Budget taxpert professionals 2010-2011


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Budget 2010-11

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Budget taxpert professionals 2010-2011

  1. 1. 1 UNION BUDGET 2010-2011 AN ANALYSIS ON MAJOR AMENDMENTS IN DIRECT AND INDIRECT TAX February 27th, 2010 “Budget is not a mere statement of government accounts. It has to reflect the government’s vision and signal the polices to come in Future” …….Pranab Mukherjee, the Finance Minister of India By: TAXPERT PROFESSIONALS Mumbai-New Delhi-Chandigarh TAXPERT Professionals…………..Adding value with quality and commitment
  2. 2. 2 MAJOR AMENDMENTS A. INDIVIDUAL TAXATION IN DIRECT TAXES 1. Slab Rates Income Slabs# Proposed Tax Rates 0 – 1,60,000 * NIL 1,60,001 - 5,00,000 10.30% of income exceeding Rs. 1,60,000 5,00,001 - 8,00,000 Rs. 35,020 plus 20.60% of income exceeding Rs. 5,00,000 8,00,001 - and above Rs. 96,820 plus 30.90% of income exceeding Rs. 8,00,000 *Minimum Tax Exemption limit for Senior Citizens and Women remains unchanged; i.e. Rs. 2,40,000 and Rs. 1,90,000 respectively. # the tax incidence for HUFs, AOPs and BOIs will be same as that of Individuals. Due to above structure, Tax Relief will be there for over 60% of Tax Payers 2. Investment made in long-term infrastructure Bonds A further deduction of Rs. 20,000 [over and above Rs.1,00,000 specified under Section 80C] is proposed in case of an Individual or a Hindu Undivided Family, in respect of the amount paid or deposited as a subscription to long- term infrastructure bonds as may be notified by Central Government. [Section 80CCF] Effective date: This deduction is proposed in respect of amount paid or deposited during FY 2010-11 3. Deduction in respect of health insurance premium paid by the assessee for himself or his family With effect from 1 April 2011, it is proposed that deduction under Section 80D shall also be allowed in respect of any contribution made to the Central Government Health Scheme by Government Servants within the existing limits. TAXPERT Professionals…………..Adding value with quality and commitment
  3. 3. 3 Introduction of SARAL-II The income tax department will notify SARAL-II form for individual salaried taxpayers for the coming assessment year. B. CORPORATE TAXATION 1. Slab Rate Entity Previous Rates Previous Rates Proposed Rates Proposed Rates [ income up to [income above [ income up to [Income Above 100,00,000] 100,00,000 100,00,000] 100,00,000] Foreign Company 41.20 % 42.23 % 41.20 % 42.23 % Domestic Company 30.90 % 33.99 % 30.90 % 33.22 % Tax Rates Domestic Company 15.45 % 16.99 % 18.54 % 19.93 % MAT Rates • Current surcharge of 10 per cent on domestic companies reduced to 7.5 per cent. • Rate of Minimum Alternate Tax (MAT) increased from the current rate of 15 per cent to 18 per cent of book profits. 2. Changes in Threshold Limits and TDS Rates: An upward revision of the thresholds limits of withholding tax rates is made which is as follows: The change will take effect from 1 July 2010. TAXPERT Professionals…………..Adding value with quality and commitment
  4. 4. 4 Proposed Section Description Existing threshold (Rs.) threshold (Rs.) 194B Winnings from lottery 5,000 10,000 or crossword puzzle 194BB Winnings from horse 2,500 5,000 race 194C Payment to contractors 20,000 30,000 (for single transaction) 194C Payment to contractors 50,000 75,000 194D Insurance commission 5,000 20,000 194H Commission or 2,500 5,000 brokerage 194-I Rent 1,20,000 1,80,000 194J Fees for professional or 20,000 30,000 Technical services 3. Section 201 – Interest rate increased from 1% to 1.5% An amendment has been brought in section 201 pertaining to interest on failure to deposit the tax deducted but not deposited that rate has been increased from 1% to 1.5% per month calculated for the month or part of the month from the date on which tax was deducted to the date on which tax is deposited Other Important Changes: DEFINITION OF CHARITABLE PURPOSE SECTION [SECTION 2(15)] Existing Provision: - Section 2(15) of the IT Act, defines ‘charitable purpose’ among others, includes ‘the advancement of any other object of general public utility’. However, ‘the advancement of any other object of general public utility’ is not a charitable purpose, if it involves carrying on of any activity in the nature of trade, commerce or business, or any activity of rendering any service in relation to any trade, commerce or business, for a cess or fee or any other consideration, irrespective of the nature of use or application, or retention, of the income from such activity. TAXPERT Professionals…………..Adding value with quality and commitment
