Presentation on Proposed Finance Bill 2010
Direct Taxes
CA. Kalyan Chakravarthy Vennety
THE JALNA CA CPE STUDY CHAPTER
3rd March, 2010
NEW TAX RATE SLAB for Individuals & HUF
Slab Rate of Tax
(1) where the total income does not exceed Rs. 1,60,000 NIL
(2) where the total income exceeds Rs.1,60,000 but does not exceed Rs. 5,00,000
10%
(3) where the total income exceeds Rs. 5,00,000 but doesnot exceed Rs. 8,00,000
20%
(4) where the total income exceeds Rs. 8,00,000 30%
3CA. Kalyan Chakravarthy Vennety3.3.2010
Increase in Surcharge on Income Tax
Total income > 1 Crore RateDomestic company 7.5%
4CA. Kalyan Chakravarthy Vennety
NowNow
Total income > 1 Crore RateDomestic company 10%
3.3.2010
Sec 2(15) Charitable Purposew.e.f. 1-04-2009
Restriction of the definition of “Charitable Purpose”
Restriction of the definition of “Charitable Purpose”
if aggregate receipts do not exceed Rs. 10 Lacsif aggregate receipts do not exceed Rs. 10 Lacs
Not ApplyNot Apply
5CA. Kalyan Chakravarthy Vennety3.3.2010
Sec 9 Income deemed to accrue or arise in India
w.e.f. 01-06-1976Income from royalties, interest,
fee for technical servicesIncome from royalties, interest,
fee for technical services
Whether or not Non-Resident rendered service in India
Whether or not Non-Resident rendered service in India
Include in Total Income of NRInclude in Total Income of NR
6CA. Kalyan Chakravarthy Vennety3.3.2010
Ishikawajima- Harima Heavy Industries Ltd
case (SC)
Sec 10(21)Incomes not included in Total Income
Date of effect: 01-04-2011
Approved Research Association
Approved Research Association
7CA. Kalyan Chakravarthy Vennety3.3.2010
Sec 12AA (3) Cancellation of trust or institution
w.e.f. 01-06-2010
Earlier Cancellation was linked to Trust/Institution granted reg’n u/s 12AA(1)
Earlier Cancellation was linked to Trust/Institution granted reg’n u/s 12AA(1)
Cancellation provided where any Trust/Institution
has obtained Reg’n any time u/s 12A
Cancellation provided where any Trust/Institution
has obtained Reg’n any time u/s 12A
NowNow
8CA. Kalyan Chakravarthy Vennety3.3.2010
Sec 32 Depreciation
w.e.f. 01-04-2011
CompanyCompany
Dep’n as if no succession has taken place Dep’n as if no succession has taken place
LLPLLP
9CA. Kalyan Chakravarthy Vennety3.3.2010
Sec 35 Weighted Deduction on Expenditure on Research
w.e.f. 01-04-2011
200%200%
10CA. Kalyan Chakravarthy Vennety
125%125% 175%175%
150%150% NowNow
NowNow
3.3.2010
Sec 35AD Expenditure on specified business
w.e.f. 01-04-2010
Cross-country Gas or Oil
pipeline network
Cross-country Gas or Oil
pipeline network
Total Capacity should be as per
P&NG Reg Board
Total Capacity should be as per
P&NG Reg Board
New specified Business
New specified Business
Hotel2Star or above
Hotel2Star or above
11CA. Kalyan Chakravarthy Vennety3.3.2010
Sec 35DDAAmortisation of Exp under VRS
w.e.f. 01-04-2011
CompanyCompany
Deduction as if no succession has taken place Deduction as if no succession has taken place
LLPLLP
12CA. Kalyan Chakravarthy Vennety3.3.2010
Sec 40(a)(ia) Disallowance of Exp
w.e.f. 01-04-2010
TDS DeductedTDS Deducted
on or before the due date of filing of returnon or before the due date of filing of return
But not paidBut not paid
13CA. Kalyan Chakravarthy Vennety3.3.2010
Sec 44 BB Business of Exploration of Mineral Oils
w.e.f. 01-04-2011
Sec 44 DA applicable?Sec 44 DA applicable?
