Finance Bill 2010 Kalyan 97 2003

THE JALNA CA CPE STUDY CHAPTER

Presentation on
Proposed Finance Bill 2010
Direct Taxes
3rd March, 2010

CA. Kalyan Chakravarthy Vennety

INCOME TAX
ACT, 1961
3.3.2010 CA. Kalyan Chakravarthy Vennety 2

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 10%
not exceed Rs. 5,00,000
(3) where the total income exceeds Rs. 5,00,000 but does 20%
not exceed Rs. 8,00,000
(4) where the total income exceeds Rs. 8,00,000 30%

Increase in
Surcharge on Income Tax
Total income > 1 Crore Rate
Domestic company 10%

Now

Total income > 1 Crore Rate
Domestic company 7.5%


Sec 2(15) Charitable Purpose
w.e.f. 1-04-2009
Restriction of the definition of
“Charitable Purpose”

Not Apply

if aggregate receipts do not exceed Rs. 10 Lacs


Sec 9
Income deemed to accrue or arise in India
w.e.f. 01-06-1976
Income from royalties, interest,
fee for technical services

Ishikawajima-
Harima Heavy
Include in Total Income of NR Industries Ltd
case (SC)

Whether or not Non-Resident rendered
service in India

Sec 10(21)
Incomes not included in Total Income
Date of effect: 01-04-2011
Approved
Research Association

Having
object

Social Statistical
science Research

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)

Now

Cancellation provided where any Trust/Institution
has obtained Reg’n any time u/s 12A

Sec 32
Depreciation
w.e.f. 01-04-2011

Company

LLP

Dep’n as if no succession has taken place

Sec 35
Weighted Deduction on
Expenditure on Research
w.e.f. 01-04-2011

125% Now 175%

150% Now 200%


Sec 35AD
Expenditure on specified business
w.e.f. 01-04-2010
Cross-country Total Capacity
Gas or Oil should be as per
P&NG
pipeline network Reg Board

New specified Hotel
Business 2Star or above


Sec 35DDA
Amortisation of Exp under VRS
w.e.f. 01-04-2011

Company

LLP

Deduction as if no succession has taken place


Sec 40(a)(ia)
Disallowance of Exp
w.e.f. 01-04-2010

TDS Deducted

But not paid

on or before the due date of filing of return


Yes, you all guessed it right !
He is the Tax Auditor


Sec 44AB
Tax Audit Provision
w.e.f. 01-04-2011

(a) in clause (a), for the words “forty
lakh rupees”, the words “sixty lakh
rupees” shall be substituted;

(b) in clause (b), for the words “ten
lakh rupees”, the words “fifteen lakh
rupees” shall be substituted

Sec 44AD
Tax Audit Provision
w.e.f. 01-04-2011

in the Explanation, in clause
(b), in sub-clause (ii), for the
words “forty lakh rupees”, the
words “sixty lakh rupees”
shall be substituted

Sec 44 BB
Business of Exploration of Mineral Oils
w.e.f. 01-04-2011

Sec 44 DA applicable?

Sec 44 BB

Not Applicable


Sec 44 DA
Royalties etc. in case of non residents
w.e.f. 01-04-2011

Sec 44 BB applicable?

Sec 44 DA

Not Applicable


Sec 47(xiii b)
Transactions not regarded as transfer
w.e.f. 01-04-2011
Company

Transfer of Capital / Intangible Asset

LLP
Six conditions? Not a Transfer

Sec 47(xiii b)
Transactions not regarded as transfer
w.e.f. 01-04-2011
Six conditions

1. All A&L of co. become A&L of LLP
2. All Shareholders become Partners of LLP
3. Shareholders do not receive any compensation in any form
4. Aggregate of PSR of shareholders should not be less than 50% for
5years
5. Turnover of the company any of the 3 years prior to conversion
does not exceed Rs. 60 Lacs
6. No amount is paid to partners out of accumulated balance of the
company on the date of conversion for a period of 3 years


