescribed
criteria. These concessions or Tax Holidays as they call are meant
to attract more and more people to pay tax. These rebates also mean
less 'pinch' on the pockets and a good fast growth of economy.
Rebate is a deduction from tax payable. Since these are the best
tax-slashing devices, it is absolutely essential to have a clear,
concise and complete insight into these.
In computing the amount of income-tax on the total income of an
assessee with which he is chargeable for any assessment year, there
shall be allowed from the amount of income-tax, in accordance with
and subject to the provisions of certain sections, the deductions
specified in those sections.
The aggregate amount of the deductions under such sections shall
not, in any case, exceed the amount of income tax on the total
income of the assessee with which he is chargeable for any
assessment year.
General Tax Incentives
The Government offers many incentives to investors in India with a
view to stimulating industrial growth and development. The
incentives offered are normally in line with the government's
economic philosophy, and are revised regularly to accommodate new
areas of emphasis. The following are some of the important
incentives offered, which significantly reduce the effective tax
rates for the beneficiary companies:
- Five year tax holiday for:
- Power projects.
- Firms engaged in exports.
- New industries in notified
states and for new industrial units established, in
electronic hardware/software parks.
- Export Oriented Units and
units in Free Trade
Zones.
- As of 1994-95 budget firms
engaged in providing infrastructure facilities, can also
avail of this benefit.
- Tax deductions of of 100 per
cent of export profits.
- Deduction of 30 per cent of
net (total) income for 10 years for new industrial undertakings.
- Deduction of 50 per cent on
foreign exchange earnings by construction companies, hotels and
on royalty, commission etc. earned in foreign exchange.
- Deduction in respect of
certain inter-corporate dividends to the extent of dividend
declared.
|
