presentation on proposed finance bill 2010 direct taxes ca. kalyan chakravarthy vennety the jalna ca...

Presentation on Proposed Finance Bill 2010

Direct Taxes

CA. Kalyan Chakravarthy Vennety

THE JALNA CA CPE STUDY CHAPTER

3rd March, 2010

INCOME TAX ACT, 1961

2CA. Kalyan Chakravarthy Vennety3.3.2010

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 not exceed Rs. 5,00,000

10%

(3) where the total income exceeds Rs. 5,00,000 but doesnot exceed Rs. 8,00,000

20%

(4) where the total income exceeds Rs. 8,00,000 30%


Increase in Surcharge on Income Tax

Total income > 1 Crore RateDomestic company 7.5%

4CA. Kalyan Chakravarthy Vennety

NowNow

Total income > 1 Crore RateDomestic company 10%

3.3.2010

Sec 2(15) Charitable Purposew.e.f. 1-04-2009

Restriction of the definition of “Charitable Purpose”

Restriction of the definition of “Charitable Purpose”

if aggregate receipts do not exceed Rs. 10 Lacsif aggregate receipts do not exceed Rs. 10 Lacs

Not ApplyNot Apply


Sec 9 Income deemed to accrue or arise in India

w.e.f. 01-06-1976Income from royalties, interest,

fee for technical servicesIncome from royalties, interest,

fee for technical services

Whether or not Non-Resident rendered service in India

Whether or not Non-Resident rendered service in India

Include in Total Income of NRInclude in Total Income of NR


Ishikawajima- Harima Heavy Industries Ltd

case (SC)

Sec 10(21)Incomes not included in Total Income

Date of effect: 01-04-2011

Approved Research Association

Approved Research Association


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)

Earlier Cancellation was linked to Trust/Institution granted reg’n u/s 12AA(1)

Cancellation provided where any Trust/Institution

has obtained Reg’n any time u/s 12A

Cancellation provided where any Trust/Institution

has obtained Reg’n any time u/s 12A

NowNow


Sec 32 Depreciation

w.e.f. 01-04-2011

CompanyCompany

Dep’n as if no succession has taken place Dep’n as if no succession has taken place

LLPLLP


Sec 35 Weighted Deduction on Expenditure on Research

w.e.f. 01-04-2011

200%200%


125%125% 175%175%

150%150% NowNow

NowNow

3.3.2010

Sec 35AD Expenditure on specified business

w.e.f. 01-04-2010

Cross-country Gas or Oil

pipeline network

Cross-country Gas or Oil

pipeline network

Total Capacity should be as per

P&NG Reg Board

Total Capacity should be as per

P&NG Reg Board

New specified Business

New specified Business

Hotel2Star or above

Hotel2Star or above


Sec 35DDAAmortisation of Exp under VRS

w.e.f. 01-04-2011

CompanyCompany

Deduction as if no succession has taken place Deduction as if no succession has taken place

LLPLLP


Sec 40(a)(ia) Disallowance of Exp

w.e.f. 01-04-2010

TDS DeductedTDS Deducted

on or before the due date of filing of returnon or before the due date of filing of return

But not paidBut not paid


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


Sec 44ABTax Audit Provision

w.e.f. 01-04-2011


Sec 44ADTax Audit Provision

w.e.f. 01-04-2011


Sec 44 BB Business of Exploration of Mineral Oils

w.e.f. 01-04-2011

Sec 44 DA applicable?Sec 44 DA applicable?

Not ApplicableNot Applicable

Sec 44 BBSec 44 BB


Sec 44 DA Royalties etc. in case of non residents

w.e.f. 01-04-2011

Sec 44 BB applicable?Sec 44 BB applicable?

Not ApplicableNot Applicable

Sec 44 DASec 44 DA


Sec 47(xiii b) Transactions not regarded as transfer

w.e.f. 01-04-2011

CompanyCompany

Six conditions? Six conditions?

