EXTRACT FROM EXPLANATORY  MEMORANDUM  TO FINANCE BILL (NO.2) 2009

II. Rates for deduction of income-tax at source during the financial year 2009-10 from certain incomes other than “Salaries”

The rates for deduction of income-tax at source during the financial year 2009-10 from certain incomes other than “Salaries” have been specified in Part II of the First Schedule to the Bill. The rates for persons not resident in India, including companies other than domestic companies, are the same as those specified in Part II of the First Schedule to the Finance Act, 2008, for the purposes of deduction of income-tax at source during the financial year 2008-2009. For resident tax payers, some of the rates have been reduced in order to converge most rates to 10 per cent.

(1) Surcharge—

The amount of tax so deducted in the case of every company other than a domestic company shall continue to be increased by a surcharge at the rate of two and one-half per cent. of such tax, where the income or the aggregate of such incomes paid or likely to be paid and subject to the deduction exceeds one crore rupees.

Levy of surcharge has been withdrawn on deductions in all other cases.

(2) Education Cess—

“Education Cess on Income-tax” and “Secondary and Higher Education Cess on income-tax” shall continue to be levied for the purposes of Union at the rate of two per cent. and one per cent. respectively of income-tax only in the cases of persons not resident in India, including companies other than domestic companies and in the cases of deductions on payment of salary.

III. Rates for deduction of income-tax at source from “Salaries”, computation of “advance tax” and charging of income tax in special cases during the financial year 2009-10

The rates for deduction of income-tax at source from “Salaries” during the financial year 2009-10 and also for computation of “advance tax” payable during the said year in the case of all categories of assessees have been specified in Part III of the First Schedule to the Bill.

These rates are also applicable for charging income-tax during the financial year 2009-10 on current incomes in cases where accelerated assessments have to be made, for instance, provisional assessments of shipping-profits arising in India to nonresidents, assessments of persons leaving India for good during that financial year, assessments of persons who are likely to transfer property to avoid tax, assessments of bodies formed for a short duration etc.

The salient features of the rates specified in the said Part III are indicated in the following paragraphs—

A. Individual, Hindu undivided family, association of persons, body of individuals, artificial juridical person

The rates of income-tax in the case of every individual or Hindu undivided family or every association of persons or body of individuals, whether incorporated or not, or every artificial juridical person referred to in sub-clause (vii) of clause (31) of section 2 of the Income-tax Act (not being a case to which any other Paragraph of Part III applies) have been specified in Paragraph A of Part III of the First Schedule.

The basic exemption is proposed to be increased from Rs. 1,50,000/- to Rs. 1,60,000/-.In the case of every individual, being a woman resident in India, and below the age of sixty-five years at any time during the previous year, the exemption limit is proposed to be raised from Rs. 1,80,000/- to Rs. 1,90,000/-. In the case of every individual, being a resident in India, who is of the age of sixty-five years or more at any time during the previous year, the exemption limit is proposed to be raised from Rs. 2,25,000/- to Rs. 2,40,000/-. The new rates of income-tax on total income in such cases shall be as under—

 No surcharge shall be levied in the cases of persons covered under Paragraph A of Part-III of the First Schedule

NOTE : FINANCE BILL(2) 2009 received the assent of President of India on 19^th August, 2009

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