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Industries which are favoured by the Finance Bill

QUESTION: Which are the industries made eligible for fresh concessions in Finance Bill, 2002?

ANSWER: Notwithstanding the stated objective of removing exemptions gradually in the low tax regime, there are some beneficiaries proposed in the Bill. The increase of the minimum limit of room rent for expenditure tax on hotels from `Rs. 2,000 or more per individual' to `Rs. 3,000 or more per day' will reduce the incidence of tax for this industry. This is intended to encourage tourism industry, badly affected by the recession.

Shipping industry gets deduction of higher reserves under Sec. 33AC with such benefit extended for minimum alternate tax under Sec. 115JB as well.

Banks and public financial institutions will have the benefit of higher deduction of reserves for bad and doubtful debts under Sec. 36(1)(viia) to meet the accounting requirement of non-performing assets. But non-banking financial companies (NBFCs) similarly placed do not get any such deduction.

National Housing Bank and Small Industries Development Bank of India can now attract deposits, since investments in these will now be recognised for reinvestment benefit to save capital gains tax under Sec. 54EC.

Amalgamated and resultant companies in telecom sector will be able to avail set off of losses and unabsorbed depreciation of amalgamating and demerged companies as in the case of losses and depreciation of industrial undertakings. There is a promise of extension of this concession for other service sectors.

Tourism industry will get part of deduction under Sec. 88HHD reinstated, qualifying for AY 2003-04 for deduction at 25 per cent as against 20 per cent and for AY 2004-05 deduction at 20 per cent as against 15 per cent.

Development and manufacture of Special Economic Zones (SEZ) will qualify for same concession under Sec. 80IA as for industrial park.

Concession under Sec. 80IB is extended to income from multiplex theatres outside metropolitan cities and convention centres for construction beginning on or after April 1, 2002 and completed on or before March 31, 2005.

S. Rajaratnam

(Proposals in the Finance Bill to be continued)

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