Sec 49(4) New sub-section
Cost of acquisition
w.e.f. 01-06-2010

Shares received without consideration
or inadequate consideration

Cost of Acquisition

Value which has been taken into account for the
purpose of section 56 (2) (viia)

56(2)(vii)(b)
Income from other sources
w.e.f. 01-10-2009

Value of Property received

Condition of Property
inadequate Taxed only if = Capital Asset only.
consideration Does not cover
Removed Stock in Trade

Property is received
without any consideration

56(2)(vii)(b)
w.e.f. 01-06-2010

w.e.f. 01-06-2010 Bullion included

Condition of Property
inadequate Taxed only if = Capital Asset only.
consideration Does not cover
Removed Stock in Trade

Property is received
without any consideration

56(2)(vii)(b)
w.e.f. 01-06-2010

Where a Firm or Pvt Ltd. Co

receives
From any
In any PY person(s)
Shares of Pvt Ltd. Co


Proviso: This clause 56(2)(vii)(a) Expl’n: FMV
meaning same as
shall not apply to
cases covered u/s 47 Income from other sources given in Expl’n to
clause (vii)
w.e.f. 01-06-2010

Scenario 1 What is Chargeable to Tax
Without Consideration & =The whole of the Aggregate
Aggregate FMV>50,000 FMV

Scenario 2 What is Chargeable to Tax
For a Consideration which is =Aggregate FMV-Consideration
less than Aggregate FMV by Expl’n of Property
>50,000 Not applicable here.
Hence, covers
Stock in Trade also.

Sec 72A (6A) New clause
C/f & Setoff in amalgamation/demerger
Proviso: fresh period
w.e.f. 1-04-2011
of 8 years
will be available for Company
set off of loss in the
hands of LLP upon
conversion

Succeeded by

Six conditions LLP Can C/f & Setoff
satisfied? accumulated
Loss & Dep'n

Sec 80A(7)
Deductions claimed in Total Income
w.e.f. 01-04-2011

Claimed deduction under this sec?

Deduction Sec 35 AD

Not Available


Sec 80CCF
Deduction on long term infrastructure bonds
w.e.f. 01-04-2011

Limit = Rs.20,000

In addition to

Rs.100,000 under Sec 80CCE


Sec 80D
Deduction for Health Insurance Premia
w.e.f. 01-04-2011

Benefit Extended

Contribution made to

Central Government Health Scheme
within Rs.15,000

Sec 80GGA
Deduction in respect of certain donations
for scientific research or rural development
w.e.f. 01-04-2011
Scope Extended

Research in

Social Statistical
Science Research


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 completion

Extended from

4 Years 5 Years

Sec 80IB(10)(d)
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
5% of the 3% of the
aggregate built- aggregate built-
up area of the up area of the
housing project Revised housing project
or or
2,000 square feet, 5,000 square feet,
whichever is whichever is
less higher

Sec 80ID(2)(i)
business of hotels and convention centres in
specified area For special impetus
w.e.f. 01-04-2011 to ensuing
Common Wealth
Games

Deadline for construction of the centre
extended to 31st July, 2010


Sec 115JJA(7)
Tax credit in respect of tax paid on deemed
income relating to certain companies
w.e.f. 01-04-2011
Company

Succeeded by

LLP
Credit of MAT
paid available? NO

Sec 115JB(1)
MAT
w.e.f. 01-04-2011

Minimum Alternative Tax

Increased

15% 18%


Sec 115WE(1B)
FBT Assessment
w.e.f. 01-04-2010

Time limit for issuance of direction
by Central Govt increased
to 31.03.2011


Sec 139(4C)
Return of Income
w.e.f. 01-04-2011

Scope Extended

Research Association

Social Statistical
Science Research

142A(1)
Estimate by Valuation Officer
in certain cases
w.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.


