Budget 2009-10 Corporate Tax Rates
BUDGET 2009-10 HIGHLIGHTS
1.Threshold exemption limit for individual, HUF, BOI and AOP increased by ` 10,000/-.
2.Threshold exemption limit for women increased by ` 10,000/- and for senior citizen increased by ` 15,000/-.
3.Surcharge on all assessees except company is abolished.
4.No changes in corporate Tax rates.
6.Section 40a(3) is amended to increase the limit of cash payment in respect of expenses of plying hiring or leasing goods carriages from ` 20,000 to ` 35,000 per day per person.
7.Definition u/s 56 of the act is enlarged to include specified properties other than a sum of money received without consideration or for inadequate consideration exceeding ` 50,000/- within the preview of the act.
8.Section 80ccd is amended to allow the deduction in respect of pension scheme to any assesses in addition to assesses being employee.
9.Section 80dd is amended to increase the deduction from ` 75,000/- to ` 1,00,000/- in respect of expenditure on a dependent who is a person with severe disability.
10.Scope of section 80e is widened by enlarging the definition of higher education to include any course of study after passing the senior examination. now deduction u/s 80e is available in respect of loan taken to pursue any course of study after passing the senior secondary school.
11.Relief of section 89 of the act is not available in respect of payment received on retirement/termination where the assessee is also getting ezemption under section 10(10c) of the act and vice-versa.
12.FBT is abolished and fringe benefit is taxable in the hands of employee as perks.
13.Mat is increased from 10% to 15%. however, mat credit is available for ten subsequent assessment year instead of seven assessment year available presently.
14.Defination of book profit is amended retrospectively from AY 1998-1999 to include the provision for diminution of value of any assets.
15.Commodities transaction tax (CTT) is abolished w.e.f. AY 2010-2011.
16.Amendment in section 145a to provide that the interest received by an assessee on compensation or enhanced compensation shall be deemed to be his income in the year in which it is received, irrespective of the method followed by the assessee.
17.TDS rates of rent & contracto ` has been changed from 1st october 2009.
18.Higher tax withholding rates has been prescribed in case of deductees not having plan.
19.Enhancement of advance tax limit from ` 5,000/- to ` 10,000/-.
20.Document identification number (din) will be alloted by the department for every notice, correspondence etc.
21.enhancement of wealth tax exemption limit from ` 15,00,000/- to ` 30,00,000/-.
Tax holiday in respect of exemption of export u/s 10A/10B further extended to one year.
Tax holiday in respect of export under section 10A/10B is extended for further one year i.e. up to A.Y. 2011-12.
Further while computing the exemption under section 10AA of the Act relating to special provision in respect of newly established Units in Special Economic Zones, the total turnover of the assessee is substituted with total turnover of the undertaking. The amendment will be effective w.e.f AY 2010-2011.
Definition of charitable purpose is amended from AY 2009-10 to provide the exemption u/s 11 of the Act to trust engaged in such activity.
Definition of charitable purpose is amended from the AY 2009-10 to include preservation of environment (including watersheds, forests and wildlife) and preservation of monuments or places or objects of artistic or historic interest along with relief of the poor, education and medical relief to provide the exemption u/s 11 of the Act to trust engaged in such activity.
It has been clarified that where more than one price is determined by the most appropriate method, the arm length price shall be arithmetical mean of such prices. It is further provided that the variation between the arm length price so determined and the price at which the international transaction has actually been undertaken if within the range of 5% difference, then the same shall be deemed to be an arm's length price.
Further the board has been authorized to make rule for 'Safe Harbour', i.e. in the circumstances in which the income tax authorities shall accept the transfer price declared by the Assessee.
Also Dispute Resolution Panel set up has been recommended w.e.f. 1st October 2009 to address the disputes relating to additions to be made by the TPO and additions in case of foreign companies.
FBT is abolished and fringe benefit is taxable in the hands of employee as perks.
FBT is abolished w.e.f. A.Y. 2010-2011. Consequently fringe benefit is taxable in the hands of the employees under section 17(2) of the Act. ESOP, contribution to superannuation fund exceeding ` 1,00,000/- and value of other prescribed fringe benefit will be taxable in the hands of the employees as perks w.e.f. A.Y. 2010-2011.
MAT is increased from 10% to 15% of book profit. Further MAT credit is available for ten subsequent years.
MAT is increased from 10% to 15% of the book profit. MAT credit is available for ten subsequent assessment year instead of seven years available presently. Further Definition of Book profit is amended retrospectively from AY 1998-1999 to include the provision for diminution of value of any assets.
Tax Deduction at source(TDS)
The new TDS rates of Rent & contractor w.e.f. 1st October 2009 are as under:-
In case of Rent:-
-Rent of plant, machinery & equipment \ 2% -Rent of land, building or furniture to an Individual/HUF & others 10%
However, the rate of TDS @ 20% will be charge if the PAN No. is not quoted by the deductee w.e.f. 01/04/2010.
In case of Contractor:-
All contractual payment to individual / HUF the TDS rate will be 1%.
However in case of other than individual or HUF the TDS rate is 2% including the payment of advertisement.
Contractor / sub-contractor engaged in transport business, NIL rate of TDS will be applicable if the transporter quotes his PAN. If the PAN no. is not quoted the rate will be 1% for individual / HUF transporter & 2% for other transporter.
