Presentation on Finance Act

1. THE JALNA CA CPE STUDY CHAPTER Presentation on Proposed Finance Bill 2010Direct Taxes 3rd March, 2010 CA. Kalyan Chakravarthy Vennety

2. INCOME TAX ACT, 1961 2 CA. Kalyan Chakravarthy Vennety 3.3.2010

3. NEW TAX RATE SLAB for Individuals & HUF 3 CA. Kalyan Chakravarthy Vennety 3.3.2010

4. Decrease in Surcharge on Income Tax 4 CA. Kalyan Chakravarthy Vennety Now 3.3.2010

5. Sec 2(15) Charitable Purposew.e.f. 1-04-2009 Restriction of the definition of “Charitable Purpose” Not Apply if aggregate receipts do not exceed Rs. 10 Lacs 5 CA. Kalyan Chakravarthy Vennety 3.3.2010

6. Sec 9 Income deemed to accrue or arise in India w.e.f. 01-06-1976 Income from royalties, interest, fee for technical services Ishikawajima- Harima Heavy Industries Ltd case (SC) Include in Total Income of NR Whether or not Non-Resident rendered service in India 6 CA. Kalyan Chakravarthy Vennety 3.3.2010

7. Sec 10(21)Incomes not included in Total IncomeDate of effect: 01-04-2011 Approved Research Association 7 CA. Kalyan Chakravarthy Vennety 3.3.2010

8. Sec 12AA (3) Cancellation of trust or institution w.e.f. 01-06-2010 Earlier Cancellation was linked to Trust/Institution granted reg’n u/s 12AA(1) Now Cancellation provided where any Trust/Institution has obtained Reg’n any time u/s 12A 8 CA. Kalyan Chakravarthy Vennety 3.3.2010

9. Sec 32 Depreciationw.e.f. 01-04-2011 Company LLP Dep’n as if no succession has taken place 9 CA. Kalyan Chakravarthy Vennety 3.3.2010

10. Sec 35 Weighted Deduction on Expenditure on Researchw.e.f. 01-04-2011 10 CA. Kalyan Chakravarthy Vennety 175% 125% Now Now 200% 150% 3.3.2010

11. Sec 35ADExpenditure on specified businessw.e.f. 01-04-2010 Cross-country Gas or Oil pipeline network Total Capacity should be as per P&NG Reg Board New specified Business Hotel 2Star or above 11 CA. Kalyan Chakravarthy Vennety 3.3.2010

12. Sec 35DDAAmortisation of Exp under VRSw.e.f. 01-04-2011 Company LLP Deduction as if no succession has taken place 12 CA. Kalyan Chakravarthy Vennety 3.3.2010

13. Sec 40(a)(ia)Disallowance of Expw.e.f. 01-04-2010 TDS Deducted But not paid on or before the due date of filing of return 13 CA. Kalyan Chakravarthy Vennety 3.3.2010

14. Yes, you all guessed it right ! He is the Tax Auditor 14 CA. Kalyan Chakravarthy Vennety 3.3.2010

15. Sec 44ABTax Audit Provisionw.e.f. 01-04-2011 15 CA. Kalyan Chakravarthy Vennety 3.3.2010

16. Sec 44ADTax Audit Provisionw.e.f. 01-04-2011 16 CA. Kalyan Chakravarthy Vennety 3.3.2010

17. Sec 44 BB Business of Exploration of Mineral Oils w.e.f. 01-04-2011 Sec 44 DA applicable? Sec 44 BB Not Applicable 17 CA. Kalyan Chakravarthy Vennety 3.3.2010

18. Sec 44 DARoyalties etc. in case of non residents w.e.f. 01-04-2011 Sec 44 BB applicable? Sec 44 DA Not Applicable 18 CA. Kalyan Chakravarthy Vennety 3.3.2010

