TAX Highlights 2010 Budget

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TAX Highlights 2010 Budget india
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  TAX highlights 2010 budgetDirect TaxesIncome tax slabs for individual taxpayers to be as followsIncome upto Rs 1.6 lakh NilIncome above Rs 1.6 lakh and upto Rs. 5 lakh 10 per centIncome above Rs.5 lakh and upto Rs. 8 lakh 20 per centIncome above Rs. 8 lakh 30 per centDeduction of an additional amount of Rs. 20,000 allowed, over and above theexisting limit of Rs.1 lakh on tax savings, for investment in long-term infrastructurebonds as notified by the Central GovernmentBesides contributions to health insurance schemes which is currently llowed as adeduction under the Income-tax Act, contributions to the Central Government HealthScheme also allowed as a deduction under the same provision.Current surcharge of 10 per cent on domestic companies reduced to 7.5 per cent.Rate of Minimum Alternate Tax (MAT) increased from the current rate of 15 percent to 18 per cent of book profits.To further encourage R&D across all sectors of the economy, weighted deductionon expenditure incurred on in-house R&D enhanced from 150 per cent to 200 percent. Weighted deduction on payments made to National Laboratories, researchassociations, colleges, universities and other institutions, for scientific researchenhanced from 125 per cent to 175 per cent.Payment made to an approved association engaged in research in social sciencesor statistical research to be allowed as a weighted deduction of 125 per cent. Theincome of such approved research association shall be exempt from tax.Limits for turnover over which accounts need to be audited enhanced to Rs. 60lakh for businesses and to Rs. 15 lakh for professions.Limit of turnover for the purpose of presumptive taxation of small businesses enhanced to Rs. 60 lakh.The_penalty_leviable_for_failure_to_get_accounts_audited_or_to_furnishaudit_report_increased_to_INR_150,000_from_INR_100,000If tax has been deducted on payment by way of any expense and is paid before thedue date of filing the return, such expenditure to be allowed for deduction. Interestcharged on tax deducted but not deposited by the specified date to be increasedfrom 12 per cent to 18 per cent per annum.To facilitate the conversion of small companies into Limited Liability Partnerships,transfer of assets as a result of such conversion not to be subject to capital gainstax.1. The_conversion_of_a_private_company_or_unlisted_public_company (Company)_into _Limited_Liability_Partnership_to_be_exempt_from_tax, subject_to_the_following:  2. The_total_sales_or_turnover_or_gross_receipts_of_the_company_do_not3. exceed_INR_6,000,000_in_any_of_the_immediate_three_preceding previous_years4. The_aggregate_profit_sharing_ratio_of_the_shareholders_of_the company_in_LLP_ to_be_minimum_50_percent_in_the_subsequent_five years5. The_partners_do_not_draw_any_amount_out_of_accumulated_profit_on the_date_of_ conversion_in_the_subsequent_three_years6. The_credit_in_respect_of_MAT_paid_by_the_company_is_not_available_to the_LLPThe_eligible_deduction_for_export_profits_of_the_SEZ_units_is_to_becomputed_with_reference_to_the_total_turnover_of_the_undertakinginstead_of_the_total_turnover_of_the_company._This_provision_is_nowmade_operational_retrospectively_from_the_financial_year_2005-06_ Effective_1_July,_2010,_the_thresholds_for_deducting_tax_at_source_onpayments_to_residents_is_to_be_revised_as_under:1. Winnings from lottery or crossword puzzle or card game and other game of anysort :Existing limit : 5000; Proposed limit : 10000;2. Winningsfromhorseraces: Existing limit : 2500; Proposed limit : 5000;3. Paymenttocontractors :Existing limit :  20,000 (for a single transaction)  50,000 (for aggregate oftransactions during the financial year); Proposed limit :  30,000 (for a single transaction)  75,000 (for aggregate of transactions during the financial year);4. Insurancecommission : Existing limit : 5000; Proposed limit : 20000;5. Commissionorbrokerage : Existing limit : 2500; Proposed limit : 5000;6. RentExisting : limit : 120000; Proposed limit : 180000;7. Fees for