AMENDMENTS FOR ASSESSMENT YEAR 2009-10
APPLICABLE FOR MAY – 2009 & NOV – 2009
COMPUTATION OF TOTAL INCOME AND TAX LIABILITY
1. Individual, HUF, AOP, BOI, Artificial Juridical person
Total Income upto Rs.1,50,000 Nil
Next 1,50,000 10%
Next 2,00,000 20%
Balance 30%
2. Resident women below the age of 65 years at any time during the previous year
Total Income upto Rs.1,80,000 Nil
Next 1,20,000 10%
Next 2,00,000 20%
Balance 30%
3. Resident individual of the age of 65 years or more at any time during the year
Total Income upto Rs.2,25,000 Nil
Next 75,000 10%
Next 2,00,000 20%
Balance 30%
No change in surcharge and education cess.
No change in tax rate and education cess for partnership firm and company.
Short term capital gain under section 111A shall be taxable @ 15% in all assessees.
Example
Compute tax liability in the following cases:
Mr. X (resident) has total income of Rs.6,00,000
Mr. X (non-resident) has total income of Rs.6,00,000
Mrs. X (resident) has total income of Rs.6,00,000
Mrs. X (non-resident) has total income of Rs.6,00,000
Mr. X (resident), aged 65 years has total income of Rs.6,00,000
Mrs. X (resident), aged 65 years has total income of Rs.6,00,000
Mr. X (non-resident), aged 65 years has total income of Rs.6,00,000
Mrs. X (non-resident), aged 65 years has total income of Rs.6,00,000
Solution:
Rs.
(i) Computation of Tax Liability
Total Income 6,00,000
Tax on Rs.6,00,000 at slab rate 85,000
Add: Education cess @ 2% 1,700
Add: SHEC @ 1% 850
Tax Liability 87,550
(ii) Computation of Tax Liability
Total Income 6,00,000
Tax on Rs.6,00,000 at slab rate 85,000
Add: Education cess @ 2% 1,700
Add: SHEC @ 1% 850
Tax Liability 87,550
(iii) Computation of Tax Liability
Total Income 6,00,000
Tax on Rs.6,00,000 at slab rate 82,000
Add: Education cess @ 2% 1,640
Add: SHEC @ 1% 820
Tax Liability 84,460
(iv) Computation of Tax Liability
Total Income 6,00,000
Tax on Rs.6,00,000 at slab rate 85,000
Add: Education cess @ 2% 1,700
Add: SHEC @ 1% 850
Tax Liability 87,550
(v) Computation of Tax Liability
Total Income 6,00,000
Tax on Rs.6,00,000 at slab rate 77,500
Add: Education cess @ 2% 1,550
Add: SHEC @ 1% 775
Tax Liability 79,825
Rounded off u/s 288B 79,830
(vi) Computation of Tax Liability
Total Income 6,00,000
Tax on Rs.6,00,000 at slab rate 77,500
Add: Education cess @ 2% 1,550
Add: SHEC @ 1% 775
Tax Liability 79,825
Rounded off u/s 288B 79,830
(vii) Computation of Tax Liability
Total Income 6,00,000
Tax on Rs.6,00,000 at slab rate 85,000
Add: Education cess @ 2% 1,700
Add: SHEC @ 1% 850
Tax Liability 87,550
(viii) Computation of Tax Liability
Total Income 6,00,000
Tax on Rs.6,00,000 at slab rate 85,000
Add: Education cess @ 2% 1,700
Add: SHEC @ 1% 850
Tax Liability 87,550
DEFINITIONS
Agricultural Income Section 2(1A) Explanation 3
Any income derived from saplings or seedlings grown in a nursery shall be deemed to be agricultural income.
Charitable Purpose Section 2(15)
“Charitable purpose”
includes relief of the poor, education, medical relief, and the advancement of any other object of general public utility:
Provided that the advancement of any other object of general public utility shall not be a charitable purpose, if it involves the carrying on of any activity in the nature of trade, commerce or business, or any activity of rendering any service in relation to any trade, commerce or business, for a cess or fee or any other consideration, irrespective of the nature of use or application, or retention, of the income from such activity.
Reverse mortgage Scheme Section 10(43)
Any amount received by an individual as a loan, either in lump sum or in instalment, in a transaction of reverse mortgage referred to in clause (xvi) of section 47 shall be exempt from Income Tax.
Reverse mortgager
means the eligible person who has mortgaged the capital asset for the purpose of obtaining loan.
Reverse mortgage transaction
means a transaction in which the loan may be disbursed to the reverse mortgagor but does not include transaction of sale, or disposal, of the property for settlement of the loan.
Any transfer of a capital asset in a transaction of reverse mortgage under a scheme made and notified by the Central Government is not regarded as transfer.
BUSINESS/PROFESSION
1. Payments in excess of Rs.20,000 section 40A(3) Rule 6DD
If any person has made the payment to a particular person during a particular day in excess of Rs.20,000 and such payment was not made through account payee cheque or account payee bank draft, in that case entire payment is disallowed.
If any person has claimed expenditure on due basis but in the subsequent year the payment was not made by account payee cheque or draft, in that case it will be considered to be income of the year in which the payment has been made.
Example
During the previous year 2008-09 ABC Ltd. has incurred Rs.1,00,000 on advertisement and the company has not made the payment till 30.09.2009 and the expenditure was claimed on due basis and the company has filed the return of income. The company made the payment on 01.01.2010 in cash, in this case Rs.1,00,000 shall be considered to be income of the company in the previous year 2009-10.
2.
Rebate under section 88E has been omitted. The assessee is allowed to debit the amount of securities transaction tax to profit and loss account.
