Finance Act (No.2) Act, 2009 Amendments

8/8/2019 Finance Act (No.2) Act, 2009 Amendments

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AMENDMENTS BY FINANCE (NO.2 ) ACT, 2 0 0 9 (APPLICABLE FOR MAY &

NOVEMBER 2 0 1 0 CA FINAL EXAMS)

Sect ion Ame ndmen t Effect ive Date

Basic Conce pts o f Inco m e Tax Law

2(24)

Definition of income include s

Voluntary Contribution received by an Electoral Trust.

Money or Valu e of Proper ty u / s 5 6(2)(vii). 01 .04 .2010Analysis of Exemptions

10(23C)Ins titutions seeking approval u / s 10(23C) can ma ke application on or

before 30th Septem ber of the relevan t as sess men t year.01 .04 .2010

10(44)

Any income received by any person for or on behalf of the New

Pension System Trust es tab l ished on 27 .02 .2008 under the

provisions of the Indian Trusts Act, 1882.01 .04 .2010

10A Exemption u / s 10A available till Asses sm ent Year 201112. 01.04.201 0

10B Exemption u / s 10B available till Asses sm ent Year 201112. 01.04.20 10

10AADeduction shall be computed with reference to the Total Turnover of the

u nderta king in SEZ and not w.r.t. to the Total turn over of the Asses see.01 .04 .2010

13B

Voluntary contributions received by an Electoral Trust shall not be included

in the Total Income if it distributes to any political party 95% of aggregate

donations received by it during the previous year along with surplus.01 .04 .2010

Salaries

10(10C)/ 89If deduction is claimed u / s 1 0(10C), then VRS Compens ation will not

be eligible for relief u / s 8 9(1).01 .04 .2010

17(2)

Perquis ites taxable in the hands of the em ployees

Securities offered u nder ESOP schem e

Em ployers Contribu tion to ap proved Su peran nu ation Fun d inexcess of Rs.1 Lakh MASTERMINDS

Valu e of an y oth er p rescr ibed fringe bene fit.01 .04 .2010

Profits an d Gains o f Busines s o r Profess ion

28

Any sum receivable in cash or kind, on account of any capital asset

(other than land or goodwill or financial instrument) being

demolished, destroyed, discarded or transferred, if the whole of the

expenditure on such capi ta l asset has been al lowed as a deduct ion

u/ s 35AD sha ll be chargeable to tax un der Business income.

01 .04 .2010

32 Definition of block of as sets provided in Expln.3 to Sec.32 deleted. 01 .0 4. 20 10

35(2AB)

All assessees engaged in any business of manufacture or production

of an y article or th ing, not being an art icle or th ing specified in t he list

of the 11 t h Schedule eligible for weighted deduction for scientific

research expenditure .

01 .04 .2010

35AD

Asssessees engaged in the business of Cold chain facility,

Warehousing facility, Cross country natural gas network can claim

deduction in respect of capital expenditure incurred for the specif ied

business. Capital expenditure incurred during the previous year prior

to commencement of operation can be claimed as deduction in the

yea r of commencem ent of opera tion su bject to fu lfillment of conditions .

01 .04 .2010


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36(1)(iiia)Scheduled Bank entitled for deduction in respect of discount on zero

cou pon bonds.01 .04 .2010

36(1)(viii)

For claiming dedu ction u / s 3 6(1)(viii), th e spe cified ent ity sha ll carr y

on t he eligible bu sines s of providing long-term fina nce for-

indu str ial or agricultu ral developm ent; developmen t of infras tru ctu re facility in India; or development of housing in India. MASTERMINDS

01 .04 .2010

40A(3)Maximu m perm issible cash paymen t for the pu rposes of plying, hir ing

or leas ing goods carriages increased to Rs.35,000.01 .10 .2009

43

Determination of actu al cost of Capital ass et allowed as a d edu ctionu / s 35AD.

If th e Total Incom e of an as ses see inclu des Agricu ltur al income,depreciation shall be computed as if entire income is chargeable

u n der th e hea d Profits an d Gains of Bu sines s or Profess ion .

01 .04 .2010

44AA and

44AB

Asses sees declaring income lower th an specified u / s 44 AD an d whose

Total Income exceeds Basic Exemption shall maintain books of

accou nts a nd get them au dited .

01 .04 .2011

44AD

Presumptive taxation of 8% of Gross receipts extended to all

bus inesses except bu siness covered u / s 44AE.

