Students , Finance Act 2010 - Income Tax Act, Wealth Tax Act
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Discussion < Students < Finance Act 2010 - Income Tax Act, Wealth Tax Act
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students zone,CA Students
CA Adarsh Agrawal

[ Scorecard :2922 ]

Rate of Tax

*Minimum Exemption Limit
Indl&HUF-1.6lacs ResiWomen-1.9lacs ResiSeniorCtzn-2.4lacs
Upto 5Lac-10%
Upto 8Lac-20%
Above 8Lac-30%
*Surchrge:only for domestic company7.5%of TI & foreign company2.5% of TI if total income EXCEEDS 1crore
*Taxable LTCG 20%
*STCG on Securities subject to SST 15%
*Lottery Winning,Horse Races etc 30%
*Cost Inflation Index-711

*Rate of MAT u/s115JB is increased from 15% to 18%
*Marginal Relief is allowed to Domestic & Foreign Company

*Wealth Tax@1% on taxable Net wealth in excess of Rs.30 Lac

CA Adarsh Agrawal

[ Scorecard :2922 ]

Total Income of NR


Explanation to Sec9(2) is substituted with retrospective effect from 01.06.1976
Now,in case of NON-RESIDENT,income by way of fees for Technical Services,Interest and royalty, from services UTILISED in INDIA will be included in his Total Income.Now it is not relevant that whether the services are rendered in India or not.

CA Adarsh Agrawal

[ Scorecard :2922 ]

Scope of Definition of Charitable Purpose[Sec.2(15)]


Now "Advancement of any other object of general public utility" wud continue 2b a "Charitable Purpose", if Total Receipts from any activity in the nature of Trade,Commerce,Business(TCB)or any activity of rendering any service in relation to TCB, does not exceeds Rs.10lacs in P.Y.

CA Adarsh Agrawal

[ Scorecard :2922 ]

Increase in limit for attracting TDS

Sec.-Nature-limit upto30.06.2010-New limit w.e.f.01.07.2010
194B-Lottery Winnings etc.-5000-10000
194BB-Winning from HorseRace-2500-5000
194D-Insurance Commission-5000-20000

194C-Payment to contractor for a single transaction
Aggregate Limit has been raised from50000 to75000.
e.g.Pmt to Contractor
on 1.5.2010=15000
on 1.8.2010=25000
on 1.12.2010=30000
Pmt due on 1.3.2010=28000
Ans:No TDS upto1.12.2010 but TDS on 98000 from last pmt of 28000

194J-Payment of
*Fees for ProfessionalServices
*Fees for TechnicalServices
*Royalty or non-compete fees referred to in Sec28(va)
U/s194J,above Limit is applicable SEPARATELY FOR EACH.
e.g.Pmt to Mr.Ad on2.8.2010,fee for Prof services 28000&for Tech services25000

CA Adarsh Agrawal

[ Scorecard :2922 ]

TDS/TCS Certificate.


Sec203 & 206C(5)
Now, considering the importance of TDS/TCS Certificate, Deductor/collector would continue to furnish the TDS/TCS Certificate to Deuctee/Collectee even after 1.4.2010

CA Adarsh Agrawal

[ Scorecard :2922 ]

Now, CIT is also empowered to cancel Regn of sec12A


Sec 12AA(3)
Now, Commissioner of income tax is also empowered cancel registration obtained u/s12A.
Thus, now CIT is having power of cancellation of registration of both 12A & 12AA.

CA Adarsh Agrawal

[ Scorecard :2922 ]



Now weighted deduction also available to approved ASSOCIATIONS u/s 35(1)(iii)

Sec35(1)(iii)125% weighted deduction of sum paid to approved/notified university,college,or other institution of object of research in SOCIAL SCIENCE/STATISTICAL RESEARCH. Earlier Approved Research ASSOCIATIONS of Social/Statistical Research were not included,bt now FA2010 includes Such ASSOCIATIONS u/s35(1)(iii)

Inclusion of Research ASSOCIATIONS in Sec35(1)(iii)..Related amendment in

*Sec10(21)for exemptn of income of such ASSOCIATIONS

*80GGA forDeductn ofDonations made to such ASSOCIATIONS

*139(4C)for requirement of filing ROI if their TI before giving exemptn u/s10 exceeds basic exemptn limit