3.
Bank cash Transaction tax shall not be applicable from 01.04.2009 i.e. previous year 2009-2010 i.e. assessment year 2010-2011.
4.
The last date for filing the return of income for the company etc. shall be 30-09 of assessment year. The amendment is applicable from retrospective effect of assessment year 2008-09.
5.
Donation/contribution given to an Indian company for scientific research and development is also allowed 1.25 times.
6. Amortisation of certain preliminary expenses section 35D
The provisions shall be applicable to all the undertakings instead of only industrial undertaking.
Amendment of section 36.
In section 36 of the Income-tax Act, in sub-section (1), after clause (xiv), the following clauses shall be inserted with effect from the 1st day of April, 2009, namely:—
36 (1)(xv) , An amount equal to the securities transaction tax paid by the assessee in respect of the taxable securities transactions entered into in the course of his business during the previous year, if the income arising from such taxable securities transactions is included in the income computed under the head “Profits and gains of business or profession.’.
Explanation.—For the purposes of this clause, the expressions “securities transaction tax” and “taxable securities transaction” shall have the meanings respectively assigned to them under Chapter VII of the Finance (No. 2) Act, 2004 (23 of 2004);
36(1) (xvi) an amount equal to the commodities transaction tax paid by the assessee in respect of the taxable commodities transactions entered into in the course of his business during the previous year, if the income arising from such taxable commodities transactions is included in the income computed under the head “Profits and gains of business or profession”.
Explanation.
—For the purposes of this clause, the expressions “commodities transaction tax” and “taxable commodities transaction” shall have the meanings respectively assigned to them under Chapter VII of the Finance Act, 2008.’.
Tax deduction at source for Payment of interest, commission, brokerage etc. in India Section 40(a)(ia)
In case of payment of interest, commission, brokerage, rent, royalty, professional fees, technical fees, payment to a contractor, payment to a sub-contractor and the payment is been made to a resident and tax has to be deducted at source as per provisions of Income Tax Act and the person making payment has deducted tax at source, the expenditure shall be allowed if tax has been paid to the government upto the end of the relevant previous year, in such cases amount shall be allowed to be debited in the relevant previous year. In section 115-O of the Income-tax Act, after sub-section (1), the following sub-section shall be inserted, namely:—
If the payment was made in the month of March, tax should be paid to the government till the last date of filling of return of income and in such cases amount shall be allowed to be debited in the relevant previous year.
If the above provisions have not been complied with, in such cases deduction shall be allowed in the year in which tax has been paid to the government.
Amendment of section 115-O.
24.
“(1A) The amount referred to in sub-section (1) shall be reduced by the amount of dividend, if any, received by the domestic company during the financial year, if—
(a) such dividend is received from its subsidiary;
(b) the subsidiary has paid tax under this section on such dividend; and
(c) the domestic company is not a subsidiary of any other company:
Provided
Explanation.
—For the purposes of this sub-section, a company shall be a subsidiary of another company, if such other company holds more than half in nominal value of the equity share capital of the company.”. that the same amount of dividend shall not be taken into account for reduction more than once.
DEDUCTION FROM GROSS TOTAL INCOME
1.
2.
Deduction shall be allowed if the assessee has paid premium towards medical insurance out of his income chargeable to tax.
3.
4.
Policy can be taken in case of an individual, in the name of wife or husband or dependent children and deduction shall be allowed equal to the amount of premium paid but subject to a maximum of Rs.15,000 but in case of senior citizen deduction shall be allowed upto Rs.20,000
If the individual has taken policy in the name of parents (dependent or independent), additional deduction shall be allowed to the extent of the premium paid but maximum Rs.15,000, however, if the policy has been taken in the name of senior citizen, deduction shall be allowed to the extent of Rs.20,000.
Hindu Undivided Family can take the policy in the name of any of its members and deduction shall be allowed in the similar manner.
5.
6.
Medical insurance shall be in accordance with a scheme framed in this behalf by the General Insurance Corporation of India or by any other insurer as approved by the Insurance Regulatory and Development Authority (IRDA). “Senior citizen” means an individual resident in India who is of the age of 65 years or more at any time during the relevant previous year.
Assessee engaged in operating and maintaining a hospital in India other than the excluded area Section 80-IB(11C)
2.
The amount of deduction in the case of an undertaking deriving profits from the business of operating and maintaining a hospital located anywhere in India, other than the excluded area, shall be 100% of the profits and gains derived from such business for a period of 5 consecutive assessment years, beginning with the initial assessment year, if–
(i) the hospital is constructed and has started or starts functioning at any time during the period beginning on the 01.04.2008 and ending on the 31.03.2013;
(ii) the hospital has at least 100 beds for patients;
(iii) the construction of the hospital is in accordance with the regulations or bye-laws of the local authority; and
(iv) the assessee furnishes along with the return of income, a report of audit in such form and containing such particulars, as may be prescribed, and duly signed and verified by an accountant, as defined in the Explanation to sub-section (2) of section 288, certifying that the deduction has been correctly claimed.
SERVICE TAX
Service tax exemption limit has been raised from Rs.8,00,000 to Rs.10,00,000 w.e.f. 01.04.2008.
Revision of Return Rule 7 Sub-Rule (7B)
An assessee may submit a revised return, in Form ST-3, in triplicate, to correct a mistake or omission, within a period of 90 days from the date of submission of the return under rule 7.
The payment must be made by any mode of payment other than cash.Deduction shall be allowed only to an individual or Hindu Undivided Family.
Deduction in respect of medical insurance premia Section 80D
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