19. Sec 47(xiii b) Transactions not regarded as transferw.e.f. 01-04-2011 Company Transfer of Capital / Intangible Asset LLP Six conditions? Not a Transfer 19 CA. Kalyan Chakravarthy Vennety 3.3.2010

20. Sec 47(xiii b) Transactions not regarded as transferw.e.f. 01-04-2011 Six conditions 20 CA. Kalyan Chakravarthy Vennety All A&L of co. become A&L of LLP All Shareholders become Partners of LLP Shareholders do not receive any compensation in any form Aggregate of PSR of shareholders should not be less than 50% for 5years Turnover of the company any of the 3 years prior to conversion does not exceed Rs. 60 Lacs No amount is paid to partners out of accumulated balance of the company on the date of conversion for a period of 3 years 3.3.2010

21. Sec 49(4) New sub-sectionCost of acquisitionw.e.f. 01-06-2010 Shares received without consideration or inadequate consideration Cost of Acquisition Value which has been taken into account for the purpose of section 56 (2) (viia) 21 CA. Kalyan Chakravarthy Vennety 3.3.2010

22. 56(2)(vii)(b)Income from other sourcesw.e.f. 01-10-2009 Value of Property received Property = Capital Asset only. Does not cover Stock in Trade Condition of inadequate consideration Removed Taxed only if Property is received without any consideration 22 CA. Kalyan Chakravarthy Vennety 3.3.2010

23. 56(2)(vii)(b)Income from other sourcesw.e.f. 01-06-2010 w.e.f. 01-06-2010Bullion included Property = Capital Asset only. Does not cover Stock in Trade Condition of inadequate consideration Removed Taxed only if Property is received without any consideration 23 CA. Kalyan Chakravarthy Vennety 3.3.2010

24. 56(2)(vii)(b)Income from other sourcesw.e.f. 01-06-2010 Where a Firm or Pvt Ltd. Co receives From any person(s) In any PY Shares of Pvt Ltd.Co 24 CA. Kalyan Chakravarthy Vennety 3.3.2010

25. Expl’n: FMV meaning same as given in Expl’n to clause (vii) Proviso: This clause shall not apply to cases covered u/s 47 56(2)(vii)(a)Income from other sourcesw.e.f. 01-06-2010 25 CA. Kalyan Chakravarthy Vennety 3.3.2010 Expl’n of Property Not applicable here. Hence, covers Stock in Trade also.

26. Sec 72A (6A) New clauseC/f & Setoff in amalgamation/demergerw.e.f. 1-04-2011 Proviso: fresh period of 8 years will be available for set off of loss in the hands of LLP upon conversion Company Succeeded by LLP Six conditions satisfied? Can C/f & Setoff accumulated Loss & Dep'n 26 CA. Kalyan Chakravarthy Vennety 3.3.2010

27. Sec 80A(7)Deductions claimed in Total Incomew.e.f. 01-04-2011 Claimed deduction under this sec? Deduction Sec 35 AD Not Available 27 CA. Kalyan Chakravarthy Vennety 3.3.2010

28. Sec 80CCFDeduction on long term infrastructure bondsw.e.f. 01-04-2011 Limit = Rs.20,000 In addition to Rs.100,000 under Sec 80CCE 28 CA. Kalyan Chakravarthy Vennety 3.3.2010

29. Sec 80DDeduction for Health Insurance Premiaw.e.f. 01-04-2011 Benefit Extended Contribution made to Central Government Health Scheme within Rs.15,000 29 CA. Kalyan Chakravarthy Vennety 3.3.2010

30. Sec 80GGA Deduction in respect of certain donationsfor scientific research or rural developmentw.e.f. 01-04-2011 Scope Extended Research in Social Science Statistical Research 30 CA. Kalyan Chakravarthy Vennety 3.3.2010

31. Sec 80IB(10)(a)Deduction in respect of profits and gains from certain industrial undertakings other than infrastructure development undertakingsw.e.f. 01-04-2010 Period of completion Extended from 5 Years 4 Years 31 CA. Kalyan Chakravarthy Vennety 3.3.2010

