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Tax Rates

Tax rate for firms, LLP and companies remain the

same as per last year's budget.

    However surcharge in the case of domestic

company gets reduced from existing 10% to 7.50%  

for  the Financial Year 2010-2011.

    Similarly   surcharge  in   the  case  of   dividend

distribution tax and minimum alternate tax gets

reduced to 7.50 %.

 

MAT

    Minimum Alternate Tax (MAT) rate has been

increased from 15 % to 18 %. Rate of MAT for the

company on the basis of profit will  be as under:-

-    Book Profit  exceeds Rs. 1.00 crore    -  19.93%

-    Book Profit upto Rs. 1.00 Crore  -  18.54%

 

Deemed Gift

    Taxation of deemed gift has been introduced. If a

company/ firm  acquires shares of other unlisted

company for inadequate consideration or without

consideration   and aggregate fair market value

exceeds Rs. 50,000/. This provision will apply w.e.f.

1  June 2010.st

 

Non Residents

    It is  proposed to expand the scope of taxation of

non residents.

    If a non resident earns interest , royalty or technical

fees, it will be deemed to accrue or arise in India,

whether or not services are rendered in India or

outside India.

    This amendment is introduced to nullify the impact

of judicial ruling in favour of assesee and is to be

applied retrospectively from FY 1976-77.

    This provision will also have implication in case of

TDS   on  payment to non resident

 

Depreciation

    It is proposed that the company and LLP will

apportion the depreciation allowable under the Act 

in the ratio of number of days for which assets were

used by them in case of conversion of private

limited or public unlisted company to LLP as per the

amended  provisions of Act.

    Further WDV of assets in case of such LLP will be

WDV of assets of  company before such conversion.

    LLP  can claim the benefit of unabsorbed  brought

forward loss and  depreciation in case of conversion

of company. 

    However MAT credit gets lapsed in the hand of LLP

in case of  conversion of company.

 

Research

    Deduction of amount paid to research association is

proposed to be     enhanced   to   one and three

fourth  time of sum  paid  as against existing of one

and one fourth time of sum paid.

    For   specified  businesses  i.e.   pharmaceutical,

chemical computers, who incur expenditure on

       scientific research, the weighted deduction to the

 extent of two time of the amount spent will be

 allowed as against existing one and one half time of

 amount spent.

 

Hotel

    A person will be allowed to claim deduction of

expenditure of capital nature incurred on a  new

hotel of two star and above category. 

    The expenditure will be allowed in the year in which

hotel  commence the operation and entire capital

expenditure incurred prior to commencement of

hotel will be eligible  for deduction.

    However the assessee will not be able to claim any

other deduction in any  other assessment year.

 

Capital gain on conversion to LLP

    It is proposed that  conversion of private limited or

public   unlisted   company  to    limited  liability

partnership will not result into transfer  and capital

gain  on such conversion  will not attract tax.

    However this clause is non starter since condition

attached with such exemption is rigorous  i.e. sales

of company in preceding three year should not

exceed 60 lacs, partners can not withdraw any

money out of balance of accumulated profit

standing in the accounts on the day of  conversion,

partners can not receive any consideration / benefit

directly or indirectly from LLP after conversion   

during the existence of LLP etc.,

 

Tax Audit

    It is proposed to increase the threshold limit for the

requirement of Tax Audit.

    Now Professionals are required to get the tax audit

done if gross receipts exceeds Rs. 15. 00 Lacs and

other business entity requires to get the tax audit

done if turnover exceeds Rs. 60 Lacs.

    However penalty  for non compliance of tax audit

provision will attract  maximum penalty of Rs. 1.50

Lacs in place of existing penalty of Rs. 1.00 lacs. 

 

Housing Project

    Deduction for housing project approved after

1  April 2005 will be allowed    in case project getsst

completed within five year from the end of financial

year in which first approval was granted after

1/4/2005 .

    However  commercial area is now restricted to 3%

of total built up area in place of existing 5% of built

up area or 5000 Sq. ft which ever is higher is

specified for claim of deduction u/s 80IB (10) of the

Act.

 

Valuation of Property

    Now department can refer the valuation of property

for determination of value of gift in case of transfer

of property without consideration or inadequate

consideration to valuation officer during the course

of scrutiny assessment proceeding.

Regards,

CA Pramod Jain

 



Category Income Tax, Other Articles by - CA Pramod Jain 



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