Budget 20
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Conten
nts 
 

I) Budgget Highligh
hts

Direct Tax
D 3
Service Tax 5
E
Excise 6
C
Customs 7
C & GST
CST 8

II) Budgget Proposal

A) Direct
D Tax

A-1)
A Personall Taxation 9
A
A-2) Corporatte Taxation 10
A
A-3) Non- Reesidents 11
A
A-4) Transferr Pricing 12
A
A-5) Limited Liability Parttnerships 13
A
A-6) Special Economic
E Zoones 13
A
A-7) Incentivees & Deductiions 14
A
A-8) Miscellaaneous Provissions 15

B) Inndirect Tax 
 
B
B-1) Service Tax
T 17
B
B-2) Excise 23 
B
B-3) Customss 27 
B
B-4) Central Sales
S Tax 28 
B
B-5) Goods & Service Taxx 29 
 

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I Buddget Hig
ghlights

D
DIRECT TAX
T

ƒ Direct Tax
x Code to be effective
e m 1st Apr’20122.
from

ƒ Basic exemmption limit for

f individualls increased too Rs1,80,0000 (for residentt women beloow the
age of 60 years
y exemptiion limit retaiined at Rs 1,990,000).

ƒ Age limit for qualifyinng as senior citizen reduuced from 655 years to 600 years and basic
exemption
n limit increassed to Rs 250,,000.

ƒ New basicc exemption limit of Rs 500,000

5 introoduced for inndividuals whho are very senior
s
citizens off 80 years andd above.

ƒ Additionall deduction of Rs 20,0000 to an inndividual or Hindu Undiivided Familly on

subscriptio
on to notified long-term infrastructure bonds
b extendeed by one morre year.

ƒ Provisionss introduced for empowerring the Centtral Governm ment to exemppt, by notificcation,
certain class or classes of
o persons froom filing the return of incoome.

ƒ Contribution by the emmployer towarrds a notifiedd pension schheme will be excluded from m the
overall lim
mit of Rs1,00,000 providedd for deductionn from indiviiduals’ gross total
t income.

ƒ Contribution made by an a employer towards

t a notified pension scheme allow
wed as a deduuction
(restricted to10% of thee salary of em
mployees).

ƒ Time limitt granted to establishmennts for filing applications with the Em mployees Provvident
Fund Orgaanization for seeking exem mption extennded from 311 December 2010 2 to 31 March
M
2012. The said amendm ment will take effect retrosppectively from
m 1 January 2011
2

ƒ Basic ratess of corporatee tax remain unchanged

u forr both domesttic and foreiggn companies..

ƒ Surcharge on domestic companies reeduced from 7.5%

7 to 5%.

ƒ Surcharge on foreign coompanies reduuced from 2.55% to 2%

ƒ Rate of MA
AT increasedd from 18% too 18.5%.

ƒ Dividends received byy Indian com mpanies from their foreignn subsidiariess during Finaancial
Year 2011-12 to be taxeed at a concesssional rate off 15 percent on
o a gross bassis.

ƒ Non resideents having Liaison

L Offices in India reequired to file a statementt, giving detaails of
the activitiies carried ouut by the Liaison Offices, within
w 60 dayys from the end
e of the finaancial
year.

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ƒ Interest recceived by nonn residents frrom notified infrastructure

i debt funds taaxable at 5% (plus
applicable surcharge annd education cess).
c

ƒ With effecct from 1 Juune 2011, provision

p for a set of coounter measuures in relation to
jurisdiction
ns with whichh there is a lacck of effectivve exchange of
o informationn to be introduuced.

ƒ 5% variatiion currentlyy allowed bettween the acttual price off the transaction and the arm’s
length pricce may be revvised and notified by the Central Governnment.

ƒ With effecct from 1 Junne 2011, the Transfer Priccing Officer can c determine the arm’s length
l
price of an
ny internationnal transactionn that comes to his notice,, in addition to
t those referrred to
him by thee Assessing Officer.
O

ƒ With effecct from 1 Junne 2011, the Transfer

T Priciing Officer can conduct on-the-spot
o ennquiry
and verificcation in exercise of powerrs of survey under
u section 133A of the Act.
A

ƒ o tax return and transfer pricing accouuntants reporrt extended too 30th
Time limitt for filing of
Novemberr, for corporatte assessee haaving internattional transacttions.

ƒ Levy of MAT
M extendded to Limitted Liability Partnershipss, SEZ Deveelopers and Units
operating in
i SEZ.

ƒ Dividend Distribution
D T exemptioon withdrawn for SEZ Devvelopers.
Tax

ƒ Investmennt linked tax deduction

d exttended to taxxpayers engagged in develooping and building
affordable housing proj
ojects under a scheme fram med by the Central
C Goveernment or a State
Governmeent or in produuction of fertiilizers in India.

ƒ Tax holidaay for underttakings engagged in comm mercial producction of mineeral oil will not
n be
available for
f blocks liceensed under a contract awaarded after 311 March 2011
.
ƒ Tax holidaay sunset clauuse for power sector extendded to 31 Marrch 2012.

ƒ Weighted deduction forr contributionns made to naational laboraatory or a uniiversity or IIT

T or a
specified person
p for scientific researcch, increased from 175% to
t 200%.

ƒ Income fro
om infrastructture debt fundds notified byy the Central Government
G w be exemppt.
will

ƒ Exemption n provided too specified inccome of a nootified body or

o authority or
o trust or boaard or
commissio on set up forr regulating or administeering an activvity not beinng an comm mercial
activity.