However eligible assessees restricted to Resident Individual, Resident

HUF, Residen t Firm (oth er th an LLP)

01.04 .2011

44AE

Increase in presum ptive incom e:

For Heavy Goods Vehicle from Rs.3,5 00 t o Rs.5,00 0

For Other than Heavy goods vehicle Rs.3,150 to Rs.4,500

01.04 .2011

44AF Presum ptive Taxation u/ s 44AF withdra wn. 01 .04 .2011

Capital Gains

2(48) Schedu led Ban ks eligible to issu e zero coupon bonds. 01.04.20 10

49(2AA)

Cost of acquisition of sh ares / secu rities allotted un der ESOP sha llbe th e FMV determ ined u / s 1 7(2)(vi).

Cost of acqu isition of property ta xable u / s 5 6(2)(vii) sh all be th evalue determ ined u / s 56(2)(vii)

01 .04 .2010

50BCost of acquisition of capital assets which have been allowed as a

dedu ction for the pu rposes of slum p sa le sh all be nil .01 .04 .2010

50C

Scope of Section 50C extended to assessable transactions also.

Assessable means the price which the Stamp valuation authority would

ha ve adopted or ass essed for the p u rposes of payment of sta mp dut y.01 .10 .2009

Inco me under the he ad Other Sources

5 6 / 1 4 5A

Gift in kind r eceived by an Individu al / HUF is taxa ble. Interest received on compensation or enhanced compensation

taxab le in th e year of receipt u nd er the h ead other s ources

01.10 .2009

01.04 .2010

57Dedu ction sh all be allowed to the exten t of 50% of interes t received on

accou nt of compen sat ion or enha nced compensat ion .01 .04 .2010


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Sect ion Ame ndme nt Effect ive Date

Set off and carry forward of losses

73ALoss arising from Specified Bus ines ses u / s 3 5AD eligible to be carried

forward for th e pu rposes of set off agains t income from specified bu sines ses .01 .04 .2010

Deductions under Chapter VIA

2(29BA)

Definit ion of Manufacture: Manufacture with i ts grammaticalvariations, means a change in a non-living physical object or article

or thing

resulting in transformation of the object or article or thing into anew a n d distinct object or a rticle or th ing having a different na me,

chara cter and us e; or

bringing into existence of a new and distinct object or article orth ing with a different ch emical compos ition or integral stru cture.

01 .04 .2010

80A

Deduction u / s 10A / 10AA / 10B / 80H to 80RRB shal l not exceedprofits an d gains of the u ndert aking / eligible ass essee.

Transfer of goods and services between the eligible undertaking andany other undertaking shall be determined at the Market value of such

goods and services for the purposes of claiming deduction.

01 .04 .2003

01.04 .2010

80CCD

Benefit of dedu ction u / s 8 0CCD extended to a ll Individuals.Maximu m dedu ction s ha ll not exceed 10% of Gross Total Income.

Assessee shall be deemed not to have received any amount if theamount is used for purchasing an annuity p lan in the same

previous year.

01 .04 .2010

80DDDeduction to assessees having dependants with severe liability

increased from Rs.75 ,000 to Rs.1,00,000.01 .04 .2010

80E

Higher Education means any course of study pursued after passingthe Senior Secondary Examination or its equivalent from any School,

Board or University recognised by the Central or State Government or

Local au th ority or by an y other Auth orized Au th ority.

Relative in relation to an Individual includes stu dent for whom theindividual is a legal guardian.

01 .04 .2010

80G

Where a n Ins titution or Fun d h as been a pproved u / s 80 G(5)(vi) forthe Previous Year 200708, such an institution or fund shall be

deemed to have been established for charitable purposes and

ap proved for the Previou s Year 200 809.

5 year time limit will not be applicable to approval accorded byCommissioner.

01 .04 .2010

80GGB /

GG CDonations m ade to Electoral Tru st eligible for dedu ction. 01.04.20 10

80IALas t d at e for com m en cing a ctivity u / s 8 0IA (4)(iii) / (iv) / (v) / (vi)

extended u pto 31 .03 .2011.

80IBFor Undertakings engaged in commercial production of mineral oiland natural gas last date for commencement of operations extended

u pto 31 .03 .2012.

