Section 2(15) defines “charitable purpose” which among others includes “the advancement of any other object of general public utility”. However, the activity of “advancement of any other object of general public utility” is not treated as a charitable purpose, if it involves the carrying on of any activity in the nature of trade, commerce or business, or any activity of rendering any service in relation to any trade, commerce or business, for a cess or fee or any other consideration, irrespective of the nature of use or application, or retention, of the income from such activity. This absolute restriction was imposed by an amendment made by the Finance Act, 2008 from the assessment year 2009-10. This absolute restriction is applicable on any receipt of commercial nature irrespective of its quantum.
The above provision of section 2(15) has been amended with retrospective effect from the assessment year 2009-10 to provide that “the advancement of any other object of general public utility” shall continue to be a “charitable purpose” if the total receipts from any activity in the nature of trade, commerce or business, or any activity of rendering service in relation to any trade, commerce or business, do not exceed Rs. 10 lakh in the previous year.
Amendment –The existing Explanation to section 9(2) has been substituted (with retrospective effect from the assessment year 1977-78) with a new Explanation to specifically state that the income of a non-resident shall be deemed to accrue or arise in India under clause (v) or clause(vi) or clause (vii) of section 9(1) and shall be included in this total income, whether or not-
a. The non-resident has a residence or place of business or business connection in India; or
b. The non-resident has rendered services in India.
[Sec 9(1)(v) covers interest, (vi) covers royalty and (vii) covers fees for technical services)]
Under the existing provisions of section 10(21), any income of a scientific research association for the time being approved for the purpose of section 35(1) (ii) is exempt from tax if a few conditions are satisfied.
This provision has been amended with effect from the assessment year 2011-12 so as to make it also applicable to a research association which has as its object, undertaking research in social science or statistical research, provided such research association is approved and notified under section 35(1)(iii). Consequently, the income of such association shall not be included in its total income from the assessment year 2011-12.
New Formula
Export turnover of the undertaking
Profit of the business of the undertaking in SEZ X
Total turnover of the business carried on by the Undertaking
Fifth proviso to section 32(1) provides that the aggregate depreciation allowable to the predecessor and successor business entities in case of succession or amalgamation shall not exceed in any previous year the deduction allowable at prescribed rates as if the succession or amalgamation had not taken place and such deduction shall be apportioned between the two entities in the ratio of the number of days for which the assets were used by them.
The reference of conversion of private company/ unlisted public limited company into limited liability company [by satisfying the requirement of section 47(xiiib)] has been inserted in the fifth proviso to section 32(1) with effect from the assessment year 2011-12. Consequently, in case of succession of a private company or unlisted public company by limited liability partnership, the aggregate depreciation allowable to the predecessor company and the successor limited liability partnership shall not be exceed, in any previous year, the depreciation calculated at the prescribed rate as if no succession has taken place.
The following amendments have been made to section 35 with effect from the assessment year 2011-12-
Increase in weighted deduction – Under the existing provision of section 35, one can claim weighted deduction. The rate of weighted deduction has been increased as given below-
Section | Weighted deduction From the assessment Year 2011-12 |
35(2AB) – Expenditure incurred by a company(not being cost of land or building)on approved in-house research and development facility
35(1)(ii) – Contribution to an approved scientific research association that has the object of undertaking scientific research or to an approved university, college or other institutions to be used for scientific research
35(2AA) – Any sum paid to an approved National Laboratory, or a university or an IIT or specified person for the purpose of approved scientific research program |
200%
175%
175% |
Note – There is no increase in weighted deduction under section 35(1)(iia)/(iii).
The following amendments have been made to section 43 with effect from the assessment year 2011-12-
“Actual cost” in the hands of successors limited liability partnership when predecessor company has claimed deduction under section 35AD – The existing provisions contained in the Explanation 13 to section 43(1) provide that “actual cost” of an asset in respect of which the deduction is allowed or allowable to assessee under section 35AD will be treated as nil.
Under the existing provision of section 44AB, every person carrying on business is required to get his accounts audited if the total sales, turnover or gross receipts in business exceed Rs. 40lakh in the previous year. Likewise, a person carrying on profession is required to get his accounts audited if the gross receipts in profession exceed Rs.10lakh in the previous year. These monetary limits have been increased (with effect from the assessment year 2011-12) from Rs.40lakh to Rs. 60lakh and from Rs. 10lakh to Rs. 15 lakh.
For the purpose of presumptive taxation under section 44AD, the threshold limit of total turnover or gross receipts will be increased from Rs. 40lakh to Rs.60lakh with effect from the assessment year 2011-12
Immovable property received by an individual / HUF will be taxable U/S 56(2)(vii) only if it is received absolutely free of cost. [i.e received with nil consideration].
A new section (7) has been inserted in section 80A with effect from the assessment year 2011-12.This sub-section provides that where a deduction under any provision of section 80HH to 80 RRB is claimed and allowed in respect of profits of any of the specified business referred to in section 35AD(8)(c) for any assessment year, no deduction shall be allowed under the provisions of section 35AD in relation to such specified business for the same or any other assessment year.