Not ApplicableNot Applicable
Sec 44 BBSec 44 BB
17CA. Kalyan Chakravarthy Vennety3.3.2010
Sec 44 DA Royalties etc. in case of non residents
w.e.f. 01-04-2011
Sec 44 BB applicable?Sec 44 BB applicable?
Not ApplicableNot Applicable
Sec 44 DASec 44 DA
18CA. Kalyan Chakravarthy Vennety3.3.2010
Sec 47(xiii b) Transactions not regarded as transfer
w.e.f. 01-04-2011
CompanyCompany
Six conditions? Six conditions?
LLPLLP
Transfer of Capital / Intangible Asset Transfer of Capital / Intangible Asset
Not a Transfer Not a Transfer19CA. Kalyan Chakravarthy Vennety3.3.2010
Sec 47(xiii b) Transactions not regarded as transfer
w.e.f. 01-04-2011 Six conditions Six conditions
20CA. Kalyan Chakravarthy Vennety
1. All A&L of co. become A&L of LLP2. All Shareholders become Partners of LLP3. Shareholders do not receive any compensation in any form4. Aggregate of PSR of shareholders should not be less than 50% for
5years5. Turnover of the company any of the 3 years prior to conversion
does not exceed Rs. 60 Lacs6. No amount is paid to partners out of accumulated balance of the
company on the date of conversion for a period of 3 years
1. All A&L of co. become A&L of LLP2. All Shareholders become Partners of LLP3. Shareholders do not receive any compensation in any form4. Aggregate of PSR of shareholders should not be less than 50% for
5years5. Turnover of the company any of the 3 years prior to conversion
does not exceed Rs. 60 Lacs6. No amount is paid to partners out of accumulated balance of the
company on the date of conversion for a period of 3 years
3.3.2010
Sec 49(4) New sub-section Cost of acquisition
w.e.f. 01-06-2010
Shares received without consideration or inadequate consideration
Shares received without consideration or inadequate consideration
Value which has been taken into account for thepurpose of section 56 (2) (viia)
Value which has been taken into account for thepurpose of section 56 (2) (viia)
Cost of AcquisitionCost of Acquisition
21CA. Kalyan Chakravarthy Vennety3.3.2010
56(2)(vii)(b) Income from other sources
w.e.f. 01-10-2009
Value of Property received Value of Property received
Property is received without any consideration
Property is received without any consideration
Taxed only ifTaxed only ifProperty
= Capital Asset only.Does not cover Stock in Trade
Condition of inadequate
consideration Removed
22CA. Kalyan Chakravarthy Vennety3.3.2010
56(2)(vii)(b) Income from other sources
w.e.f. 01-06-2010
w.e.f. 01-06-2010 Bullion includedw.e.f. 01-06-2010 Bullion included
Property is received without any consideration
Property is received without any consideration
Taxed only ifTaxed only ifProperty
= Capital Asset only.Does not cover Stock in Trade
Condition of inadequate
consideration Removed
23CA. Kalyan Chakravarthy Vennety3.3.2010
56(2)(vii)(b) Income from other sources
w.e.f. 01-06-2010
Where a Firm or Pvt Ltd. CoWhere a Firm or Pvt Ltd. Co
receivesreceives
In any PYIn any PYFrom any person(s)
From any person(s)
Shares of Pvt Ltd. CoShares of Pvt Ltd. Co
24CA. Kalyan Chakravarthy Vennety3.3.2010
56(2)(vii)(a) Income from other sources
w.e.f. 01-06-2010
Scenario 1 What is Chargeable to TaxWithout Consideration & Aggregate FMV>50,000
=The whole of the Aggregate FMV
Scenario 2 What is Chargeable to TaxFor a Consideration which is less than Aggregate FMV by
>50,000
=Aggregate FMV-Consideration
Proviso: This clause shall not apply to cases covered u/s
47
Expl’n: FMV meaning same as given in Expl’n to
clause (vii)
25CA. Kalyan Chakravarthy Vennety3.3.2010
Expl’n of Property Not applicable here.