ƒ Activities in the naturee of trade/com mmerce/businness, pursuedd for advanceement of objeect of

general puublic utility iss “charitable purpose”, if annual receippts from such activities do
d not
exceed Rs 10 Lacs. This monetary liimit now increeased to Rs.225 Lacs.

ƒ Entities rellated to taxpaayer, who is thhe subject maatter of searchh, would now
w be allowed to t file
an applicattion for settleement, if addittional incomee tax payable in their appliication exceedds Rs.
10 Lacs.

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ƒ Settlementt Commissionn empoweredd to rectify its order passsed by it, witthin a periodd of 6
months fro
om the date off the order.

ƒ n of information on requessts received frrom tax authoorities outsidee India in term

Collection ms of
Tax Inform
mation Exchange Agreemeents.

ƒ Time limiit prescribed for completiion of assesssment and reeassessments (including search
s
assessmennts) to excludde time takenn for obtaininng informatioon from foreiign tax authoorities
under agreeement for exchange of infformation or six
s months, whichever
w is leess.

ƒ Rate of taax on incomee distributed by

b mutual fuunds (other thhan equity orriented funds)) to a
person oth
her than indiviidual or HUF
F, increased too 30% (plus appplicable surccharge and ceess).

ƒ Deletion of
o scheme of DIN
D for correespondence with
w tax authorrities.

S
SERVICE TAX

ƒ No changee in the effective service taax rate of 10.33%.

ƒ Two new taxable

t servicces introduceed. (Air-condiitioned restauurants having liquor licensse and
Short term
m accommodattions in hotell etc.)

ƒ Scope of seven existinng service caategories exppanded viz. life l insurancee service, cluub or
n services, auuthorized servvice station, business
association b suppport services,, legal consulltancy
services, commercial annd training cooaching servicces and healthh services.

ƒ Some servvices exempt from tax viz. business exhibition

e ouutside India, transport
t of goods
g
through sh
hipping, workks contract serrvices, generaal insurance, transport
t of goods by air ettc.

ƒ Outright service tax exxemption for input

i servicess “wholly connsumed” in a SEZ, linkedd with
Export Ruules.

ƒ Rates of seervice tax on air travel servvice have beeen revised.

ƒ or delayed payyment of servvice tax increeased to 18%

Interest fo % a year and penalty proviisions
amended. Restrictions on Cenvat credit
c on inpuut services prrescribed in the case of works
w
contractorss (availing coomposition schheme).

ƒ Certain serrvices have beeen re-groupeed in the expoort/ import off services rulees.

ƒ Definition of 'input servvices' has been broadened.

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ƒ Trading clearly definedd as an exemppt service.

ƒ Banking companies
c orr financial institutions oblligated to paay an amountt equal to 500% of
Cenvat creedit availed. For services related to liffe insurance or management of ULIP,, such
amount to be equal to 20%
2 of credit availed.

ƒ Rule 6(5) that

t allowed complete
c creddit of 17 serviices has been withdrawn.

ƒ Point of Taaxation Ruless to be introduuced from 1st Apr’ 2011 to

t define the point
p in time when
services sh
hall be deemeed to have beeen provided. Accordinglyy, the point off taxing serviices is
being channged from caash basis to acccrual basis. The rules alsso clarify the taxable evennt and
applicable rates when a new service is introducedd or advance payment
p is recceived.

EX
XCISE

ƒ Peak rate for

f excise is retained
r at thee existing leveels of 10%.

ƒ y rate increaseed from 4% too 5% to align with state VA

Basic duty AT rates.

ƒ Nominal Excise
E Duty of
o 1% imposedd on 130 new
w items (withoout cenvat creedit facility)

ƒ Mandatory
y excise duty of 10% on Brranded Readyymade garments with SSI exemptions
e

ƒ A duty at the
t rate of 1%
% is on brandeed jewellary and
a branded articles
a of precious metals

ƒ Excise dutty exempted on certain eqquipment for installation of

o cold chainn infrastructurre for
specified purposes.
p

ƒ Enzymaticc preparationss used in leathher industry are

a being fullyy exempted frrom excise duuty

ƒ Colour, unnexposed cineematographic film in jumbo rolls of 4000 feet and 10000 feet Pipe fiittings
required fo
or a water suppply project

ƒ Exemptionn to packagedd or canned software (froom value thatt represents transfer

t of rigght to
use) provid
ded to cover supplies
s madee other than under
u MRP asssessment.

ƒ Full exemp ption from ceertain compuuter componennts and disk-drives has beeen withdraw
wn and
rises to con
ncessional ratte of 5%.

ƒ Reduction of excise dutty to 8% on LED

L lights/ligghting fixturess.

ƒ Packaged and
a Bulk cem
ment excise raate revised to ad-velorem based.
b

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ƒ To determ
mine the variaation on the basis
b of MRPP it is propossed to repeal the “Standarrds of
weight & measurementt Act, 1976” & “Medicinaal & Toilet Prreparation Acct” by introduuction
of “Legal Metrology
M Acct, 2009” w.ee.f. 1st March,, 2011.

ƒ Additionall excise duty removed on sugar, textile and textile products

p to ennable states too levy
VAT.

ƒ Refund off 20 percent of excise dutyd paid on vehicles (othher than threee wheeled motor m
vehicles) carrying
c up too 13 persons (including
( thee driver) regisstered as a taxxi allowed.

