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FD is out of the scope of wealth tax....As per Sec 2(ea) the following six are taxable....
1.) House
2.) Motor Car
3.) Jewellery
4.) Yacths, boats and aircrafts
5.) Urban Land
6.) Cash in hand in excess of Rs. 50,000 for indviduals.
there fore on 31st March every year deposit all the cash in hand in bank( that is accounted money
) since bank account is out of the purview of Wealth tax.
1.) House
2.) Motor Car
3.) Jewellery
4.) Yacths, boats and aircrafts
5.) Urban Land
6.) Cash in hand in excess of Rs. 50,000 for indviduals.
there fore on 31st March every year deposit all the cash in hand in bank( that is accounted money
) since bank account is out of the purview of Wealth tax.Important recent amendments
Some of the general important amendments in Income Tax laws made by the Finance Act 2009 and other general provisions which may be use full for you are as under:-
For Assessee whose accounts are required to be audited under any Law, all Companies and working partners of the firm whose accounts are required to be audited. 30th September
For all Assessee other than above 31st July
(Same dates are for Wealth Tax also.)
The carry forward of loss will be allowed only if return is filed in time.
All Companies and Partnership firm whether having any income or not are required to file the returns.
If return for year ending 31.3.2009 is not filed by 31.3.2010 the Rs 5,000/- penalty leviable.
From Asstt Year 2006-07 it would be mandatory to file the return of income if the income before claiming the deduction u/s 80C etc (i.e. on investments) exceeds minimum amount chargeable to tax.
1. TAX RATES - For Asstt Year 2009-10 (YE 31.3.2009)
Individual\HUF Other Then Women & Senior Citizen Slab Rate Surcharge Education Cess 2% & Secondary Education Cess 1% (on Tax+ Surcharge)
Upto Rs 1,50,000/- Nil Nil Nil
1,50,000/- to 3,00,000/- 10% Nil 3%
3,00,000/- to 5,00,000/- 20% Nil 3%
Above 5,00,000/- 30% 10% if Income more than 10.00 Lacs 3%
Women Less than 65 Years of Age
Upto Rs 1,80,000/- Nil Nil Nil
1,80,000/- to 3,00,000/- 10% Nil 3%
3,00,000/- to 5,00,000/- 20% Nil 3%
Above 5,00,000/- 30% 10% if Income more than 10.00 Lacs 3%
Senior Citizen of 65 Years of Age
Upto Rs 2,25,000/- Nil Nil Nil
2,25,000/- to 3,00,000/- 10% Nil 3%
3,00,000/- to 5,00,000/- 20% Nil 3%
Above 5,00,000/- 30% 10% if Income more than 10.00 Lacs 3%
Firm/ Companies 30% 10% If Income more than 1 Crore 3%
2. TAX RATES - For Asstt Year 2010-11 (YE 31.3.2010)
Individual\HUF Other Then Women & Senior Citizen Slab Rate Surcharge Education Cess 2% & Secondary and Higher Education Cess 1% (on Tax+ Surcharge)
Upto Rs 1,60,000/- Nil Nil Nil
1,60,000/- to 3,00,000/- 10% Nil 3%
3,00,000/- to 5,00,000/- 20% Nil 3%
Above 5,00,000/- 30% Nil 3%
Women Less than 65 Years of Age
Upto Rs 1,90,000/- Nil Nil Nil
1,90,000/- to 3,00,000/- 10% Nil 3%
3,00,000/- to 5,00,000/- 20% Nil 3%
Above 5,00,000/- 30% Nil 3%
Senior Citizen of 65 Years of Age
Upto Rs 2,40,000/- Nil Nil Nil
2,40,000/- to 3,00,000/- 10% Nil 3%
3,00,000/- to 5,00,000/- 20% Nil 3%
Above 5,00,000/- 30% Nil 3%
Firm & Limited Liability Partnership 30% Nil 3%
Companies 30% 10% If Income more than 1 Crore 3%
3. ADVANCE TAX: The Advance tax is to be paid as under if exceeds Rs 10,000/- (previously this limit was Rs 5,000/-)
Other than Companies For Companies
By 15th June Nil 15%
By 15th September 30% 30%
By 15th December 30% 30%
By 15th March Balance Balance
If assessee has opted for presumptive taxations u/s 44AD or AE then he has not to pay advance tax.
4. CASH EXPENSES: Any expense or purchase or aggregate of payment in a day to one party is in excess of Rs 20,000/ the payment of it should be made by A/c payee Cheque or Bank Draft otherwise entire payment will be disallowed. From 1st Oct, 2009 limit for payment of freight has been increased to Rs 35,000/- for other it will remain 20,000/-.
5. LOANS/DEPOSITS: No person can take loan or deposit in cash equal to or more than Rs 20,000/ , if taken then penalty can be imposed equal to the amount so taken. It is advised that all loans or deposit should be taken by A/c Payee Cheque/Draft only. If in the account of person from whom loan or deposit is to be taken there is already some credit balance then only that amount can be taken in cash to make total in this account Rs 19,999/ . If the balance in the account before taking this loan is equal to or more than 20,000/ then even Rs 1/ cannot be taken in cash.