80UAssessee suffering from severe disability eligible for deduction upto

Rs.1,00,000.01 .04 .2010

Taxation of Partne rship Firm s

2(23)Definition of Firm in cludes Limited Liab ility Par tn ers h ip as defined in

Limited Liab ility Par tn ers h ip Act, 20 08.01 .04 .2010

2(23)Definition of Partner includes Minor who has been admitted for

benefits of part ners hip a nd a Partner of limited liability par tners hip.01 .04 .2010


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Sect ion Ame ndme nt Effect ive Date

40(b)Increase in ceiling limit on allowability of deduction w.r.t.

remu nera tion p aid to Working Partner of a Partn ersh ip Firm.01.04 .2010

167BLiability of Part ne rs of a LLP in res pect of the t ax du es of th e Lim ited

Liability Partnership Firm.01.04 .2010

Taxation of Companies

115J B MAT rate in creased from 10% to 15%. 01.04.20 10

1 15 J A / J B

Book Profits sh all be increa sed a ny am oun t set as ide as provision for

diminution in the value of any asset. Supreme Court Ruling in CIT

VS HCL Comn et System s & Services Ltd 305 ITR 409 overru led.

01 .04 .2001

115 J AA MAT credit can be car ried forward for 10 Ass ess m ent Year s. 01.0 4.20 10

115O

Dividends liable for Dividend distribution tax shall be reduced by

dividend payable to any person for or on behalf of New Pension

System Trus t .

01 .04 .2010

Charitable Trus t

2(15)

Definition of Charitable purpose in clud es preservation of environmen t

(including watersheds, forests and wildlife) and preservation of

mon u men ts or places or objects of artistic or historic interest.

01 .04 .2010

115BBCAnonymous donations to the extent it exceeds higher of 5% of Total

dona tion s received or Rs.1,00,00 0 s ha ll be ta xable @ 30%.01.04 .2010

Taxation of Nonres ident s

90Central Government empowered to enter into agreements with non

soverign t erritories.01 .10 .2009

92C

When more than 1 pr ice is determined by the most appropr iate

meth od, ALP sh all be the a rithm etic mean of the prices.

If the variation between ALP and the Actual Price does not exceed 5%

then Actu al Price sh all be taken as ALP.

01.10 .2009

92CB Safe Harbou r Rule sh all be prescribed by the Board. 01.04.20 10

144C

Constitution of Dispute Resolution Panel for resolving disputes in

cases on a ccou nt of TPOs order u / s 9 2CA.

TDS and TCS

194AInterest payable on Zero Coupon Bond issued by a Scheduled Bank

exemp t from TDS.01.04 .2010

194C

Contract includes su bcontra ct . MASTERMINDS Rates of TDS revis ed as follows

Payment m ade to Individua l / HUF 1%

Payment m ade to person other th an Ind ividual / HUF 2%

If m at erial value sep ar at ely me nt ioned in the invoice th en TDS on

Invoice value exclud ing valu e of m ate rials.

Exclusion s from TDS:Contractor in the business of plying, hiring or leasing goodscarr iages on fu rn ish ing of PAN.

If the Contractor purch ases su ch mater ials from a person o ther

tha n the customer , then su ch Man ufacture or su pply is not

work for TDS purposes.

Specified Person includes Government of a Foreign State or a ForeignEn terprise or an y Association or Body established ou tside Ind ia.

01 .10 .2009

194I

Rat e of TDS revised a s follows

Use of an y Mach inery, Plan t or Equ ipment 2%

Use of an y Lan d, Bu ilding (includ ing Factory Bu ilding) or lan d

appu r tenan t thereto , Furni ture or Fit t ings 10%

01.10 .2009


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197ANo TDS sh all be m ade from an y payment to an y person for or on

beh alf of New Pen sion System Tru st .01 .04 .2010

200 A Procedu re for process ing of TDS Retu rn s filed. 01.0 4.20 10

201

No Order shal l be passed deeming an assessee as , assessee in

defau lt for non dedu ction of ta x from a Residen t a fter th e expiry of

2 years from th e end of the Fin an cial Year in which theStatement u / s 200 is filed [s ta temen ts in Form 2 4Q / 26Q],

4 years from the en d of the Financial Year in which th e paymen t is made.For periods u pto Fina ncial Year 2007 08, order can be pas sed on or

before 31.03 .2011.

01 .04 .2010

200(3)/

206A/ 206C

Periodicity of TDS Retu rn filing to be pre sc ribed .01 .10 .2009

206AA

Requirement to furnish PAN in applications made for obtaining No or

lower deduction of tax at source Certificates and in Self Declaration

forms. In case PAN is not furnished to the Deductor TDS to be

dedu cted at th e rate of 20%.

01.04 .2010

TDS on payments o ther than Salar ies to Domest ic Compan y and a ny

other person being resident in India has to be deducted on the Basic

Rate. Surcharge, Education Cess, Secondary and Higher EducationCess is not a pplicable for such paymen ts.