  5. 5. 5 Proposed : - It is proposed that the advancement of any other object of general public utility” to be considered as “charitable purpose” even if it involves carrying on of any activity in the nature of trade, commerce or business provided that the receipts from such activities do not exceed Rs.10 lakh in the year. Effective Date: - This amendment is proposed to take effect retrospectively from 1 April 2009 and will accordingly, apply in relation to the AY 2009-10 and subsequent years. Income deemed to accrue or arise in India Exiting Provision: - As per section 5 of the Income Tax Act, Proposals on direct taxes 1961 for a non resident only that income which (a) is received or is deemed to be received in India in such estimated to result in a revenue year by or on behalf of such person; or loss of Rs. 26,000 crore for the (b) accrues or arises or is deemed to accrue or arise to him in year. India during such year. Section 9 of the Income Tax Act, 1961 specifies the situations where the Income is deemed to accrue or arise in India. Clause V, VI, VII of section 9 respectively deals with • Interest • Royalty • Fees for technical services As per explanation to this section such income shall be included in the total income of the non- resident, whether or not the non-resident has a residence or place of business or business connection in India, which means that the situs of the rendering of services is not relevant. It is the situs of the payer and the situs of the utilization of services which will determine the taxability of such services in India. This position was a settled position till the Supreme Court decision on the subject which stated otherwise. Proposed: - Since the intention of legislature was that rendering of services in not relevant, it is the utilization of services therefore to put an end to ambiguity this explanation has been substituted by the following explanation “Explanation.—For the removal of doubts, it is hereby declared that for the purposes of this section, income of a non-resident shall be deemed to accrue or arise in India under clause (v) or clause (vi) or clause (vii) of sub-section (1) and shall be included in the total income of the nonresident, whether or not,— (i) the non-resident has a residence or place of business or business connection in India; or (ii) the non-resident has rendered services in India.” TAXPERT Professionals…………..Adding value with quality and commitment
  6. 6. 6 Procedure for registration of Trusts It has been held in certain judicial precedents that Commissioner of Income tax does not have power to cancel registrations of the trusts / institutions registered under Section 12A. To remove the ambiguity raised by the Judicial precedents it is proposed to provide the Commissioner of Income tax with the explicit power to cancel registrations of the trusts / institutions registered under Section 12A where the activities of such trust / institution are not genuine or are not in accordance with their objects. Effective Date: - This amendment will take effect from 1 June 1 2010 (relevant for A.Y 2011- 12) Section 35 To further encourage R&D across all sectors of the economy, weighted deduction on expenditure incurred on in-house R&D enhanced from 150 per cent to 200 percent. Weighted deduction on payments made to National Laboratories, research associations, colleges, universities and other institutions, for scientific research enhanced from 125 per cent to 175 per cent. Existing section 10(21) exempts the income of scientific research association which has been approved under Section 35. Pursuant to the amendment in Section 35, corresponding amendment has been made in section 10(21) to widen its scope to include social science research and statistical research within the category of activities that can be carried out by such associations in addition to scientific research. Deduction in respect of specified business Existing Provision: - Section 35AD allows a deduction for the whole of capital expenditure incurred by certain specified businesses subject to certain conditions. Such Specified business have been defined to include the business of setting up and operating of cold chain facilities for storage or transportation of agricultural produce, dairy products and other related items. It would also include the business of warehousing for storing agricultural produce and the business of laying and operating a cross-country natural gas or crude or petroleum oil pipeline network for distribution, including storage facilities being an integral part of such network subject to fulfillment of specified conditions. TAXPERT Professionals…………..Adding value with quality and commitment