6. LOAN REPAYMENTS: No person can make repayment of any loans or deposit of any nature in cash if the amount of deposit together with the Interest is equal to or more than Rs 20,000/ . The payment can be made by only by A/c Payee Cheque/Draft in the name of the person who has made loan or depositor. So even LIP, taxes or other debits also can not be made directly from the loan account they have to be routed through savings bank account of depositor.
GOVERNMENT TAX & FEES ETC: The deduction for all sums payable of Tax, duty or other sums as defined etc are allowable on payment basis, i.e. will be allowed in the year when actual payment is made, However amounts due as on 31st March will be allowed in that year if these are paid before due date of filing the return and proof of payment are attached with the return. For example: - Provident Fund, Mandi Tax, Purchase Tax, Excise Duty, Sales Tax, Bonus/Commission to staff, House/Water Tax, E.S.I., Interest to Central & State Financial Institutions, Interest on Loans and advances from Scheduled Banks and Leave salary of staff.
7. Remuneration to Partners in partnership firm and LLP: with effect from Assessment year 2010-11 i.e. year ending 31st March 2010 the salary allowable for partners has been increased. The new salary which is allowable is as under:-
Book Profits (profit as per books before partners Salary & Income Tax) Amount Deductible
In loss Rs 1,50,000/-
In case of Profits
On first Rs 3,00,000/-
On balance profits
Higher of Rs 1,50,000/- or 90% of Book profits
60%
8. TAX TO BE DEDUCTED AT SOURCE (TDS): For Financial Year 2009-10
Now Surcharge, and Education Cess is not to be included for TDS purposes.
Type of Payment Minimum limit To Firm To Companies To Individual\HUF
Interest (194A) 5,000/- 10% 20% 10%
Professional & technical services (194-J) 20,000/- or more per year
10%
10%
10%
Commission & Brokerage (194-H) Rs 2,500/- or more per year
10%
10%
10%
Rent (194-I)
Upto 30th September 2009 1,20,000/- or more per year
(a) for Land, Building, or Furniture or fitting
(b) Plant & Machinery, or Equipments 20%
10% 20%
10% 15%
10%
From 1st October 2009 1,20,000/- or more per year
(a) for Land, Building, or Furniture or fitting
(b) Plant & Machinery 10%
2% 10%
2% 10%
2%
U/s 194C
Upto 30th September 2009 20,000/- per contract or Rs 50,000/- in a year
(a)To Contractors 2% 2% 2%
(b) On Advertising Contracts & other sub contractors 1% 1% 1%
From 1st October 2009
To all contractors including Advertising and sub contract 20,000/- per contract or Rs 50,000/- in a year 2% 2% 1%
Salary Taxable Income Average rate of tax plus Education Cess (3%)
Following beside general work contract are also covered in definition of Work: -
Broadcasting and telecasting
Carriage of goods and passengers by any transport other than Railways
Catering
And carrying out manufacturing when material is supplied by the buyer.
From 1st October 2009 no TDS will be required to be deducted from transporters if transporter furnishes his PAN.
In case of work contract involving manufacturing if material value is given separately in the invoice then TDS has to be deducted on labour element only otherwise on total bill.
From 1st April 2010 if PAN number is not provided by the deductee TDS @20% will have to be deducted.
PAN has to be mentioned in all correspondence (bills, vouchers, and documents) exchanged between deductor and deductee.
If Tax is not deducted or deducted but not paid on an amount on which Tax deductible within time allowed to file return of income then the amount of such expenses will not be allowed. This will be allowed in the year in which TDS is paid.
The TDS is to be deducted at the time of payment or credit, whichever is earlier.
PAYMENT: -The TDS is required to be paid within 7 days of the end of the month in which deduction has been made. The TDS on amounts Credited on 31st March is to be paid by 31st May.
RETURN: - Quarterly Return of TDS is to be filed within 15 days of end of quarter i.e. 15th July, 15th October and 15th January. The Return for March Quarter to be filed by 15th June
TDS has to be deducted by all firm & Company, however in case the sale\gross turnover during last year was more than 40 Lacs then Individual and HUF will also have to deduct TDS. On salary TDS has to be deducted by all persons.
For not deducting TDS on Interest to any person, (Other than Company and firm) form 15H will have to be taken from recipient in duplicate before the first time Interest is paid or credited during the year. One Form 15H will have to be filed with the Commissioner of Income Tax within seven days of end of the month in which form 15H was received. This form will have to be obtained and filed every year.
The professional services include legal, medical, engineering, architectural, accountancy, technical consultancy, interior decoration or advertising.
The TDS certificates are required to be issued on form No 16A for all except on salary. In case of deduction from actual payment within 1 month from the end of the month in which deduction is made, and in case of credit at the year end before 7th June. For salary it is to be issued on form No 16 before 30th April.
