For payment to residents and domestic companies,there will be no surcharge and cess on the basic rate of
TDS. This simplifies TDS rates to a great extent.

There are changes in TDS rates for payments to contractors and payment of rent. Those are explained
below.

TDS on payment to contractors : Section 194C

The proposed amendment is effective from 01-10-2009.

Rate of deduction: Rate of deduction is now based on the status of payee and not on the basis of type of
payment. Earlier the rate was 2% for payment to contractors and 1% for payment to sub-contractors
and advertisement contracts. Now the rate is 1% for payments made to individuals and HUF and 2% in
other cases.

Contractor manufacturing is now covered as "work"and is liable to TDS under this section.
- This is defined as manufacturing or supplying a product according to the requirement or
  specification of a customer by using material purchased from such customer, but does not include
  manufacturing or supplying a product according to the requirement or specification of a customer by
  using material purchased from a person, other than such customer
- If the invoice mentions value of material separately then such value will be excluded for calculation of
  TDS, in all other cases TDS will apply to total invoice value.

Persons carrying business of plying, hiring or leasing goods carriages.
- Need not deduct TDS if contractor furnishes PAN.
- Will have to furnish information as may be prescribed.

TDS on Rent : Section 194I

The proposed amendment is effective from 01-10-2009.

Rent	Earlier	Now
Plant and Machinery	10%	2%
Land building	15% for Indviduals / HUF and 20% for others	10%

eTDS Statement Filing: Section 200

The proposed amendment is effective from
01-10-2009. Currently section 200 specifies quarterly
filing of eTDS statements.

This is changed and now CBDT can specify the periodicity for which the statements are to be filed.

Processing of eTDS Statements: Section 200A

The proposed amendment is effective from 01-04-2010.

This new section introduces processing of eTDS Statements in the following manner.

Sum deductible shall be calculated after making adjustment of arithmetical errors and apparent
incorrect claims.

Interest will be calculated.

From the above actual amount paid will be deducted to arrive at TDS payable or refundable.

Deductor will be informed about the TDS payable or refundable.

Time limit for the processing is within one year of the financial year of filing of eTDS statement.

CBDT will make a scheme of centralized processing of e-TDS Statements.

Time limit for Penalty proceedings : Section 201

The proposed amendment is effective from 01-04-2010.

A person is deemed to be an assesee in default for failure to deduct TDS in whole or part.

The order for such default now will have to be passed.
- Within two years from the end of the financial year in
  which the eTDS statement is filed.
- Within four years from the end of the financial year in which payment is made or credit is given, in any
  other case.
- For financial year commencing on or before 01-04-2007, this time limit is upto 31st March 2011.

TDS Rate when PAN not available: Section 206AA

The proposed amendment is effective from 01-04-2010.

If deductee fails to furnish PAN to deductor, the deductor shall apply highest of the following rates for
deducting TDS.
- (i) at the rate specified in the relevant provision of
  this Act; or
- (ii) at the rate or rates in force; or
- (iii) at the rate of 20%.

Form 15G/ 15H declaration for no deduction of tax will become invalid if PAN is not mentioned therein.

PAN will have to be mentioned in bills, vouchers and other documents communicated between deductor
and deductee.

If deductee furnishes invalid PAN or submits PAN belonging to someone else, it will amount to non
furnishing of PAN.

Other Changes

No TDS on zero coupon bonds issued by scheduled banks : Section 194A. Effective 01-04-2009

No TDS for payments from New Pension Scheme :Section 197A. Effective 01-04-2009

Quarterly statement for interest paid without deducting TDS is now to be submitted for "such
periods as may be prescribed" : Section 206A Effective 01-10-2009.

Quarterly statement regarding tax collection at sources are now to be submitted for " such periods as
may be prescribed": Section 206C Effective 01-10-2009.