Section 80CCF has been introduced for the assessment year 2011-12.Under this section ,an individual or a Hindu undivided family can claim a deduction of the whole of the amount paid or deposited during the previous year 2010-11 as subscription to a notified long-term infrastructure bonds. Deduction under this section will be available only for the assessment year 2011-12 and the quantum of deduction cannot exceed Rs.20,000. This deduction will be over and above the existing overall limit of deduction on saving of upto Rs.1 lakh under section 80C, 80CCC and 80CCD.
Section 80-ID provides for 100 per cent deduction for 5 years, of profits derived by an undertaking from the business of a two-star, three-star or four-star category hotel or from the business of building, owning and operating a convention centre located in NCR. Deduction is, however, available only if such hotel has started functioning or such convention centre is constructed during the period April 1, 2007 and March 31, 2010.
To provide some more time for these facilities to be set up, the above provision has been modified to extend the date by which the hotel has to start functioning or the convention center has to be constructed, from the present March 31, 2010 to July 31, 2010.
Under the existing provisions contained in section 139(4C), every scientific research association [referred to in section 10(21)], shall furnish a return of income of the previous year. This provision is, however, applicable only if the total income in respect of such scientific research association (without giving effect to provisions of section 10) exceeds the maximum amount which is not chargeable to income-tax.
Section 139(4C) has been amended from the assessment year 2011-12 in order to require a research association having as its object undertaking research in social science or statistical research to also furnish its return of income.
The existing provisions contained in section 142A(1) provide that where an estimate of the value of any investment, bullion, jewellery, etc., referred to in sections 69, 69A,69B is required for the purpose making an assessment or re-assessment, the Assessing Officer may require the Valuation Officer to make an estimate of such value and report the same to him.
The above provision has been amended with effect from July 1, 2010 so as to also enable the Assessing Officer to make reference to the Valuation Officer for making an estimate of fair market value of any property referred to in section 56(2).
Under the existing provisions of section 143(1B), the Central Government may, for the purposes of giving effect to the scheme of centralized processing of returns U/S 143(1A) issue a notification relating to such processing of returns. However, such a notification can be issued up to March 31, 2010.
The above provisions has been amended to extend the time-limit for issue of such notification under section 143(1B) from March 31, 2010 to March 31, 2011. A similar amendment is made in section 115WE.
Section | Nature of payment | Existing limit applicable up to June 30, 2010 Rs. | New limit applicable from July 1 , 2010 Rs. |
194B | Winning from lottery or crossword puzzle | 5,000 | 10,000 |
194BB
| Winning from horse race
| 2,500 | 5,000 |
194C | Payment to contractors (consideration for single contract) | 20,000
| 30,000
|
194C
| Payment to contractors (aggregate consideration for all contracts during the financial year)
| 50,000 | 75,000
|
194D
| Insurance commission
| 5,000
| 20,000 |
194H
| Commission / Brokerage | 2,500
| 5,000
|
194-I
| Rent
| 1,20,000
| 1,80,000
|
194J | Fees for professional services, or technical services | 20,000 | 30,000 |
SURCHARGE EDUCATION CESS, ETC, IN THE CASE OF TDS –For the financial year 2010-11, these are applicable as follows –
Education Cess on TDS is applicable in the case of residents only on salaries. However, the same is applicable on all type of payments to non-residents.
Surcharge is applicable on TDS rates only if it is a foreign company and when the payment or credit which is subject to TDS exceeds Rs.1 Crore.
Under the existing provisions of section 201(1a), if a persons fails to deduct tax at source or after deduction fails to deposit TDS, he is liable to pay simple interest at 1 per cent per month (or part thereof) on the amount of such tax from the date on which such tax was deductible to the date on which such tax is actually paid. Such interest shall be paid before furnishing quarterly return.
The aforesaid provisions has been amended with effect from July 1, 2010 as follows –
Rate of interest (p.m or part of month) | Period for which interest is payable |
1 percent | From the date on which tax was deductible to the date on which tax is actually deducted |
1.5 percent | From the date on which tax was actually deducted to the date on which tax is actually paid |
The existing provisions of section 203(3) dispense with the requirement of furnishing of TDS certificates by the deductor to the deductee after March 31,2010.Similarly,under section 206C(5), a collector of tax at source will also not be required to issues TCS certificate to the person from whom tax has been collected after March 31,2010.
Considered the fact that the TDS/TCS certificate constitutes an important document for the deductee /collectee, the above provision have been deleted .Consequently, the deductor /collector will continue to furnish TDS/TCS certificates to the deductee/collectee even after March 31,2010.
Section 271B
Section 271B provides that if any person fails to get his accounts audited or furnish a report of such audit as required under section 44AB, the Assessing Officer may impose a penalty equal to 0.5 percent of the total sales, turnover, etc., or Rs.1 lakh, whichever is less .This monetary limit of Rs.1 lakh has been increased to Rs.1.5 lakh with effect from the assessment year 2011-12.