ƒ Excise dutty exemption available to Mega/Ultra

M M
Mega Power Project
P extendded to developpment
of specifieed facilities off such projectts.

ƒ Provision of the first charge on thhe property of

o assessee has
h been inseerted in respeect of
amounts due.

ƒ Definition of capital gooods amendedd to include goodsg used ouutside the facttory for generration
of electriciity for captivee use w.e.f 1sst April, 2011.

ƒ Input and input servicces redefinedd to excludee specified goods

g and seervices. Exem mpted
services to
o include tradding “trading”” for the purpposes of com
mputing creditt reversal w.ee.f 1st
April, 2011

ƒ ude goods ussed in the facctory by the manufacturerr of final prooduct except those
Input inclu
i negative liist which inccludes goods used for connstruction of civil structurre and
specified in
those havin
ng no relationnship with maanufacture off final productt w.e.f 1st Appril, 2011

ƒ Rate of intterest in case of short/ delaayed paymennt of duty to be

b increased from
f 13% to 18 %.
w.e.f 1st April,
A 2011

CU
USTOMS
S

ƒ Peak rate of
o Basic Custom Duty (BC
CD) remains unchanged
u at 10%.

ƒ BCD of 2%
%, 2.5% and 3%
3 replaced with
w median rate
r of 2.5%.

ƒ BCD reduuced on certaain priority sectors

s like agricultural
a m
machinery annd micro irriggation
equipmentt.

ƒ Exemption
n from BCD on
o componennts of mobile handsets
h extended till 31 March
M 2012.

ƒ Self-assesssment of dutty is allowedd on goods imported

i or exported subbject to presccribed
Proceduress.

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ƒ Enhancem
ment of time-liimit for claim
ming refund from six monthhs to one yearr.

ƒ n from educattion cess and higher educaation cess pressently availabble to aircraftss now
Exemption
withdrawn
n.

C & GS
CST ST

ƒ No changee in Central Sales Tax rate..

ƒ Date of im
mplementationn of Goods annd Service Taxx not announced.

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II Budget Pro
oposal

A DIRECT TAX
A)

A-1) P ersonal Taxation

T
i)) Rates

No changees are proposed in the incoome tax ratess, however baasic exemptioon limits revissed in
the followiing manner:-

Senior Citizen
C Very Seniorr
Taxablee Income Men Women
(60>Agge<80) Citizen (Age>880)
Up to Up to
Basic exem
mption limit
Rs.1.80 Rs.1.90 Up to Rs.2.5 Lacs Upp to Rs.5 Laccs
*
Lacs Lacs
From Basicc exemption
10% 10% 10% NA
A
limit To Rss.5 Lacs
From Rs. 5 Lacs
20% 20% 20% 200%
To Rs. 8 Laacs
Above Rs.88 Lacs 30% 30% 30% 300%

* Notes:
ƒ In case of residdent men, bassic exemptionn limit increased by Rs.20,000 from exxisting
mit of Rs.1.600 Lacs.
lim
ƒ In case of residdent women, limit remains unchanged.
ƒ In case of senioor citizens, baasic exemption limit increaased by Rs.100,000 from exxisting
mit of Rs.2.400 Lacs.
lim
ƒ Neew category of ‘Very Sennior Citizen’ introduced for f more thann 80 years of o age
group, where in there wiill be no inncome tax liiability up to t the amouunt of
Rss.5,00,000/-.

iii) New Pen

nsion Schem
me

With effect from 1st Apr’2012, deduction

d in respect of contribution made by Central
C
Governmeent or the empployer to the ‘New Pensioon Scheme’ under u Sectionn 80CCD(2) of
o Act
is proposed
d to be excludded from the limit of Rs.1,,00,000 as proovided under Section 80CCCE of
Act, wheree in total amoount of deducction under seections 80C, 80CCC
8 and 80CCD is resttricted
to Rs.1,00
0,000 only, thhus passing ana additional benefit to thhe employeess to the exteent of
amount coontributed by the
t employerr.

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iiii) Long-Teerm Infrasttructure Bonds

Section 80
0CCF of the Act,
A allow deeduction of Rs.20,000/- forr making inveestment in nootified
long-term infrastructure bonds, whhich is now proposed
p b amend wiith effect froom 1st
to be
Apr’2012 to extend the benefit of deeduction for one more yearr i.e. assessmeent year 20122-13.

ivv) Return of
o Income

To removee the duplicattion of inform mation and too reduce the compliance
c buurden on smaall tax
payers, it is
i proposed to insert a new w sub-sectionn (1C) in secttion 139 of thhe Act, with effect
st
from 1 Ju un’2011, to empower
e the Central Govvernment to exempt
e any class
c or classses of
persons froom the requirrement of filinng of return of
o income undder the prescriibed guidelinees.

With the inntroduction of

o this new suub-section salaried tax payyers, whose enntire tax liability is
dischargedd by the emplloyer in the foorm of TDS, are not required to file anyy return of inncome
with the in
ncome tax deppartment.

A-2) Corporate
C Taxation
n
i) Rates

ƒ Basic income
i tax raate remains unnchanged.

ƒ In casee of domesticc companies, surcharge redduced from 7..5% to 5%. Likewise,

L in caase of
foreignn companies, surcharge redduced from 2.5%
2 to 2%.