Hence, covers Stock in Trade also.
Sec 72A (6A) New clauseC/f & Setoff in amalgamation/demerger
w.e.f. 1-04-2011
CompanyCompany
Six conditions satisfied?
Six conditions satisfied?
LLPLLP
Succeeded by Succeeded by
Can C/f & Setoff accumulated Loss & Dep'n
Can C/f & Setoff accumulated Loss & Dep'n
Proviso: fresh period of 8 years
will be available for set off of loss in the hands of LLP upon
conversion
26CA. Kalyan Chakravarthy Vennety3.3.2010
Sec 80A(7)Deductions claimed in Total Income
w.e.f. 01-04-2011
Claimed deduction under this sec?Claimed deduction under this sec?
Not AvailableNot Available
Deduction Sec 35 ADDeduction Sec 35 AD
27CA. Kalyan Chakravarthy Vennety3.3.2010
Sec 80CCFDeduction on long term infrastructure bonds
w.e.f. 01-04-2011
Limit = Rs.20,000 Limit = Rs.20,000
Rs.100,000 under Sec 80CCERs.100,000 under Sec 80CCE
In addition toIn addition to
28CA. Kalyan Chakravarthy Vennety3.3.2010
Sec 80DDeduction for Health Insurance Premia
w.e.f. 01-04-2011
Benefit ExtendedBenefit Extended
Central Government Health Scheme within Rs.15,000
Central Government Health Scheme within Rs.15,000
Contribution made toContribution made to
29CA. Kalyan Chakravarthy Vennety3.3.2010
Sec 80GGA Deduction in respect of certain donations
for scientific research or rural developmentw.e.f. 01-04-2011
Scope ExtendedScope Extended
Research in Research in
Social ScienceSocial Science
Statistical Research
Statistical Research
30CA. Kalyan Chakravarthy Vennety3.3.2010
Sec 80IB(10)(a)Deduction in respect of profits and gains from
certain industrial undertakings other than infrastructure development undertakings
w.e.f. 01-04-2010
Period of completionPeriod of completion
Extended fromExtended from
4 Years4 Years 5 Years5 Years31CA. Kalyan Chakravarthy Vennety3.3.2010
Sec 80IB(10)(d)Deduction in respect of profits and gains from
certain industrial undertakings other than infrastructure development undertakings
w.e.f. 01-04-2010
Built up Area of shops & commercial estb. included in Housing Project
Built up Area of shops & commercial estb. included in Housing Project
RevisedRevised
5% of the aggregate built-up area of the
housing project or
2,000 square feet, whichever is
less
5% of the aggregate built-up area of the
housing project or
2,000 square feet, whichever is
less
3% of the aggregate built-up area of the
housing project or
5,000 square feet, whichever is
higher
3% of the aggregate built-up area of the
housing project or
5,000 square feet, whichever is
higher32CA. Kalyan Chakravarthy Vennety3.3.2010
Sec 80ID(2)(i)Deduction in respect of profits and gains from business of hotels and convention centres in
specified areaw.e.f. 01-04-2011
Deadline for construction of the centre extended to 31st July, 2010
Deadline for construction of the centre extended to 31st July, 2010
33CA. Kalyan Chakravarthy Vennety3.3.2010
For special impetus to ensuing
Common Wealth Games
Sec 115JJA(7)Tax credit in respect of tax paid on deemed
income relating to certain companiesw.e.f. 01-04-2011
Company Company
Credit of MAT paid available?
Credit of MAT paid available?