LLPLLP

Transfer of Capital / Intangible Asset Transfer of Capital / Intangible Asset

Not a Transfer Not a Transfer19CA. Kalyan Chakravarthy Vennety3.3.2010

Sec 47(xiii b) Transactions not regarded as transfer

w.e.f. 01-04-2011 Six conditions Six conditions


1. All A&L of co. become A&L of LLP2. All Shareholders become Partners of LLP3. Shareholders do not receive any compensation in any form4. Aggregate of PSR of shareholders should not be less than 50% for

5years5. Turnover of the company any of the 3 years prior to conversion

does not exceed Rs. 60 Lacs6. No amount is paid to partners out of accumulated balance of the

company on the date of conversion for a period of 3 years

1. All A&L of co. become A&L of LLP2. All Shareholders become Partners of LLP3. Shareholders do not receive any compensation in any form4. Aggregate of PSR of shareholders should not be less than 50% for

5years5. Turnover of the company any of the 3 years prior to conversion

does not exceed Rs. 60 Lacs6. No amount is paid to partners out of accumulated balance of the

company on the date of conversion for a period of 3 years

3.3.2010

Sec 49(4) New sub-section Cost of acquisition

w.e.f. 01-06-2010

Shares received without consideration or inadequate consideration

Shares received without consideration or inadequate consideration

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

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

Cost of AcquisitionCost of Acquisition


56(2)(vii)(b) Income from other sources

w.e.f. 01-10-2009

Value of Property received Value of Property received

Property is received without any consideration


Taxed only ifTaxed only ifProperty

= Capital Asset only.Does not cover Stock in Trade

Condition of inadequate

consideration Removed



w.e.f. 01-06-2010

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



Taxed only ifTaxed only ifProperty

= Capital Asset only.Does not cover Stock in Trade

Condition of inadequate

consideration Removed



w.e.f. 01-06-2010

Where a Firm or Pvt Ltd. CoWhere a Firm or Pvt Ltd. Co

receivesreceives

In any PYIn any PYFrom any person(s)

From any person(s)

Shares of Pvt Ltd. CoShares of Pvt Ltd. Co


56(2)(vii)(a) Income from other sources

w.e.f. 01-06-2010

Scenario 1 What is Chargeable to TaxWithout Consideration & Aggregate FMV>50,000

=The whole of the Aggregate FMV

Scenario 2 What is Chargeable to TaxFor a Consideration which is less than Aggregate FMV by

>50,000

=Aggregate FMV-Consideration

Proviso: This clause shall not apply to cases covered u/s

47

Expl’n: FMV meaning same as given in Expl’n to

clause (vii)


Expl’n of Property Not applicable here.

Hence, covers Stock in Trade also.

Sec 72A (6A) New clauseC/f & Setoff in amalgamation/demerger

w.e.f. 1-04-2011

CompanyCompany

Six conditions satisfied?

Six conditions satisfied?

LLPLLP

Succeeded by Succeeded by

Can C/f & Setoff accumulated Loss & Dep'n

Can C/f & Setoff accumulated Loss & Dep'n

Proviso: fresh period of 8 years

will be available for set off of loss in the hands of LLP upon

conversion


Sec 80A(7)Deductions claimed in Total Income

w.e.f. 01-04-2011

Claimed deduction under this sec?Claimed deduction under this sec?

Not AvailableNot Available

Deduction Sec 35 ADDeduction Sec 35 AD


Sec 80CCFDeduction on long term infrastructure bonds

w.e.f. 01-04-2011

Limit = Rs.20,000 Limit = Rs.20,000

Rs.100,000 under Sec 80CCERs.100,000 under Sec 80CCE

In addition toIn addition to


Sec 80DDeduction for Health Insurance Premia

w.e.f. 01-04-2011

Benefit ExtendedBenefit Extended

Central Government Health Scheme within Rs.15,000

Central Government Health Scheme within Rs.15,000

Contribution made toContribution made to


Sec 80GGA Deduction in respect of certain donations

for scientific research or rural developmentw.e.f. 01-04-2011

Scope ExtendedScope Extended

Research in Research in

Social ScienceSocial Science

Statistical 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 completionPeriod of completion