9. MAINTENANCE/AUDIT OF BOOKS OF ACCOUNTS AND DEEMED PROFITS:
UPTO Assessment year 2010-11 (i.e. year ending 31.3.2010)
a. The maintenance of books of accounts is compulsory if total turnover is more than 10,00,000/ or if profit is more than 1,20,000/ In any one of the three previous years). In case total Turnover is more than 40 Lacs Audit is also compulsory. Not filing Tax audit report within time will attract penalty of 0.5% of Sales or Rs 1, 00,000/- which ever is less. For not maintaining books of accounts as required the penalty can be levied of Rs 25,000/-
b. In following cases the deemed profit will be assessed after deducting partners salary and interest.
In case of contractors if the sales/total turnover is less than Rs 40 lacs. 8% of turnover.
In business of plying, hiring or leasing of trucks etc if own upto 10 trucks profit will be assessed @ 3,500/- per heavy vehicle per month and @ 3,150/- per light vehicle per month.
In case of retail trade in any goods or merchandise, if sales/total turnover is less than 40 Lacs, 5% profit on sales will be assessed as profit.
In all three above cases if profits are assessed as above then books of accounts are not required to be maintained. In case the Assessee whishes to show lessor profit then he will have to maintain the books of accounts and get them audited u/s 44AB.
From Assessment year 2011-12 (i.e. from year starting from 1.4.2010)
The Salient features of presumptive taxation u/s 44AD & 44AE (as replaced) are as under:-
Applies to resident assessees who are Individual, HUF or a firm (Other Than LLP).
Extends to cover all business having turnover or gross receipts of Rs 40 Lacs or less (other than business of plying, firing or leasing of goods a carriage for which there is separate section).
Presumptive income shall be 8% of total turnover or gross receipts or the income claimed to have been earned from such business whichever is higher
Partnership firm can claim deduction of salary & interest to partners within limits of section 40(b).
The assessee who is covered u/s 44AD the maintenance of books of accounts is not required
The Assessee will be required to maintain books of accounts and also get them audited if he claims that profits & gains from such business is less than deemed profit of 8% as calculated u/s 44AD and if his total income exceeds the basic exemption limit.
FOR TRUCK OWNERS u/s 44AE:- If own upto 10 trucks profit will be assessed @ 5,000/- per heavy vehicle per month and @ 4,500/- per light vehicle per month.
10. DEPRECIATION RATES: FULL RATE IF PURCHASED BEFORE 2nd OCT, OTHERWISE HALF RATE WOULD APPLY.
ASSET Rate
Other than Residential building 10%
Residential buildings 5%
Plant & Machinery 15%
Furniture and fittings including Electrical fittings e.g. wiring, switches, sockets, other fittings and fans etc 10%
Motor Cars purchased after 1.4.90 15%
Motor Cars Purchased before 1.4.90 15%
Scooter/Cycles etc 15%
Motor Buses, motor Lorries and motor Taxis used in a business of running them on hire 30%
Moulds used in Rubber & Plastic Goods factories 30%
Computers & Software 60%
Specified Air Pollution Control Equipments, Water Pollution Control Equipments, Solid waste control equipments 100%
Specified Energy Saving Devices 80%
Specified Renewal Energy Devices 80%
Intangible assets like know-how, patents, copyrights, trademark, licenses, franchises or any other business or commercial rights of similar nature 25%
Initial Depreciation
Those assessee who are engaged in the business of manufacture or production, will get Initial depreciation of 20% of the cost of the new plant and machinery added after 31st March 2005. This initial depreciation will not be available in respect of (i) machinery or plant used either in India or outside by any other person (ii) machinery or plant installed in office or residential complex (iii) office appliance or road transport vehicle (iv) Machinery or plant the whole cost of which is allowed as deduction. The initial depreciation will be taken into account while computing the written down value.
11. MINIMUM ALTERNATE TAX CREDIT
From Assessment year 2010-11 the tax rate has been increased from 10% to 15% (plus Surcharge and Education Cess and SHE Cess as applicable) and credit period has been extended to 10 year from 7 years.
12. LONG TERM CAPITAL GAINS
The Long term capital gains on sale of land and buildings will be levied on the basis of the value adopted for the purposes of stamp duty. From 1st October 2009 The provisions have been extended to transfer which may not require to be registered. In such cases the amount assessable (the price which the stamp valuation authority would have adopted if it was referred to such authority) shall be deemed value of consideration
Long Term Capital Gains on sale of Shares, or Units of equity oriented funds (after 1st October 2004) on which Securities Transaction tax has been paid is exempt.
13. SHORT TERM CAPITAL GAINS
For transactions after 1st October 2004 Tax rate on Short Term Capital Gains on Shares or units in equity oriented funds etc will be 15% if Securities Transactions Tax has been paid on the transaction.