*143(3)for considering exemptn of Sec10,b4 Assessment Order.But AO may pass assessment order without giving exemption of sec10 if prescribed conditions r not satisfied by such ASSOCIATIONS

CA Adarsh Agrawal

[ Scorecard :2922 ]

Substantial Increase in % of Weighted Deduction u/s35

*Sec35(1)(ii) Amount paid to Approved Research Association,university,college,institutions of SCIENTIFIC RESEARCH-Increase from 125% to175%

*Sec35(2AA) Amount paid to National Lab,University,an IIT or specified person for Approved Scientific Research Program-Increase from 125% to175%

*Sec35(2AB) Exp on Scientific Research (Otherthan exp on Land&Bldng)on IN-HOUSE R&D facility incurred by a COMPANY-Increase from 150% to200%

CA Adarsh Agrawal

[ Scorecard :2922 ]

Example on Section 35

SHAYVIDZ Aqua Ltd. furnishes following particulars for the P.Y.2010-11
A.Payment for Scientific Research
1.Indian Institute of Science,Bangalore-1L
3.X Ltd.-4L
B.Expenditure on in-house R&D Facility - Revenue exp 3L & Cap Exp(Including land of 5L) 7.50L



B. u/s35(2AB)

Rev Exp 200% of 3L &
Cap Exp 200% of 2.5L

Total deduction allowable u/s35 for A.Y.2011-12 = 22,12,500

CA Adarsh Agrawal

[ Scorecard :2922 ]

Sec35AD - "Specified Business" expanded for "Investment-linked Tax Incentives"

*Last yr-1. Cold Chain facility
2. Warehousing facility
3. Operating Cross-country natural gas/crude/petroleum oil pipeline netwrk
*Addition inFA2010-4.NEW hotel ofTWO-STAR or above in India
5.NEW hospital in India with atleast100beds for patients
6.Developing/building HOUSING PROJECT forSLUM Redevelopmnt/rehabitation under scheme of CG/SG&Notified byCBDT
if OPERATIONS are COMMENCED on or after 1.4.2010

CA Adarsh Agrawal

[ Scorecard :2922 ]

Sec35AD - Change in Condition of "Specified Business"


Amendment in Condition for Specified Business No.3
– must have made available the PRESCRIBED CAPACITY for USE on COMMON CARRIER BASIS any person otherthan assessee or its associated person. PRESCRIBED CAPACITY by Regulations of Petroleum & Natural Gas Regulatory Board is –
1.atleast One-third for Natural Gas
2.atleast One-fourth for Petroleum Product

CA Adarsh Agrawal

[ Scorecard :2922 ]

Sec35AD - "Specified Business" expanded for "Investment-linked Tax Incentives"..Related amendment in Sec80A....

Once assessee has claimed benefit of deduction u/s35AD for a particular year in respect of specified business, he cannot claim benefit under Chapter VI-A for the SAME OR ANY OTHER YEAR and VICE-VERSA

CA Adarsh Agrawal

[ Scorecard :2922 ]

Example on Sec35AD


Que.SHAYVIDZ Aqua Ltd commenced operation of business of a New3star hotel on1.4.2010.
Capital Exp Rs.50L (Jan2010toMar2010)& capitalized it.
In P.Y.2010-11,Capital Exp Rs.200L(inclusive of Rs.150L for acquisition of Land)
Compute deduction u/s35AD assuming that no Deduction claimed under chapter VI-A 
CapExp incurrd prior to1.4.2010(i.e.prior to commencemnt of business)& capitalized it=50L
Total deductn u/s35AD=100L

CA Adarsh Agrawal

[ Scorecard :2922 ]

Sec. 40(a)(ia) ExtentedTime Limit for depositing TDS  

*Earlier,specified pymnt was disallowed if No TDS or after deduction it had not been paid as below:
April to Fab-on or b4 31st March
March-on or b4 due date u/s139(1) i.e.31st July/31st Sep
**Amendment-New scheme
+Tax is reqd 2b deducted in P.Y.
+Time Limit 4 deposit of Deducted Tax :April to March (i.e. entire year) - on or b4 due date u/s139(1) i.e.31st July/31st Sep
+ if deducted tax is deposited after due dt,then it wud b allowed in Year of Payment