01 .10 .2009

Fringe Bene fits Tax

115WM FBT not applicable from Asses sm ent Year 201011. 01.04.20 10

Income Tax Authorit ies

132Additional Directors / Additiona l Comm issioner ha ve p ower t o issu e

authorization.01 .06 .1994

132AAu th orised Officer includes Additional Director / Addln.

Commissioner.01 .06 .1994

282B

Notice, order or any correspondence issued or received by any

Income Tax Authority without a computer generated Document

Ident ification Num ber s ha ll be trea ted a s invalid.

01 .10 .2010

293C

Central Government, Board or Income Tax Authority vested with

powers to grant app roval sh all also h ave power to with draw a pproval

at any time after providing an opportunity of being heard to the

assessee.

01 .10 .2009

Asses sm ent Procedure

140

In case of Limited Liability Partnership Firm Signatory shall be

designated Partner. If there is no designated Partner or the

designa ted Partner is not able to sign th en an y part ner.

147

The Assessing Officer may assess or reassess the income in respect

of any issue which has escaped assessment which has come to h is

notice su bseque ntly in th e cou rse of th e proceedings u/ s 147 even if

reasons for such issue have not been included in the reasonsrecorded u / s 148(2).

01 .04 .1989

Advance Tax, Collec tion and Reco very of Tax

208Person shall be liable to pay advance tax if the tax payable on his

Total Income exceeds Rs.10,000.

281B

Time limit for validity of at ta chm en t to exclude period du ring which

the proceedings for assessment or reassessment are s tayed by an

order or injunction of an y cou rt.

01 .04 .1988

282Mode of Service of Notice, summon, requisition, order or any other

communicat ion .01 .10 .2009


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Appeals and Revisions

246AOrder pas sed by AO u/ s 1 43(3) in pu rsu an ce of direction of Dispute

Resolution Panel not appealable before CIT (A).01 .10 .2009

253Order passed by AO u/ s 143 (3) / 147 in pu rsu an ce of d irect ion of

Dispu te Resolut ion Pan el app ealab le before ITAT.01.10 .2009

TAX RATES APPLICABLE FOR INDIVIDUALS, HUF, AOP AND BOI

FINANCIAL YEAR 2 0 0 9 -10 ASSESSMENT YEAR 2 0 1 0 -11

Tax RateTaxable Inc om e

(Rs.) IT SCEC +

SHEC

Inco m e Tax (IT) TP = IT + SC + EC

+ SHEC

(A) FOR INDIVIDUALS OTHER THAN (B) & (C) BELOW

Upt o 1, 60 ,0 00 Nil Nil Nil Nil Nil

1,6 0,0 01 3,00, 00 0 10 % Nil 3% IT= (TI Les s 1,6 0,0 00 ) 10 % TP = IT+ 3% of IT

3,0 0,0 01 5,00, 00 0 20 % Nil 3% IT= 14 ,00 0 + [(TI Less 3,0 0,0 00) 20% ] TP = IT + 3% of IT

Above 5,0 0, 00 0 30 % Nil 3% IT= 54 ,0 00 + [(TI Les s 5, 00 ,0 00 ) 30 %] TP = IT + 3% of IT

(B) RESIDENT WOMEN ASSESSEES BELOW 65 YEARS


1,9 0,0 01 3,00, 00 0 10 % Nil 3% IT= (TI Less 1, 90 ,0 00 ) 10 % TP = IT+ 3% of IT

3,0 0,0 01 5,00, 00 0 20 % Nil 3% IT= 11 ,00 0 + [(TI Less 3,0 0,0 00) 20% ] TP = IT + 3% of IT

Above 5,0 0, 00 0 30 % Nil 3% IT= 51 ,0 00 + [(TI Les s 5, 00 ,0 00 ) 30 %] TP = IT + 3% of IT

(C) RESIDENT SENIOR CITIZENS


2,4 0,0 01 3,00, 00 0 10 % Nil 3% IT= (TI Less 2, 40 ,0 00 ) 10 % TP = IT + 3% of IT

3,00 ,001 5,00 ,000 20% Nil 3% IT= 6,00 0 + (TI Less 3,0 0, 00 0) 20 % TP = IT + 3% of IT

Above 5,0 0,0 00 30 % Nil 3% IT= 46, 00 0 + [(TI Less 5, 00 ,0 00 ) 30 %] TP = IT + 3% of IT

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Finance Act (No.2) Act, 2009 Amendments