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Alterations to be Expected in the Upcoming Budget regarding Income Tax Exemption Plan
(Jan 17, 2008)
Income Tax Exemption From Budget 2008 entails several issues concerning different sections of the taxation system in the country. Various charitable organizations carrying out commercial activities get an easy exemption from income tax. This kind of income tax exemption is probably to be removed. This measure is very much likely to be included in the upcoming budget for the year 2008-09. There are speculations that there would be modifications or alterations in the tax exemption plan availed by several companies.

Since under this tax exemption plan, many companies in the year 2006-07 became nontaxable. Because of this exemption plan, corporate sector suffered a revenue loss of Rs 50,000 crores. According to the studies carried out, this calculated loss in revenue was around 44% greater than the loss suffered in the previous year.

Various organizations got exempted from paying taxes because such companies got themselves registered under the Section 12A of Income Tax Act 1961. After scrutinizing such companies closely, the Central Board of Direct Taxes or the CBDT found that such companies in the name of charity carry out other plans and become nontaxable that leads to misuse of the funds.

It is anticipated that there might be some constructive and positive alterations regarding this issue in the upcoming budget of 2008-09. This modifications might make up for some loss occurring over the years. It is also expected that the limit for the tax exemption would also be increased from Rs 40,000 to Rs 1,50,000 and it is very much likely to be included in the forthcoming budget of 2008-09.