CA Adarsh Agrawal

[ Scorecard :2922 ]

Example on Sec 40(a)(ia)


If Tax deducted on Royalty paid to Mr.AD,a resident,during PY2010-11at any time between April2010to March2011&deposited by31st July/31st Sep,then SUCH EXPENDITURE (here,Royalty) wud b allowed as deduction in PY2010-11(A.Y.2011-12)

CA Adarsh Agrawal

[ Scorecard :2922 ]

Sec 40(a)(ia).. Related amendment in Sec201(1)


Earlier,Simple Intt was payable @1%p.m. in both the failure i.e. failure deduct tax deposit aftr deductn
Now by amendment,Intt rate has been changed:
1.failure to deduct-1%pm
2.failure to deposit aftr deductn- 1.5%pm
Q.On1.7.2010-Rs.40000 paid without TDS.
On28.2.2011-Rs-50000 paid & TDS@10% Rs.9000 and deposited it on 22.6.2011.Compute intt u/s201(1)
Ans.1%on 4000 for 8Months
&1.5%on 9000 for 4months

CA Adarsh Agrawal

[ Scorecard :2922 ]

Sec44AB - Increase in Threshold Limit for applicability of Tax Audit


Threshold Limit of Turnover/Gross Receipt for applicability of Tax Audit u/s 44AB has been increased

from Rs.40Lacs to Rs.60Lacs for Business

from Rs.10Lacs to Rs.15 Lacs for Profession

CA Adarsh Agrawal

[ Scorecard :2922 ]

Sec.44AB.. Related amendments in Sec.44AD & Sec.271B..

Sec44AD - Now it covers all businesses with Total Turnover/Gross Receipts upto Rs.60L & 8% of total turnover/gross recpt wud b the business income.
Sec271B-In case of failure to get a/c audited&Report filed,
Penalty =0.5%of turnover/gross recpt OR Rs.1.50Lacs whichever is less

CA Adarsh Agrawal

[ Scorecard :2922 ]

Sec44BB & Sec44DA - Tax treatment of Income of NR providing services or facilities for extraction or production of Mineral Oil


*Now,if INCOME of NR is IN THE NATURE OF fee for technical services,it shall b taxable either u/s44DA or115A IRRESPECTIVE OF BUSINESS to which it relates.
*Sec44BB wud apply only in case where consideration is for services&other facilities relating to MINERAL OIL exploration,extraction,productn activities WHICH ARE NOT IN THE NATURE of tech services.

CA Adarsh Agrawal

[ Scorecard :2922 ]

Sec47(xiiib) inserted-Conversion of Small Pvt Companies &Unlisted public companies into LLPs 2b EXEMPT FROM CAPITALGAINTAX subjct to FULFILLMENT OF CERTAIN CONDITIONS..


only 1 bt Biggest&Very imp Amendmnt(for May2011 exam)

i.e.Sec47(xiiib) inserted-Conversion of Small Pvt Companies &Unlisted public companies into LLPs 2b EXEMPT FROM CAPITALGAINTAX subjct to FULFILLMENT OF CERTAIN CONDITIONS.

Related amendmnt in Sec.47A(4),72A,115JAA,32(1),43(6),49(1),49(2AAA),43(1)&35DDA

CA Adarsh Agrawal

[ Scorecard :2922 ]

Transfer of IMMOVABLE PROPERTY for INADEQUATE Consideratn wud always b outside the ambit of Sec.56(2)(vii)..

Income from Other Sources

Sec56(2)(vii)-Now,transfer of IMMOVABLE PROPERTY for INADEQUATE Consideratn wud always b outside the ambit of 56(2)(vii)

So,nowSec56(2)(vii)will cover


*WITHOUT CONSIDERATION whr FMV exceeds Rs50000 *INADEQUATE CONSIDERATION whr FMV less Sale Consideratn exceeds Rs50000

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