Union Budget 2010-11 Direct Tax

Direct Tax proposal

Corporate Tax
Corporate income-tax rates remain unchanged for both domestic as well as foreign companies, except for an increase in the effective rate of Minimum Alternative Tax (MAT) from 15% to 18%.

The applicable rates of income-tax are as under:

Particulars Tax Tax Rate (%) *

Domestic Company
Normal Tax Rate 30%
Minimum Alternative Tax 18%

Foreign Company
Normal Tax Rate 40%

Currently the surcharge on income tax @10% is payable by a domestic company having total income exceeding one crore rupees. It is proposed to reduce the surcharge on income-tax from 10% to 7.5%.

I n case of companies, other than domestic companies, having total income exceeding one crore rupees, the surcharge on income-tax will continue to be levied @ 2.5%.

The marginal relief in tax will continue to be allowed in the cases where income is more than one crore rupees.

The Education Cess shall continue to be levied @ 3%.

Personal Tax
Tax Rate
At present, the income upto Rs.1,60,000/- is exempt in respect of individuals (other than women below the age of sixty-five years and senior citizens), Hindu Undivided Families (HUF), Association of Persons (AOP), Body of Individuals (BOI) etc. In respect of women below the age of sixty-five years and senior citizens resident in India, the income upto Rs. 1,90,000/- and upto Rs. 2,40,000/- respectively is exempt.

I t is proposed to increase the limit of income under each slab keeping the threshold limit of exemption at the same level. The proposed changes have been tabulated below

Existing Limit Proposed Limit Tax Rate
Upto 1,60,000 Upto 1,60,000 Nil
Upto 1.6 to 3 Lakh Upto 1.6 to5 Lakh 10%
Upto 3 to 5 Lakh Upto 5 to 8 lakh 20%
5 Lakh & Above 8Lakh & above 30%

No surcharge will be levied in case of individuals, HUF, AOP & BOI, co-operative society, local authority and firms

The education cess shall continue to be levied at the rate of 3%.

This budget have also offer some other benefits/relaxation as explain below

I n order to promote the investment in infrastructure sector, it is proposed to allow deduction in respect of subscription made by an individual or a Hindu undivided family in long-term infrastructure bonds (as may be notified by the Central Government) during financial year 2010-11, to the extent of Rs. 20,000/-, in computing the total income in addition to normal 100000 investment as explain under section 80C.

Total medical health insurance premium limit have increase from 15000 to 20000 in case of senior citizen under section 80D

Enhancement of threshold limit for applicability of tax audits for business or profession

Section 44AB of the Act deals with audits of accounts of every person carrying on business or profession, if his total sales or turnover exceeds Rs. 40 lakhs in the previous year or gross receipts in profession exceeds Rs. 10 lakhs

Such threshold limits for the applicability of tax audits have been enhanced to Rs. 60 lakhs and Rs. 15 lakhs respectively. This would help reduce the compliance burden on the small taxpayers.

While the threshold limits have been increased, it is proposed to also increase the maximum penalty leviable, from Rs. 1 lakh to Rs. 1.5 lakhs in case of failure to get books of account audited u/s 44AB or to furnish a report on such audit.