By A N Shanbhag & Sandeep Shanbhag

However, silence on these fronts doesn't mean that the measures won't come through. For, the Finance Minister always has the option of introducing new measures by way of notifications that could be introduced during the course of the year i.e. outside the Budget exercise. For now, here's a glance at the major announcements.

• For NRIs, The TDS rate on short-term capital gains on equity and equity oriented funds has been reduced to 10% in line with the tax rate imposed by Sec. 111A.
• Ceiling on aggregate investments by MFs in overseas instruments increased from $ 1 bln to $ 2 bln
• The 10% reciprocal ceiling required by overseas companies in Indian companies has been removed. This basically widens the investment universe of overseas stocks for the fund manager immensely and we should be seeing such schemes being launched shortly. So all those who want to own a part of Google or Microsoft, start licking your lips.
• A limited number of qualified Indian Mutual Funds to be allowed to invest a cumulative of $ 1 billion in overseas exchange traded funds. However, which MFs qualify and what are the parameters is yet not known generally.
• Securities Transaction Tax increased by 25% across the board. This means that redemption of units of a mutual fund would attract STT of 0.25% as against the erstwhile 0.2%. Similarly buying and selling equity shares on the exchange would attract STT of 0.125% as against the earlier 0.1%.
• Close-ended equity oriented funds will be no longer subject to dividend distribution tax and now will be on par with open ended equity oriented funds. This is a salutary move that will encourage long-term investments in equities.
• The definition of equity oriented fund has been amended to mean those funds where the equity holding in domestic companies is to the extent of more than sixty five per cent. The earlier limit here was fifty per cent. This will directly affect balanced funds that don't have up to 65% in equity shares.
• Investments in ULIPs, ELSS and Pension Fund plans offered by Mutual Funds "referred to under clause 10(23D)" will be eligible for Sec. 80C deduction. Earlier the section used the words "notified under clause 10(23D)". This is a clarificatory provision that states that separate notification for specific schemes is not required. On this count, we will see ULIPs and pension plans from the MF stables now over and above those already being sold by insurance companies.
• The earlier limit of Rs. 10,000 in respect of pension funds under sec. 80CCC has been removed. Now, investment in pension funds will be having the ceiling of Rs. 1 lakh along with other instruments under sec. 80C. Again a very good move.
  
  Other miscellaneous measures relating to direct taxes
• The One-by-Six scheme has been abolished. Now, only those who have income above the maximum amount not chargeable to tax have to file tax return. This amendment has been brought in retrospectively and is applicable to FY 05-06.
• Fixed Deposits of not less than 5 years tenure with scheduled banks will attract the Sec. 80C benefit. This basically converts the FD into an NSC like product. The reason is that if the interest is cumulative, then for the subsequent year, it will be deemed to be reinvested and thus qualify for the Sec. 80C deduction.
• Avenues under sec. 54EC have been diluted. NABARD, SIDBI and NHB no longer to issue capital gains tax saving bonds. Now, the bonds will only be issued by NHAI and REC.
• Sec. 54ED that offered exemption in respect of long-term gains from equity and equity oriented funds has been omitted as it is redundant.
  
  Amendments to Fringe Benefit Tax
• Expenditure on distribution of free samples of medicines or of medical equipment, to doctors and payment to any person of repute for promoting the sale of goods or services of the business of employers, shall not be included in 'sales promotion including publicity' for valuation of fringe benefits.
• Any benefit or amenity in the nature of free or subsidised transport or any such allowance provided by the employer to his employees for journeys by the employees from their residence to the place of work or such place of work to the place of residence shall not form part of fringe benefits.
• Contribution by an employer to an approved superannuation fund to the extent it does not exceed rupees one lakh per employee in respect of whom contribution is made, shall not be liable to fringe benefit tax.
• Tour and travel including foreign travel was being valued at 20%. The Bill proposes to dilute the valuation to 5%. However, the valuation on conveyance remains the same @20%.
• For airlines and shipping companies, fringe benefits in respect of hospitality and use of hotel, lodging and boarding respectively will be valued at "five per cent." instead of "twenty per cent."