  7. 7. 7 Proposed: It is proposed to include “business of building and operating a new hotel of two-star or above category as classified by Central Government" within the specified businesses eligible to claim deduction under this section The eligibility condition of business of laying and operating cross-country natural gas/ crude oil/ petroleum oil pipeline, w.r.t that it makes available one third of its pipeline capacity available for use on common carrier basis has been replaced by the limit with such proportion of its pipeline capacity as specified by Petroleum and Natural Gas Regulatory Authority Effective Date: - These amendments will apply from assessment year 2011-12 and subsequent years. RELIEF IN THE TIME LIMIT FOR DEPOSIT OF TAX WITHHELD Existing Provision: - As per section 40(a)(ia) of Income Tax Act, 1961, deduction of expenditure such as interest, commission, brokerage, professional fees (other than those incurred in the last month of the financial year) is not allowed if tax on such expenditure was not deducted, or after deduction was not paid during the previous year Proposed: - The proposed amendment in the section grants deduction of the expenditure incurred during the entire year if the tax deductible is deposited on or before the due date of filing of return of income Effective Date: - retrospectively from assessment year 2010-11 and subsequent years. TAX AUDIT [SECTION 44AB, SECTION 271B] Nature Present Threshold Limit for Audit Proposed Threshold Limit for Audit Every person Total sales, turnover or The Limit is proposed to be carrying on gross receipts in business exceed Rs. increased to Rs. 60,00,000 Business 40,00,000 in the previous year Profession Gross receipts in profession exceed The Limit is proposed to be increased Rs. 10,00,000 to Rs. 15,00,000 PRESUMPTIVE TAXATION UNDER SECTION 44AD TAXPERT Professionals…………..Adding value with quality and commitment
  8. 8. 8 The threshold limit of applicability of Section 44AD relating to business of civil construction or supply of labour for Civil Construction has been increased from Rs. 40,00,000 to Rs. 60,00,000. Effective Date: - These amendments will apply in relation to the assessment year 2011-12 and subsequent years SPECIAL PROVISION FOR COMPUTING INCOME OF NON RESIDENT [SECTION 44BB AND SECTION 44DA] Existing provisions: - As per section 44BB of the Act which provides a presumptive method of taxing the income of a non resident says that income of a non-resident taxpayer who is engaged in the business of providing services or facilities in connection with, or supplying plant and machinery on hire used, or to be used, in the prospecting for, or extraction or production of, mineral oils is computed at 10% of the aggregate of the amounts paid. Section 44DA provides the procedure for computation of income under the head business and profession of a non- resident from royalty or fees for technical services or professional services performed through a permanent establishment in India. Proposed :- To put an end to ambiguity raised by judicial pronouncements regarding the above two section read with Section 115A , Section 44BB has been amended so as to exclude income which is covered under section 44DA and similarly section 44DA has also been amended exclude the income covered under section 44BB Effective Date:-1 April 2011 INSERTION OF CONVERSION OF CERTAIN COMPANIES INTO LLP (LIMITED LIABILITY PARTNERSHIP) [SECTION 47 (XIIIB)] To facilitate the conversion of small companies into Limited Liability Partnerships, section 47 (xiiib) is inserted to propose that transfer of assets as a result of such conversion not to be subject to capital gain tax on complying with specified conditions. Section 47 (xiiib) specifies that any transfer of a capital asset or intangible asset by a private company or unlisted public company (hereafter in this clause referred to as the company) to a limited liability partnership as a result of conversion of the company into a limited liability partnership in accordance with the provisions of section 56 or section 57 of the Limited Liability Partnership Act, 2008: In other words, any transfer of capital asset or intangible asset by Private Company or Unlisted Public Company pursuant to the conversion of such company into a LLP as per the provisions of TAXPERT Professionals…………..Adding value with quality and commitment
  9. 9. 9 LLP Act, 2008 will not be treated as transfer for the purpose of capital gains tax on fulfilling of certain conditions. Effective Date: - 1st day of April, 2011 ANOMALY IN SECTION 10AA IN CASE OF SEZ UNITS REMOVED Anomaly in the formula under section 10AA for computing exempted profits in case of SEZ units, whereby exempted profits were computed with respect to total turnover of the business carried on by assessee and not of the eligible undertaking was resolved by an amendment introduced by Finance Act, 2009 under which assessee was replaced with undertaking with effect from 1 April 2010. Effective Date: Provisions of this sub-section shall have effect for the assessment year beginning on the 1st day of April, 2006 [first year for claim of exemption by SEZ units under Section 10AA] and subsequent assessment years. SECTION 282 B Section 282B was inserted by section 78 of the Finance (No. 2) Act, 2009], with effect from the 1st day of October, 2010. It was proposed that the income-tax authorities will allot a computer generated Document Identification Number in respect of every notice, order, letter or any correspondence issued or accepted by an income-tax authority. Proposed: Due to lack of system in Place the date for the introduction of the above requirement on a pan-India basis has been deferred to 1 July 2011. ***** ***** TAXPERT Professionals…………..Adding value with quality and commitment
