Union Budget 2010-11:Amendments to Income Tax Act

1.Part III to Schedule I : Advance taxes & TDS u/s 192

Advance taxes for the FY 2010-11 and TDS u/s 192 from salary shall be made at the following rates:    In case of Individuals, HUF, AOP/BOI & Artificial juridical person: Slab of Income Rate of Income tax Upto Rs. 160,000# Nil Rs. 160,001 to Rs. 500,000   10% RS. 500,001 to Rs. 800,000 20% Rs. 800,001 & above 30% Surcharge irrespective of the total income Nil # In case of individual being woman resident in India and below the age of 65 years at any time during the PY, the basis exemption limit is Rs. 190,000. #In case of individual, being resident in India, who is age of 65 years or more at any time during the PY, the basic exemption limit is Rs. 2,40,000. ·         In case of Partnership firms [Including LLP], the rate of tax shall be 30%. Surcharge shall be NIL. ·         In case of companies, the rate of taxes shall be same as specified in the Finance Act 2009. Further, Surcharge has been reduced to 7.5% in case of domestic companies [2.5% in case of non domestic companies continues], if total income of the company exceeds Rs. One crore. Education cess and SHEC shall be continued to be levied in all cases.

2.Sec.2(15) :Definition of Charitable purpose

The term Charitable Purpose has been amended as follows: advancement of any other object of general public utility included in definition is not a charitable purpose if the activity involves carrying of trade, commerce or business or rendering any service in relation thereto for consideration irrespective of nature of use or application, or retention of income from such activity. However, if total receipts from aforesaid activity do not exceed Rs. 10 Lakhs in the PY, the said activity shall continue to be charitable in nature.

3. Sec.40(a)(ia) :Disallowance for non deduction of TDS

   If the tax deducted at any time during the PY [not last month of PY] is remitted on or before   the due date specified u/s 139(1), no disallowance

4.Sec.35(1)(ii): Contribution to approved institutions for scientific research

   

   Deduction eligibility has been increased from 125% to 175%

5.Sec.35(1)(iii) & 10(21) :Contribution to approved research associations

Income of approved research association engaged in undertaking research in social science or statistical research shall be exempt u/s 10(21) subject to prescribed conditions

6. Sec.35(2AB) :Weighted deduction

The benefit of 150% deduction is extended to all companies engaged in the business of manufacture or production of any article or thing except those specified in XI schedule [Finance Act 2009]Investment linked deduction In the current budget, the quantum of weighted deduction has been raised from 150 % to 200%

7. Sec.35AD : Investment linked deduction

   

   

100% deduction shall be allowed in respect of any capital expenditure [other than on land, goodwill or financial instrument] incurred for the purposes of specified business:

   The list of specified business has been extended to include the business of building and  operating a new hotel of 2 star category or above, anywhere in India, which starts functioning  after 1.4.2010.

8. Sec.45 : Exempt Transfer

Transfer of assets on conversion of a company to LLP in accordance with section 56 and 57 of LLP Act shall not be regarded as transfer subject to following conditions: ·         Total turnover, gross receipts  or sales of the company do not exceed Rs. 60 Lakhs in any of the 3 preceding PY; ·         The shareholder of the company become the partners of LLP in same proportion as their shareholding in the company; ·         No consideration other share in profit and capital contribution arises to partners; ·         All assets and liabilities of the company become the assets and liabilities of the LLP; ·         No amount is paid, either directly or indirectly, to the partGifts Receivedners of the LLP from accumulated profits of the company for a period of 3 years from the date of conversion; ·         The erstwhile shareholders of the company continue to be entitled to receive atleast 50% of the profits of the LLP for a period of 5 years from the date of conversion The LLP fulfilling the above mentioned conditions is allowed the benefit of carry forward of business loss and unabsorbed depreciation. No MAT credit of the company shall be allowed to be availed in the hands of LLP. Aggregate depreciation allowed to company and LLP in any PY shall not exceed the depreciation calculated at prescribed rates if the conversion had not taken place.

Actual cost of the block in the hands of LLP shall be WDV in case of predecessor company on the date of conversion.

9. Sec.56(2) : Gifts Received

   

  

Transfer of shares of a company in which public are not substantially interested shall be covered by the provisions of section 56(2)(vii) if: ·         Such shares are transferred to a firm or a company in which public are not substantially interested; ·         Transfer is for no or inadequate consideration.

The cost of such shares in the hands of recipient shall be the value which has been taken into account and subject to tax u/s 56(2).

10. Sec. 56(2) : Gifts Received

The provisions of section 56(2) shall be applicable to gift of property which are in nature of capital asset of the recipient and, therefore, would not apply to stock in trade, raw materials and consumable stores of any business of such recipient.