Implications of Budget 2009 in Excise Duty

Excise Duty
No Change in the mean Cenvat rate of 8% ad valorem.However the concessional excise duty rate of 4% has
been increased to 8% with certain exceptions.
Modification
Basic duty on branded Petrol converted from "6%+Rs.5 per litre" to a specific rate of Rs.6.50 per
litre. Now total duty on branded petrol will be Rs.14.50 per litre.
Basic duty on branded High Speed Diesel converted
from "6%+Rs.1.25 per litre" to a specific rate of Rs.2.75 per litre. Now total duty on branded High
Speed Diesel will be Rs.4.75 per litre.
Duty exemption on recorded smart cards and recorded proximity cards, tags made optional.
Manufacturer may opt to pay duty and avail the credit.
Reduction
High Speed Diesel blended with upto 20% bio-diesel to be fully exempt from excise duties provided
appropriate duties paid on HSD and bio-diesel.
Duty on Special Boiling Point spirits and Naphtha reduced to 14%.
Duty exemption provided to tops (man-made), made out of duty paid man-made tow procured from outside
the factory using 'tow-to-top' process.
Goods manufactured at the site of construction for use in construction work at such site fully exempted.
Duty on articles of jewelry on which the brand name or trade name is indelibly affixed or embossed on the
articles of jewelry itself, reduced from 2% to nil.
Specific component of duty on motor vehicles of heading 8702 / 8703 having engine capacity
exceeding 1999 CC reduced from Rs.20000 per unit to
Rs.15000 per unit.
Duty on petrol driven motor vehicles for transport of goods except dumpers reduced from 20% to 8%.
Duty exempted on specified medical devices namely Patent Ductus Arteriosus/ Atrial Septal Defect
occlusion device.
Exemption provided to packaged software, subject to specified conditions, from so much of the duty of
excise leviable thereon as is equivalent to the excise duty payable on the portion of the value which
represents the consideration paid or payable for transfer of right to use such software.
Increase
Exemption to Naphtha or Natural Gasoline Liquid would not be available if they are used in the
manufacture of fertilizer/ammonia which in turn is used for manufacture of some other item.
Duty on following items increased from 4% to 8%:
Ink used in writing instruments.
Pure terephthalic acid (PTA), dimethyl terephthalate(DMT), acrylonitrile Polyester chips
Heat resistant latex rubber tension thread and Heat resistant rubber tension tape.
Raw, tanned and dressed fur skins.
Goods falling under heading 4408 (sheets for veneering for plywood and related products), 4410
(different kinds of wood boards), 4411 (fibre board of wood or ligneous materials) and 4412 (plywood).
Flush doors and articles of wood other than articles of densified wood.
All goods falling under heading 4820 (folders, file covers and other articles of stationary)
Paper and paperboard labels.
Man made filament yarn falling under heading 5402,5403 and 5406.
Manmade fibres (tow and staple fibres) falling under chapter 5501 to 5507.
All textile goods made of manmade fibre/yarn or natural fibres/yarn other than cotton i.e. beyond the
fibre/yarn stage.
Goods in which not les than 25% by weight of fly ash or phosphogypsum or both have been used.
Articles of mica.
Solid or hollow building blocks, including aerated or cellular light weight concrete blocks and slabs.
Ceramic tiles, manufactured in a factory not using electricity for firing the kiln.
LPG Gas stoves.
Electronic milk tester / solid non-fat (SNF) tester.
MP3/MP4 or MPEG 4 players with or without radio/video reception facility.
Contact lenses.
Parts of drawing and mathematical instruments, used in the manufacture of drawing and mathematical instruments.
Playing cards.
Goods classified under heading 9603 like paint brushes, toothbrushes etc.
Slide fasteners and parts thereof.