  10. 10. 10 SERVICE TAX MAJOR MAJOR AMENDMENTS: Rate of Service Tax: INDIRECT TAX For Indian service sector, the rate of service tax has been kept intact in order to pave the way forward for Goods and Services Tax Act which is Service Tax proposed to come into effect from 1st April, 2011. Service Tax will be levied at the present rate i.e. 10% (plus Education Cess and Higher & Secondary Education Cess). The effective service tax rate is 10.30 % of the gross value of the services. New Services Introduced: Following the practice of previous years, the Finance Bill, 2010 proposed to broaden the service tax net through the introduction of eight new services. These services are:- Services of promoting, marketing or organizing of games of chance, including lottery. Health services undertaken by hospitals or medical establishments for the employees of business organizations and health services provided under health insurance schemes offered by the insurance companies. Service provided for maintenance of medical records of employees of a business entity. Services for permitting commercial use or exploitation of any event organized by a person or an organisation. Service provided by the Electricity Exchangers in relation to assisting, regulating, controlling the business of trading, processing and settlement pertaining to sale or purchase of electricity. Services relating to copyrights of recording of cinematographic films and sound recording Special services provided by the builder etc to the prospective buyer such as providing preferential location or external or internal development of complexes on extra charges. Service for promoting of brand of goods, services, events business entity Consolidation of Existing Taxable Services: Port Services, Other Port Services and Airport Services are proposed to consolidate into one service. All services provided entirely within the port/airport premises would fall under this category. Further, specific authorization from the port /airport authorities would not be the pre- condition for the levy under this category. TAXPERT Professionals…………..Adding value with quality and commitment
  11. 11. 11 Amendment in Existing Services Following amendments are proposed in following existing taxable services:- • Auctioneer’s Services: Section 65 (105) (zzzr) of the Finance Act, 1994 provides that taxable service means any service provided or to be provided to any person, by any other person, in relation to auction of property, movable or immovable, tangible or intangible, in any manner, but does not include auction of property under the directions or orders of a court of law or auction by the Government; It is clarified that the phrase ‘auction by government” appearing in the taxable service means an auction where government property is being auctioned and not when the government acts as an auctioneer for the private goods. • Unit Linked Insurance Plans: Section 65 (105) (zzzzf) defines the taxable service provided or to be provided to policy holder, by an insurer carrying on life insurance business, in relation to management of investment, under unit linked insurance business, commonly known as Unit Linked Insurance Plan (ULIP) scheme. The taxable value for the purpose of this service is the difference between:- Premium paid by the policy holder for the Unit Linked Insurance Plan policy; and Sum of premium paid for or attributable to risk cover, whether for life, health or other specified purposes AND the amount segregated for actual investment. In other words the differential amount was considered as the charges for asset management. The Finance Bill, 2011 propose to change the value of taxable service and provides that value of the taxable service for any year of the operation of policy shall be the actual amount charged by the insurer for management of funds under ULIP or the maximum amount of fund management charges fixed by IRDA, whichever is higher. • Expansion of the scope of Information technology Services: The levy of service tax was limited to cases where IT software was to be used in the course of furtherance of business or commerce. The definition of taxable services is being amended to extend the levy to cover all the cases whether or not used in the course or furtherance of business or commerce. • Commercial Training and Coaching Services: The meaning of term commercial has been clarified The word ‘commercial’ means any training or coaching that is provided TAXPERT Professionals…………..Adding value with quality and commitment