ƒ Basic rate of Minim

mum Alternatte Tax (MAT
T) increased to
t 18.5% from
m the existing rate
of 18%
% only.

ii)) New Pen

nsion Schem
me

Up till no
ow, contributiion made by employer toowards New Pension Schheme (NPS) is i not
allowed ass deduction unlike
u recognnized provideent fund / appproved supeerannuation fund
f /
approved gratuity
g fund.. It is now beeing proposedd to amend seection 36 of thhe Act, with effect
from 1st Apr’2012,
A so as to providee the deduction of any sum contributed by the empployer
towards NPS
N as referreed under sub--section (2) of o section 80CCD of the Act.A Howeveer, the
quantum of
o deduction cannot
c exceedd 10% of the salary
s of the employee
e in the
t previous year.
y

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iii) Foreign Dividend

Unlike exiisting provisioons, wherein foreign dividdend income received

r by an
a Indian com
mpany
w section 1155BBD is propposed to be innserted with effect
is taxable at the rate off 30%, a new
from 1st Apr’2012
A , foor the AY 20012-13, to levvy tax on thee dividend inncome received by
Indian commpanies from m their foreiggn subsidiaryy companies @ 15% onlyy (plus appliicable
surcharge and cess) onn the gross amount receivved. Howeverr, no expendditure in respeect of
such divid
dend shall be allowed
a underr the act.

A-3) Non
N Resid
dents
i) Liaison Offices
O

In the currrent scenario,, Non-Resideents does not a file a returrn of income with regard to its
liaison offfices located in
i India consiidering the faact that such offices
o are noot allowed to carry
any busineess activity inn India.

However, to seek regullar informatioon for their acctivities, a new

w section 2855 is proposedd to be
inserted with effect fromm 1st Jun’2011, wherein it is made manndatory for thee Non-Resideents to
file annuaal informationn within 60 days
d from thhe end of thee financial yeear, with commplete
details of activities
a undertaken by their liaison offfices.

ii)) Infrastru
ucture Deb
bt Fund

With effecct from 1st Junn’2011, it is proposed

p to am
mend section 115A of the Act, to levy tax
t @
5% on any y interest amoount received by a Non-Resident from ‘IInfrastructuree Debt Fund’ being
setup in acccordance with prescribedd Central Govvernment guiddelines as perr the provisioons of
section 10 of the Act.

However, the same is subject to TD DS (Tax deduuced at sourcce) also in acccordance witth the
provisions of newly inserted section 194LB of thee Act, with efffect from 1st Jun’2011.

iii) Anti Avo

oidance Meeasures

With effecct from 1st Junn’2011, a new

w section 94AA is proposedd to be inserteed in the Act, as an
anti-avoidaance measuree, to discourage the transsactions withh persons/enteerprises locatted in
notified co
ountries whichh do not effeectively exchaange informattion with India. Salient feaatures
of these measures
m propoosed are:-

ƒ Suchh enterprises shall be deem med to be asssociated enterrprises and traansactions shhall be
deem
med to be an international transaction and
a thus, transsfer pricing regulations shhall be
appllicable to suchh transactionss.

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ƒ No deduction
d shaall be allowedd in respect ofo payment made
m to finanncial institutioons or
any other expennditure includding depreciaation unless the prescribbed informatiion is
mainntained and fuurnished to thhe Board or anny other incom me tax authorrity.
ƒ Anyy sum receiveed from such persons/enterrprises shall be b deemed too be the incom me of
the assessee
a if thhe assessee faails to explainn the source of such money in the hannds of
such
h person or beeneficial owneer.
ƒ Anyy sum paid to such person//enterprise shhall be liable to TDS at thhe higher of rate r in
forcee or rates undder specific prrovisions of thhe Act or 30%
%.

The termm ‘Person’ is defined in i such a wide

w manner thereby inccluding perm
manent
establish
hment of the persons
p who otherwise
o is not
n a resident of such counntries.

A-4) Transfer
T Pricing
P
i) Arm’s Length
L Pricce

As per seecond provisoo to section 92C(2), if the variationn between thhe actual priice of
n and Arm’s Length Pricee (ALP) does not exceed 5%
transaction 5 of the acttual price, theen, no
adjustmentt will be madde. Now it is proposed
p to replace this fixxed percentagge of 5%, effe
fective
st
from the 1 day of Aprr’2012, by succh percentagee as may be notified
n by Ceentral Governnment
in this beh
half.

ii)) Transferr Pricing Officer

O

ƒ With effect
e from 1st day of Jun’’2011, jurisdiiction of Trannsfer Pricing Officer (TPO O) has
been extended
e to innclude such innternational trransactions which
w were noot being referrred to
him byy the Assessinng Officer (A
AO) but noticeed by him subbsequently duuring the couurse of
proceeedings before him.

