Snapshot of tax proposals – BUDGET 2009 - Direct taxes - CORPORATES

·        Fringe Benefit Tax to be abolished and fringe benefits to be taxed as perquisites

 

·        No change in corporate tax rate;

 

·        MAT increased from 10% to 15%. MAT credit available for 10 years

 

·        Date of commencement of operations for eligibility to tax holiday extended by a year to March 31 2011 for units engaged in power generation, distribution and transmission.

 

·        Similarly, date of commencement of operation for undertakings set-up for reconstruction and revival of a power generating plant extended retrospectively from April 1 2008 to March 31 2011.

 

Expansion of scope of weighted deduction for scientific research [section 35 (2AB)]

 

·        Scope of weighted deduction of 150%for in-house scientific research and development facility extended to all business engaged in the manufacturing or production of article or thing

 

·        Tax holiday benefit for STP/ EOU units extended till March 31, 2011.

 

·        Anomaly in computation of deduction for SEZ units rectified –total turnover of the 'undertaking' to be considered instead of total turnover of the business of the assessee.

 

·        Deduction for undertakings engaged in production and refining of mineral oil extended to production of natural gas on blocks licensed under NELP VIII round.

 

·        Certain conditions are imposed on undertakings engaged in developing and building housing projects.

 

  

Corporate Tax

 

·        No change in corporate tax rate

 

·        MAT increased from 10% to 15%

 

·        No change in surcharge and education cess

 

Other taxes

 

·        Fringe Benefit Tax abolished

 

·        Commodity Transaction Tax (CTT) abolished

 

·        No change in Dividend Distribution Tax

 

 

TDS

 

·        Provision for TDS on payment to contractors substituted

 

-uniform rate of 1% for individual and HUF and 2% for any other person

 

·        TDS rates on rent revised

 

-2% for use of plant and machinery and 10% for land, building or furniture and fixture

 

·        Summary assessment procedures for TDS returns have been introduced

 

·        Separately, TDS assessment to be completed within 2 years of filing of return and 4 years when no return is filed

 

·        Furnishing of PAN mandatory for deducting tax and for obtaining lower withholding tax certificate.

 

Procedural changes

 

Requirement to furnish PAN [Section 206AA]

 

·        A deductee shall required to furnish PAN to the deductor, failing which tax shall be deducted at higher of the following rates:

 

 –prescribed rate

–at the rates in force (as per the Finance Act)

–at the rate of 20%

 

·        Tax shall also be deducted at aforementioned tax rates in case declaration of PAN by deductee to deductor is invalid / declaration filed under section 197A is not correct.

 

·        Lower withholding tax certificate shall be not granted by income-tax authorities unless application filed contains PAN of the applicant.

 

·        PAN shall also be mentioned in all correspondence/ bills/ vouchers/ other documents exchanged between deductee and deductor.

 

This amendment will take effect from AY 2010-2011