  12. 12. 12 for a consideration irrespective of the presence or absence of any profit motive. This is a retrospective amendment from July 2003. • Sponsorship Service: The exclusion available for sponsorship pertaining to sports is being removed. • Renting of Immovable Property: The Hon’ble High Court of Delhi in its order in the case of Home Solutions Retail India Limited & Others verses Union of India has struck down the levy of service tax on the activity of renting of immovable property and observed that renting of immovable property for use in the course of furtherance of business or commerce does not involve any value addition and therefore cannot be regarded as service. In order to clarify the legislative intent, it is that the activity of renting of immovable property per se would also constitute a taxable service. This amendment is being given retrospective effect from June 01, 2007. Further, it is also provided that service tax would be charged on rent of vacant land if there is an agreement or contract between the lessor and lessee that a construction on such land is to be undertaken for furtherance of business or commerce during the tenure of the lease. • Construction Services: An explanation is being introduced to provide that unless the entire payment for Proposals relating to the property is paid by the prospective buyer or on his behalf after the completion of construction (including Service Tax are estimated its certification by the local authorities), the activity of to result in a net revenue construction would be deemed to be a taxable service gain of Rs. 3000 crore for provided by the builder/promoter/developer to the prospective buyer and the service tax would be charged the year. accordingly. This would only expand the scope of the existing service, which otherwise remain unchanged. Other Amendments:- Refund of Input/ Input Services: To bring more clarity and allow refund at faster pace, Notification No. 5/2006 – CE (NT) dated March 14, 2006, the words “in relation to “and “in” has been added to ensure that the provisions of the refund notification and the CENVAT Credit Rules are aligned and refund is granted on all goods or services on which CENVAT credit can be claimed by the exporter of goods or services. TAXPERT Professionals…………..Adding value with quality and commitment
  13. 13. 13 Export of Services: Amendments in Export of Service Rules, 2005 are tabulated below:- S. No. Taxable Applicable Rule of Export Amended Rule of Export of Service Services of Service Rules Rules 1. Mandap Keeper Rule 3 (1) (ii) i.e. Rule 3 (1) (i) i.e. Immovable Section 65 (105) Performance Related Property Related Services (m) of the Services Finance Act. 2. Chartered Rule 3 (1) (ii) i.e. Rule 3 (1) (iii) i.e. Residual Accountants Performance Related Category of Services Services, Services Section 65 (105) (s) of the Finance Act. 3. Company Rule 3 (1) (ii) i.e. Rule 3 (1) (iii) i.e. Residual Secretary Performance Related Category of Services Services, Services Section 65 (105) (u) of the Finance Act. 4. Cost Rule 3 (1) (ii) i.e. Rule 3 (1) (iii) i.e. Residual Accountant’s Performance Related Category of Services Services, Services Section 65 (105) (t) of the Finance Act. TAXPERT Professionals…………..Adding value with quality and commitment
  14. 14. 14 CENTRAL EXCISE MAJOR AMENDMENTS: Change in Excise Duty Rates INDIRECT TAX The standard rate of excise duty for non petroleum goods has been increased from 8% to 10%. The increased rates are applicable from Central Excise February 27, 2010. The changes on major products industry wise are tabulated below: Industry/ Products Previous Current Increase/Decrease Rate Rate 1. Cement Industry: - Excise Duty of cement has been increased. Previous rate and enhanced rates are tabulated below. The details are available in Notification NO. 102010- CE, dated February 21, 2010 Cement (Mini cement Plant) RSP above Rs. 250 Rs. 315 Increase Rs.190 per 50 Kg bag or Rs.3800 per metric per metric per metric tonne tonne tonne Cement (Mini cement Plant) RSP not below Rs. 145 Rs. 185 Increase Rs.190 per 50 Kg bag or Rs 3800 pmt per metric per metric tonne tonne Cement (Mini cement Plant) except packing Rs. 170 Rs. 215 Increase form per metric per metric tonne tonne Cement (other than mini Cement plant) RSP Rs. 230 Rs. 290 Increase not below Rs.190 per 50 Kg bag or Rs.3800 per metric per metric per metric tonne tonne tonne Cement (other than mini Cement plant) RSP 8 % of 10 % of Increase above Rs.190 per 50 Kg bag or Rs.3800 pmt Retail Retail Sale Sale Price Price Cement (other than mini Cement plant) other 8% or Rs. 10% or Rs. Increase than in packing form 290 per 230 per metric metric- tonne - whichever whichever is higher is higher Cement Clinker Rs 300 375 per Increase per metric metric tonne tonne TAXPERT Professionals…………..Adding value with quality and commitment
