Budget Update by CA. Sudha Gupta and CA. Vinay Bhushan
Here are the salient features of the Budget 2009
- Exemption of threshold limit for personal income tax raised by
- For senior Citizens Rs.15,000 from Rs.2.25 lakh to Rs.2.40 lakh
- For women tax payers by Rs.10,000 from Rs.1.80 lakh to Rs.1.90 lakh
- Other categories of individual taxpayers by Rs.10,000 from Rs.1.50 lakh to Rs.1.60 lakh for all
Surcharge of 10% on personal income tax removed.[not for corporate entities ]
- Threshold limit for payment of wealth tax to be increased from INR 1.5 million to INR 3 million.
- Fringe Benefit Tax on the value of certain fringe benefits provided by employers to their employees to be abolished
- Deduction under section 80-DD in respect of maintenance, including medical treatment, of a dependent who is a person with severe disability being raised from the present limit of Rs.75,000/- to Rs.1,00,000/-
- Deduction under section 80E of the Income-tax Act allowed in respect of interest on loans taken for higher education by an individual extends to any course of study pursued after passing senior secondary examination or its equivalent
- Section 10 A and Section 10 B [deduction in respect of export profits] extended by one more year i.e. for the financial year 2010-11.
- Minimum Alternate Tax (MAT) to be increased to 15 % of book profits from 10 %. The period allowed carrying forward the tax credit under MAT to be extended from seven years to ten years.
- Scope of provisions relating to weighted deduction of 150% on expenditure incurred on in-house R&D to all manufacturing businesses being extended except for a small negative list.
- Changes in the Rates of Tax Deducted at Source [w.e.f 1st Oct 2009]
|Section||Nature of Payment||Type of Deductee||Old Rate||New Rate|
|194 I||Rent of plant, machinery or equipment||Any||10%||2%|
|Rent of land building or furniture||Individual and HUF||15%||10%|
|Rent of Land, building or furniture||Other than Individual and HUF||20%||10%|
|194C||Payment to contractors||Individual or HUF||2%||1%|
|Payment to contractors||Other than Individual or HUF sub contractor||1%||2%|
|For advertising||Other than individual/HUF contractor/sub Contractor||1%||2%|
|Sub contractor / contractor in transport business||Any||1% / 2%||nil|
- Commodity Transaction Tax (CTT) to be abolished.
- Donations to electoral trusts to be allowed as a 100 percent deduction in the computation of the income of the donor.
- Anonymous donations received by charitable organizations to the extent of 5 percent of their total income or a sum of Rs.1 lakh, whichever is higher, not to be taxed.
- Presumptive taxation scope to be extended to all small businesses with a turnover upto Rs. 40 lakh. All such taxpayers to have option to declare their income from business at the rate of 8 percent of their turnover and simultaneously enjoy exemption from the compliance burden of maintaining books of accounts. As a procedural simplification, they are also to be exempted from advance tax and allowed to pay their entire tax liability from business at the time of filing their return. This new scheme to come into effect from the financial year 2010-11.
- Tax holiday under section 80-IB(9) of the Income Tax Act, which was hitherto available in respect of profits arising from the commercial production or refining of mineral oil, to be extended to natural gas. This tax benefit to be available to undertakings in respect of profits derived from the commercial production of mineral oil and natural gas from oil and gas blocks which are awarded under the NELP-VIII round of bidding. The section to be retrospectively amended to provide that “undertaking” for the purposes of section 80-IB(9) will mean all blocks awarded in any single contract.
- No change in corporate tax rates.
- LLPs to be taxed in the same manner as general partnerships. Conversion of general partnership to LLP to have no tax implications if rights and obligations remain same and there is no transfer of any asset or liability.
- Arm’s length price to be the arithmetical mean in cases where more than one price is determined by the most appropriate method. However, if such arithmetical mean is within 5% of the transfer price, then the transfer price declared will be deemed to be the arm’s length price.
- Weighted deduction of 150% allowed under Section 35 for R&D to be extended to all manufacturers other than those engaged in items specified in the Eleventh Schedule of the Income Tax Act, 1961.
- Tax holiday under section 80-IB(9) to be extended to natural gas from blocks awarded under the NELP-VIII round of bidding. Definition of “undertaking” to be inserted with retrospective effect from 1 April 2000, to mean all blocks awarded in any single contract by the Government of India in case of mineral oil and natural gas.
- Taxation of gifts received in excess of INR 50,000 (without consideration or for inadequate consideration) to be extended to immovable property (land and/or building), shares and securities, jewellery, archaeological collections, drawings, paintings, sculptures or any work of art. Stamp duty value in case of immovable property and fair market value in case of movable property to be computed.