professional or technical services, royalty and non-compete fees : Existing limit : 20000; Proposed limit : 30000;Simplified_Form_SARAL-II_for_individual_salaried_taxpayers_to_benotified.Post_1_July,_2010,_reference_to_the_Valuation_Officer_stipulated_forestimating_fair_market_value_of_immovable_property_(being_land_andbuilding,_shares_and_securities,_jewellery,_archaeologicalcollections,_drawings,_paintings,_sculptures_or_any_work_of_art)while_computing_income_from_other_sources_in_respect_of_receiptswithout_consideration_or_for_inadequate_considerationEffective_1_June,_2010,_with_respect_to_the_Settlement_CommissionThe_threshold_of_making_an_application_with_respect_to_additionaltax_payable_increased_to_INR_1,000,000_from_INR_300,000The_scope_of_cases_to_be_admitted_expanded_to_includeproceedings_resulting_from_search_or_from_requisition_of_books_ofaccount_or_other_documents_or_any_assets_where_additionalincome_tax_payable_on_the_income_disclosed_is_in_excess_of_INR5,000,000.__Consequential_amendment_also_made_in_the_Wealth Tax_ActThe_time_limit_for_passing_the_order_increased_to_18_months_wherethe_application_is_filed_on_or_after_1_June,_2010.__Consequentialamendment_also_made_in_the_Wealth_Tax_Act.  Proposals on direct taxes estimated to result in a revenue loss of Rs. 26,000 crorefor the year.Indirect TaxesRate reduction in Central Excise duties to be partially rolled back and the standardrate on all non-petroleum products enhanced from 8 per cent to 10 per centad valorem.Value limit of Rs. 1 lakh per annum on duty-free import of commercial samples aspersonal baggage enhanced to Rs. 3 lakh per annum.Service TaxRate of tax on services retained at 10 per cent to pave the way forward for GST.Introduction of eight new taxable services (effective froma date to be notified upon enactment of Finance Bill2010):  Services_for_promoting,_marketing,_organising_/_assisting_in_organising_gamesof_chance,_including_lottery,_bingo_or_lotto___   Health_services_provided_by_hospitals,_nursing_homes_or_multi-specialty_clinicsto:- Employees_of_business_entity_in_relation_to_health_check-up_or_preventivecare_ - Persons_covered_by_health_insurance_schemes_in_relation_to_health_check-upor_treatment,_when_payment_for_such_services_are_made_by_   business_entity  or_insurance_company._   Business_entity   _defined_to_include_an_association_ofpersons,_body_of_individuals,_company_or_firm,_specifically_excludingindividuals  Services_in_relation_to_storing,_keeping_or_maintaining_medical_records_ofemployees_of_a_business_entity  Services_of_promoting_or_marketing_of_   brand   _of_goods,_services,_events_orendorsement_of_a_name,_including_a_trade_name,_logo_or_house_mark_of_abusiness_entity  Services_of_granting_the_right_or_permitting_commercial_use_/_exploitation_ofany_event_including_events_related_to_art,_entertainment,_business,_sports_ormarriage  Services_provided_by_electricity_exchanges_in_relation_to_trading,_processing,clearing_or_settlement_of_spot_contracts,_term_ahead_contracts,_seasonalcontracts,_derivatives_or_any_other_electricity_related_contract_   Services_in_relation_to_copyright_of_cinematographic_film_and_sound_recording  Services_of_preferential_location_or_development_of_complex_provided_by_abuilder_/_his_authorized_representative_to_prospective_buyers,_excludingservices_in_relation_to_parking_spaceAmendments (expansion / modification) in the scope ofexisting services1. Airport_service,_port_service_and other_port_service2. Auctioneer  s_service Management_of_investment under_ULIP_service3. Transport_of_passenger_by_air Service  4. IT_software_service5. Commercial_training_or_coaching Service6. Sponsorship_service7. Commercial_or_industrial construction_service_ 8. Construction_of_Complex_service9. Renting_of_immovable_property ServiceFollowing_services_shifted_from_the_   performance_category   _to_   recipientcategory   _to_qualify_as_exports:_ - Chartered_accountant_service- Cost_accountant_service- Company_secretary_serviceNo_penalty_if_duty_and_interest_paid_before_the_issue_of_show_cause_notice_in cases_other_than_fraudulent_evasion
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