Duty on all textile goods made of pure cotton, not containing any other textile material increased from
nil to 4%.
Custom Duty
Modification
Description of some specified machinery items for use in leather or footwear industry has been amended.
Reduction
Duty on unworked corals reduced from 5% to nil.
Duty on rock phosphate reduced from 5% to 2%.
Basic Duty on bio-diesel reduced from 7.5% to 2.5%.
Basic Duty on nine specified life saving drugs and their bulk drugs and one vaccine reduced to 5% with nil
CVD by way of excise exemption.
Basic duty on waste of wool and cotton waste reduced from 15% to 10%.
Concessional duty of 5% on specified plantation machinery available upto 30.04.09 extended upto 06.07.10.
Duty on Permanent magnets for manufacture of PM synchronous generators above 500 KW for use in wind
operated electricity generators reduced from 7.5% to 5%.
Duty on mechanical harvesters for coffee plantation sector reduced from 7.5% to 5%. This exemption valid upto 06.07.2010.
Exemption provided to packaged or canned software, subject to specified conditions, from so much of the
additional duty of customs leviable thereon as is equivalent to the duty payable on the portion of the
value which represents the consideration paid or payable for transfer of right to use such software.
Duty on LCD panels for manufacture of LCD TV reduced from10% to 5%.
Full exemption from special additional duty of customs on parts, components and accessories of mobile
handsets has been reintroduced. This exemption is valid for one year.
Basic custom duty on inflatable rafts fully exempted.
Duty on Artificial Heart (left ventricular assist device) reduced from 7.5% to 5%.
Duty on Patent Ductus Arteriosus/Atrial Septal Defect occlusion device reduced from 7.5% to 5% with nil CVD by way of excise duty exemption.
Duty fully exempted on snow skis and other snow-ski equipment, water-skis, surf boards, sailboards and
other water-sports equipments.
Increase
Basic duty on gold and silver has been increased as follows:

Gold bars from Rs.100 per 10 gm to Rs.200 per 10 gm
Gold in any form other than bars from Rs.250 per 10 grams to Rs.500 per 10 grams.
Silver in any form from Rs.500 per kg. to Rs.1000 per kg.

Exemption of duty on concrete batching plants of capacity 50 cum/hr or more withdrawn. Now these
items will attract 7.5% duty.
Duty on set top boxes increased from nil to 5%.
CVD exemption on Aerial Passenger ropeway projects has been withdrawn.

Implications of Budget 2009 Business Income

Tax Liability in respect of MAT has been increased from 10% to 15% of book profit. Further It shall be
increased by surcharge of 10% of tax in case Total Income under provisions of MAT exceeds Rs. 1.00 crore.

Tax	Total Income under MAT Upto Rs. 1.00 crore	Total Income under MAT exceeds Rs. 1.00 crore
Rate of Tax	15.45%	16.99%

However the credit for Tax paid under MAT regime shall be allowed to be carried forward for subsequent tenth
assessment years. Further the assessee has to add provision for diminution in value of assets debited to P & L account in computation of book profit. Hence assessee has to pay more MAT in case it makes
provisions for bad debts since this is to be added in book profit and tax is to be paid thereon. This
amendment was brought to reverse the decision of Apex Court pronounced recently in favour of
assessee.
Fringe Benefit Tax has been abolished from the A.Y.2010-2011.
Rate of taxation in respect of Companies / firms remain unchanged.

Tax Benefit

Definition of Manufacturing has been provided to include that new and distinct product should come in to
existence with a different chemical composition or integral structure . This definition will restrict the
deduction available under different provisions with regard to manufacturing of goods since many courts
held that manufacturing includes processing . Now this definition will restrict the deduction to manufacturing
test being satisfied.
It has been decided to extend the benefit of deduction u/s10A /10B in respect of profit derived from
undertaking set up under free trade zone/ 100% export oriented undertaking up to A.Y. 2011-2012.
Earlier it was to be allowed upto A.Y.2010-2011.
Tax benefit for units set up in SEZ area will be enhanced marginally in view of fact that turnover of
units will be considered instead of turnover of assesee while working out deduction under proportionate
method.
Tax benefit for electricity companies when unit is set up upto 31/03/2010 was available u/s80IA of the Act.
Now the date for setting up unit has been extended to 31/03/2011.
Scope of deduction u/s 80IB (10) of the Act with reference to profits of builders are restricted since
builders can not allot the more than one residential unit to individual or his relative as specified in this section.