14. DEDUCTIOPN OF TAX ON INVESTMENTS (LIP, PF & NSC etc)
From FY 2006-07 the deduction for specified investment as under will be given from income itself instead of deduction from tax. The total limit of such deduction will be Rs 1,00,000/- without any sectoral individual limits:-
i. FDR of more than 5 years period with Scheduled Bank under scheme to be framed by the Government
ii. Life Insurance (The premium will be restricted to 20% of the actual capital sum assured.)
iii. Deferred annuity
iv. Sum deducted by Government for deferred annuity to the extent it does not exceed one-fifth of the salary.
v. Provident Fund Contribution.
vi. Contribution to Recognised Provident Fund
vii. Contribution by Employee to Recognised Provident Fund
viii. Contribution to an Approved Superannuation Fund
ix. Specified Security or the deposit of the Central Government as specified in this behalf.
x. Subscription to Saving Certificates as may be specified by the Central Government.
xi. ULIP 1971 specified in Schedule-II of UTI.
xii. ULIP of LIC mutual fund notified u/s 10(23D)
xiii. Annuity Plan of LIC or any other insurer as may be specified.
xiv. Any specified units of the Mutual Fund
xv. Contribution to any Pension fund set up by any Mutual Fund.
xvi. Subscription to any Pension Fund scheme of National Housing Bank.
xvii. Subscription to deposit scheme of Public Sector Company engaged in providing long term finance for construction or purchase of houses in India or any authority constituted in India for house construction or planning, development etc of cities, towns and villages etc as specified.
xviii. Tuition fees to any university, college, school or other educational institution situated within India for the purpose of 2 children.
xix. Payment for the purpose of purchase or construction of residential house property. This will not include cost of renovation or repairs.
xx. Subscription to equity shares or debentures forming part of an eligible issue.
xxi. Subscription to any notified bonds of NABARD
xxii. Senior Citizen Saving Scheme 2004 and 5 Year Post Office Time Deposit
There will continue to be holding period in respect of some investments as under:
i. In case of single premium policy, the same should have been held for 2 years. In case of other policies, premium for 2 years should have been paid.
ii. In case of Unit linked insurance plans it should continue for a period of 5 years.
iii. In case of house property, it should not be transferred before the expiry of 5 years from the end of the financial in which possession is taken.
iv. The equity shares or the debentures should not be sold or transferred within a period of 3 years.
Section 80CCC- Deduction from income upto Rs 1,00,000/- is allowable for payment to LIC or other insurer for pension fund (section 80CCD- in which payment to new pension system will alo be covered if not exceeds 10% of Gross Total Income) within overall limit of Rs 1 Lacs as above
15. Deduction for Education Loan (Section 80E)
From Assessment year 2010-11 Entire payment of interest on education loan (for studies in all fields including vocational studies after Senior Secondary Examination) is deductible. If Loan was taken by the taxpayer for the purpose of pursuing his own higher education or for the purpose of higher education of his relatives, i.e. spouse/ any child.)
16. The deductions for Medical Treatment expenses, Medical Insurance shall continue as before. Deduction for physical disability has been increased to 75,000/-(from 50,000/-) and 1,00,000/- (from 75,000/-).
17. Limited Liability Partnership (LLP) - The Taxation of LLP will like that of partnership firm. Conversion of partnership firm into LLP will have no tax implications subject to certain conditions.
18. GIFTS RECEIVED- Section 56(2)(vii)
Upto 30th September 2009 If total sum of money exceeding Rs 50,000/- received on or after 1.4.2006 without consideration (i.e. gift) from all sources by an Individual or HUF the whole of such sum shall be added to income subject to certain exemptions given below.
From 1st October 2009 the scope of this section has been increased providing as under
Where Individual or HUF receives any year from any person or persons
Any sum of money without consideration the total of which exceeds Rs 50,000/- the whole aggregate of such money shall be added as income.
In case of immoveable property being land or building received without consideration or with inadequate consideration the stamp value of which is more than Rs 50,000/- then stamp value of such property in excess of such consideration shall be the income
In case of Moveable property (being Shares & Securities, jewelry, archeological collections, drawings, paintings, sculptures, or any work of art) received the Total Fair Market Value of which exceeds Rs 50,000/- the whole aggregate of such Fair Market Value exceeds consideration shall be income
Exemptions:-
Received on the occasion of marriage of the Individual
Received under a will or by way of inheritance
In contemplation of death of payer
From any relative (as given below)
i. Spouse of Individual
ii. Brother or Sister of the Individual
iii. Brother or Sister of the spouse of the Individual
iv. Brother or Sister of either of the parents of the Individual
v. Any lineal ascendant or descendent of the Individual
vi. Any lineal ascendant or descendent of the spouse of the Individual
vii. Spouse of the persons referred to in clauses (ii) to (vi) above
19. MISCELLANEOUS:
a. Income of spouse from salary from concern where such individual has substantial interest will be clubbed in all cases except where it is professional firm as per 44AA and spouse has technical qualification.
b. From FY 2007-08 Mediclaim Insurance premium paid is deductible from income upto Rs 15,000/ (for Senior Citizen Rs 20,000/-). From Asstt Year 2009-10 additional Rs 15,000/- will be allowable if premium paid for Parents.
c. Medical Treatment expenses as specified in rules up to Rs 40,000/- (for senior citizen Rs 60,000/-)
d. If house acquired or constructed with borrowed capital after 1.4.99 and completed within 3 years deduction of Interest shall be up to Rs 1,50,000/-
e. Deduction for repair etc from property income will be allowed 30% and deduction of municipal taxes will be allowed on payment basis.
f. The dividend Income from companies, Mutual funds and receipts from UTI will be not taxable.
