INCOME TAX REPORTS (ITR) HIGHLIGHTS ISSUE DATED 1-3-2010
F Budget Speech of Minister of Finance for 2010-11 :
Part - A 1
Part - B 21
F FINANCE BILL, 2010 33
Notes on Clauses 79
Memorandum explaining the provisions in the Finance Bill, 2010 110
HIGHLIGHTS OF FINANCE BILL, 2010
DIRECT TAXES
Rates of income-tax for A. Y. 2011-12
F individuals, HUFs, AOPs and BOIs : up to Rs. 1,60,000 (Rs. 1,90,000 for women residents and Rs. 2,40,000 for senior citizens), nil ; Rs. 1,60,001 to Rs. 5,00,000, 10 per cent. ; Rs. 5,00,001 to Rs. 8,00,000, 20 per cent. ; and above Rs. 8,00,000, 30 per cent.
F no change in rate of tax for firms, co-operative societies, local authorities and companies ; surcharge on domestic companies reduced to 7.5 %
Charitable purpose
F "the advancement of any other object of general public utility" remains "charitable purpose" if total receipts from activity in nature of trade, commerce or business, etc. do not exceed Rs. 10 lakhs in previous year : s. 2(15) : wref 1-4-2009
Registration of trusts
F Commissioner can cancel registration granted under section 12A : s. 12AA : 1-6-2010
Weighted deduction for scientific research and development
F for expenditure on approved in-house research and development facility, increased from 150% to 200% : s. 35(2AB)
F for payment to approved scientific research association or approved university, college or other institution and payment to a National Laboratory or a university or an Indian Institute of Technology, increased from 125% to 175% : s. 35(1)(ii), (2AA) :
1-4-2011
Weighted deduction on payments to associations engaged in research in social science or statistical research
F approved association undertaking research in social science or statistical research included : ss 10(21), (23C), 35(1)(ii), (iii), 80GGA : 1-4-2011
Investment-linked deduction for specified business
F business of building and operating a new hotel of two-star or above category, anywhere in India included : s. 35AD : 1-4-2011
Deduction for subscription to long-term infrastructure bonds
F subscription to long-term infrastructure bonds notified by Central Government up to Rs. 20,000 deductible for individuals and HUFs in addition to existing limit of Rs. 1 lakh for tax saving investments : new s. 80CCF : 1-4-2011
Deduction of contribution to Central Government Health Scheme
F contribution made to CGHS deductible : s. 80D : 1-4-2011
Developing and building housing projects
F period for completion of project increased from 4 years to 5 years ; built-up area of shops and commercial establishments in housing project to be three per cent. of aggregate built-up area of the housing project or 5000 sq. ft., whichever is higher : 80-IB(10) : 1-4-2010
Deduction of profits of hotel or convention centre in National Capital Territory
F date by which hotel has to start functioning or convention centre to be constructed extended from 31st March, 2010 to 31st July, 2010 : 80-ID : 1-4-2011
Limit of turnover or gross receipts for compulsory audit of accounts and presumptive taxation
F threshold limit for compulsory audit of accounts from Rs. forty lakh to Rs. sixty lakh for business and from Rs. ten lakh to Rs. fifteen lakh for persons carrying on profession ; maximum penalty for failure to get accounts audited or to furnish audit report increased from Rs. one lakh rupees to Rs. one lakh fifty thousand : ss. 44AB, 271B : 1-4-2011
F threshold limit of total turnover or gross receipts for presumptive taxation increased from Rs. forty lakh to Rs. sixty lakh : s. 44AD : 1-4-2011
Non-resident providing services or facilities in connection with prospecting for, or extraction or production of, mineral oil
F s. 44BB not to apply to income covered under s. 44DA : ss. 44BB(1), 44DA, 115A : 1-4-2011
Non-resident
F income deemed to accrue or arise in India under section 9(1)(v) or (vi) or (vii) whether or not non-resident has a residence or place of business or business connection in India or non-resident has rendered services in India : s. 9, Expln. : 1-6-1976
Conversion of company into limited liability partnership
F transfer of assets on conversion of company into LLP not transfer for purposes of capital gains tax subject to conditions ; cost of acquisition for LLP to be cost for which company acquired asset : ss. 47, 47A, 49 : 1-4-2011
F depreciation allowable to company and LLP not to exceed depreciation calculated as if conversion had not taken place ; actual cost of block of assets of LLP to be written down value of block of assets of predecessor company on date of conversion : ss. 32, 43(6) : 1-4-2011
F carry forward and set-off of business loss and unabsorbed depreciation to the successor LLP which fulfills conditions : s. 72A : 1-4-2011
F no tax credit under section 115JAA allowable to successor LLP : ss. 115JAA : 1-4-2011
Transactions without consideration or for inadequate consideration
F transactions in shares of private company for inadequate consideration or without consideration where recipient is firm or private company included : transactions for business reorganization, amalgamation and demerger excluded : s. 56(2)(vii) : 1-6-2010
F value of such shares included in definition of income : s. 2(24) :
1-6-2010
F stock-in-trade, raw material and consumable stores of business of recipient excluded : s. 56(2)(vii) : 1-10-2009
F receipt of immovable property for inadequate consideration excluded : s. 56(2)(vii) : 1-10-2009
F transactions in bullion included : s. 56(2)(vii) : 1-6-2010
F reference to Valuation Officer for estimate of value of property received without consideration or for inadequate consideration : s. 142A(1) : 1-7-2010
Minimum alternate tax
F rate increased to eighteen per cent from fifteen per cent : s. 115JB : 1-4-2011
Disallowance of expenditure for failure to deduction tax at source
F no disallowance if after deduction in previous year, it is paid on or before due date of filing return under section 139(1) : s. 40(a)(ia) : 1-4-2010
