Eleven Tax Propsal of Budget 2010-11 Affecting Business & Companies


Settlement Scope Increased

Now search and seizure cases pending for assessment is eligible for application for settlement to Settlement Commission .

Extra Deduction of Rs 20,000 For Individuals & HUF

A deduction u/s 80CCF for  an additional amount of Rs.20,000 for investment in long-term infrastructure bonds as notified by the Central Government has been proposed. .  This would be over and above the existing limit of Rs.1 lakh on tax savings. .

Companies Tax Rate Modified

The  surcharge of 10 per cent on domestic companies is reduced to 7.5 per cent , but  rate of Minimum Alternate Tax (MAT) has been increased from the current rate of 15 per cent to 18 per cent of book profits.

Research & Development Get Boost!

The weighted deduction on expenditure incurred on in-house R&D has been enhanced from 150 per cent to 200 per cent .Similarly , the weighted deduction on payments made to National Laboratories, research associations, colleges, universities and other institutions, for scientific research has gone up from 125 per cent to 175 per cent.

Also the payments made to approved associations engaged in research in social sciences or statistical research would be allowed a weighted deduction of 125 per cent. The income of such approved research associations shall be exempt from tax.

Two Start & Above Hotel Business Gets Boost

The benefit of section 35AD under which the capital expenditure is allowed deduction in case of specified business. Now , the benefit of investment linked deduction under the Act to new hotels of two-star category and above anywhere in India has been proposed.

Boost to Realty Sector

Reality sector get deduction u/s 80IB and  two of the restriction for claiming deduction was  that the project should complete within four years from the date of approval and the market complex with the residential project should  not be more than 5% of total built   up area.

Now , the budget proposal is that  pending projects can  be completed within a period of five years instead of four years for claiming a deduction on their profits. It is   proposed  to relax the norms for built-up area of shops and other commercial establishments in housing projects to enable basic facilities for their residents.

Tax Audit Limit Enhanced

Till now business having turnover exceeding Rs 40 lakhs of turnover was required to be tax audited u/s 44AbB, now the limit has been increased to  Rs.60 lakh in the case of businesses. Similarly  , tax audit limit in case of profession has gone up from Rs.10 Lakh to 15 lakh

Presumptive Taxation Limit Enhanced

U/s 44AD , there is provision for presumptive taxation. Anyone carrying on business upto Rs 40 lakhs can  to all small businesses with a turnover of up to Rs.40 lakh  to enhanced to Rs.60 lakh.

Beneficial Amendment ot Disallowance section u/s 40(a)(ia)

to allow deduction of such expenditure, if tax has been deducted at any time during the financial year and paid before the due date of filing the return. This will allow most deductors additional time up to September of the next financial year.  At the same time, I propose to increase the interest charged on tax deducted but not deposited by the specified date, from 12 per cent to 18 per cent per annum.

No Capital Gains on Conversion of companies into

the conversion of small companies into Limited Liability Partnership Firm s, it is  proposed that conversion of company to LLP  will not be subject to capital gains tax.

Charity Gets Relief

Under the current provisions of the Act, “the advancement of any other object of general public utility” cannot be considered as “charitable purpose” if it involves  carrying on of any activity in the nature of trade, commerce or business.Now , this restriction would not be applicable if the receipts from such activities do not exceed Rs.10 lakh in the year.


  1. I’m trying to see if I itemize if it will lower my taxes however I’m not sure what the standard deduction is. From what I understand it makes more sense for me to take the standard deduction if itemizing is not higher correct?