Budget 2009 10

Dipti Chheda, FCA

BUDGET 2009-10

SNAPSHOT OF TAX PROPOSALS

CHANGES IN RATES

For Others

For Women (Below 65 Years)

For Senior Citizens (Abv 65 Years)

0 100000 200000 300000

Proposed Exemption LimitExisting

Dipti Chheda, FCA

150000160000

180000190000

225000240000

Personal Tax (cont..)

Dipti Chheda, FCA

•Surcharge of 10% has been abolished for

individuals, HUF and partnership firms

•Education cess and Secondary and

Higher Education Cess at 3% to continue

Corporate Tax

•No change in corporate tax rate

•MAT increased from 10% to 15%

Dipti Chheda, FCA

OTHER TAXES•Commodity Transaction Tax (CTT)

abolished

•No change in Dividend Distribution Tax

•Fringe Benefit Tax to be abolished and

fringe benefits to be taxed as perquisites

•Advance Tax only if it is above 10000

Dipti Chheda, FCA

TDS•Provision for TDS on payment to contractors

substituted

-uniform rate of 1% for individual and HUF and 2%

for any other person

•TDS rates on rent revised

2% for use of plant and machinery and 10% for land,

building or furniture and fixture

•Furnishing of PAN mandatory for deducting tax

and for obtaining lower withholding tax certificate.Dipti Chheda, FCA

PROCEDURAL CHANGES

Requirement to 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.

•Lower withholding tax certificate shall be not granted by income-tax

authorities unless application filed contains PAN of the applicant.

•PAN shall also be mentioned in all correspondence/ bills/ vouchers/

other documents exchanged between deductee and deductor.

•This amendment will take effect from AY 2010-2011 Dipti Chheda, FCA

PARTNERSHIP

Deduction 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:

for the first Rs.300,000 of book profits or in case of loss

Rs. 150,000 or 90% of book profits, whichever is higher

for balance amount of book profits –60% thereof

Dipti Chheda, FCA

BUSINESS INCOME

Increase in limit 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. •Capital expenditure incurred by certain business like cold chain facility, warehousing facility and laying and operating natural gas or crude or petroleum oil pipeline shall be allowed as deduction

Dipti Chheda, FCA

Provisions relating to voluntary 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; and

b) 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

Relief from anonymous donations [Section

115BBC]

•Anonymous donations received by certain specified

institutions would not be taxed upto:

5% of the total income of such institution, or

Rs.100,000 whichever is higher.

Earlier, all anonymous donations were taxed in the hands

of the institutions.

Dipti Chheda, FCA

Other Deductions under chapter VI A

Deduction in respect of contributions to political

parties

•It 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

80GGC

Dipti Chheda, FCA

Deduction in respect of maintenance of a

dependent with a severe disability SEC. 80DD

•It 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 2010

Dipti Chheda, FCA

Interest on loan taken for higher education Sec 80E

•Deduction 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, 2010

Dipti Chheda, FCA

•Presumptive tax provisions for residents revamped;

businesses with turnover less than Rs.40 lacs can be taxed at

presumptive rate of 8%

•Tax holiday benefit for STP/ EOU units extended till March 31,

2011.

WEALTH TAX

•Wealth Tax exemption limit enhanced to Rs.30 lakh

Dipti Chheda, FCA

INDIRECT

TAX

PROPOSALS

Dipti Chheda, FCA

•Service TaxThe service tax rate remains unchanged at 10%The levy is now extended to the following new services:–

•Legal Consultancy Services rendered 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

•Cosmetic and Plastic Surgery 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

•The definition of Stock 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–

Dipti Chheda, FCA

• The definition of 'India' has been amended to include

installations, structures and vessels in the continental

shelf of India and exclusive economic zones.

•Specific exemptions have been granted to the following services:

Services in relation to buying and selling of foreign currency between scheduled banks

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

•Membership and other fees collected by the Federation of Indian Export Organizations and other 21 specified export promotion council exempt till 31 March 2010.

Excise duty•The excise duty on branded jewellery is reduced but custom duty on import of gold is increased.

All that glitters is not gold•Custom duty reduced on LCD TV but increased on set top boxes.

See costly DTH on cheap LCD TV•CVD on Cell phones exempt for 1 more year. •Custom duty on life saving drugs reduced.

Dipti Chheda, FCA

PROMISES FOR BRIGHTER FUTURE

Govt to meet the deadline for implementation

of GST from April,1 2010

New tax code to be set up in 45 days

Saral-II forms to simplify taxation process

Dipti Chheda, FCA

Major impact

Though the benefit 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 everyone

Dipti Chheda, FCA

Thank You

Questions??Dipti Chheda, FCA