F rate of interest for non-payment of tax after deduction increased from 1% to 1½% per month : s. 201(1A) : 1-7-2010
Deduction of tax at source
F threshold limit of payments for deduction of tax at source raised : sections 194B (winnings from lottery or crossword puzzle from Rs. 5,000 to Rs. 10,000), 194BB (winnings from horse race from Rs. 2,500 to Rs. 5,000), 194C (payment to contractors from Rs. 20,000 30,000 for single transactions and 50,000 to Rs. 75,000 for aggregate of transactions in a year), 194D (insurance commission from Rs. 5,000 to Rs. 20,000), 194H (commission or brokerage from Rs. 2,500 to 5,000), 194-I (rent from Rs. 1,20,000 to Rs. 1,80,000) and 194J (fees for professional or technical services from Rs. 20,000 to Rs. 30,000) : 1-7-2010
Certificate of tax deduction and tax collection at source
F deductor/collector to continue to furnish TDS/TCS certificates to the deductee/collectee after 1st April, 2010 : ss. 203(3), 206C(5) : 1-4-2010
Settlement of cases
F proceedings as result of requisition of books of account or docu-ments or assets included : additional amount of income-tax payable on income disclosed in application should exceed Rs. fifty lakh : time for completion of proceedings : ss. 245A(b), 245C, 245D(4A) (ss. 22A, 22D, Wealth-tax Act, 1957) : 1-6-2010
Power of High Court to condone delay in filing appeals and reference applications
F High Court may admit appeal or application for reference after expiry of period specified, for sufficient cause shown : s. 260A(2) (s. 27A, Wealth-tax Act, 1957) : 1-10-1998 ; s. 256(2A) (s. 27, Wealth-tax Act, 1957) : 1-6-1981
Document identification number
F required to be issued on or after 1st July, 2011 : s. 282B :
1-10-2010
SERVICE TAX
New services to be included
F permitting commercial use or exploitation of any event organized by a person or organization
F copyright on cinematographic films and sound recording
F health services namely health check up for the employees of business entities ; health services health insurance schemes offered by insurance companies where payment made directly by business entity or insurance company to hospital or medical establishment
F maintenance of medical records of employees
F service provided by Electricity Exchanges
F additional services provided by builder to prospective buyers on extra charges excluding provision of vehicle-parking space
F promoting "brand" of goods, services, events, business entity etc.
F promotion, marketing or organizing of games of chance, including lottery
Existing services expanded or altered
F air passenger transport service to include domestic and international journeys in any class
F information technology software service to cover all cases irres-pective of its use
F commercial training or coaching service to mean any training or coaching provided for consideration, whether or not for profit (wref 1-7-2003)
F sponsorship service to include sponsorship pertaining to sports
F construction of complex taxable unless entire consideration for property is paid after receipt of completion certificate from competent authority
F renting of immovable property
F rent of vacant land where there is an agreement for undertaking construction on land for furtherance of business
F services provided entirely within the airport/port premises
F auctioneer's service : auction by Government to mean auction involving sale of Government property and not when Government acts as an auctioneer for sale of private property
F management of investment under ULIP service : value of taxable service to be actual amount charged by insurer for management of funds under ULIP or maximum amount of fund management charges fixed by the Insurance Regulatory and Development Authority (IRDA), whichever is higher
Exemptions
F statutory taxes charged by foreign Governments excluded from taxable value under air passenger transport service
F services relating to "erection, commissioning or installation" of (a) mechanized food grain handling systems etc. ; (b) equipment for setting up or substantial expansion of cold storage ; and (c) machinery/equipment for initial setting up or substantial expansion of units for processing of agricultural, apiary, horticultural, dairy, poultry, aquatic, marine or meat products
F pre-packaged I. T. software, with licence for right to its use
F transport by road by goods transport agency to include food grains and pulses in list of exempted goods
F Indian news agencies under "online information and database retrieval service" subject to specified conditions
F "technical testing and analysis service" and "technical inspection and certification service" provided by Central and State seed testing laboratories, and Central and State seed certification agencies
F transmission of electricity
Withdrawal or amendments of exemptions
F exemption to service provided in relation to transport of goods by rail withdrawn
F exemption to group personal accident insurance scheme provided by Government of Rajasthan to its employees, under General Insurance Service withdrawn
F exemption to commercial training or coaching service restricted to vocational training courses in the designated trades notified under the Apprentices Act, 1961
F condition in Export of Service Rules that service is provided from India and used outside India deleted
F construction and operation of installations, structures and vessels for prospecting or extraction or production of mineral oils and natural gas in the Exclusive Economic Zone and the Continental Shelf of India to be within the purview of the provisions of Chapter V of Finance Act, 1994
Other amendments (Finance Act, 1994)
F no penalty where service tax with interest paid before issuance of notice by the Department : s. 73(3), Expln.
F "business entity" to include an association of persons, body of individuals, company or firm but not an individual
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