  15. 15. 15 2. Tobacco & Related Industry: The rate of basic excise duty have been raised on all forms of tobacco and tobacco product like branded unmanufactured tobacco refuse, branded hookah or gudaku tobacco, chewing tobacco, preparations containing chewing tobacco, jarda scented tobacco, snuff and its preparation, tobacco extracts and essences etc. smoking tobacco, cut tobacco, smoking mixtures etc., other than which are already fully exempted. Branded manufactured tobacco refuse 42% 50% Increase Chewing tobacco, Zarda, Scented tobacco, 50% 60% Increase snuff tobacco Other Branded chewing tobacco 34% 40% Increase Smoking Mixture of pipe and cigarettes 300% 360% Increase 3. Petroleum Products: The rates of excise rate on petrol and diesel have been increased by Rs. 1 per litre. The increase is applicable to both branded and un branded products. Motor Sprit (Petrol) Rs Rs Increase Without Brand Name 13.35/Ltr 14.35/Ltr Motor Sprit (Petrol) Rs Rs Increase With Brand 14.50/ltr 15.50/Ltr High Speed Diesel Rs Rs 4.60/Ltr Increase Without Brand 3.60/Ltr 4. Automobile Electronically operated vehicle, cars, electric Nil 4% Increase motor assisted rickshaw Large motor cars/ SUVs 20% + Rs 22% + Rs Increase 15000 15000 5. Jewellery Plain Gold Jewellery Rs. 500 Rs.750 per Increase Per 10 g 10 g Plain Silver Jewellery Rs. 1000 Rs 1500 Increase per Kg Per KG Gold Bar other than tola bar bringing Nil Rs. 280 Increase manufactures engraved serial number per10 gm TAXPERT Professionals…………..Adding value with quality and commitment
  16. 16. 16 Clean Energy Cess A clean energy cess is being imposed on coal, lignite and peat produced in India. This cess would be levied and collected as a duty of excise from coal mines. The rate of cess, the date from which it will be effective and the rules and procedure for its collection shall be notified after the enactment of the Finance Bill, 2010. Small Scale Industry: Following two significant procedural relaxation / concessions are introduced. These amendments come into effect on the April 01, 2010: Full CENVAT Credit on capital goods in one installment in the year of receipt of such capital goods in the factory premise Payment of the duty on quarterly rather than monthly basis. Other Procedural Simplification Measures: Pre-authentication of invoices has been dispensed with “Proposals relating to customs and central excise Benefits of allowing CENVAT Credit to be reversed on are estimated to result in a proportionate basis (in case common inputs are used net revenue gain of Rs. for the manufacture of dutiable and exempt products) is being extended retrospectively for pending cases 43,500 crore for the year” Accelerated depreciation of the credit amount has been allowed for reversing credit taken on computers and computer peripherals when they are cleared after use in the factory Movements of moulds, dies, jigs and fixtures by the main manufacturer to vendors (other than Job worker) without loss of CENVAT Credit have been facilitated. In case of voluntary payment of duty under section 11A (2B) of the Central Excise Act, no penalty shall be imposed. Settlement of cases through the Settlement Commission has been liberalized by removing restrictions on the number of times the Commission may be approached by an assessee. TAXPERT Professionals…………..Adding value with quality and commitment
  17. 17. 17 CUSTOMS DUTY Exemption from Additional Duty of Customs under Section 3 (5) of the Customs Tariff Act: Outright exemption from additional duty of customs (presently 4%) MAJOR AMENDMENTS: leviable under sub- section (5) of diction 3 of the Customs Tariff Act, 1975 INDIRECT TAX is being provided to goods imported in a pre- packed form and intended for retail sale. Customs Project Imports: Following new projects are being notified under chapter 98 of the Customs Tariff Act (Basic Customs Duty Rate is 5%):Cold Storage, cold room (including farm pre- coolers) or industrial project for preservation, storage or processing of agriculture, apiary, horticultural, dairy, poultry, aquatic and marine products. Mono Rail Projects for urban public transport Setting up Digital Head Ends Project for installation of mechanized handling system & pallet racking systems in mandis or warehousing for food grains and sugar Import of Sample: The current limit of Rs. One lac per annum for duty free import of sample in terms of Notification No. 154/94- Customs, dated July 13, 1994 is being enhanced to Rs. Three lacs per annum. Transmission of Electrical Energy: Presently, electrical energy is fully exempt from customs duty. Electrical energy supplied from a Special Economic Zone to the Domestic Tariff Area and non processing area of SEZ would now attract duty at the rate of 16% ad valorem. This amendment would have retrospectively applicability with effect from June 26, 2009. It is relevant to note in this regard that exemption on supplies or imports of electrical energy, other than supply from SEZ to DTA or Non processing area, would continue. Customs Duty Rates: TAXPERT Professionals…………..Adding value with quality and commitment
