Highlights of Indian Financial Budget 2009-2010

Indian Budget 2009-2010

Indian Direct Taxes 2009-2010

• Limited Liability Partnership has been given the status at par with Partnership formed as per Indian Partnership Act, 1932. (Except for S/44AE – where the same is not eligible assessee)
• Amount received (In cash or kind) on account of any capital asset (other than land or goodwill or financial instruments) being demolished, destroyed or transferred, if the whole of the expenditure on such capital asset has been allowed as a deduction under section 35AD.
• S/40: Remuneration allowable to partner:
  On the first Rs.3,00,000/- of Book Profit or in case of loss: Rs.1,50,000/- or at the rate 90% of book profit, which ever is more On the balance book profit – @ 60%
• No maintenance of books of accounts if Presumptive Profits @ 8% for each and every business and/or profession other than business of plying, hiring or leasing of goods carriage carried on by an Individual, HUF or Partnership Firm (other than Limited Liability Firm) and turnover or gross receipt in the previous year does not exceed Rs.40 Lakhs.(However for the purpose of Vat the dealer shall have to maintain books of accounts) If the profit is declared as less than 8%, Tax Audit is compulsory
• 44AE: Presumptive Profits for business of plying, hiring or leasing of goods carriage
  Heavy Goods Vehicle: Rs.5000/- per month
  Other than above: Rs. 4500/- per month
• Transfer of movable and/or immovable property without adequate consideration has also been included in S/56 (taxable as Gift)
• Rates of deduction of TDS: Surcharge to be deducted only in case of payment to companies for above Rs. 1 Cr
• 194 – C: Rate of TDS on payment to contractor from 01.10.2009
  • 1% if payment is to an Individual or HUF
  • 2% for others
  • Amount will be deductible on the value of Invoice after deducting value of material supplied there from, if the same is separately mentioned on Invoice
  • Other wise on Full Invoice Value.
• No deduction on Transport charges, if transport contractor furnishes his PAN to the deductor 01.10.2009
• If a product has been manufactured as per specification of customer and by using the material purchased from such customer than TDS will be applicable, If however the goods are produced as per specification of customer and by using the material purchased from parties other than such customer than no TDS is required to be deducted. 01.10.2009
• 194 – I: Rate for deduction of T.D.S 01.10.2009
  • 2% for the use of Plant & Machinery
  • 10% for the use of use of any land or building (including factory building) or land appurtenant to it or Furniture or Fixtures.
• Assessment of TDS Return / Quarterly Statements within one year from the end of the financial year in which such statement is filed (Like 143 (1)). Refund will be given if the same is claimed in statements and found to be correct. 01.10.2009
• Above Orders pertaining to the period on or before 01.04.2007 may be passed at any time before 31.03.2011.
• S/206AA: The person receiving any income or any sum after deduction of tax, shall furnish to the deductor his PAN. If the person furnishes his PAN deductor shall deduct the TDS as per the rates in force. If the person does not furnish the PAN, TDS will be deducted @ 20%. (From 01.04.2010)
• PAN number has to be mentioned in Form 15G and 15H, otherwise tax will have to be deducted.
• Compulsory to mention PAN is Bills, Vouchers, Correspondence and other documents.
• S/208: Advance tax to be paid, only if Tax Payable is more than Rs.10,000/-
• Wealth tax limit has been increased to Rs.30,00,000/- from Rs.15,00,000/-
• Fringe Benefit Tax has been abolished
• Commodity Transaction Tax has been abolished
• New Personal Income Tax exemption limits:
  • Senior Citizen: Rs. 2,40,000
  • Woman Assessee: Rs. 1,90,000
  • Other: Rs. 1,60,000
• No Surcharge on Personal Income Tax
• No Changes in Corporate Tax
• Minimum alternate tax (MAT) rate increased to 15%
• MAT credit can now be carried forward for 10 Assessment Years
• Single Cash payment to transporter for more than Rs.35000/- (Previously Rs.20000/-) will be disallowed.

Indian Indirect Taxes 2009-1010

Indian Service Tax 2009-2010

• Following Services has been removed from the net of service tax
  • Services provided to any person, by a tour operator in relation to a tour excluding tourism, conducted tours, charter of hire services
  • The definition of stock broker has been amended to exclude sub-broker from its ambit. So hence forth no service tax will be levied by Sub-broker
• 4 new services has been brought in the tax net
  • Transport of goods through Water
  • Transport of goods by rail,
  • Cosmetic and plastic surgery service,
  • Legal consultancy service (advise & technical assistant) other than for Individuals.
• Scope of following services is being enhanced or modified
  • Job work services creating an excisable product will only be exempt under business auxiliary – earlier if the product satisfied the definition of manufacture was also exempt.
• Major changes have been brought about in the refund procedures for exporters of goods and the budget has tried to make it more simpler – 2 services have been brought in the completely exempt category for exporters – this means that the exporter does not have to pay tax on these services if the goods are being exported
  • Good Transport by road
  • Commission agents services – in cases where the agent is resident outside India – earlier the exporters were required to pay tax on these services and then claim refund
• Powers of the Commissioner Service Tax or the Chief Commissioner to review orders passed by their sub-ordinates have been curtailed – now all orders will have to be sent to Commissioner (Appeals) – this is a major procedural relief as the review powers were seen to be used a lot in assessee favored cases.
• In case of composition scheme of works contract – the developer will have to declare the value of goods – he cannot avail the benefit of the scheme if he does not so declare (details awaited)
• CENVAT credit rules have been amended to reduce the rates of tax payable on exempted goods (from 10% to 5%) and exempted services (from 8% to 6%) if the assessee chooses to take entire credit.
• The luxury bus operators who transported passengers either interstate or intra state will now be tax free – many cases have already been lodged against them in the past.
• Authority for Advance Rulings for Income tax will now also take application on service tax – (details awaited)

Disclaimer: The above note is for the reference purpose only. There may be some variation of our understanding of the forms / provisions as compared to the intention of the legislature.