However, the TDS rate @ 20% in all cases of contractor if the PAN No. in not quoted by teg deductee w.e.f. 01/04/2010. As per section 194C "work" shall not include manufacturing or supplying a product according to the requirement or specification of a customer by using raw material purchased from a person other than such customer as such a contract is a contract for 'sale', Further for manufacturing or supplying a product according to the requirement or specification of a customer by using material purchased from such customer, is covered within the definition of 'work'. In such a case TDS shall be deducted on the invoice value excluding the value of material purchased from such customer if such value is mentioned separately in the invoice.
Where the material component has not been separately mentioned in the invoice, TDS shall be deducted on the whole of the invoice value.
Verification of TDS Returns
As per new section 200A, while processing the statement of TDS made under section 200, the sums deductible under Chapter XVII-B shall be computed after making adjustments of any arithmetical error or apparent incorrect claim in the statement and interest shall be charged on the sum so computed.
It is proposed to provide that after making adjustment, tax and interest would be calculated and sum payable by the deductor or refund due to the deductor will be determined. An intimation will be sent to the deductor informing him of his tax liability or the refund due to him within one year from from the end of the financial year in which the statement is filed.
No intimation shall be sent after the expiry of aforesaid period.
Time limit for passing the orders of TDS
Presently, there is no limitation of time for passing the order u / s 201 (1) for making the deductor assessee in default.
Now the AO is required to pass the order within two years from the end of the financial year in which the statement of TDS is filed by the deductor and where no statement is filed by the deductor, such order should be passed within four years from the end of the financial year which the payment is made or credit is given.
Further there is no time limit for aforesaid order:-
The TDS deducted by deductor but no TDS deposited;
The employer has failed to pAY tax wholly or partly; as the employee would not have been paid tax on perquisite;
The deducted is a non-resident as it mAY not be administratively possible to recover the tax from the non-resident.
Furnishing of PAN to the deductor (Section 206AA)
The aforesaid section w.e.f. 1st April 2010 provides that if any person fails to furnish his PAN to the deductor, then the tax will be deducted at the rate mentioned in the relevant provisions of the Act or at the rate in force or at the rate to 20%, whichever is higher.
Liability of Advance Tax u/s 208
W.e.f. 1st April 2009 the liability for payment of advance tax will be applicable only if the amount of such tax payable during the year ` 10,000/- or more.
Document Identification Number (DIN) (Section 282B)
From 1st October 2010 the income tax department shall allot a computer generated document identification number in respect of every notice, order, letter or any correspondence issued by them. Without issue of DIN, the documents issued shall be treated as invalid and shall be deemed never to have been issued.
Further every documents, letters or any other correspondence received by the income tax authority, shall be accepted after allotting & quoting of computerized generated document identification number. Without quoting the document identification number, the documents shall be treated as invalid and shall be deemed never to have received.
(a)Extension for time limit for obtaining exemption from EPFO
The time limit for obtaining exemption under section 17 of the EPF & MP Act has been extended from 31st March 2009 to 31st December 2010.
The threshold limit of wealth tax has been increase from ` 15 lakhs to ` 30 lakhs from AY 2010-11.
A. New Services introduced (to be applicable from the date of notification after passage of finance (No.2) Bill 2009)
1. Services provided in relation to transport of goods by rail;
2. Services provided in relation to transport of
a) Coastal goods; and
b) Goods through Inland Water including National Waterways
3.Services provided in relation to advice, consultancy or assistance in any branch of law excluding appearance before any court or authority. Individuals are exempted.
4. Cosmetic and Plastic Surgery Services.
B. Scope of certain services extended/ altered (to be applicable from the date of notification after passage of Finance (No.2) Bill 2009)
1.Business Auxiliary Services: Definition amended to provide that only those processes, which result in the manufacture of 'excisable goods' are excluded fro the purview of the definition.
2.Stock-broker: Definition amended to exclude sub-broker.
C. Exemptions provided ( effective from immediate effect)
1.Club or Association Services: To Federation of Indian Export Organizations and Specified export Promotion Councils, upto 31.03.2010.
2.Banking and other Financial or Foreign Broking Services: Inter-bank purchase and sale of foreign currency between scheduled banks.
D.Certain changes in Act & Rule (effective from immediate effect)
1.CENVAT Credit Rules 2004: Rule 6(3), provider of both taxable and exempted services, who does not maintain separate accounts of inputs, shall pAY an amount equal to 6% of the value of exempted services instead of 8%.
2.Works Contract Rules, 2007: Explanation provided being modified to allow benefit of optional compensation scheme only to such works contracts where the taxpayer declares the entire value of goods and services used in the execution of the works contract as the 'gross value' chargeable for works contract.
E.Refund Scheme for Exporter of Goods
1.Services of 'Transport of goods by road' and 'Commission paid to foreign agents' have been exempted from the levy of service tax, if the exporter is liable to pAY service tax on reverse charge basis. For other services, the exports shall be required to claim refund after paying service tax.
2.Other Salient features of the Scheme:
a)Terminal Handling Charges is being added in the list of eligible services:
b)Time limit for filing claim is increased to one year from the date of export.
c)Condition for filing claim once in quarter has been dispensed off.
d)Simplified format prescribed for filing claim:
e)Self certification of documents is introduced where refund claim does not exceed 0.25% of f.o.b value of exports under claim.
f)In case refund claim exceeds 0.25% of f.o.b value of exports under claim, the documents submitted shall be certified by Chartered Accountant who audits the annual accounts.
g)Refunds shall be granted within one month without any pre-audit.