ƒ Powerrs of the TPO Os have now w been extendded to includde the ‘Powerr of survey’ under
section
n 133A of thee Act to enabble him to connduct on-the--spot enquiryy and investiggation.
(with effect
e from 1sts day of Jun’22011)

iii) Return of
o Income

d before 300th Sep, with effect

To removee the practicaal difficulties in accessing comparable data
from 1st day
d of Apr’2011, in case of companies which aree required to furnish charrtered
accountantt’s report on international transactions in the form 3CEB,
3 the duue date of filiing of
‘Return off Income’ now w proposed too be extendedd till 30th Novv of the assessment year innstead
of existing 3 th Sep.
g due date of 30

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A-5) L imited Liiability Paartnership

ips (LLP)
i) Alternatte Minimum
m Tax (AM
MT)

ƒ Up tilll now LLP firms, which has the feeatures of booth the corpporate and normal
partnership firms, are not subjeect to Minimmum Alternatee Tax (MAT T). It is now being
propossed to insert a new Chapteer XII-BA with
w effect from assessmennt year 2012-13, to
levy MAT
M in the foorm of Alternaate Minimum
m Tax (AMT) on the profitss earned by LLPs.
L

ƒ As perr the special provisions

p off this new chaapter, in case the regular inncome tax paayable
by LL
LP is less thann AMT, thenn adjusted totaal income deemed to be thhe total incom me of
LLP annd liable to AMT
A at the raate of 18.5%.

ƒ Similaar to MAT proovisions, excess of AMT paid

p over income tax shalll be allowed as
a tax
credit for carry forw
ward and set off
o for 10 succceeding yearss.

ƒ Adjustted total incoome will be calculated

c by taking into account
a total income earned by
LLP as increased byy deductions under chapter VI-A and seection 10AA.

A-6) Sp
pecial Econ
nomic Zon
nes (SEZ)
i) Minimum
m Alternatte Tax (MA
AT)

ƒ Till daate, SEZ devvelopers and units

u located in SEZ are subject to 1000% deductioons of
profitss under sectioon 10AA and 80-IAB of thhe Act and noot liable for Minimum
M Alteernate
Tax (MMAT) and Divvidend Distribbution Tax (DDDT).

ƒ Now, it is proposedd to withdraw

w the exempttion of MAT in case of SE EZ developerrs and
units operating
o in SEZ with efffect from thee assessmentt year 2012-113 and subseequent
years.

ii)) Dividend
d Distributtion Tax (D
DDT)

ƒ In case of dividend distributed by

b SEZ devellopers, it is nown proposedd to levy Divvidend
Distribu
ution Tax (DD
DT) for dividdend distributeed, declared or
o paid on or after
a 1st Jun’22011.

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A-7) In
ncentive and
a Dedu
uctions
i) Investmeent Linked
d Incentive

With effect from 1st Apr’2011, investment-linnked tax inccentive in thhe form of 100%
deduction of expenditture of capittal nature, has h been exttended to foollowing two new
businessess in accordancce with the prrovisions of seection 35AD of the Act:-

a) Developing and building

b a houusing project
b) Prod
duction of ferttilizers

ii)) Profit Liinked Dedu

uction

ƒ Minerral Oil - As per the provvisions of secction 80-IB(99) of the Act,, it is propossed to
sunset the 7-year prrofit-linked deduction
d of 100%
1 for certtain undertakking engaged in the
commercial producction of mineeral oil, if thee block licennse under thee New Explorration
y will be awarrded after 31stt Mar’2011.
Policy

ƒ Powerr - As per thee provisions of

o section 80-IIA(4) of the Act,
A it is propposed to extennd the
sunset clause by exxtending the teerminal date for a further period of onee year i.e. uptto 31st
Mar’2012, for undeertaking whicch starts generration or distrribution of poower or underrtakes
substantial renovatiion of an exissting network of transmissiion or distribuution lines.

iii) Scientific Research

h Programm
me

To boost contributions
c towards ‘appproved scienttific research programmes’, it is propossed to
he amount of weighted dedduction from 175% to 2000% as enumerrated under seection
increase th
35(2AA) ofo the Act.

iv)) Infrastru
ucture Deb
bt Fund

To facilitaate low cost fuunds from abroad for the infrastructure

i sector, it is proposed
p to amend
a
st
section 10 of the Act with
w effect froom 1 Jun’20011, to exemppt the incomee of ‘Infrastruucture
Debt Fund d’ being setupp in accordancce with prescrribed Central Government guidelines.

v) Specified
d Income

By inserting a new clause in sectiion 10 of thee Act, with effect from 1st Jun’2011,, it is
proposed to
t provide exemption from m income tax to any speciffied income, notified
n by Central
C
Governmeent in this beehalf, of a boody/authority//board/trust/ccommission which
w is set up or
constituted
d by a Centraal/State/Provinncial Act or constituted
c byy the Central/State Governnment,
provided:-

a) It is not engageed in any commmercial activvity, and

b) It is notified byy the Central Government
G i this behalf..
in

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A-8) Miscellane
M eous Provvisions
i) Settlemeent Commiission

ƒ With effect
e from 1sts Jun’2011, it
i is proposedd to insert a new
n clause (iaa) in the provviso to
section
n 245C(1) ofo the Act, to t expand thhe criteria foor filing an application
a b
before
Settlem
ment Commisssion by a taxx payer in whhose case procceeding have been initiatedd as a
result of search or requisition of
o books of accounts
a provvided the addditional incom
me tax
payablle exceeds Rss.10 Lacs.