LLPLLP
Succeeded by Succeeded by
NONO
34CA. Kalyan Chakravarthy Vennety3.3.2010
Sec 115JB(1)MAT
w.e.f. 01-04-2011
Minimum Alternative TaxMinimum Alternative Tax
IncreasedIncreased
15%15% 18%18%
35CA. Kalyan Chakravarthy Vennety3.3.2010
Sec 115WE(1B)FBT Assessmentw.e.f. 01-04-2010
Time limit for issuance of direction by Central Govt increased
to 31.03.2011
Time limit for issuance of direction by Central Govt increased
to 31.03.2011
36CA. Kalyan Chakravarthy Vennety3.3.2010
Sec 139(4C) Return of Income
w.e.f. 01-04-2011
Scope ExtendedScope Extended
Research Association Research Association
Social ScienceSocial Science
Statistical Research
Statistical Research
37CA. Kalyan Chakravarthy Vennety3.3.2010
142A(1)Estimate by Valuation Officer
in certain casesw.e.f. 01-07-2010
AO is now empowered to make reference to the
Valuation Officer for making an estimate of FMV
of any property referred to in sub-section (2) of section 56 of the Act.
AO is now empowered to make reference to the
Valuation Officer for making an estimate of FMV
of any property referred to in sub-section (2) of section 56 of the Act.
38CA. Kalyan Chakravarthy Vennety3.3.2010
Sec 143(1B)Assessment
w.e.f. 01-04-2010
Time limit for issuance of direction relating to processing of returns By
Central Govt increased to 31.03.2011
Time limit for issuance of direction relating to processing of returns By
Central Govt increased to 31.03.2011
39CA. Kalyan Chakravarthy Vennety3.3.2010
Sec 143(1B)Assessment
w.e.f. 01-04-2011
Time limit for issuance of direction relating to processing of returns By
Central Govt increased to 31.03.2011
Time limit for issuance of direction relating to processing of returns By
Central Govt increased to 31.03.2011
Proviso: AO shall not withdraw exemption u/s10(21) unless intimation has been given by him to the prescribed authority and
the approval granted to the association has been withdrawn
40CA. Kalyan Chakravarthy Vennety3.3.2010
Sec 143(3)Assessment
w.e.f. 01-04-2011
References to scientific research association
are proposed to be substituted by references to
research association
References to scientific research association
are proposed to be substituted by references to
research association
41CA. Kalyan Chakravarthy Vennety3.3.2010
Changes in TDS Threshold Limitsw.e.f. 1-07-2010
SEC NATURE OF PAYMENT EXISTING THRESHOLD
PROPOSED THRESHOLD
194B Winning from Lottery & crossword puzzles 5,000 10,000
194BB Winnings from Horse Race 2,500 5,000
194C Payment to Contractors20,000
[for single transaction]
30,000
194C Payment to Contractors50,000
[for aggregate transactions]
75,000
194D Insurance Commission 5,000 20,000
194H Commission or brokerage 2,500 5,000
194I Rent 1,20,000 1,80,000
194J Fess for professional or technical services 20,000 30,000
42CA. Kalyan Chakravarthy Vennety3.3.2010
Sec 201(1A) Consequences of failure to
deduct or pay taxw.e.f. 01-07-2010
Interest on delayed DepositInterest on delayed Deposit
Rate increasedRate increased
12% p.a.12% p.a. 18% p.a.18% p.a.
43CA. Kalyan Chakravarthy Vennety3.3.2010
Sec 203(3) & 206(C)Certificate of TDS
w.e.f. 01-04-2010
It is proposed to omit the sub-section (3)
which provides that on or after 1st April, 2010 there is no need to issue
a TDS Certificate
It is proposed to omit the sub-section (3)
which provides that on or after 1st April, 2010 there is no need to issue
a TDS Certificate
44CA. Kalyan Chakravarthy Vennety3.3.2010
Sec 245Aexpression “case”
w.e.f. 01-06-2010
The expression “case” amended so as to include Assessment
in case of search or requisition
The expression “case” amended so as to include Assessment
in case of search or requisition
45CA. Kalyan Chakravarthy Vennety3.3.2010
It alsoremoves the prohibition in cases where the AO has to proceed u/s. 153C of the
Act.
