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2% surcharge to be imposed on Income-Tax

The Union Cabinet on Thursday evening decided to promulgate with immediate effect an ordinance to levy a further surcharge of two per cent on personal income tax for the current financial year (2000-01).

Briefing reporters on the meeting, Union Parliamentary Affairs Minister Pramod Mahajan said the Taxation Laws (Amendment) Ordinance 2001 would levy a similar surcharge on corporate tax for the assessment year 2000-01.

Mahajan said the measure is expected to generate Rs 130 billion, which will be used for the reconstruction of the earthquake-hit areas of Gujarat.

The Cabinet also decided to amend the Income-Tax Act to provide cent per cent deduction for donations made to charitable institutions to provide relief to the quake victims. This, however, will be subject to four conditions:

1. The institution must be registered under section 80(G) of the Income-Tax Act.
2. The institution must maintain separate accounts of income and expenditure for the quake relief.
3. Donations received on or before September 30, 2001, must be used before March 31, 2002. If not, the institution must contribute the monies to the Prime Minister's Relief Fund or pay income-tax on them.
4. The institution will have to submit its accounts to the Central Board of Direct Taxes by June 30, 2002.

Mahajan said the benefit of clauses A-C of section 35 of the Income-Tax Act would be extended to all assessees, including corporates, who wish to take up relief work themselves.

The Complete Coverage | List of earthquake sites

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