Extended fromExtended from

4 Years4 Years 5 Years5 Years31CA. Kalyan Chakravarthy Vennety3.3.2010

Sec 80IB(10)(d)Deduction in respect of profits and gains from

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

Built up Area of shops & commercial estb. included in Housing Project

RevisedRevised

5% of the aggregate built-up area of the

housing project or

2,000 square feet, whichever is

less


housing project or


less


housing project or


higher


housing project or


higher32CA. Kalyan Chakravarthy Vennety3.3.2010

Sec 80ID(2)(i)Deduction in respect of profits and gains from business of hotels and convention centres in

specified areaw.e.f. 01-04-2011

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

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


For special impetus to ensuing

Common Wealth Games

Sec 115JJA(7)Tax credit in respect of tax paid on deemed

income relating to certain companiesw.e.f. 01-04-2011

Company Company

Credit of MAT paid available?

Credit of MAT paid available?

LLPLLP

Succeeded by Succeeded by

NONO


Sec 115JB(1)MAT

w.e.f. 01-04-2011

Minimum Alternative TaxMinimum Alternative Tax

IncreasedIncreased

15%15% 18%18%


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

Time limit for issuance of direction by Central Govt increased

to 31.03.2011

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 ExtendedScope Extended

Research Association Research Association

Social ScienceSocial Science




142A(1)Estimate by Valuation Officer

in certain casesw.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.

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

Time limit for issuance of direction relating to processing of returns By

Central Govt increased to 31.03.2011




Sec 143(1B)Assessment

w.e.f. 01-04-2011





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

References to scientific research association

are proposed to be substituted by references to

research association


Changes in TDS Threshold Limitsw.e.f. 1-07-2010

SEC NATURE OF PAYMENT EXISTING THRESHOLD

PROPOSED THRESHOLD

194B Winning from Lottery & crossword puzzles 5,000 10,000

194BB Winnings from Horse Race 2,500 5,000

194C Payment to Contractors20,000

[for single transaction]

30,000

194C Payment to Contractors50,000

[for aggregate transactions]

75,000

194D Insurance Commission 5,000 20,000

194H Commission or brokerage 2,500 5,000

194I Rent 1,20,000 1,80,000

194J Fess for professional or technical services 20,000 30,000


Sec 201(1A) Consequences of failure to

deduct or pay taxw.e.f. 01-07-2010

Interest on delayed DepositInterest on delayed Deposit

Rate increasedRate increased

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

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 245Aexpression “case”

w.e.f. 01-06-2010

The expression “case” amended so as to include Assessment

in case of search or requisition

The expression “case” amended so as to include Assessment

in case of search or requisition


It alsoremoves the prohibition in cases where the AO has to proceed u/s. 153C of the

Act.

Sec 245CSettlement of cases

w.e.f 01-06-2010


Sec 245D(4A)Procedure on receipt of an application for

settlement of casesw.e.f 01-06-2010

The SC shall make an OrderThe SC shall make an Order


Sec 256(2A)Statement of case to the High Court

w.e.f. 01-06-1981


Sec 260A(2A)Statement of case to the High Court

w.e.f. 01-10-1998


271BPenalty for failure toget accounts audited

w.e.f. 01-04-2011


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

Effective Date for use of computer generated

Document Identification Number extended to 01-10-2011


Rule 5(b) First ScheduleComputation of Profits & Gains of other

insurance Business


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

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 22DProcedure on receipt of an application for

settlement of casesw.e.f 01-06-2010

The SC shall make an OrderThe SC shall make an Order


Sec 27(3B)Reference to the High Court.

w.e.f. 01-06-1981


Sec 27AStatement 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

• 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

3.3.2010 CA. Kalyan Chakravarthy Vennety 59

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

• 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

3.3.2010 CA. Kalyan Chakravarthy Vennety 61

End of Presentation.


THANK YOU !

CA. Kalyan Chakravarthy VennetyBCOM, ACA, DISA(ICAI), CISA

V R Jogeswara Rao & Co., Chartered AccountantsPhone: 99700-88669

Email: [email protected]

CA. Kalyan Chakravarthy VennetyBCOM, ACA, DISA(ICAI), CISA

V R Jogeswara Rao & Co., Chartered AccountantsPhone: 99700-88669

Email: [email protected] 63CA. Kalyan Chakravarthy Vennety

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