Deduction

It has been proposed to allow a deduction of entire capital expenditure except land, goodwill or financial
instruments in respect of cold chain facility, warehousing facility for storage of agricultural produce
and laying and operation of gas pipe line business activity.
Simile of transfer of such capital assets or being demolished, any sum received/ receivable thereon
shall be chargeable to tax since entire expenditure is proposed to be allowed.
Further the cost of such capital assets in case of slump sale shall be taken to be nil in computation of net
worth of undertaking in case of sale of such business. Loss suffered from such eligible business shall not be
set off from any profit of other business activity and it will be allowed to be carried forward to set off against
the eligible business as aforesaid.
Benefit of weighted deduction of 150% of expenditure, in case incurred for Research & Development has
been extended to all business engaged in manufacturing or production of articles except those
specified in eleventh schedule.
CTT has been abolished . As a natural corollary , it has been decided to withdraw CTT as business
expenditure.
It has been decided to do away with different limit for allowability of partners' remuneration in case of
working partner for professional firm and other firm. Now uniform limit for all partnership firm has been
provided as under. It is therefore necessary to amend the deed of partnership with reference to clause of
remuneration to partner in order to align with new rate as aforesaid.

On the first Rs. 3.00 lacs book profit or in case of loss	Rs. 1.50 lacs or at the rate of 90% of book profit which ever is more
On the balance of the book profit	60% of balance book profit

It has been decided to increase the limit of cash expenditure up to Rs. 35,000/- in a day w,e,f .
01/10/2009. Accordingly the cash expenses in excess of Rs. 35000/ after 01/10/2009 shall be disallowed in
the computation of income under the head of business.
Now it is proposed to deny the deduction to the assessee under section 10A, 10AA, 10B, or 10BA or
chapter VIA if the assessee fails to make claim in the return of Income.
It has been decided to allow deduction to companies in case they make donation to electoral trust.

Presumptive Taxation

New presumptive based taxation scheme is proposed to be introduced for individual/ HUF and partnership
firm except LLP when turnover does not exceed Rs.40.00 lacs w.e.f A.Y. 2011-2012 .
In this scheme, the eligible assesee is required to declare 8 % of turnover as income from business and
no deduction shall be allowed except the remuneration from partners as permitted under the law.
If assessee does not offer 8% of turnover as income , he is is required to maintain books of accounts and get
his account audited under section 44AB popularly know as tax audit from chartered accountants.
It has been decided to increase the presumptive income being Rs. 5000/- per month in case of heavy
goods vehicle and Rs. 4500/- per month in case of other than heavy goods vehicle in case the assessee is
engaged into plying /hiring of vehicle and he does not own more than vehicle. This amendment shall be
effective w.e.f. 2011-2012.

Capital Gain

At present, if assessee sells immoveable property being capital assets, the consideration as adopted or
assessed by the stamp authority or consideration as per agreement which ever is higher is taken as total
sale value . Now it is decided to include the term as assessable value of property for stamp duty purpose
shall also be taken . This was done since some decision from tribunal has gone in favour of assessee that if
agreement is not registered the value as per stamp authority can not be substituted as consideration. In
order to negate the fallout of such decisions, this amendment is proposed to be made.

Gift

It has been decided to bring within the tax net gift of moveable and immoveable property which is received
without consideration or inadequate consideration in excess of Rs. 50,000/- from any person except
relative as defined in the explanation to section 56 (2) (vi) of the Act w.e.f 01/10/2009.

Taxation of Limited Liability Partnership ( LLP)

It is decided to have taxation system for LLP as prevalent for partnership firm. It is therefore desirable
to have LLP in place of companies in case of small and medium business house since LLP taxation regime is
more efficient in view of the fact that MAT and Dividend distribution tax is not chargeable for LLP
and entire profit distributed among partners are tax free in the hands of partners.

Assessment/ Re assessment

It has been decided to include safe harbour rule in the assessment of Transfer pricing. It is also proposed that
if two ALP is determined by the most appropriate method, the arithmetical mean of such price shall be
taken to be ALP. Further if variation between the transaction declared by the assessee and value
adopted by the A.O. does not exceed 5% , then price declared by the assessee shall be taken to be ALP in
case of transfer pricing assessment.
It is proposed to start new mechanism in the assessment in case of transfer pricing assessment and
assessment relating to foreign companies in which Dispute Resolution panel will look into cases in case
A.O. did not agree with the contention of the eligible assessee . A.O. has to follow the proposed steps as
envisaged in the new section 144C of the Act. The appeal against the order passed by the Dispute
Resolution panel lies with the Tribunal.
It is proposed to expand the scope of re assessment in case assessment is reopened on the ground that
income has escaped assessment. The A.O. can make addition on any issue which comes to his notice during
the course of re assessment even it they are not related to the reasons recorded earlier for re assessment.
It is proposed to serve the notice by courier or email. Such service of notice shall be valid.