Sec 143(1B)
Assessment
w.e.f. 01-04-2010

relating to processing of returns By
Central Govt increased to 31.03.2011


Sec 143(1B)
Assessment
w.e.f. 01-04-2011

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


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


Changes in TDS Threshold Limits
w.e.f. 1-07-2010
EXISTING PROPOSED
SEC NATURE OF PAYMENT
THRESHOLD THRESHOLD
Winning from Lottery &
194B 5,000 10,000
crossword puzzles
194BB Winnings from Horse Race 2,500 5,000
20,000
194C Payment to Contractors [for single 30,000
transaction]
50,000
194C Payment to Contractors [for aggregate 75,000
transactions]
194D Insurance Commission 5,000 20,000

194H Commission or brokerage 2,500 5,000

194I Rent 1,20,000 1,80,000
Fess for professional or
194J 20,000 30,000
technical services

Sec 201(1A)
Consequences of failure to
deduct or pay tax
w.e.f. 01-07-2010
Interest on delayed Deposit

Rate increased

12% p.a. 18% p.a.


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


Sec 245A
expression “case” It also
removes the prohibition in
w.e.f. 01-06-2010 cases where the AO has to
proceed u/s. 153C of the
Act.

The expression “case” amended so as
to include Assessment
in case of search or requisition


Sec 245C
Settlement of cases
w.e.f 01-06-2010
Application can be made before S-Commission
In case of sec 132 In case of sec 132A

If additional amount of income tax payable
Exceeds Rs.50 Lacs

Other cases
Exceeds Rs. 10 Lacs

Sec 245D(4A)
Procedure on receipt of an application for
settlement of cases
w.e.f 01-06-2010
The SC shall make an Order
In respect of an In respect of an
application made on or application made
after 1st June, 2007 on or after 1st June, 2010
But before 1st June, 2010

Within 12 months Within 18 months


Sec 256(2A)
Statement of case to the High Court
w.e.f. 01-06-1981

(6 months from if it is satisfied
High Court can the date of that there was
receipt of the
admit an order of Tribunal
sufficient
application refusing to state cause for not
after the the case on the filing the same
expiry ground that no within the said
question of law period
arises)


Sec 260A(2A)
Statement of case to the High Court
w.e.f. 01-10-1998

if it is satisfied
High Court is from the date of that there was
empowered to receipt of the sufficient
admit an order appealed cause for not
appeal after against filing the same
120 days within the said
period


271B
Penalty for failure to
get accounts audited
w.e.f. 01-04-2011

Penalty equal
to 0.50% of the or of the gross
total sales, receipts in or A sum of Rs
turnover or profession, in 150,000/-
gross such previous whichever is
receipts, as the year less
case may be, in
business

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


Rule 5(b) First Schedule
Computation of Profits & Gains of other
insurance Business
Any gain or loss on realisation of investments
if such gain or
to the profit
Shall be added loss is not
and loss
or deducted credited or
account
debited
Any provision for diminution in the value of
investment
debited to the profit
shall be added back
and loss account


WEALTH TAX
ACT, 1957

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

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


Sec 22D
Procedure on receipt of an application for
settlement of cases
w.e.f 01-06-2010
The SC shall make an Order
In respect of an In respect of an
application made on or application made
after 1st June, 2007 on or after 1st June, 2010
But before 1st June, 2010

Within 12 months Within 18 months


Sec 27(3B)
Reference to the High Court.
w.e.f. 01-06-1981

(90 days from the if it is satisfied
date of receipt of that there was
High Court can the order of
Tribunal refusing
sufficient cause
admit an
to state the case for not filing
application
on the ground the same
after the expiry
that no question within the said
of law arises) period


Sec 27A
Statement of case to the High Court.
w.e.f. 01-10-1998


CENTRAL SALES
TAX ACT, 1956

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


SERVICE TAX
ACT

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


End of Presentation.


THANK YOU !

CA. Kalyan Chakravarthy Vennety
BCOM, ACA, DISA(ICAI), CISA
V R Jogeswara Rao & Co., Chartered Accountants
Phone: 99700-88669
Email: ca.vkalyanc@gmail.com

Finance Bill 2010 Kalyan 97 2003

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