Personal tax
- Personal income-tax slabs are proposed to be revised as under:
Existing Slabs Revised Slabs Rate %
Up to 1,60,000 Up to 1,60,000 Nil
1,60,001-3,00000 1,60,000-5,00,000 10%
3,00,001-5,00,000 5,00,001-8,00,000 20%
Above 5,00,000 Above 8,00,000 30%
- Additional deduction up to INR 20,000 prescribed for investment in notified long term infrastructure bonds for individuals or Hindu Undivided Families
- Section 80D benefit now available in respect of contribution made to Central Government Health Scheme.
- Corporate Tax Rate remains unchanged
- Surcharge on domestic companies reduced to 7.5% from 10% where income exceeds Rs.10,000,000
- Rate of MAT in case of Companies is proposed to be increased from 15% to 18%
- Technical services, whether or not rendered in India, shall be taxable in India when relating to or utilizing in India. This will apply retrospectively.
- The threshold limit for getting the accounts audited in case of persons carrying on business increased to INR 6,000,000 from INR 4,000,000 and in case of persons carrying on a profession to INR 1,500,000 from INR 1,000,000.
- Non compliance penalty for tax audit increased from Rs 1 lakh to Rs 1.5 lakh.
- Threshold for presumptive taxation scheme available to small businesses enhanced from Rs 40 lakh to Rs 60 lakh.
- Effective from 1 June 2010, in computing the income from other sources, transactions of transfer of shares of closely held company without or for inadequate consideration to a firm or to a closely held company to be taxable. The taxable income for the transferee is the fair value if the transfer is without consideration or the difference between the fair value and inadequate consideration over the stipulated threshold of INR 50,000.
- Interest, commission or brokerage, rent, royalty, fees for professional or technical services, payments to contractors or subcontractor incurred and payable to residents during the financial year to be deductible if the underlying tax withheld at source during the financial year, is paid on or before the due date of filing of the return of income
- Effective 1 July 2010, the interest rate for delay in deduction or payment of withholding tax is revised from 1% to 1.5% per month from the date on which tax is deducted till its payment. For the period from the date of obligation to deduct to the date of deduction of tax at source, the interest rate continues to be at 1% per month.
- The conversion of a private company or unlisted public company (Company) into Limited Liability Partnership to be exempt from Capital Gain tax, subject to the following:
- The total sales or turnover or gross receipts of the company do not exceed INR 6,000,000 in any of the immediate three preceding previous years
- All the assets and liabilities of the company before conversion become those of the LLP
- All the shareholders of the company become partners of LLP with their capital contribution and profit-sharing ratio remaining same as their shareholding in the company
- Apart from the above, the shareholders of the company do not receive any other consideration or benefit, directly or indirectly
- The aggregate profit sharing ratio of the shareholders of the company in LLP to be minimum 50% in the subsequent five years
- The partners do not draw any amount out of accumulated profit on the date of conversion in the subsequent three year
- Benefit of weighted deduction at 1.25 times of contribution made to approved association now available to those engaged in social science and research.
- The weighted deductions for scientific research and development increased as under:
- For expenditure incurred by eligible company in the recognized in house research and development facility from 150% to 200%
- For payments to the National Laboratory or a University or an Indian Institute of Technology or a Research Association from 125% to 175%
- For payments to Approved Research Associations, undertaking statistical research to 125%.
- Eligible deduction for housing project approved on or after 1 April 2005, the period for completion of such a project extended from 4 years to 5 years post approval by the local authority and the permissible built-up area of shops and other commercial establishments, enhanced to 3% of the aggregate built-up area of the housing project or 5,000 sq. ft, whichever is higher. (Earlier the permissible built-up area for such purposes was 2% of the aggregate built-up area of the housing project or 2,000 sq. ft, whichever is less).
- The prescribed date for starting functioning of a hotel or convention centre located in the specified area for claiming deduction u/s 80ID has been extended from 31st March 2010 to 31 July 2010 w.e.f AY 2011-12
- It is proposed that the amendments made under section 10AA(7) replacing the words "by the assessee" with "by the undertaking" in the formula for computing exempted profits in case of SEZ units w.e.f 1st April 2010 will be applicable retrospectively with effect from AY 2006- 07 which is the first year for claim of exemption by SEZ units under Section 10AA.
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