No major change in Income Tax. Only change in slabs to benefit taxpayers.

n a relief to individual tax payers, the government today changed the slabs cutting the rate to 10 per cent for income up to Rs 5 lakh, while leaving the threshold limit for tax-free income unchanged at Rs 1.6 lakh. Income between Rs 5 lakh to Rs 8 lakh will attract 20 per cent tax against the current slab of Rs 3 lakh to Rs 5 lakh. Hitherto, the income between Rs 1.6 lakh and Rs 3 lakh was taxed at the rate of 10 per cent.
In case of income over Rs 8 lakh, tax would be levied at a rate of 30 per cent — which was applicable on income above Rs 5 lakh. The tax concessions would put more money in the hands of consumers.
Finance Minister Pranab Mukherjee also extended income tax exemption to investment in infrastructure bonds by up to Rs 20,000, over and above the existing limit of Rs 1 lakh.
In a major relief to the corporate sector, the government proposed to reduce the surcharge on corporate tax to 7.5 per cent from 10 per cent now.
However, it has increased the Minimum Alternate Tax (MAT) from existing 15 per cent to 18 per cent on book profits of those companies which do not pay tax because of various exemptions.

Source : Business Standard

Koda scam: I-T raids continue, cash and documents seized

The Income Tax raid at the premises of Jharkhand Chief Minister Shibu Soren's private secretary M L Pal residence and others continued for the second day today with the department claiming that it has unearthed more documents which would strengthen the disproportionate assets case against Madhu Koda.
The Income Tax department has made cash seizure totalling Rs 70 lakh during searches at the premises of the alleged associates of former Jharkhand Chief Minister Madhu Koda in connection with the money laundering scam.
Raids have been initiated in different places of Jharkhand and Kolkata. There is a flat of  M L Pal in the southern fringe of the city where the IT sleuths raided and sealed the flat.
"As we are digging deeper, we are getting many important documents which will strengthen our evidence into the illegal investments and hawala transactions involving former chief minister Madhu Koda," a top IT official told PTI.

"The raids are a sequence to the October 31 searches involving Koda and his associates. The current raids have covered some more people," he said.

"Raids at some places have concluded while some will be concluded tonight. But the rest, including Pal's, will take one or two more days.
Source : PTI and own source.

No Direct Taxes Code in Budget

The Direct Taxes Code 2009 is now on the back burner. The Union finance ministry has veered round to the view that its bold move to reform direct taxes should be subjected to further scrutiny. Contrary to earlier expectations, therefore, the Direct Taxes Code 2009 will not be presented to Parliament as a Bill along with the Union Budget for 2010-11 on February 26.

No fresh date has as yet been finalised for the completion of scrutiny of the Code, raising doubts on whether the legislative exercise will have to be put off at least till the monsoon session of Parliament.

A senior government official told Business Standard that there were several “complications” in the Direct Taxes Code 2009 in its current form and it can be presented to Parliament only after these were resolved through more consultation. The new tax provisions included in the draft document were originally planned to become effective from April 2011.

Much of the work on the Direct Taxes Code was completed by the time P Chidambaram left the finance ministry in early December 2008. Pranab Mukherjee, who succeeded Chidambaram as finance minister, told Parliament in July 2009 that a draft Bill would be presented by the end of August and that the Bill would be placed before Parliament in the winter session. The first target was achieved, but not the second, dampening hopes of a major simplification and rationalisation of tax rates and rules for individuals as well as corporations.

The Direct Taxes Code was to have replaced the Income Tax Act by consolidating and amending income tax provisions for all categories of people and institutions. In its current form it would have taxed retirement savings, done away with tax exemptions and brought under the tax purview a number of entities including trusts that pay no tax at the moment. The thrust of the new code was to promote efficiency and equity, Chidambaram had said, by eliminating distortions in the tax structure, introducing moderate levels of taxation and expanding the tax base.

However, the draft Direct Taxes Code had provoked strong reactions from different quarters. It also sparked off debate on what an ideal tax structure should be in a developing country like India. One of the major oppositions to the Bill came from officers of the Indian Revenue Service, who administer the tax system in the country. They were opposed to many provisions in the draft bill that sought to truncate the many powers currently enjoyed by the Central Board of Direct Taxes (CBDT) and the tax collection bureaucracy.

Industry and trade representatives also came forward with several major suggestions for plugging what they thought were loopholes in the draft Direct Taxes Code. The finance ministry’s decision to place the Code on the back burner seems to have been prompted also by these representations.

The deferral of the Direct Taxes Code is also being viewed by industry as one more instance of how Mukherjee has looked afresh at several proposals and initiatives of his predecessor. In his first Budget in the United Progressive Alliance government in July 2009, Mukherjee had substantially diluted the fringe benefit tax, a controversial fiscal measure introduced by Chidambaram in his 2005 Budget.

Source : Business Standard.

Date for filing ITR-V form extended

Central Board of Direct Taxes has decided to extend the time limit for filing ITR-V form relating to income-tax returns filed electronically (without digital signature) on or after 1st April 2009, up to 31st March 2010 or within a period of 120 days from the date of uploading of the electronic return data, whichever is later. The ITR-V form should continue to be sent by ordinary post to Post Bag No.1, Electronic City Post Office, Bengaluru – 560100 (Karnataka). However, in cases where email acknowledgement for ITR-V form is not received by the taxpayer from the CPC Bengaluru, the taxpayer may send another duly signed ITR-V form by speed post to Centralized Processing Centre, Electronic City Post Office, Bengaluru, Karnataka – 560100.

This has been done in relaxation of the stipulation in Circular No. 3/2009 dated 21.05.2009 which allows taxpayers who file their income tax returns in electronic form without digital signature to submit their ITR-V form duly verified and signed, within a period of 30 days thereafter to Post Bag No.1, Electronic City Post Office, Bengaluru, Karnataka-560100, by ordinary post.

The relaxation has been made following requests from taxpayers that, as a one-time measure, the time limit for filing of ITR-V form may be extended to 31st March 2010 and that alternative modes of submission of ITR-V form may also be provided in cases where an ITR-V form has not been received at CPC, Bengaluru by ordinary post.

Source : PIB

Govt to net Rs 1,400 cr as tax from pay arrears to staff

The government will mop up Rs 1,400 crore this fiscal by taxing the second instalment of arrears due to central government employees, who were awarded increased salary by the sixth pay commission.

The first instalment of arrears (representing 40 per cent of the increased pay) was disbursed during financial year 2008-09.

The employees will also have to pay two per cent education cess on the total amount of the arrears.

"The total arrears for this fiscal is Rs 18,000 crore. The arrears that would fall in the tax net would be about Rs 9,000 crore. Barring the grade-IV employees, and according to calculations, around 15 per cent of this amount-- about Rs 1,400 crore (plus education cess) would go into government's coffers during this fiscal as tax," a senior Finance Ministry official said.

"The Central and State government and various organisations under them are advised to compute the correct tax liability of every employee on second instalment of arrears drawn by him and immediately recover the full tax liability along with education cess thereon at the rates in force," a recent CBDT circular asked all government employers.

Distribution of the remaining 60 per cent of arrears has already begun.

The I-T department has received the TDS on arrears from various government departments, while the rest would be received soon, the official said.

Source : Economic Times.