20. Wealth Tax- from Assessment Year 2010-11 the limit of wealth tax has been increased to 30 Lacs from 15 Lacs at present
IMPORTANT RECENT AMENDMENTS
Some of the general important amendments in Income Tax laws made by the Finance Act 2009 and other general provisions which may be use full for you are as under:-
For Assessee whose accounts are required to be audited under any Law, all Companies and working partners of the firm whose accounts are required to be audited. 30th September
For all Assessee other than above 31st July
(Same dates are for Wealth Tax also.)
The carry forward of loss will be allowed only if return is filed in time.
All Companies and Partnership firm whether having any income or not are required to file the returns.
If return for year ending 31.3.2009 is not filed by 31.3.2010 the Rs 5,000/- penalty leviable.
From Asstt Year 2006-07 it would be mandatory to file the return of income if the income before claiming the deduction u/s 80C etc (i.e. on investments) exceeds minimum amount chargeable to tax.
1. TAX RATES - For Asstt Year 2009-10 (YE 31.3.2009)
Individual\HUF Other Then Women & Senior Citizen Slab Rate Surcharge Education Cess 2% & Secondary Education Cess 1% (on Tax+ Surcharge)
Upto Rs 1,50,000/- Nil Nil Nil
1,50,000/- to 3,00,000/- 10% Nil 3%
3,00,000/- to 5,00,000/- 20% Nil 3%
Above 5,00,000/- 30% 10% if Income more than 10.00 Lacs 3%
Women Less than 65 Years of Age
Upto Rs 1,80,000/- Nil Nil Nil
1,80,000/- to 3,00,000/- 10% Nil 3%
3,00,000/- to 5,00,000/- 20% Nil 3%
Above 5,00,000/- 30% 10% if Income more than 10.00 Lacs 3%
Senior Citizen of 65 Years of Age
Upto Rs 2,25,000/- Nil Nil Nil
2,25,000/- to 3,00,000/- 10% Nil 3%
3,00,000/- to 5,00,000/- 20% Nil 3%
Above 5,00,000/- 30% 10% if Income more than 10.00 Lacs 3%
Firm/ Companies 30% 10% If Income more than 1 Crore 3%
2. TAX RATES - For Asstt Year 2010-11 (YE 31.3.2010)
Individual\HUF Other Then Women & Senior Citizen Slab Rate Surcharge Education Cess 2% & Secondary and Higher Education Cess 1% (on Tax+ Surcharge)
Upto Rs 1,60,000/- Nil Nil Nil
1,60,000/- to 3,00,000/- 10% Nil 3%
3,00,000/- to 5,00,000/- 20% Nil 3%
Above 5,00,000/- 30% Nil 3%
Women Less than 65 Years of Age
Upto Rs 1,90,000/- Nil Nil Nil
1,90,000/- to 3,00,000/- 10% Nil 3%
3,00,000/- to 5,00,000/- 20% Nil 3%
Above 5,00,000/- 30% Nil 3%
Senior Citizen of 65 Years of Age
Upto Rs 2,40,000/- Nil Nil Nil
2,40,000/- to 3,00,000/- 10% Nil 3%
3,00,000/- to 5,00,000/- 20% Nil 3%
Above 5,00,000/- 30% Nil 3%
Firm & Limited Liability Partnership 30% Nil 3%
Companies 30% 10% If Income more than 1 Crore 3%
3. ADVANCE TAX: The Advance tax is to be paid as under if exceeds Rs 10,000/- (previously this limit was Rs 5,000/-)
Other than Companies For Companies
By 15th June Nil 15%
By 15th September 30% 30%
By 15th December 30% 30%
By 15th March Balance Balance
If assessee has opted for presumptive taxations u/s 44AD or AE then he has not to pay advance tax.
4. CASH EXPENSES: Any expense or purchase or aggregate of payment in a day to one party is in excess of Rs 20,000/ the payment of it should be made by A/c payee Cheque or Bank Draft otherwise entire payment will be disallowed. From 1st Oct, 2009 limit for payment of freight has been increased to Rs 35,000/- for other it will remain 20,000/-.
5. LOANS/DEPOSITS: No person can take loan or deposit in cash equal to or more than Rs 20,000/ , if taken then penalty can be imposed equal to the amount so taken. It is advised that all loans or deposit should be taken by A/c Payee Cheque/Draft only. If in the account of person from whom loan or deposit is to be taken there is already some credit balance then only that amount can be taken in cash to make total in this account Rs 19,999/ . If the balance in the account before taking this loan is equal to or more than 20,000/ then even Rs 1/ cannot be taken in cash.
6. LOAN REPAYMENTS: No person can make repayment of any loans or deposit of any nature in cash if the amount of deposit together with the Interest is equal to or more than Rs 20,000/ . The payment can be made by only by A/c Payee Cheque/Draft in the name of the person who has made loan or depositor. So even LIP, taxes or other debits also can not be made directly from the loan account they have to be routed through savings bank account of depositor.
