1) The Union Budget for 2010-2011 made several amendments to direct and indirect taxes in India. 2) Some key amendments included increasing the basic income tax exemption limit and reducing tax rates for individual taxpayers earning between Rs. 1.6 lakh to Rs. 8 lakh per year. 3) The budget also increased tax deductions for investments made in infrastructure bonds and health insurance premiums. 4) For corporate taxes, the surcharge on domestic companies was reduced from 10% to 7.5% and MAT rates were increased. Threshold limits for tax deducted at source were also revised upward. 5) Several amendments were made to provide tax incentives for research and development activities and for specified

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
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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.
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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.
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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.
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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.”
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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.
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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
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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
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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.
***** *****
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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.
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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
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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.
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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.
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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
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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
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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.
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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:
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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
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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. Motion pictures, music, 7.5% NIL Decrease
ENTERTA-
gaming software for
INMENT
20 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
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.
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