Union Budget 2010: Highlights of Corporate Taxability

The most significant revision in the Union Budget 2010 with respect to corporate tax is the reduction of surcharge from 10% to 7.5%. This will enable domestic companies to benefit from lower tax burden. Additionally, the revenue threshold for tax audit of businessmen has been raised from Rs.40 lakh to Rs. 60 lakh, enabling further empowerment of businesses and businessmen in India.

Union Budget Analysis: Where does a Business suffer?

An important cause of concern for businessmen post the Union Budget 2010 is the increase of Minimum Alternate Tax (MAT) from 15% to 18%.

The following revisions to the budget could become a source of worry to a domestic businessman: 

Mean excise rate hiked from 8% to 10%

• Customs duty of 5% on crude reinstated
•   Interest on delay in TDS deposit increased from 1% to 1.5%

Additionally, payments to non-residents, including royalty, fees and interest for technical assistance is taxable in India. This law is applicable even if the service is rendered outside India.

Union Budget 2010 and SMEs

The Union Budget has introduced several revisions for uplifting small and medium enterprises. This includes extending interest subvention on exports by the SMEs. Other vital efforts in this direction are:

• Increased allocation to the sector, from Rs.1,794 crore to Rs.2,400 crore.
•  Doubling of the funds for Micro-Finance Development and Equity Fund to Rs.400.

The Union Budget 2010, besides focusing on taxability of corporates, has concentrated on encouraging best practices in the business sector. The budget has highlighted the introduction of Companies Bill, 2009 to replace the Companies Act, 1956. This move is intended towards addressing regulation issues in the corporate sector in the context of the changing business environment.