Wednesday, July 15, 2009

Tax Rates

  • Basic exemption limits in personal tax is proposed to be raised. Accordingly, the new exemption limits in case of different categories of individual assesses shall be as under:

Category of Assessee              Existing Limit                New Limit

Senior Citizens                         2,25,000                        2,40,000                

Women Assessees                   1,80,000                         1,90,000

Other Assessees                       1,50,000                        1,60,000

  • Surcharge of 10 percent in respect of individuals and HUFs having income exceeding Rs. 10 lacs and on firms having total income exceeding Rs. 1 Crore has been eliminated.
  • Corporate Tax Rates remain unchanged
  • Tax rate for Minimum Alternate Tax (MAT) u/s 115JB is increased from 10 per cent of book profits to 15 per cent of book profits.
  • The period allowed for carry forward of tax credit under section 115JAA under MAT is extended from 7 yrs to 10 yrs.
  • A New clause has been inserted in explanation 1 to section 115JB (2) to provide that any provision debited in the profit and loss account for diminution in the value of any asset shall be added to the net profits for computation of book profits for MAT.
  • Fringe Benefit Tax (FBT) abolished w.e.f. Assessment Year 2010-11 (F.Y 2009-10).
  • Commodity Transaction Tax (CTT) is to be abolished.
  • All purchase and sale of equity by New Pension Scheme (NPS) Trust to be exempt from Securities Transaction Tax (STT).
  • Threshold limit for payment of Advance Tax raised from Rs.5,000/- to Rs.10,000/-.
Deductions/Exemptions Extended
  • Deduction under section 80DD in respect of maintenance of a dependent with severe disability raised from 75,000 to Rs. 1 Lakhs.
  • Sun-set clauses for deduction in respect of export profits under section 10A and section 10B being extended for financial year 2010-11.
  • Donations to electoral trusts to be allowed as a 100% deduction from income under section 80GGB and section 80GGC.
  • Deduction under section 80E in respect on interest on loans for higher education to be extended to all fields of study, including vocational studies.
  • Tax holiday under section 80IB (9) available in respect of profits arising from commercial production or refining of mineral oil, to be extended to natural gas with retrospective effect.
  • Scope of provisions relating to weighted deduction of 150% extended to all manufacturing businesses except for a small negative list.
Tax Deducted at Source
  • The distinction between contractor and sub- contractor removed and uniform rate of TDS prescribed for payment to contractor and sub-contractors u/s 194C. The new rates w.e.f.
  • 1st October, 2009 are as under:
  • 1% where payment made to or credit to an individual or HUF.
  • 2% where payment made / credit to person other than individual or HUF.
The rate of TDS u/s 194I on payment by way of rent of machinery, plant and equipment is proposed
to be reduced from 10% to 2% w.e.f. 01.10.2009. Also TDS on payment by way of rent of land,
building or furniture is proposed to be reduced from 15% / 20% to 10% w.e.f. 01.10.2009, irrespective of who the payee is.
  • Rate of TDS u/s 194A on interest other than on securities has been reduced from 20% to 10% w.e.f. the date of enactment of Finance Act.
  • No surcharge and cess to be taken into account in case of TDS on non salary payments to resident taxpayers.
  • Payment to transport operators exempted from the purview of TDS where transporter furnishes his PAN to the deductor.
  • Non furnishing of PAN by the deducted shall result in higher TDS @ 20% w.e.f. 1st April, 2010.
  • Section 56(vi) related to gifts has been amended to include any kind of property (movable or immovable) w.e.f. 1.10.2009.
  • Basic exemption limit under Wealth Tax is increased from Rs. 15 lakhs to Rs. 30 lakhs.
  • Limit for dis allowance of cash expenditure u/s 40(A)(3A) has been increased from Rs.20,000/- to Rs.35,000/- in case of transporters.


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