GOVERNMENT TAX & FEES ETC: The deduction for all sums payable of Tax, duty or other sums as defined etc are allowable on payment basis, i.e. will be allowed in the year when actual payment is made, However amounts due as on 31st March will be allowed in that year if these are paid before due date of filing the return and proof of payment are attached with the return. For example: - Provident Fund, Mandi Tax, Purchase Tax, Excise Duty, Sales Tax, Bonus/Commission to staff, House/Water Tax, E.S.I., Interest to Central & State Financial Institutions, Interest on Loans and advances from Scheduled Banks and Leave salary of staff.
7. Remuneration to Partners in partnership firm and LLP: with effect from Assessment year 2010-11 i.e. year ending 31st March 2010 the salary allowable for partners has been increased. The new salary which is allowable is as under:-
Book Profits (profit as per books before partners Salary & Income Tax) Amount Deductible
In loss Rs 1,50,000/-
In case of Profits
On first Rs 3,00,000/-
On balance profits
Higher of Rs 1,50,000/- or 90% of Book profits
60%
8. TAX TO BE DEDUCTED AT SOURCE (TDS): For Financial Year 2009-10
Now Surcharge, and Education Cess is not to be included for TDS purposes.
Type of Payment Minimum limit To Firm To Companies To Individual\HUF
Interest (194A) 5,000/- 10% 20% 10%
Professional & technical services (194-J) 20,000/- or more per year
10%
10%
10%
Commission & Brokerage (194-H) Rs 2,500/- or more per year
10%
10%
10%
Rent (194-I)
Upto 30th September 2009 1,20,000/- or more per year
(a) for Land, Building, or Furniture or fitting
(b) Plant & Machinery, or Equipments 20%
10% 20%
10% 15%
10%
From 1st October 2009 1,20,000/- or more per year
(a) for Land, Building, or Furniture or fitting
(b) Plant & Machinery 10%
2% 10%
2% 10%
2%
U/s 194C
Upto 30th September 2009 20,000/- per contract or Rs 50,000/- in a year
(a)To Contractors 2% 2% 2%
(b) On Advertising Contracts & other sub contractors 1% 1% 1%
From 1st October 2009
To all contractors including Advertising and sub contract 20,000/- per contract or Rs 50,000/- in a year 2% 2% 1%
Salary Taxable Income Average rate of tax plus Education Cess (3%)
Following beside general work contract are also covered in definition of Work: -
Broadcasting and telecasting
Carriage of goods and passengers by any transport other than Railways
Catering
And carrying out manufacturing when material is supplied by the buyer.
From 1st October 2009 no TDS will be required to be deducted from transporters if transporter furnishes his PAN.
In case of work contract involving manufacturing if material value is given separately in the invoice then TDS has to be deducted on labour element only otherwise on total bill.
From 1st April 2010 if PAN number is not provided by the deductee TDS @20% will have to be deducted.
PAN has to be mentioned in all correspondence (bills, vouchers, and documents) exchanged between deductor and deductee.
If Tax is not deducted or deducted but not paid on an amount on which Tax deductible within time allowed to file return of income then the amount of such expenses will not be allowed. This will be allowed in the year in which TDS is paid.
The TDS is to be deducted at the time of payment or credit, whichever is earlier.
PAYMENT: -The TDS is required to be paid within 7 days of the end of the month in which deduction has been made. The TDS on amounts Credited on 31st March is to be paid by 31st May.
RETURN: - Quarterly Return of TDS is to be filed within 15 days of end of quarter i.e. 15th July, 15th October and 15th January. The Return for March Quarter to be filed by 15th June
TDS has to be deducted by all firm & Company, however in case the sale\gross turnover during last year was more than 40 Lacs then Individual and HUF will also have to deduct TDS. On salary TDS has to be deducted by all persons.
For not deducting TDS on Interest to any person, (Other than Company and firm) form 15H will have to be taken from recipient in duplicate before the first time Interest is paid or credited during the year. One Form 15H will have to be filed with the Commissioner of Income Tax within seven days of end of the month in which form 15H was received. This form will have to be obtained and filed every year.
The professional services include legal, medical, engineering, architectural, accountancy, technical consultancy, interior decoration or advertising.
The TDS certificates are required to be issued on form No 16A for all except on salary. In case of deduction from actual payment within 1 month from the end of the month in which deduction is made, and in case of credit at the year end before 7th June. For salary it is to be issued on form No 16 before 30th April.
9. MAINTENANCE/AUDIT OF BOOKS OF ACCOUNTS AND DEEMED PROFITS:
UPTO Assessment year 2010-11 (i.e. year ending 31.3.2010)
a. The maintenance of books of accounts is compulsory if total turnover is more than 10,00,000/ or if profit is more than 1,20,000/ In any one of the three previous years). In case total Turnover is more than 40 Lacs Audit is also compulsory. Not filing Tax audit report within time will attract penalty of 0.5% of Sales or Rs 1, 00,000/- which ever is less. For not maintaining books of accounts as required the penalty can be levied of Rs 25,000/-
b. In following cases the deemed profit will be assessed after deducting partners salary and interest.
