I also propose to allow depreciation in the case of
fractional ownership of assets because of the need for joint
financing of big, capital intensive projects by a consortium of
financiers having fractional shares in the assets.
In order to promote efficiency in industry, I propose to
provide that unabsorbed depreciation will be carried forward for
a period of eight years only in the same manner as business
losses.
The practice of sale-and-lease-back of assets results in
passing of very high depreciation to the leasing concerns. This
needs to be curbed. Hence, I propose to provide in the Income
Tax Act that in case of sale-and-lease-back transactions, the
written down value of the asset, in the hands of lessee, who was
the previous owner, will be treated as cost in the hands of the
lessor. This measure, while not affecting bonafide transactions,
will prevent loss-making concerns from indulging in unhealthy
trade-off of depreciation.
I find it unreasonable that commercial properties, not
used by the assessee as his business, office or factory premises,
should be outside the levy of wealth-tax. Accordingly, I
propose to plug this unintended loophole and levy wealth-tax on
such commercial properties.
Other measures of tax relief proposed by me include -
Allowing a special deduction of Rs.15,000 to the
patient or guardian of a patient of protracted diseases
like cancer or AIDS involving considerable expenditure
on treatment.
Exempting under section 10(24) of the Income Tax Act
the income of an Association of Registered Trade
Unions.
Extending 100 per cent deduction under section 80G of
the Income Tax Act to -
Donations made to Illness Assistance Funds
established by the Central government and the
State governments to meet the medical expenses of
the poorest of the poor;
Donations made to State and National Councils of
Blood Transfusion recently set up by the Ministry
of Health and Family Welfare; and
Donations made to the three funds established by
the armed forces of the country. These are the
Army Central Welfare Fund, The Indian Naval
Benevolent Fund and the Air Force Central Welfare
Fund. This is my way of saluting the brave
officers and jawans of our armed forces.
As a part of our obligation to SAARC I am exempting from
income tax the income of SAARC Fund for Regional Projects (SFRP).
In order to promote industrial development in the North-
Eastern region of the country, a North-Eastern Development
Finance Corporation was established in August, 1995. I propose
to exempt its income from tax.
These proposals are likely to result in an
improvement of revenue under direct taxes which is estimated at
Rs.912 crore.
I shall now come to the proposals relating to indirect
taxes.