32. Sec 80IB(10)(d)Deduction in respect of profits and gains from certain industrial undertakings other than infrastructure development undertakingsw.e.f. 01-04-2010 Built up Area of shops & commercial estb. included in Housing Project 5% of the aggregate built-up area of the housing project or 2,000 square feet, whichever is less 3% of the aggregate built-up area of the housing project or 5,000 square feet, whichever is higher Revised 32 CA. Kalyan Chakravarthy Vennety 3.3.2010

33. Sec 80ID(2)(i)Deduction in respect of profits and gains from business of hotels and convention centres in specified areaw.e.f. 01-04-2011 Deadline for construction of the centre extended to 31st July, 2010 33 CA. Kalyan Chakravarthy Vennety 3.3.2010 For special impetus to ensuing Common Wealth Games

34. Sec 115JJA(7)Tax credit in respect of tax paid on deemedincome relating to certain companiesw.e.f. 01-04-2011 Company Succeeded by LLP Credit of MAT paid available? NO 34 CA. Kalyan Chakravarthy Vennety 3.3.2010

35. Sec 115JB(1)MATw.e.f. 01-04-2011 Minimum Alternative Tax Increased 18% 15% 35 CA. Kalyan Chakravarthy Vennety 3.3.2010

36. Sec 115WE(1B)FBT Assessmentw.e.f. 01-04-2010 Time limit for issuance of direction by Central Govt increased to 31.03.2011 36 CA. Kalyan Chakravarthy Vennety 3.3.2010

37. Sec 139(4C)Return of Incomew.e.f. 01-04-2011 Scope Extended Research Association Social Science Statistical Research 37 CA. Kalyan Chakravarthy Vennety 3.3.2010

38. 142A(1)Estimate by Valuation Officer in certain casesw.e.f. 01-07-2010 AO is now empowered to make reference to the Valuation Officer for making an estimate of FMV of any property referred to in sub-section (2) of section 56 of the Act. 38 CA. Kalyan Chakravarthy Vennety 3.3.2010

39. Sec 143(1B)Assessmentw.e.f. 01-04-2010 Time limit for issuance of direction relating to processing of returns By Central Govt increased to 31.03.2011 39 CA. Kalyan Chakravarthy Vennety 3.3.2010

40. Sec 143(1B)Assessmentw.e.f. 01-04-2011 Time limit for issuance of direction relating to processing of returns By Central Govt increased to 31.03.2011 Proviso: AO shall not withdraw exemption u/s10(21) unless intimation has been given by him to the prescribed authority and the approval granted to the association has been withdrawn 40 CA. Kalyan Chakravarthy Vennety 3.3.2010

41. Sec 143(3)Assessmentw.e.f. 01-04-2011 References to scientific research association are proposed to be substituted by references to research association 41 CA. Kalyan Chakravarthy Vennety 3.3.2010

42. Changes in TDS Threshold Limitsw.e.f. 1-07-2010 42 CA. Kalyan Chakravarthy Vennety 3.3.2010

43. Sec 201(1A)Consequences of failure to deduct or pay taxw.e.f. 01-07-2010 Interest on delayed Deposit Rate increased 18% p.a. 12% p.a. 43 CA. Kalyan Chakravarthy Vennety 3.3.2010

44. Sec 203(3) & 206(C)Certificate of TDSw.e.f. 01-04-2010 It is proposed to omit the sub-section (3) which provides that on or after 1st April, 2010 there is no need to issue a TDS Certificate 44 CA. Kalyan Chakravarthy Vennety 3.3.2010

45. Sec 245Aexpression “case”w.e.f. 01-06-2010 The expression “case” amended so as to include Assessment in case of search or requisition 45 CA. Kalyan Chakravarthy Vennety 3.3.2010 It also removes the prohibition in cases where the AO has to proceed u/s. 153C of the Act.

