Budget 2009 10

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Dipti Chheda, FCABUDGET2009-10SNAPSHOT OF TAX PROPOSALS

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CHANGES IN RATES240000225000190000180000160000150000DiptiChheda, FCA

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Personal Tax (cont..)Surcharge of 10% has been abolished for individuals, HUF and partnership firms

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Education cess andSecondary and Higher Education Cess at 3% to continueDipti Chheda, FCA

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Corporate TaxNo changein corporate tax rate

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MAT increased from10% to 15%Dipti Chheda, FCA

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OTHER TAXESCommodity TransactionTax (CTT) abolished

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No change inDividend Distribution Tax

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Fringe Benefit Taxto be abolished and fringe benefits to be taxed as perquisites

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Advance Tax onlyif it is above 10000Dipti Chheda, FCA

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TDSProvision for TDSon payment to contractors substituted -uniform rate of 1% for individual and HUF and 2% for any other personTDS rates on rent revised 2% for use of plant and machinery and 10% for land, building or furniture and fixtureFurnishing of PAN mandatory for deducting tax and for obtaining lower withholding tax certificate.Dipti Chheda, FCA

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PROCEDURAL CHANGES Requirementto furnish PAN [Section 206AA]A deductee shall required to furnish PAN to the deductor, failing which tax shall be deducted at higher of the following rates:–prescribed rate –at the rates in force (as per the Finance Act)–at the rate of 20%Tax shall also be deducted at aforementioned tax rates in case declaration of PAN by deductee to deductor is invalid / declaration filed under section 197A is not correct.

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Lower withholding taxcertificate shall be not granted by income-tax authorities unless application filed contains PAN of the applicant.

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PAN shall alsobe mentioned in all correspondence/ bills/ vouchers/ other documents exchanged between deductee and deductor.

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This amendment willtake effect from AY 2010-2011Dipti Chheda, FCA

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PARTNERSHIPDeduction for partners'salary [Section 40(b)]The limits for allowability of partners' salary have been made uniform for both professional firms as well as other firms and stand increased as follows:

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for the firstRs.300,000 of book profits or in case of loss Rs. 150,000 or 90% of book profits, whichever is higher

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for balance amountof book profits –60% thereof Dipti Chheda, FCA

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BUSINESS INCOMEIncrease inlimit for payments made otherwise than by cheque [Section 40A]Limit for payment made for plying, hiring or leasing goods carriage other than a account payee cheque has been increased to Rs.35,000 from the present limit of Rs.20,000 Expansion of scope of weighted deduction for scientific research [section 35 (2AB)]Scope of weighted deduction of 150%for in-house scientific research and development facility extended to all business engaged in the manufacturing or production of article or thing.

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Capital expenditure incurredby certain business like cold chain facility, warehousing facility and laying and operating natural gas or crude or petroleum oil pipeline shall be allowed as deductionDipti Chheda, FCA

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Provisions relating tovoluntary contributions received by electoral trust [Section 13B]A new section has been introduced providing exemption on voluntary contributions received by an electoral trust provided:a) such electoral trust distributes 95% of the aggregate donations received during the PY along with the surplus (if any) including brought forward surplus from earlier PY to any political party; andb) such electoral trust functions in accordance with the rules made by the Central Government.This amendment will take effect from AY 2010-2011 and subsequent years.Dipti Chheda, FCA

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Relief from anonymousdonations [Section 115BBC]Anonymous donations received by certain specified institutions would not be taxed upto:

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5% of thetotal income of such institution, or

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Rs.100,000 whichever ishigher. Earlier, all anonymous donations were taxed in the hands of the institutions. Dipti Chheda, FCA

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Other Deductions underchapter VI ADeduction in respect of contributions to political partiesIt is proposed that with effect from April 1 2010, donations to Electoral Trust shall be allowed as a 100 percent deduction under Section 80GGB and section 80GGCDipti Chheda, FCA

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Deduction in respectof maintenance of a dependent with a severe disability SEC. 80DDIt is proposed to increase the limit for deduction in respect of maintenance (including medical treatment) of a dependent suffering from severe disability to Rs.100,000 from Rs. 75,000 w.e.f. April 1 2010Dipti Chheda, FCA

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Interest on loantaken for higher education Sec 80EDeduction for interest on loans taken for higher education has been extended to cover all fields of studies (including vocational studies) pursued after passing the Senior Secondary Examination or its equivalent from any school, board or university recognized by the Central Government or State Government or local authority. This amendment is effective from 1st day of April, 2010Dipti Chheda, FCA

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Presumptive tax provisionsfor residents revamped; businesses with turnover less than Rs.40 lacs can be taxed at presumptive rate of 8%

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Tax holiday benefitfor STP/ EOU units extended till March 31, 2011.WEALTH TAXWealth Tax exemption limit enhanced to Rs.30 lakhDipti Chheda, FCA

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INDIRECT TAX PROPOSALSDiptiChheda, FCA

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Service Tax

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The service taxrate remains unchanged at 10%

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The levy isnow extended to the following new services:–

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Legal Consultancy Servicesrendered by one business entity to another business entity. Individuals are excluded from the levy, both as receiver and provider. Appearance before any court, tribunal or authority is also excluded from the levy

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Cosmetic and PlasticSurgery Services excluding any surgery undertaken to restore/ reconstruct anatomy or functions of the body affected due to congenital defects, developmental abnormalities, degenerative diseases, injury or trauma–Dipti Chheda, FCA

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The definition ofStock Broker's Services has been amended to exclude sub-brokers from the levy. It has been further clarified that sub-brokers would also not be covered as 'commission agents' under Business Auxiliary Services–

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The definition of'India' has been amended to include installations, structures and vessels in the continental shelf of India and exclusive economic zones. Dipti Chheda, FCA

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Specific exemptions havebeen granted to the following services:

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Services in relationto buying and selling of foreign currency between scheduled banks

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Transport of passengersby private bus operators in a vehicle bearing 'contract carriage permit'

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Membership and otherfees collected by the Federation of Indian Export Organizations and other 21 specified export promotion council exempt till 31 March 2010.Excise dutyThe excise duty on branded jewellery is reduced but custom duty on import of gold is increased.All that glitters is not goldCustom duty reduced on LCD TV but increased on set top boxes. See costly DTH on cheap LCD TVCVD on Cell phones exempt for 1 more year. 

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Custom duty onlife saving drugs reduced.Dipti Chheda, FCA

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PROMISES FOR BRIGHTERFUTUREGovt to meet the deadline for implementation of GST from April,1 2010

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New tax codeto be set up in 45 days

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Saral-II forms tosimplify taxation process Dipti Chheda, FCA

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Major impactThough thebenefit from budget 2009-10 is fringe but it is for everyone -right from rural Indian farmer, unorganized sector woman, minorities, salaried people defence personnel, small tax payers and corporate leaders. It has offered something to everyoneDipti Chheda, FCA

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Thank YouQuestions??Dipti Chheda,FCA

Budget 2009 10

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