Union Budget 2010 - Income tax amendments

Section /Schedule

Head

Amendment/New Provision

Effective date

Part III to Schedule I

Advance taxes & TDS u/s 192

Advance taxes for the FY 2010-11 and TDS u/s 192 from salary shall be made at the following rates:

   In case of Individuals, HUF, AOP/BOI & Artificial juridical person:

# In case of individual being woman resident in India and below the age of 65 years at any time during the PY, the basis exemption limit is Rs. 190,000.

#In case of individual, being resident in India, who is age of 65 years or more at any time during the PY, the basic exemption limit is Rs. 2,40,000.

• In case of Partnership firms [Including LLP], the rate of tax shall be 30%. Surcharge shall be NIL.

• In case of companies, the rate of taxes shall be same as specified in the Finance Act 2009. Further, Surcharge has been reduced to 7.5% in case of domestic companies [2.5% in case of non domestic companies continues], if total income of the company exceeds Rs. One crore.

Education cess and SHEC shall be continued to be levied in all cases.

FY 2009-10

2(15)

Definition of Charitable purpose

The term Charitable Purpose has been amended as follows:

advancement of any other object of general public utility included in definition is not a charitable purpose if the activity involves carrying of trade, commerce or business or rendering any service in relation thereto for consideration irrespective of nature of use or application, or retention of income from such activity.

However, if total receipts from aforesaid activity do not exceed Rs. 10 Lakhs in the PY, the said activity shall continue to be charitable in nature.

Retrospective

1-4-2009

40(a)(ia)

Disallowance for non deduction of TDS

If the tax deducted at any time during the PY [not last month of PY] is remitted on or before the due date specified u/s 139(1), no disallowance

Retrospective

1-4-2009

35(1)(ii)

Contribution to approved institutions for scientific research

Deduction eligibility has been increased from 125% to 175%

1-4-2010

35(1)(iii) & 10(21)

Contribution to approved research associations

Income of approved research association engaged in undertaking research in social science or statistical research shall be exempt u/s 10(21) subject to prescribed conditions

1-4-2010

35(2AB)

Weighted deduction

The benefit of 150% deduction is extended to all companies engaged in the business of manufacture or production of any article or thing except those specified in XI schedule [Finance Act 2009]

In the current budget, the quantum of weighted deduction has been raised from 150 % to 200%

1-4-2010

35AD

Investment linked deduction

100% deduction shall be allowed in respect of any capital expenditure [other than on land, goodwill or financial instrument] incurred for the purposes of specified business:

The list of specified business has been extended to include the business of building and operating a new hotel of 2 star category or above, anywhere in India, which starts functioning after 1.4.2010.

Retrospective

1-4-2010

45

Exempt Transfer

Transfer of assets on conversion of a company to LLP in accordance with section 56 and 57 of LLP Act shall not be regarded as transfer subject to following conditions:

• Total turnover, gross receipts  or sales of the company do not exceed Rs. 60 Lakhs in any of the 3 preceding PY;
• The shareholder of the company become the partners of LLP in same proportion as their shareholding in the company;
• No consideration other share in profit and capital contribution arises to partners;
• All assets and liabilities of the company become the assets and liabilities of the LLP;
• No amount is paid, either directly or indirectly, to the partners of the LLP from accumulated profits of the company for a period of 3 years from the date of conversion;
• The erstwhile shareholders of the company continue to be entitled to receive atleast 50% of the profits of the LLP for a period of 5 years from the date of conversion

The LLP fulfilling the above mentioned conditions is allowed the benefit of carry forward of business loss and unabsorbed depreciation.

No MAT credit of the company shall be allowed to be availed in the hands of LLP.

Aggregate depreciation allowed to company and LLP in any PY shall not exceed the depreciation calculated at prescribed rates if the conversion had not taken place.

Actual cost of the block in the hands of LLP shall be WDV in case of predecessor company on the date of conversion.

1-4-2010

56(2)

Gifts Received

Transfer of shares of a company in which public are not substantially interested shall be covered by the provisions of section 56(2)(vii) if:

• Such shares are transferred to a firm or a company in which public are not substantially interested;
• Transfer is for no or inadequate consideration.

The cost of such shares in the hands of recipient shall be the value which has been taken into account and subject to tax u/s 56(2).

1-6-2010

56(2)

Gifts Received

The provisions of section 56(2) shall be applicable to gift of property which are in nature of capital asset of the recipient and, therefore, would not apply to stock in trade, raw materials and consumable stores of any business of such recipient.

Retrospective

1-10-2009

56(2)(vii)

Immovable property

Only those transaction relating to immovable property that are without consideration are covered. Cases involving inadequate consideration in respect of immovable property has been removed.

Retrospective

1-10-2009

56(2)

Definition

The definition of property has been amended to include bullion.

Further, section 142A has been amended to allow the AO to make reference to valuation officer for estimation of value of property for purposes of section 56(2)

1-6-2010

80CCF

Deduction in respect of investment in LT Infra Bonds

Deduction is allowed to Individual & HUF only in respect of investment in notified long term infrastructure bonds to the extent of Rs. 20,000/-. This deduction is over and above the limit of Rs. 1,00,000/- specified u/s 80CCE

1-4-2010

115JB

MAT

-         Rate of MAT is increase to 18% of Book Profits.

-         Tax credit shall be allowed to be carried forward and set off up to 10 Assessment years immediately succeeding the AY in which tax credit becomes allowable.

1-4-2010

44AB

Audit

The limit for getting the books of accounts audited has increased as follows:

In case of business, if the total turnover or gross receipts in business exceeds Rs. 60 Lakhs in the PY.

In case of profession, if the gross receipts in profession exceeds Rs. 15 Lakhs in the PY.

1-4-2010

44AD

Presumptive Income

The threshold limit has been raised to Rs. 60 Lakhs

1-4-2010

Chapter XVII B

Theshold limit of TDS

1-7-2010

203

TDS Certificates

Deductor of TDS or collector of TCS required to furnish TDS/TCS certificates to deductees/collectee

Retrospective

1-4-2010

245

Settlement Commission

• Proceeding from assessment or reassessment resulting from search or as a result of requisition of books of accounts or any other documents or any other assets has been included within the definition of case which can be admitted by settlement commission.
• In the aforesaid case, application can be made to SC if the additional amount of income tax payable on the income disclosed in the application exceeds Rs. 50 Lakhs.
• In any other case, application can be made if the income tax payable exceeds Rs. 10 Lakhs
• SC shall pass order within a period 18 months in respect of application made on or after 1-6-2010.

1-6-2010

201(1A)

Interest for non deduction or delayed remittance of TDS

Interest has been increased to 1.5% per month or part thereof

1-7-2010

271B

Penalty for not getting books audited and furnish audit report

Maximum penalty has been increased to Rs. 1,50,000

1-4-2010