In case of contractors if the sales/total turnover is less than Rs 40 lacs. 8% of turnover.
In business of plying, hiring or leasing of trucks etc if own upto 10 trucks profit will be assessed @ 3,500/- per heavy vehicle per month and @ 3,150/- per light vehicle per month.
In case of retail trade in any goods or merchandise, if sales/total turnover is less than 40 Lacs, 5% profit on sales will be assessed as profit.
In all three above cases if profits are assessed as above then books of accounts are not required to be maintained. In case the Assessee whishes to show lessor profit then he will have to maintain the books of accounts and get them audited u/s 44AB.
From Assessment year 2011-12 (i.e. from year starting from 1.4.2010)
The Salient features of presumptive taxation u/s 44AD & 44AE (as replaced) are as under:-
Applies to resident assessees who are Individual, HUF or a firm (Other Than LLP).
Extends to cover all business having turnover or gross receipts of Rs 40 Lacs or less (other than business of plying, firing or leasing of goods a carriage for which there is separate section).
Presumptive income shall be 8% of total turnover or gross receipts or the income claimed to have been earned from such business whichever is higher
Partnership firm can claim deduction of salary & interest to partners within limits of section 40(b).
The assessee who is covered u/s 44AD the maintenance of books of accounts is not required
The Assessee will be required to maintain books of accounts and also get them audited if he claims that profits & gains from such business is less than deemed profit of 8% as calculated u/s 44AD and if his total income exceeds the basic exemption limit.
FOR TRUCK OWNERS u/s 44AE:- If own upto 10 trucks profit will be assessed @ 5,000/- per heavy vehicle per month and @ 4,500/- per light vehicle per month.
10. DEPRECIATION RATES: FULL RATE IF PURCHASED BEFORE 2nd OCT, OTHERWISE HALF RATE WOULD APPLY.
ASSET Rate
Other than Residential building 10%
Residential buildings 5%
Plant & Machinery 15%
Furniture and fittings including Electrical fittings e.g. wiring, switches, sockets, other fittings and fans etc 10%
Motor Cars purchased after 1.4.90 15%
Motor Cars Purchased before 1.4.90 15%
Scooter/Cycles etc 15%
Motor Buses, motor Lorries and motor Taxis used in a business of running them on hire 30%
Moulds used in Rubber & Plastic Goods factories 30%
Computers & Software 60%
Specified Air Pollution Control Equipments, Water Pollution Control Equipments, Solid waste control equipments 100%
Specified Energy Saving Devices 80%
Specified Renewal Energy Devices 80%
Intangible assets like know-how, patents, copyrights, trademark, licenses, franchises or any other business or commercial rights of similar nature 25%
Initial Depreciation
Those assessee who are engaged in the business of manufacture or production, will get Initial depreciation of 20% of the cost of the new plant and machinery added after 31st March 2005. This initial depreciation will not be available in respect of (i) machinery or plant used either in India or outside by any other person (ii) machinery or plant installed in office or residential complex (iii) office appliance or road transport vehicle (iv) Machinery or plant the whole cost of which is allowed as deduction. The initial depreciation will be taken into account while computing the written down value.
11. MINIMUM ALTERNATE TAX CREDIT
From Assessment year 2010-11 the tax rate has been increased from 10% to 15% (plus Surcharge and Education Cess and SHE Cess as applicable) and credit period has been extended to 10 year from 7 years.
12. LONG TERM CAPITAL GAINS
The Long term capital gains on sale of land and buildings will be levied on the basis of the value adopted for the purposes of stamp duty. From 1st October 2009 The provisions have been extended to transfer which may not require to be registered. In such cases the amount assessable (the price which the stamp valuation authority would have adopted if it was referred to such authority) shall be deemed value of consideration
Long Term Capital Gains on sale of Shares, or Units of equity oriented funds (after 1st October 2004) on which Securities Transaction tax has been paid is exempt.
13. SHORT TERM CAPITAL GAINS
For transactions after 1st October 2004 Tax rate on Short Term Capital Gains on Shares or units in equity oriented funds etc will be 15% if Securities Transactions Tax has been paid on the transaction.
14. DEDUCTIOPN OF TAX ON INVESTMENTS (LIP, PF & NSC etc)
From FY 2006-07 the deduction for specified investment as under will be given from income itself instead of deduction from tax. The total limit of such deduction will be Rs 1,00,000/- without any sectoral individual limits:-
i. FDR of more than 5 years period with Scheduled Bank under scheme to be framed by the Government
ii. Life Insurance (The premium will be restricted to 20% of the actual capital sum assured.)
iii. Deferred annuity
iv. Sum deducted by Government for deferred annuity to the extent it does not exceed one-fifth of the salary.
v. Provident Fund Contribution.
vi. Contribution to Recognised Provident Fund
vii. Contribution by Employee to Recognised Provident Fund
viii. Contribution to an Approved Superannuation Fund
ix. Specified Security or the deposit of the Central Government as specified in this behalf.