ƒ With a view to recttify any mistaake apparent from the recoord, it is now proposed to insert
a new sub-section (6B)
( in sectionn 245D, withh effect from 1st Jun’2011, to enablee the
ment Commission to ameend any orderr passed by it
Settlem i within a period of 6 months
m
from the
t date of itts order. On thet similar linnes, section 22D
2 of the Wealth
W Tax Act,
A is
propossed to be ameended.

ii)) Income Tax

T Authoorities

To facilitaate prompt coollection of innformation onn requests received from the tax authoorities
outside India in terms of Tax Inforrmation Exchhange Agreem ments, a new sub-section (2) in
section 131 of the Act is proposed to t be insertedd with effect from
f 1st Jun’22011, to enabble the
ncome tax authhorities to haave powers veested in a Civvil Court as well
notified in w as the pow wer to
call for infformation forr the purposee of making an
a enquiry or investigationn in respect of o any
person or class
c of persoons.

iii) Assessm
ment/Reasseessment

With effecct from 1st Juun’2011, a new clause (viiii) in explanattion 1 to secttion 153 of thhe Act
is proposeed to be inserted to exclude the folllowing time limit from the t statutoryy time
prescribed
d for completion of assessmment or reasseessment:-

a) Time commencing
c from the datee on which reference madee by Indian taax authorities to tax
authorrities in jurisddiction situateed outside Inndia for exchhange of inforrmation as peer the
provision of sectionn 90 or 90A of o the Act OR R
b) A period of 6 monthhs, whicheverr is less

iv)) Debts Fu
unds

With effecct from 1st Junn’2011, by am

mending sectiion 115R(2), it is proposedd to levy addiitional
income taxx at a higher rate
r of 30% on o income disstributed by debt
d funds to a person otherr than
an individuual or HUF. However, noo change is prroposed in thhe rate in casee of distributiion to
any individ
dual or HUF.

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v) Set off of Losses

As per the provisions of section 73A7 read with section 355AD, any looss of a ‘specified
business’ is
i allowed to be set-off agaainst profit off any other sppecified businness not eligibble for
deduction. In case of hotels and hospitals,
h noow it is propposed, retrosppectively froom 1st
Apr’2011, to remove thhe word “new w” from the deefinition of sppecified businness to removve any
ambiguity in this regardd.

vi)) Charitab
ble Purpose

The term “Charitable Purpose”, ass defined undder section 2(15)2 of the Act, excludees the
activities in the nature of
o advancemeent of any objject of generaal public utilitty if it involves the
carrying ono of any acctivity in thee nature of trade/commeerce/business.. However, if i the
aggregate value of receeipts from suuch trade/com
mmerce/busineess do not exxceed Rs. 10 Lacs,
such exclu usion does not holds good. With effect from 1st Apr’’2012, it is prroposed to inccrease
this monettary limit to Rs.25
R Lacs.

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II Budget Pro
oposal

B IND
B) DIREC
CT TAX
X
B--1) Servicce Tax
i)) Rate

Effective service
s tax ratte continues to
t be 10.3%.

iii) New Tax

xable Serviices

Following two new taxaable services introduced frrom a date to be notified affter the enactm
ment
of finance bill, 2011:-

ƒ Servicces provided by air-condiitioned restauurants havingg a license to

t serve alcooholic
beveraages.

ƒ Short term accom mmodation seervices provided by hoteel, inn, guessthouse etc. for a
continuous period of
o less than thhree months.

iiii) Amendm
ment in Exiisting Services

Following key existing services ameended/expandded/modified from a date to

t be notifiedd after
the enactm
ment of financce bill, 2011:-

Service
S. No. Amendmen
nts/Expansioon/Modificatiion
Category

ƒ The scoope of service has been widened

w to cover all
servicess including service
s in rellation to the managemennt
Life of invesstments.
1) In
nsurance
Seervices ƒ It is alsoo provided thhat tax shall be charged on premium
m
other thhan what is allocated
a for investment if breakup of
o
premium m shown sepparately to policyholder.

Club
C or
ƒ The scoppe of service has
h been expaanded to incluude services
2) asssociation
providedd to Non mem mbers also.
Seervices

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ƒ Service provider
p also includes servvice providedd by ‘any persson’
as againsst existing ‘A
Authorized Serrvice Station’’.
Authorized
A
Seervice
3) ƒ Scope off Motor vehiccle replace to cover all mottor vehicle otther
Sttation
than thosse meant for goods
g carriagge and three wheeler,
w scootter,
Seervices
auto-rickkshaws as agaainst existing ‘Motor car, light
l motor
vehicle or
o two wheeleed motor vehiicle’.

Business
B
ƒ Inclusionn of the services provided by way of opperational or
4) Su
upport
administtrative assistaance in any manner.
m
Seervices

ƒ The scoppe of service also include:

– Serrvice providedd by business entity to indiividuals.

Legal
5) Consultancy
C – Reppresentational services proovided to busiiness entity
Seervices (buusiness entity does not incluude individuaals).

– ‘Arrbitration’ serrvice providedd by arbitral tribunal

t to anyy
bussiness entity.

Commercial
C
ƒ The scoppe of service expanded to also
a cover unnrecognized
Training and
6) courses even
e if such courses
c provide by instituttes which alsoo
Coaching
C
provide recognized coourses.
Seervices

ƒ Health services includde:

– All services, including ‘Diagnnostic servicees’ provided byb

cenntrally air-connditioned cliniical establishm
ment having
more than 25 beds;

Health
H – Serrvices provideed with the aid of laboratorry or other
7)
Seervices meddical equipmeents

– Serrvices provideed by doctor, not being a employee of

clinnical establishhment, from premises
p of such
s
estaablishment

ƒ Existingg health servicces would no longer be opeerational.

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ivv) Exemptiion from Seervice Tax

S. No. Parrticulars

Services inn relation to ‘B

Business exh
hibition’ organnize outside India
I by
1)*
organizer of
o business exxhibition is exxempted from
m tax levy.

