BUDGET 2010

SALIENT FEATURES

 Aim to implement the Direct Tax Code (DTC) with effect from April 1, 2011.

 Endeavour to introduce GST (Goods and Services Tax) by April 1, 2011.

 Plan allocation to Ministry of Health & Family Welfare increased from Rs.19,534 crs.
in 2009-10 to Rs.22,300 crs. for 2010-11.

 Plan outlay for Women and Child Development stepped up by almost 50 per cent.

 Automation of Central Excise & Service Tax, already rolled out throughout the
country this year. Similarly, a Mission Mode Project for computerization of
Commercial Taxes in States approved.

 The Income-tax Centralized Processing Centre at Bengaluru is fully functional,

processing around 20,000 returns daily. This initiative will be taken forward by
setting up two more Centres during the year.

 By and large, Budget 2010 is an effort to harness economic growth.

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 BUDGET 2010
INDIVIDUAL TAXPAYERS

 The income tax department to notify 2 pages SARAL-II form for individual salaried
taxpayers for the coming assessment year i.e. F.Y.2010-11.

 Income-tax slabs for individual taxpayers revised.

 Additional deduction of Rs.20,000 u/s.80CCF, for investment in ‘long-term

infrastructure bonds’ to be notified by Central Government, over and above the
existing Rs.1 lac on tax savings eligible u/s.80C. So total eligible tax saving
investment now will be Rs.1,20,000.

 Health insurance premium eligible for deduction u/s.80D now also to include
contribution to the ‘Central Government Health Scheme’.

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 BUDGET 2010
INCOME TAX SLABS

                   
INDIVIDUALS       RATES VIS-À-VIS SLAB APPLICABLE  
Total Income <= Rs.1,60,000     Nil        
Rs.1,60,000 < Total Income <= Rs.5,00,000   10% x (Total Income - above Rs.1,60,000)  
Rs.5,00,000 < Total Income <= Rs.8,00,000   Rs.34,000 + 20% x (Total Income - above Rs.5,00,000)
Rs.8,00,000 < Total Income     Rs.94,000 + 30% x (Total Income - above Rs.8,00,000)
                   
                   
INDIVIDUALS, BEING WOMAN              
Total Income <= Rs.1,90,000     Nil        
Rs.1,90,000 < Total Income <= Rs.5,00,000   10% (Total Income - Rs.1,90,000)  
Rs.5,00,000 < Total Income <= Rs.8,00,000   Rs.31,000 + 20% x (Total Income - above Rs.5,00,000)
Rs.8,00,000 < Total Income     Rs.91,000 + 30% x (Total Income - above Rs.8,00,000)
                   
                   
INDIVIDUALS, BEING SENIOR CITIZEN            
Total Income <= Rs.2,40,000     Nil        
Rs.2,40,000 < Total Income <= Rs.5,00,000   10% (Total Income - Rs.2,40,000)  
Rs.5,00,000 < Total Income <= Rs.8,00,000   Rs.26,000 + 20% x (Total Income - above Rs.5,00,000)
Rs.8,00,000 < Total Income     Rs.86,000 + 30% x (Total Income - above Rs.8,00,000)
                   

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 BUDGET 2010
CORPORATE TAXPAYERS
 Surcharge @10% on domestic companies reduced to 7.5%

 “Education Cess” @ 2% and “Secondary and Higher Education Cess” @1% shall
continue to be levied.

 Effective rate for ‘Dividend Distribution Tax’ (DDT) reduced to 16.60875% from
16.995%, due to reduction in surcharge from 10% to 7.5%.

 MAT (Minimum Alternate Tax) rate increased from 15% to 18% of book profits.

 Weighted deduction on in-house R&D expenditure enhanced from 150% to 200%.

 Weighted deduction on payments made to National Laboratories, research

associations, universities etc. for scientific research enhanced from 125% to 175%.

 Tax Audit now applicable where turnover exceeds Rs.60 lacs (earlier Rs.40 lacs) for
businesses and Rs.15 lacs (earlier Rs.10 lacs) for professionals.

 Failure to get the tax audit of accounts will now attract penalty equal to 1.50% of
total sales or Rs.1.50 lacs (earlier Rs.1 lac), whichever is less.

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 BUDGET 2010
TAX DEDUCTION AT SOURCE (i.e. TDS)

 Interest on delayed payment of TDS increased from 1% p.m. to 1.50% p.m.

 Minimum amount not subject to TDS revised with effect from July 1, 2010 -
1. Sec.194C – Payment to contractors :
Increased to Rs.30,000 (earlier Rs.20,000) for a single transaction
Increased to Rs.75,000 (earlier Rs.50,000) for aggregate transactions

2. Sec.194H – Commission or brokerage :

Increased to Rs.5,000 (earlier Rs.2,500)

3. Sec.194-I – Rent :
Increased to Rs.1,80,000 (earlier Rs.1,20,000)

4. Sec.194J – Professional or technical fees :

Increased to Rs.30,000 (earlier Rs.20,000)

 If TDS is deducted and paid before the due date of filing the return (i.e. 30 th
September), such expenditure is allowed as deductible expense.

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 BUDGET 2010
SERVICE TAX
 No change in Service tax rate i.e. 10% to pave the way forward for GST.

 Certain additional services, to be brought within the purview of the service tax levy,
with effect from enactment of the Budget:
1. Health check-up undertaken by hospitals or medical establishments for the
employees of business entities; and health services provided under health insurance
schemes offered by insurance companies
2. Services provided for maintenance of medical records of employees of business
entities
3. Services provided by electricity exchanges
4. Additional services provided by builder to the prospective buyers such as
providing preferential location or external/internal development of complexes on
extra charge (excluding amount paid for vehicle parking space)
5. Service of promoting a ‘brand’ of goods, services, events, business entity etc.

 Modified the scope of certain taxable services like port services, commercial training
or coaching services, commercial or industrial construction services, sponsorship
services, renting of immovable properties, information technology software services,
etc.

 Export of services rules modified.

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 BUDGET 2010
EXCISE

 The standard rate of excise duty of 8% on non-petroleum products is being

increased to 10%, with a few exceptions where exemptions/concessions have been
given.

 Micro-processors for computers (other than motherboard), Floppy disk drive, Hard
disk drive, Flash drive, CD/DVD and Combo drive meant for external use, will now
attract excise duty of 4%.

 The ad valorem component of excise duty on large cars, multi-utility vehicles and
sports-utility vehicles increased by 2% points to 22%.

 Restored the basic duty of 5% on crude petroleum; 7.5% on diesel and petrol and
10% on other refined products. Central Excise duty on petrol and diesel enhanced
by Re.1 per litre each.

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 BUDGET 2010
CUSTOMS

 Uniform, concessional basic duty of 5%, CVD of 4% with full exemption from special
additional duty prescribed on all medical equipments. A concessional basic duty of
5% is being prescribed on parts and accessories for the manufacture of such
equipment while they would be exempt from CVD and special additional duty.

 Concessional customs duty available to spares for the maintenance of medical

equipments is being withdrawn except in specified cases.

 Custom duty on crude petroleum is being increased from Nil to 5%.

 Custom duty on petrol and Diesel is being increased from 2.5% to 7.5%.

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BUDGET 2010

THANKS !!!
Team Taxation - Finance

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