Académique Documents
Professionnel Documents
Culture Documents
Fundamentals of Budget
Refer Details Inside … … … 1
Presented by:
CA. SANJAY KADEL & Team
www.sanjaykadel.com
Budget Estimates
Refer Details Inside … … … 8
The most important document containing tax and other related proposals is the Finance Bill.
Finance Bill deals with Income Tax, Wealth Tax, Customs, Excise and Service Tax
The BSE Sensex, one of the Nation’s Economic Indicator or Barometer, saw red during the
Budget Presentation.
Open: 14913.05
High: 15600.30
Low: 13959.44
The following discussion is a brief and crisp analysis of the union budget 2009-2010
presented by Finance Minister, Mr. Pranab Mukherjee. Important amendments pro-
posed in the Finance Bill 2009 relating to Direct and Indirect Taxes are discussed fur-
ther.
1
Income Tax & Wealth Tax
Tax Holidays:
□ Sun-set clauses for deduction in respect of export profits under sections 10A and 10B of the In-
come-tax Act being extended by one more year i.e. for the financial year 2010-11.
□ Tax holiday under section 80-IB(9) of the Income Tax Act, which was hitherto available in respect
of profits arising from the commercial production or refining of mineral oil, to be extended to natural
gas.
2
Income Tax & Wealth Tax (contd.)
Transfer Pricing:
Analysis of □ Alternative dispute resolution mechanism to be created Safe Harbour Rules indicate a
Budget 2009 within the Income Tax Department for the resolution of sort of presumptive taxation.
& transfer pricing disputes. Such practices are already preva-
Important lent world over and now, India is
amendments □ Central Board of Direct Taxes (CBDT) to be empow- following the trend. What India, should
proposed in ered to formulate ‘safe harbour’ rules to reduce the im- also have is a “Advance Pricing Arrange-
Finance Bill pact of judgemental errors in determining transfer price in ment”. May be in the next budget!
2009 international transactions.
□ Deduction u/s 80DD allowed till maximum of Rs.100000 instead of earlier limit of Rs.75000
Section 80DD relates to deduction in respect of maintenance including medical treatment, of a de-
pendent who is a person with SEVERE DISABILITY.
Trusts
To mitigate the practical difficulties faced by charitable organisations, anonymous donations received
by charitable organisations to the extent of 5 percent of their total income or a sum of Rs.1 lakh,
whichever is higher, not to be taxed.
Note: Similar provisions
already existed in the case
Presumptive Taxation of Business of Civil Con-
Scope of presumptive taxation to be extended to all small busi- struction, Exclusive Retail
nesses with a turnover upto Rs. 40 lakh. All such taxpayers to Business and Business of plying,
have option to declare their income from business at the rate leasing or hiring trucks.
of 8 percent of their turnover and simultaneously enjoy ex-
emption from the compliance burden of maintaining books For instance, in the case of Retail
of accounts. As a procedural simplification, they are also to be Business, option of 5% presump-
exempted from advance tax and allowed to pay their entire tax tive Profit on turnover is eligible
liability from business at the time of filing their return. This new for taxing (subject to turnover upto
scheme to come into effect from the Financial Year 2010-11. Rs.40 Lakh)
3
Income Tax & Wealth Tax (contd.)
Impact:
For instance, if the Book profits was Rs.3,00,000/- then in the case of Professional Firm, the allow-
able remuneration would have been Rs.190,000/-. And in the case of Non-Professional Firm, the al-
lowable remuneration would have been Rs.172,500/-
Now to plug the loop-hole, new provision is introduced w.e.f. Note: Still there is a loop-
1.10.2009 where even ‘in KIND’ receipts will also be covered. hole TILL 30.9.2009. So if
The new section mentions the following three - you want to take a legal
A) any sum of money exceeding 50,000 advantage of the section
B) Immovable property where value for the purpose of stamp you have approximately 3 months
duty exceeds 50,000 from now.
C) Other Properties where fair value exceeds 50,000
4
Income Tax & Wealth Tax (contd.)
By:
CA. SANJAY Limit for Advance Tax RAISED:
KADEL & Section 208
Team Every person shall pay advance tax if such estimated tax for the year exceeds 10,000/-. Ear-
lier the limit was 5000/-
SARAL Form
The Government will re-introduce the earlier popular SARAL Form with a twist where fil-
ing of supporting enclosures may not be required as was required in SARAL of the earlier
era.
5
Customs, Excise, VAT and Service Tax
GST:
Analysis of GST will be introduced w.e.f. 1.4.2010
Budget 2009 Dual GST system is planned, Central GST & State GST.
&
Important Changes in Excise Duties
amendments Products Description Earlier Rate New Rate
proposed in
Finance Bill Specified food items including biscuits, sharbats, 4% 8% ↑
2009 cakes and pastries
Pressure cookers, Medical Equipment, Power driven 4% 8% ↑
pumps for handling water, Certain varieties of paper,
By: paperboard and articles thereof, Paraxylene, Compact
CA. SANJAY Fluorescent Lamps, Cars for physically handicapped
KADEL & Large cars / utility vehicles of engine Capacity 2000 20000 15000 ↓
Team cc per Vehicle per Vehicle
Petrol Driven truks/lorries 20% 8% ↓
Chassis of trucks /lorries 20% + 10000 8% + 10000 ↓
6
Customs, Excise, VAT and Service Tax (Contd.)
By:
CA. SANJAY Service Tax proposed to be exempted for FOLLOWING
KADEL & SERVICES:
Team
** Inter-State or Intra-State transportation of passengers in a vehicle bearing ‘Contract Carriage
Permit’ with specified conditions.
** Inter-bank purchase and sale of foreign currency between scheduled banks.
** Transport of goods through road’ and ‘Commission paid to foreign agents’ to be exempted from
the levy of service tax, if the exporter is liable to pay service tax on reverse charge basis.
** Export Promotion Councils and the Federation of Indian Export Organizations (FIEO) to be
exempt from service tax on the membership and other fees collected by them till 31st March 2010.
7
Budget Estimates in Brief
“Democracy is the art and science of mobilizing the entire physical, economic
and spiritual resources of various sections of the people in the service of the
common good of all.”
- Mahatma Gandhi
“With strong hearts, enlightened minds and willing hands, we will have to
overcome all odds and remove all obstacles to create a brave new India of our
dreams.”
- Pranab Mukherjee
Jai Hind
Note from Authors: Year-on-Year we try to bring out our technical and specific analysis of the im-
portant changes proposed in Finance Bill 2009 after going through the fine print and not going
just by the FM Speech or media reports. This year too we have done it! In case you wish to provide
feedback on our efforts, please do write us at sanjaykadel@gmail.com
Disclaimer: While extra care has been taken to maintain the accuracy of the contents, some unwarranted errors or
8 discrepancies may have crept in. The authors of this document do not accept any responsibility for the acts done
on the basis of the subject matter mentioned herein.