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15. Amendment of section 40 |
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In section 40 of the Income-tax Act, in clause (b), in sub-clause (v), for items (1) and (2), the following shall be substituted with effect from the 1st day of April, 2010, namely:—
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"(a) on the first Rs. 3,00,000 of the book-profit or in case of a loss |
Rs. 1,50,000 or at the rate of 90 per cent. of the book profit, whichever is more; |
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(b) on the balance of the book profit |
at the rate of 60 per cent.". |
Clause 15 of the Bill seeks to amend sub-clause (v) of clause (b) of section 40 of the Income-tax Act, relating to amounts not deductible.
The existing sub-clause (v) of the said clause, inter-alia, provides that in case of working partners, payments of salary, bonus, commission or remuneration, by whatever name called, will be allowed as a deduction subject to the following limits, namely:—
(1) In case of a firm carrying on a profession referred to in section 44AA or which is notified for the purposes of that section—
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(a) on the first Rs. 1,00,000 of the book-profit or in case of a loss |
Rs. 50,000 or at the rate of 90 per cent. of the book profit, whichever is more ; |
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(b) on the next Rs. 1,00,000 of the book profit |
at the rate of 60 per cent. ; |
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(c) on the balance of the book profit |
at the rate of 40 per cent. ; |
(2) in the case of any other firm—
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(a) on the first Rs. 75,000 of the book profit, or in case of a loss |
Rs. 50,000 or at the rate of 90 per cent. of the book profit, whichever is more ; |
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(b) on the next Rs. 75,000 of the book profit |
at the rate of 60 per cent. ; |
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(c) on the balance of the book profit |
at the rate of 40 per cent. ; |
It is proposed to revise the above limits and provide uniform limits for both professional firms and non-professional firms as under—
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(a) on the first Rs. 3,00,000 of the book profit or in case of a loss |
Rs. 1,50,000 or at the rate of 90 per cent. of the book profit, whichever is more ; |
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(b) on the balance of the book profit |
at the rate of 60 per cent. |
The proposed amendment will take effect from 1st April, 2010 and will, accordingly, apply in relation to the assessment year 2010- 2011 and subsequent years.
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