01 March 2010

Income-tax Proposals – Budget 2010


Important Changes proposed in Budget 2010 with reference to Income-tax

  • Introduction of Direct Tax Code postponed for 1 year

  • Rates of Income tax revised by increase in slabs in case of individuals, HUF, AOP/BOI & Artificial Jursidical Person:

  • Slab of Income

    Rate of Income tax

    Up to Rs. 160,000#


    Rs. 160,001 to Rs. 500,000 


    RS. 500,001 to Rs. 800,000


    Rs. 800,001 & above


    Surcharge irrespective of the total income


    # In case of individual being woman resident in India and below the age of 65 years at any time during the PY, the basis exemption limit is Rs. 190,000.

    #In case of individual, being resident in India, who is age of 65 years or more at any time during the PY, the basic exemption limit is Rs. 2,40,000.

  •   In case of Partnership firms [Including LLP], the rate of tax shall be 30%. Surcharge shall be NIL. 

  • In case of companies, the rate of taxes shall be same as specified in the Finance Act 2009. Further, Surcharge has been reduced to 7.5% in case of domestic companies [2.5% in case of non domestic companies continues], if total income of the company exceeds Rs. One crore.

  • Education cess and SHEC shall be continued to be levied in all cases.

  • Deduction for individuals and HUF u/s.80CCF for investment up to Rs.20,000/- in 'long term infrastructure bonds'

  • Benefit for payment to mediclaim u/s.80D also extended to payment made to 'Central Government Health Scheme'

  • Simplified Saral-II for individual tax payer to be notified.

  • Limit of compulsory tax-audit u/s.44AB enhanced from Rs40 Lakhs to Rs60 Lakhs in case of assessee having income from business and in case of assessee having income from profession, it is enhanced from Rs.10 Lakhs to Rs.15 Lakhs. This will be applicable in relation to financial year 2010-2011

  • Minimum penalty for not submitting audit report before due date is enhanced from Rs.1 Lakhs to Rs.1.5 Lakhs

  • Retrospetive from 1-4-2009 no disallowance u/s 40(i)(ia) will be made in relation to payment made subject to tax in previous year if after deduction of tax during the previous year, the same has been paid on or before the due date of filing of return of income specified in sub-section (1) of section 139.

  • Threshold limit of TDS has been proposed to be increased from 1-7-2010 In respect of following payments


    Nature of payment

    Existing threshold

    Proposed Threshold


    Winning from Lottery & crossword puzzles




    Winnings from Horse Race




    Payment to Contractors

    20,000  [for single transaction]




    50,000 [for aggregate transactions]



    Insurance Commission




    Commission or brokerage








    Fess for professional or technical services



  • Effective 1 July2010, the interest rate for delay in deduction or payment of withholding tax is revised from 1 % to 1.5% p.m. from the date on which tax is deducted till its payment. For the period from the date of obligation to deduct to the date of deduction of tax at source, the interest rate continues to beat 1 % p.m.

  • The Tax Deductor or Tax Collector obliged to furnish relevant certificate to the Payee for taxes deducted at source for financial year 2010-11 and onwards.

  • Certain exemption form Capital Gains granted to companies for conversion to LLP

  • Rate of MAT is increase to 18% of Book Profits.   Tax credit shall be allowed to be carried forward and set off up to 10 Assessment years immediately succeeding the AY in which tax credit becomes allowable.

  • The income of Approved Research Associations undertaking research in social science or statistical research are to be tax exempt

  • The weighted deductions for scientific research and development increased as under: - For expenditure incurred by eligible company in the recognised in house research and development facility, the weighted deduction increased to 200 percent from 150 percent- For payments to the National Laboratory or a University or an Indian Institute of Technology or a Research Association or a specified person, the weighted deduction has been increased to 175 percent from 125 percent - For payments to Approved Research Associations, undertaking research in social science or statistical research, the weighted deduction is to be allowed at 125 percent