Penalty

It is decided to levy concealment penalty for search case initiated after 01/06/2007 in case the assessee
declares any income for the earlier assessment years for which he has already filed return or time for filing
return has lapsed, the income declared for such years shall be deemed to be income for which he has
furnished inaccurate particulars of income and penalty ranging 100% to 300% on tax sought to be evaded
shall be leviable.

Implications of Budget 2009 on personal Tax

Tax Rates: Income Tax Slabs for Individuals:

New Pension System (NPS)

The Tax Benefit Under Section 80CCD has been
extended to "self employed" individuals as well.
It is also proposed to amend the Explanation to the
said section to provide that for the purposes of the said
section the assessee shall be deemed not to have
received any amount in the previous year if such
amount is used for purchasing an annuity plan in the
same previous year. These amendments will take
effect retrospectively from 1st April, 2009 and will,
accordingly, apply in relation to assessment year
2009-2010 and subsequent years

Limits of Section 80DD increased

Donations given to Political Party or Electoral Trust

Perquisites: Section 17

It is proposed that value of any specified security or sweat shares allotted to employee free of cost or at
concessional rates will be perquisite. The value will be the fair market value on the date on which option is
exercised as reduced by the amount paid by the
employee.
It is also proposed to include as perquisite employers contribution in excess of Rs. 1 lakh to approved
superannuation fund.
IT is proposed to include as perquisite value of any other fringe benefits or amenity as may be prescribed.
The Amendment will take effect from 1/4/2010.

Interest of Loan taken for Higher Education:Section 80E

Voluntary Retirement: Section 89

July 7, 2009

BUDGET 2009 - 2010

India Union Budget 2009-2010

Hightlights

Exemption limit Changed

For Senior Citizens - Now Rs 240,000

For Women - Now Rs.190,000 For

Others - Rs 160,000

Finance minister Pranab Mukherjee begins presentation of Union Budget
2009-10 in Lok Sabha. Some of the major excerpts of the budget speech
are:

Excise duty on fibre for cheaper cloth reduced

Excise duty on petrol-driven small trucks reduced to 10%

100% deduction in donation to electoral trusts

Service tax to be levied on law firms

Exemption of duty on goods made at construction sites restored

Drugs for heart diseases to become cheaper

Customs duty on gold and silver import increased

Customs duty of 5% being levied on import of set-top boxes

Drugs for heart diseases to become cheaper

Customs duty on gold and silver import increased

Commodities Transaction Tax to be rolled back

Exemption of duty on goods made at construction sites restored

Mobile phone accessories to become cheaper

New direct tax code in 45 days

Set-top boxes to cost more

Anonymous funds to charitable bodies to get some tax relief

Small businesses exempt from advance tax

Custom duty on LCD panels halved

Customs duty on bio-diesel reduced

Tax holiday extended for textile units

Total budget expenditure for 2009-10 will Rs 10,28,032 cr

Higher public investment in infrastructure

One lakh dwelling units for paramilitary forces to be built

Allocation for rehab of Lankan Tamils

New pension benefits for 12 lakh jawans and JCOs

Pension of non-commissioned officers to be hiked

Defence outlay has gone up

Fringe Benefit Tax to be scrapped

Eliminate the surcharge on personal Income tax by 10%

Hike in IT exemption for women to Rs 1,90,000

Hike in IT exemption to Rs 2,40,000 for senior citizens

General Sales Tax model will have a Central GST and State GST

GST to come into effect from April 01, 2010

Corporate tax unchanged

Interest subsidy on students' loans in higher education

Rs 1,000 cr for Aila rehabilitation programme to West Bengal

Rs 25 cr each for AMU campuses in Murshidabad and Mallapuram

Rs 2,113 cr for IITs and NITs

Government to spend Rs.12K cr on rural roads in FY'10

Commonwealth allocation hiked to Rs 16,300 cr

Govt to hike allocation to National Ganga Project to Rs 562 cr

Rs 7000 cr for rural electrification

Rice, wheat at Rs 3 per kg to the poor

One rank, one pension for ex-servicemen from July 1

Allowances to para-military forces at par with defence forces

Unique Identification ID project to tap private talent

National action plan on climate change

Full interest subsidy for students in approved institutions

Modernisation of national employment exchanges

50% cent of rural women in self-help groups

Real wage of Rs.100/day provided under NREGA

Allocation of Rs 50 cr to Chandigrah University

Rs 100 cr one-time grant to expand banks in unbanking areas

Allocation for PM Gram Sadak Yojna up by 59 per cent

Work on National Food Security scheme for subsidised food

Government to shift to nutrient based fertiliser subsidy regime

Rural mega clusters in Bengal and Rajasthan

Interest subsidy on education loans

National Mission for female literacy

Rural mega clusters in Bengal and Rajasthan

Interest subsidy for home loans up to Rs 1 lakh

LNG infrastructure in the country being expanded

Government to introduce food security bill

Scheduled commercial bks can set up offsite ATM

Will create close to 12 million jobs

Institutional refo reform measures to stabilise BOP

Aiming for direct transfer of subsidy to farmers

Rs 4000cr fund to incentivise banks & SFCs to lend

To provide all possible relief to exporters

Banking network to be expanded

One banking centre in every bloc

Rs 31,100 crore allocation for NREGA

NREGA gave employment opportunities to more than 4.479 cr
households

Banks, insurance to stay with Government

Raise threshold for non-promoter public listed companies

Indira Awaas Yojna hiked by 63% to Rs 8,883 cr

1% int subvention to farmers making timely payment

Allocation to NHAI increased by 23%

An expert group will look into petroleum product pricing

GDP grew at 6.7% in 2008-09

Move towards energy security via Integrated Energy Act

Saral-II forms to simplify taxation process

Domestic oil prices must be in sync with global prices

Raise threshold for non-promoter public listed companies

Hike in allocation for Mumbai flood management

LNG infrastructure in the country being expanded

Total fiscal stimulus during '08-09 is Rs 1,86,000 cr

Set up a task force for farmer lending

Allocation of Rashtriya Krishi Vikas Yojna stepped up by 30%

Additional budget allocation to farmers

Will ensure farm sector growth at 4%

Need to strengthen improve regulatory framework

Private investment has been the key growth driver

FIIs have returned to India in last few months

Print media stimulus package extended by six months

Target for agriculture credit raised to Rs 3,25,000 cr in 2009-10

Export Credit Guarantee scheme extended till March 2010

Incentives in interest rates to farmers to pay back

Agriculture loans in time

Storm-water drainage project fund hiked to Rs 500 cr

Blueprint for national gas grid

IIFCL will refinance 60% of commercial bank loans in PPP

IIFCL will look at new projects

IIFCL will also look at incremental lending by banks

JNNURM allocation hiked by 87 per cent

Hike infrastructure investment to over 9% of GDP by 2014

Fund alloction for urban poor accommodation is 3,973,000 cr

Housing allocation hiked under Rajiv Gandhi Rozgar Yojana

Trade in goods and services doubled in 2008

Significant hike in foreign capital

Need to reduce population below poverty line

New company IIFCL to look at infrastructure needs

Signs of revival in the domestic industry

Fiscal stimulus gave economy a boost

Govt took 3 stimulus packages to fight slowdown

Taxes and Rates slab for individual,women and senior citizen india

Labels

Blog Archive

July 22, 2009

TDS F.Y 2009- 10

July 19, 2009

Advance Tax Calculator

Income Tax Calculator Ay(2008-9)(9-10)

TDS CALCULATOR INDIA

July 18, 2009

Due Dates for IT

Implications of Budget 2009 TDS and TCS Rates F.Y 2009-10

Implications of Budget 2009 in Excise Duty

Implications of Budget 2009 Business Income

Implications of Budget 2009 on personal Tax

July 7, 2009

BUDGET 2009 - 2010

India Union Budget 2009-2010

Hightlights