Sec 245D(4A)Procedure on receipt of an application for
settlement of casesw.e.f 01-06-2010
The SC shall make an OrderThe SC shall make an Order
47CA. Kalyan Chakravarthy Vennety3.3.2010
Sec 256(2A)Statement of case to the High Court
w.e.f. 01-06-1981
48CA. Kalyan Chakravarthy Vennety3.3.2010
Sec 260A(2A)Statement of case to the High Court
w.e.f. 01-10-1998
49CA. Kalyan Chakravarthy Vennety3.3.2010
271BPenalty for failure toget accounts audited
w.e.f. 01-04-2011
50CA. Kalyan Chakravarthy Vennety3.3.2010
Sec 282B Document Identification No.
w.e.f 01-10-2010
Effective Date for use of computer generated
Document Identification Number extended to 01-10-2011
Effective Date for use of computer generated
Document Identification Number extended to 01-10-2011
51CA. Kalyan Chakravarthy Vennety3.3.2010
Rule 5(b) First ScheduleComputation of Profits & Gains of other
insurance Business
52CA. Kalyan Chakravarthy Vennety3.3.2010
Sec 22A(b)expression “case”
w.e.f 01-06-2010
Definition of “case” altered to include the proceedings of
assessment or reassessment which may be initiated on the basis of
a search or requisition
Definition of “case” altered to include the proceedings of
assessment or reassessment which may be initiated on the basis of
a search or requisition
Expl’n amended to specify the date on which the proceedings for assessment or reassessment shall be deemed to have been initiated and concluded pursuant to a search or requisition
54CA. Kalyan Chakravarthy Vennety3.3.2010
Sec 22DProcedure on receipt of an application for
settlement of casesw.e.f 01-06-2010
The SC shall make an OrderThe SC shall make an Order
55CA. Kalyan Chakravarthy Vennety3.3.2010
Sec 27AStatement of case to the High Court.
w.e.f. 01-10-1998
57CA. Kalyan Chakravarthy Vennety3.3.2010
Major Amendments
• Amendment -sub-section 2 of Section 6 A‒The assessing authority should satisfy himself that the declaration filed by a dealer is true and there is no inter-state sale
•Insertion –sub-section 3 of Section 6 A ‒Assessing authority is empowered to do re-assessment on discovery of new facts or revision by higher authority•Insertion of new Chapter V A to the CST Act, - “Appeals to the Highest Appellate Authority of the State”•The Central Sales Tax Appellate Authority has been
empowered to direct refund of tax collected
• Amendment -sub-section 2 of Section 6 A‒The assessing authority should satisfy himself that the declaration filed by a dealer is true and there is no inter-state sale
•Insertion –sub-section 3 of Section 6 A ‒Assessing authority is empowered to do re-assessment on discovery of new facts or revision by higher authority•Insertion of new Chapter V A to the CST Act, - “Appeals to the Highest Appellate Authority of the State”•The Central Sales Tax Appellate Authority has been
empowered to direct refund of tax collected
3.3.2010 CA. Kalyan Chakravarthy Vennety 59
New services introduced in the tax net –effective from a date to be notified
• Commercial use or exploitation of any event•Copyrights on recording of cinematographic films/sound
recording•Health Services for employees of business entities/services•Services of maintenance of medical records•Electricity Exchange Services•Additional services provided by a builder to the prospective
buyers•Brand Endorsement Services•Promotion, marketing or organizing of games of chance
including lottery
• Commercial use or exploitation of any event•Copyrights on recording of cinematographic films/sound
recording•Health Services for employees of business entities/services•Services of maintenance of medical records•Electricity Exchange Services•Additional services provided by a builder to the prospective
buyers•Brand Endorsement Services•Promotion, marketing or organizing of games of chance
including lottery
3.3.2010 CA. Kalyan Chakravarthy Vennety 61
THANK YOU !
CA. Kalyan Chakravarthy VennetyBCOM, ACA, DISA(ICAI), CISA
V R Jogeswara Rao & Co., Chartered AccountantsPhone: 99700-88669
Email: [email protected]
CA. Kalyan Chakravarthy VennetyBCOM, ACA, DISA(ICAI), CISA
V R Jogeswara Rao & Co., Chartered AccountantsPhone: 99700-88669
Email: [email protected] 63CA. Kalyan Chakravarthy Vennety
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