x. Subscription to Saving Certificates as may be specified by the Central Government.
xi. ULIP 1971 specified in Schedule-II of UTI.
xii. ULIP of LIC mutual fund notified u/s 10(23D)
xiii. Annuity Plan of LIC or any other insurer as may be specified.
xiv. Any specified units of the Mutual Fund
xv. Contribution to any Pension fund set up by any Mutual Fund.
xvi. Subscription to any Pension Fund scheme of National Housing Bank.
xvii. Subscription to deposit scheme of Public Sector Company engaged in providing long term finance for construction or purchase of houses in India or any authority constituted in India for house construction or planning, development etc of cities, towns and villages etc as specified.
xviii. Tuition fees to any university, college, school or other educational institution situated within India for the purpose of 2 children.
xix. Payment for the purpose of purchase or construction of residential house property. This will not include cost of renovation or repairs.
xx. Subscription to equity shares or debentures forming part of an eligible issue.
xxi. Subscription to any notified bonds of NABARD
xxii. Senior Citizen Saving Scheme 2004 and 5 Year Post Office Time Deposit
There will continue to be holding period in respect of some investments as under:
i. In case of single premium policy, the same should have been held for 2 years. In case of other policies, premium for 2 years should have been paid.
ii. In case of Unit linked insurance plans it should continue for a period of 5 years.
iii. In case of house property, it should not be transferred before the expiry of 5 years from the end of the financial in which possession is taken.
iv. The equity shares or the debentures should not be sold or transferred within a period of 3 years.
Section 80CCC- Deduction from income upto Rs 1,00,000/- is allowable for payment to LIC or other insurer for pension fund (section 80CCD- in which payment to new pension system will alo be covered if not exceeds 10% of Gross Total Income) within overall limit of Rs 1 Lacs as above
15. Deduction for Education Loan (Section 80E)
From Assessment year 2010-11 Entire payment of interest on education loan (for studies in all fields including vocational studies after Senior Secondary Examination) is deductible. If Loan was taken by the taxpayer for the purpose of pursuing his own higher education or for the purpose of higher education of his relatives, i.e. spouse/ any child.)
16. The deductions for Medical Treatment expenses, Medical Insurance shall continue as before. Deduction for physical disability has been increased to 75,000/-(from 50,000/-) and 1,00,000/- (from 75,000/-).
17. Limited Liability Partnership (LLP) - The Taxation of LLP will like that of partnership firm. Conversion of partnership firm into LLP will have no tax implications subject to certain conditions.
18. GIFTS RECEIVED- Section 56(2)(vii)
Upto 30th September 2009 If total sum of money exceeding Rs 50,000/- received on or after 1.4.2006 without consideration (i.e. gift) from all sources by an Individual or HUF the whole of such sum shall be added to income subject to certain exemptions given below.
From 1st October 2009 the scope of this section has been increased providing as under
Where Individual or HUF receives any year from any person or persons
Any sum of money without consideration the total of which exceeds Rs 50,000/- the whole aggregate of such money shall be added as income.
In case of immoveable property being land or building received without consideration or with inadequate consideration the stamp value of which is more than Rs 50,000/- then stamp value of such property in excess of such consideration shall be the income
In case of Moveable property (being Shares & Securities, jewelry, archeological collections, drawings, paintings, sculptures, or any work of art) received the Total Fair Market Value of which exceeds Rs 50,000/- the whole aggregate of such Fair Market Value exceeds consideration shall be income
Exemptions:-
Received on the occasion of marriage of the Individual
Received under a will or by way of inheritance
In contemplation of death of payer
From any relative (as given below)
i. Spouse of Individual
ii. Brother or Sister of the Individual
iii. Brother or Sister of the spouse of the Individual
iv. Brother or Sister of either of the parents of the Individual
v. Any lineal ascendant or descendent of the Individual
vi. Any lineal ascendant or descendent of the spouse of the Individual
vii. Spouse of the persons referred to in clauses (ii) to (vi) above
19. MISCELLANEOUS:
a. Income of spouse from salary from concern where such individual has substantial interest will be clubbed in all cases except where it is professional firm as per 44AA and spouse has technical qualification.
b. From FY 2007-08 Mediclaim Insurance premium paid is deductible from income upto Rs 15,000/ (for Senior Citizen Rs 20,000/-). From Asstt Year 2009-10 additional Rs 15,000/- will be allowable if premium paid for Parents.
c. Medical Treatment expenses as specified in rules up to Rs 40,000/- (for senior citizen Rs 60,000/-)
d. If house acquired or constructed with borrowed capital after 1.4.99 and completed within 3 years deduction of Interest shall be up to Rs 1,50,000/-
e. Deduction for repair etc from property income will be allowed 30% and deduction of municipal taxes will be allowed on payment basis.
f. The dividend Income from companies, Mutual funds and receipts from UTI will be not taxable.
20. Wealth Tax- from Assessment Year 2010-11 the limit of wealth tax has been increased to 30 Lacs from 15 Lacs at present
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