The proposed increase in threshold limits for tax deduction at source with effect from July 1, 2010, is given in the table.

Other changes regarding TDS

An important provision is that the recognition of physical format of tax deduction and tax collection certificates would continue to be required even after April 1, 2010. Sec. 203(3) was the section which was intended to replace the physical format of the certificate by automatic credit by computerisation with the object of preventing the fraud enabled by forged certificates in physical format. Experimentally electronic system of automatic credit was also existing side-by-side. Sec. 203 had initially set a goal of change-over from April 1, 2005, later substituted for 2006, 2008 and 2010.

It is now realised that computerisation has still a long way to go before the objective of replacing physical form could be realised.

Incidentally, Sec. 282B proposes computer generated Documentation Identification Number (DIN) for every communication to be effective from October 1, 2010.

It is unlikely that the new numbering system could be put on gear by this date in the light of past experience.

Interest for delay in deduction will continue at one per cent but delay in deposit of tax deducted and filing return of tax deductions will be enhanced from the present one per cent to 1.5 per cent for every month or part of the month. This will come into effect from July 1, 2010.

Presumptive taxation for civil contractors

The limit for presumptive taxation for civil contractors under Sec. 44AD to be taxable at 8 per cent of the gross receipts is proposed to be raised from Rs. 40 lakh to Rs. 60 lakh with effect from assessment year 2011-12. This increase in limit is inadequate as for the increase in tax audit report to the same extent.

Settlement commission

Search cases which were taken out of the purview of the Settlement Commission are now restored to it. Time limit for completion of a settlement will stand extended to 18 months. There is also a revised upward jurisdiction for admission of a settlement petition, which now requires minimum undisclosed income of Rs. 50 lakh in search cases and Rs. 10 lakh as tax in other cases. Such periodical restrictions and restorations from time to time is losing the faith in this procedure of settlement itself for most taxpayers, especially in the context of the uncertainty regarding waiver of interest and the restricted jurisdiction for waiver of penalty and prosecution.

It is necessary that the powers available to the Settlement Commission available at the time it was formed, should be restored, if its role has to be of any use for tax administration itself.

Extension of relief for health scheme

Though the law has proposed to extend the benefit of deduction for contributions to CGHS Scheme with effect from assessment year 2011-12, no such scheme has been yet notified. When it is so done, it is likely to be confined to employees including the retirees of the Central Government.

Gratuity exemption

Sec. 80D exempts whatever gratuity amount is received by a government servant. If the employee is governed by the Payment of Gratuity Act, 1972, the exempt amount is the amount payable under Sec. 4(2) and 4(3) of that Act.

It is only where the employee does not fall under either of the above two categories, namely, Sec. 10(10)(i) and (ii), the exempt gratuity amount is calculated under the formula of one-half month's salary (based on average of last ten months' salary) for each year of completed service, subject to the limit notified by the Central Government.

The present notified limit is Rs. 3.50 lakh, which may be expected to be revised with reference to the same date on which ceiling under the Payment of Gratuity Act was enhanced.

If the reader falls under the third category, he may have to await notification enhancing the limit. Hopefully, the Central Government would issue a revised notification under Sec. 10(10)(iii) shortly and that it would be done as in the past in similar circumstances with effect from the date of revision under the Payment of Gratuity Act.


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