An abatem
ment of 25% provided
p from
m the taxable value
v of services for the
2)* purpose off levy of serviice tax under ‘Transport off goods throu
ugh coastal and
a
inland shippping’.

‘Works coontract’ serviice provided for constructtion or finishhing of new

3)* residentiall complex unnder ‘Jawaharrlal Nehru National Urban Renewal
Mission’ and
a ‘Rajiv Aw waas Yojanaa’ is exempt from
f tax levyy.

‘Works con ntract’ servicces provided wholly

w withinn an airport orr port will be
4)*
exempt froom service taxx levy.
‘General Insurance’
I seervices providded by ‘Rashttriya Swasthy
ya Bima
5)*
Yojana’ iss exempt fromm tax levy.

A modifieed scheme is being

b introduuced to refunnd service taxx to SEZ uniits
6)*
and develoopers and nottification Noo. 9/2009-ST is being supeerceded.

‘Transporrtation of gooods by air’, to

t the extent of
o air freightt included in
7)#
value of im
mported goodds for customms duty purpooses, will be exempt.

Exemptionn from servicee tax on services of ‘Trannsportation of o goods by air/

a
8) # road/ rail’ to a person located
l in Inddia when bothh the origin and
a the
destinationn are located outside.
o

* Effectivee with immeddiate effect.

#
Effectivee from 1st Aprr’2011

v Amendm
v) ment to exissting exem
mptions from
m Service Tax
T

Rates of service
s tax on
o travel by air m 1st Apr’2011:-
a are beingg revised withh effect from

Type of Airr
S.No. Classs of Travel Existin
ng Revised
Travel
1) Domestic eeconomy Rs. 1000 Rs. 150
2) Internationaal e
economy Rs. 5000 Rs. 750
3) Domestic other than
t econom
my Rs. 1000 10% (Standard
( Raate)

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v
vi) Amen
ndments in
n Finance Act,
A 1994

Follow
wing amendm
ment in Finaance Act, 19994 will com
me into effect from a datee to be
notifieed after the ennactment of thhe finance bill 2011:-

ƒ In the case of Fraud, Colluusion etc. undder proviso tot Section 733(1A) reductiion of
peenalty is remooved. Furtherrmore, reduceed penalty is introduced by
b new sectioon 4A
(1% per monthh of the tax amount
a upto a maximum of 25%) for the cases whherein
un
nreported traansactions arre found inn the coursee of audit, verificationn and
invvestigation.

ƒ Th
he penalty foor delayed paayment u/s 766 is reduced from 2% to 1% per monnth or
10
00(whichever is higher). Maximum
M pennalty reduced to the extentt of 50% of thhe tax
am
mount.

ƒ Maximum penaalty u/s 77 foor contraventiion of any othher provisionn increase from
m Rs.
5,0
000 to Rs. 10,000.

ƒ Intterest rate byy 3% is propoosed to be redduced for the assessee havving turnover up to
Rss.60 Lacs unnder both secction 73B (Innterest on am mount collectted in excesss) and
section 75 (Inteerest on delayyed payment ofo service tax))

ƒ Maximum penaalty for delayy in filing of return

r are prooposed to be enhanced
e from
m Rs.
2,0
000 to Rs. 20,000. How wever, other successive penalties
p undder rule 7C shall
co
ontinue at exissting rates.

ƒ Prrovision of thhe first chargee on the property of assesssee has been inserted in reespect
off amount due.

v
vii) Amen
ndments in
n rules and
d notificatioons

Follow
wing amenddment in rulees and notifications com
me into effectt from a date to be
notifieed after the ennactment of thhe finance bill 2011:-

ƒ Ann insurer carrrying on life insurance

i bussiness is proviided an optionn, to pay tax either
on
n gross premiium charged reduced
r by thhe amount alllocated for innvestment whherein
thee breakup of such amount allocated is shown
s separaately to policyy holder or paay tax
@ 1.5% of the gross premium m charged froom the policyyholder.

wing amenddment in rulles and notiifications will come intto effect froom 1st
Follow
Apr’20
011:-

20   
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ƒ Limit of self adjustment off service tax under

u rule 6((4B) of Serviice tax Ruless,1994
(STR, 1994) iss raised to Rs..2,00,000 from
m existing lim
mit of Rs. 1,000,000.

ƒ Insertion of new w rule 6(6A)) in STR, 19994 providing that the amoount of unpaid self
assessed servicce tax shall be recovereed with interrest under seection 87 wiithout
ressorting the prrovision of secction 73.

ƒ Ruule 6(7)(B) of STR, 19994 pertainingg to sale and purchase off foreign exchhange
am
mended to Reeduce compoosition rate from
fr 0.25% too 0.1% of thhe gross amouunt of
forreign currenccy exchange.

ƒ Ann explanationn to rule 5(1) of

o service taxx (Determinatiion of Value)) Rules,2006 added
a
to clarify that thhe Value of telecommunic
t cation servicees will be the gross amounnt paid
by
y the person (ultimate
( useer or subscribber) to whom the service is i provided by
b the
tellegraph authoority.

ƒ Works
W Contracct (Compositioon Scheme foor Payment of Service Taxx) Rules, 2007 will
bee amended to restrict Cenvvat credit to 40%
4 of tax paaid on input services
s relatiing to
ereection, comm missioning, installation, commercial
c o industrial constructionn and
or
co
onstruction off residential complex.
c Thiis will be appplicable wheere service taax has
beeen paid by thhe vendor on full value off such servicee after availinng cenvat creddit on
inpputs.

