Simplified Exit Scheme(SES)

Sitting Fees for Board Meetings

The Department of Company Affairs has considered providing an easy exit route to small, non-functioning or defunct companies. It has introduced a Simplified Exit Scheme (SES), to be adopted by companies as well as the Registrar of Companies in striking off the name of defunct companies. There will be an incentive for the companies to exit, and a penalty for continuing to remain on the register without complying with the requirement of increasing their paid-up capital to Rs. 1,00,000 in case of private companies and Rs. 5,00,000 in case of public companies. It is also proposed that companies, which actually exit, may not be prosecuted and if prosecutions have already been filed, they may be withdrawn immediately after the name of the company is struck off the register. Similarly, if there are any pending prosecutions for non-filing of Annual Return and Balance Sheet, that can be withdrawn. However, if there are other offences then prosecutions can be withdrawn only with the prior permission of the Department. On the other hand if such companies continue to remain on the register without complying with the requirements then they will be vigorously prosecuted. The SES will be applicable to all companies making application under Section 560 of the Companies Act, 1956. This facility is available only till 31st December, 2003.

For each meeting of the Board of directors or a committee, the amount of remuneration by way of fee shall be as follows: Companies with a paid up share capital and free reserves of Rs. 10 crores and above or turnover of Rs. 50 crores and above sitting fee not to exceed Rs.20,000 Other Companies sitting fee not to exceed Rs.10,000 FOR YOUR URGENT ATTENTION: Three (3) copies of the balance Sheet must be submitted to Registrar of Companies within 30 days from the date of Annual General Meeting. One(1) copy of the annual return must be submitted to the Registrar of Companies within 60 days from the date of Annual General Meeting. Note: In normal circumstances Annual General Meeting of a company must to be held within 30th September, 2003.

OPTIONS	RETURNS	BENEFITS	REMARKS
NSC - VIII Available from local Post Office	8% per annum compounded half yearly	Rebate under section 88 as applicable Interest accured is exempted U/S 80L subject to overall limit Interest accured except the 6th year interest is entitled to tax rebate U/S 88.	Minimum duration of (six) 6 years. No easy early withdrawal options available.
PPF Available from specified Banks	8% per annum compounded yearly	Rebate under section 88 as applicable Interest is totally free of tax	Minimum duration of (five) 5 years from the 1st date of deposit, subsequently withdrawal subject to certain limits.
Approved Infrastructure Bonds Available depending upon the issue mainly ICICI, IDBI, IFCI, etc.,	Interest is notified at the time of issue of Bonds.	Rebate under section 88 as applicable Interest is exempt u/s 80L subject to overall limit	Minimum duration of (three) 3 years or as per the terms of the issue.

For the Rainy day Savings Options

The following table illustrates some additional saving options. These saving options are not necessarily tax incentives but have a higher yield. Along with the higher yield, the risk factor also increases.

You may need to evaluate the risk factors carefully with a financial consultant to ensure that the options meet your requirements. Some of these are market driven and require adequate knowledge in the share market and the implications of market fluctuations.

OPTIONS	RETURNS	RISK FACTOR	REMARKS
Relief Bonds	6.5% Taxfree 8% Taxable (exempt U/S 80L)	None	Minimum duration of (six) 6 years. No easy early withdrawal options. No investment limit. Cannot be mortgaged or hypothecated.
Company Deposits	Variable depends on company and period Interest not eligible for 80L exemption	Medium	Premature encashment possible subject to company rules. No investment limit.
G-Sec Mutual Fund	Moderate	Medium	All Funds are higly liquid and are encashable at the ruling price. Transaction fee as applicable.
Debt Mutual Fund	Moderate	Medium
Balanced Mutual Fund	High	Flexible
Equity Mutual Fund	Very High	Flexible
Equity Shares	Very High	Flexible	Need to have good understanding of the equity market. Need to monitor the investments on a regular basis. Transaction fee as applicable.

If the aforementioned conditions are satisfied, then the long term capital gains arising on transfer is not chargeable to tax. In the other way, long term capital loss arising on transfer cannot be adjusted against any income if the aforesaid conditions are satisfied.

Income from Other Sources

Income by way of dividend from domestic company is exempted from tax in the current year.

Income from Units received by a unit holder (not being income arising from transfer of units) from Unit Trust of India or Mutual Fund or the specified company on or after 1st April 2003 is exempted from Tax in the current year.

Deductions U/S Chapter - VI A

Section 80DD:

In the current year, an assessee, who is a resident Indian or a Hindu Undivided Family(HUF) and who has incurred any expenditure for the medical treatment (including nursing), training and rehabilitation of a dependent (being a person with disability) or paid or deposited any amount under a scheme framed in this behalf by Life Insurance Corporation or any other insurer or specified company and approved by the Board in this behalf, for the maintenance of the dependent will be eligible for deduction. The dependent should be a person with disability of not less than 40% and should be wholly dependent upon the individual or the HUF.

The quantum of deduction is as follows:

Rs.50,000	if the disability is 40% or more but less than 80%.
Rs.75,000	if the disability is above 80%.

Section 80DDB:

In the current year, provision regarding deduction in respect of medical treatment has been substituted by a new one. The new provision is that the assessee should be a resident individual or HUF and actually paid for medical treatment of himself or wholly/mainly dependent husband/wife, children, parents, brother(s). In this regard a certificate has to be submitted in the prescribed form from a specialist doctor, working in a government hospital.

The quantum of deduction is as follows:

• Rs.40,000 or the amount actually paid, whichever is lower - in general cases.
• Rs.60,000 or the actual amount spent, whichever is lower - if the amount is paid for any senior citizen.

However, the amount of deduction will be reduced by the amount received from an insurer or reimbursed by the employer.

Section 80L:

Dividend on shares in domestic company and income from units received by a unit holder (not being income arising from transfer of units) from Unit Trust of India or Mutual Fund or the specified company on or after 1st April 2003 is exempted from tax in the current year and hence not eligible for deduction U/S 80L in the current year.

Rebate under Section 88

Tution fees will be taken into consideration in computing gross qualifying amount. The following conditions should be fulfilled for this purpose:

• Taxpayer should be an individual.
• He has paid tution fees.
• The fees is paid at the time of admission or thereafter.
• The fees is paid for full time education.
• The fee is paid to a university, college, school or other educational institution in India.
• The fees is paid for any two children of the taxpayer who need not be a minor only and need not be dependent on the tax payer.

The payments made towards any development fees or donation or payments of similar nature are not considered.

On fulfillment of the above conditions then tution fees paid is included in gross qualifying amount subject to a maximum of Rs. 12000/- per assessment year per child upto a maximum of two children.

Life insurance premium paid in the current year which is more than 20% of the actual capital sum assured shall not be included in the gross qualifying amount for the purpose of computation of tax rebate U/s 88.

Rebate under Section 88B

Quantum of rebate for senior citizens U/s 88B has been increased to Rs. 20,000 in the current year.

Surcharge rate for individuals

If net income is less than or equal to Rs. 8,50,000	surcharge is nil.
If net income is more than Rs. 8,50,000	surcharge is 10%

Marginal Relief

This relief will be granted to those taxpayers whose income is slightly higher than Rs. 8,50,000.

Individuals who have missed last date for filing Income Tax Returns should take necessary step to submit their returns immediately. It is important to note that if no tax is payable on income then no interest or penalty is levied otherwise interest is payable for late filing of return @1% per month. Penalty of Rs. 5000 is payable if return is not submitted by 31st March, 2004 together with interest.

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