46. Sec 245CSettlement of casesw.e.f 01-06-2010 46 CA. Kalyan Chakravarthy Vennety 3.3.2010

47. Sec 245D(4A)Procedure on receipt of an application forsettlement of casesw.e.f 01-06-2010 The SC shall make an Order 47 CA. Kalyan Chakravarthy Vennety 3.3.2010

48. Sec 256(2A)Statement of case to the High Courtw.e.f. 01-06-1981 48 CA. Kalyan Chakravarthy Vennety 3.3.2010

49. Sec 260A(2A)Statement of case to the High Courtw.e.f. 01-10-1998 49 CA. Kalyan Chakravarthy Vennety 3.3.2010

50. 271BPenalty for failure toget accounts auditedw.e.f. 01-04-2011 50 CA. Kalyan Chakravarthy Vennety 3.3.2010

51. Sec 282B Document Identification No.w.e.f 01-10-2010 Effective Date for use of computer generated Document Identification Number extended to 01-10-2011 51 CA. Kalyan Chakravarthy Vennety 3.3.2010

52. Rule 5(b) First ScheduleComputation of Profits & Gains of other insurance Business 52 CA. Kalyan Chakravarthy Vennety 3.3.2010

53. WEALTH TAX ACT, 1957 53 CA. Kalyan Chakravarthy Vennety 3.3.2010

54. Sec 22A(b)expression “case”w.e.f 01-06-2010 Definition of “case” altered to include the proceedings of assessment or reassessment which may be initiated on the basis of a search or requisition Expl’n amended to specify the date on which the proceedings for assessment or reassessment shall be deemed to have been initiated and concluded pursuant to a search or requisition 54 CA. Kalyan Chakravarthy Vennety 3.3.2010

55. Sec 22DProcedure on receipt of an application forsettlement of casesw.e.f 01-06-2010 The SC shall make an Order 55 CA. Kalyan Chakravarthy Vennety 3.3.2010

56. Sec 27(3B)Reference to the High Court.w.e.f. 01-06-1981 56 CA. Kalyan Chakravarthy Vennety 3.3.2010

57. Sec 27AStatement of case to the High Court.w.e.f. 01-10-1998 57 CA. Kalyan Chakravarthy Vennety 3.3.2010

58. CENTRAL SALES TAX ACT, 1956 58 CA. Kalyan Chakravarthy Vennety 3.3.2010

59. Major Amendments • Amendment -sub-section 2 of Section 6 A ‒The assessing authority should satisfy himself that the declaration filed by a dealer is true and there is no inter-state sale •Insertion –sub-section 3 of Section 6 A ‒Assessing authority is empowered to do re-assessment on discovery of new facts or revision by higher authority •Insertion of new Chapter V A to the CST Act, - “Appeals to the Highest Appellate Authority of the State” •The Central Sales Tax Appellate Authority has been empowered to direct refund of tax collected 3.3.2010 CA. Kalyan Chakravarthy Vennety 59

60. SERVICE TAX ACT 60 CA. Kalyan Chakravarthy Vennety 3.3.2010

61. New services introduced in the tax net –effective from a date to be notified • Commercial use or exploitation of any event •Copyrights on recording of cinematographic films/sound recording •Health Services for employees of business entities/services •Services of maintenance of medical records •Electricity Exchange Services •Additional services provided by a builder to the prospective buyers •Brand Endorsement Services •Promotion, marketing or organizing of games of chance including lottery 3.3.2010 CA. Kalyan Chakravarthy Vennety 61

62. End of Presentation. 62 CA. Kalyan Chakravarthy Vennety 3.3.2010

63. THANK YOU ! CA. Kalyan Chakravarthy Vennety BCOM, ACA, DISA(ICAI), CISA V R Jogeswara Rao & Co., Chartered Accountants Phone: 99700-88669 Email: ca.vkalyanc@gmail.com 3.3.2010 63 CA. Kalyan Chakravarthy Vennety