  18. 18. 18 The change in Customs duty of major products is tabulated below Increase/ Industry Products Previous Rates Current Rates Decrease Motor Sprit commonly 2.5% 7.5% Increase known as Petrol PETROLEUM High Speed Diesel 2.5% 7.5% Increase Other petroleum 5% 10% Increase products (excepts Naphtha, LPG, LNG Gold in any other form Rs. 500/ 10gram Rs. 750/10gram Increase (including ornaments imported as personal baggage) Specified Gold Bars Rs. 200/ 10gram Rs. 300/ 10gram Increase JEWELLERY Silver in any form Rs. 1000/ Rs. 1500/ Increase Kilogram Kilogram (including ornaments imported as personal baggage excluding ornaments studded with stones or pearls) Platinum Rs. 200/ 10gram Rs. 300/ 10gram Increase Specified medical 5% 7.5% Increase equipment, accessories and parts thereof MEDICAL Compostable polymer 10% NIL Decrease or bio-plastic used in the manufacturing of biodegradable agro mulching films, nursery plantations TAXPERT Professionals…………..Adding value with quality and commitment
  19. 19. 19 pots and flower pots Tunnel Boring Machine 7.5% NIL Decrease Agriculture Machinery 7.5% 5% Decrease Truck Refrigeration 7.5% NIL Decrease MACHINERY Unit Machinery including 7.5% 5% Decrease prime movers and other equipments for initial setting up of a solar power generation project/facility Exemption from 4% CVD NIL Decrease Special CVD for goods imported in pre- packaged form for retail sale including- apparel & clothing but not the parts CONSUMER GOODS Telephone sets, Wrist watches Parts, components of 7.5% NIL Decrease battery chargers, and handsfree headphones of mobile handsets including cellular phones Pepper long 70% 30% Decrease Asafoetida 30% 20% Decrease TAXPERT Professionals…………..Adding value with quality and commitment
  20. 20. Motion pictures, music, 7.5% NIL Decrease ENTERTA- gaming software for INMENT20 use on gaming console Goods required for 7.5% 5% Decrease medical, surgical, dental or veternity use including parts and accessories Hospital equipment, 5% 4% Decrease MEDICAL apparatus and parts thereof for use in specified hospitals Life saving medical 5% 4% Decrease equipment, accessories and spare parts or both of such equipment for personal use Goods & Service Tax: Studies commissioned by the 13th Finance Commission indicated the roll out of Goods and Service Tax could increase gross domestic product by almost Rs. One trillion by ironing out inefficiencies and lowering tax collection and administration cost. The GST implementation date has been shifted to April 2011. The Finance Minister has reiterated the need to build consensus with the states and seems to be in favour of the 13th Finance Commission’s recommendation on a flawless GST. In a nutshell The Budget 2010-11 is an attempt to consolidation and correction of the fiscal deficit, tradeoff between inflation and growth with partial roll back of fiscal stimulus. This budget provides more purchasing power to common man and a levy of additional duty on manufacture activity is a good try to balance the growth and industry expectations. In the words of Mr. Pranab Mukerhjee “This Budget belongs to AAM Aadmi. It belongs to the farmer, the agriculturist, the entrepreneur and the investor. The opportunity is great, the time is right” TAXPERT Professionals…………..Adding value with quality and commitment
  21. 21. 21 TAXPERT Professionals Private Limited (TAXPERT Professionals) is a pioneer consultancy company and conglomerate of upcoming professionals in India. TAXPERT Professionals have offices in Mumbai, New Delhi & NCR and Chandigarh. The company is having director driven teams for Direct Tax, Indirect Tax and Corporate Law Matters with leading professionals having About respective expertise in their areas. TAXPERT Professionals Our range of services are designed to effectively deal with complex business issues from direct taxation, indirect taxation, corporate governance, financial structuring and further services in relation to mergers and acquisitions, valuations, capital market services, risk management, restructuring, strategy development, audit etc. may be provided through our associates. TAXPERT Professionals Private Limited Mumbai – New Delhi- Chandigarh Email: taxpertprofessionals@gmail.com Contact: + 91 8108712410/ 91 9221340038 / 91 9769033172 We would be happy to discuss the budget amendments, please mail us or contact on above contact numbers Disclaimer:- With respect to the Budget Update available here, TAXPERT Professionals does not make any warranty, express or implied , including the warranty of merchantability and fitness for a particular purpose, or assume any liability or responsibility for the accuracy, completeness or usefulness of such information, TAXPERT Professionals shall not be liable for any claims or losses of any nature, arising indirectly or directly from use of the data or material or otherwise however arising. TAXPERT Professionals…………..Adding value with quality and commitment