ƒ Raate of interestt on delayed payment of service

s tax haas been increeased from 133% to
18
8% per annum m.

ƒ In Export / Im
mport of Servvice Rules Amendments
A h
have been inntroduced to move
wards a desstination baseed levy in all cases whhere transacttions are bettween
tow
bu
usinesses. Thee origin basedd levy remainns in case of transactions
t b
between businnesses
to customer.

v
viii) Amen
ndments in
n Cenvat Credit
C Rulees

wing amenddment in rulles and notiifications will come intto effect froom 1st
Follow
Mar’2011:-

ƒ Prrovision of seervices without payment ofo service taxx to a SEZ deeveloper/ uniit will
no
ot require pro rata reversal of Cenvat creedit.

wing amenddment in rulles and notiifications will come intto effect froom 1st
Follow
Apr’20
011:-

21   
 Budget 20
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ƒ Th
he scope of eligible inpuut and input services has been defineed more clearrly to
miinimize dispuutes.

ƒ Fo
ollowing amenndments havee been made in
i the definitiion of “input services”:

– Certainn services meeant for persoonal consumpption by empployees have been

specificcally excluded.

– Expression “activitties relating to business”” has been deleted from

m the
definitiion.

– Certainn services useed in building constructioon and layingg down founddation

for suppport of capitaal goods like construction of complex services
s and works
w
contracct services have
h been sppecifically exxcluded exceept under sppecific
circumstances.

– Certainn services useed in relationn to motor vehicles

v like authorised seervice
stationss; general innsurance servvices, etc. haave been speecifically exccluded
except under specifiic circumstancces.

ƒ Deefinition of ‘eexempted serrvice’ will incclude trading and taxable services whicch are
paartially exemppted.

ƒ Prrinciples for valuation

v of aforesaid
a exem
mpted servicees prescribed for the purpoose of
av
vailment of prop rata Cennvat credit. Inn case of traading, such value will be b the
diffference betw
ween sale price and purchasse price of thee goods traded.

ƒ Opption to mainntain separatee accounts only in respecct of inputs (and

( not for input
serrvices) has been given annd consequenttial changes in credit reveersal formulaa have
beeen made.

ƒ Ammount payable on exemptted services under

u the option to avail full Cenvat credit
wiill be reducedd from 6% to 5% of the vallue of exemptted services.

ƒ Baanking compaanies and finaancial instituttions providinng Banking annd Other Finaancial
Seervices will be
b allowed too utilize onlyy 50% of thhe CENVAT credit availeed for
paayment of serrvice tax. This could be onn account of no service taax being appliicable
on
n interest.

ƒ Ru
ule 6(5) of thee Cenvat Creddit Rules alloowing full Cennvat credit onn specified serrvices
wiill be deleted..

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 Budget 20
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ƒ Where
W paymennt for an inputt service, or a part thereof, is returned, the
t person avvailing
creedit on such input servicee will need to t proportionaately reverse the Cenvat credit
av
vailed.

ixx) Point of Taxation Rules

R

With effecct from 1st Apr’2011,

A neew “Point off Taxation Rules”
R has been introducced to
determine the point in time
t when thee services shaall be deemed to be provideed.

Point of taaxation services (which waas earlier receiipt of taxable value) will be
b deemed to be:-

ƒ Daate on which service is proovided or to be provided

ƒ Daate of invoicee
ƒ Daate of paymennt

Which
hever is earlieer.

Excise 1
B-2) E
i) Rates

ƒ No Chaange in generaal excise dutyy rate of 10% for non-petrooleum produccts.

ƒ A tarifff rate of excisse duty of 10%

% for jute yarrn is being nootified but it is
i yet exemptt from
imposittion of excise duty.

iii) Incremeent or impoosition of Excise

E Dutyy Rate

ƒ A rate of 5% frrom 4% on Prrepared foodsstuffs such as sugar confectionary, pastrry and

caakes, starches; paper and articles
a of paaper; textile intermediarie
i s & textile goods;
g
druugs; medical equipments etc.
e

ƒ Att a rate of 1%
% without cenvvat credit facility on new 130 specifiedd items whichh were
eitther exempt from
f excise duty
d or charggeable to nil rate of duty till now. How wever
geeneral SSI exeemption woulld be available to these prooducers.

ƒ Mandatory exccise duty ratee of 10% on Readymade garments andd textile madde ups
beearing brand name or solld under brannd name. Hoowever generral SSI exemmption
woould be avaiilable to reaadymade garmments and textile
t made up articles. This
proposed duty will
w be impossed on tariff value
v of 60% of the retail sale
s price.

ƒ 5%
% on automatic looms and projectile loooms.

ƒ Co
oncessional duty
d rate of 100% for hydroggen vehicle baased on fuel cell
c technologgy.

                                                            
1
 All changges will be effeective with imm
mediate effect unless
u specifieed otherwise.

23   
 Budget 20
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ƒ Concessional duty rate of 1% to water filters using pressurized tap watter but withouut use
of electtricity and theeir replaceablee kits.

ƒ Concessional duty rate of 10% on factory built ambulaances. Howevver other vehhicles
retrofittted as ambullance subsequuent to their removal from
m the factoryy shall eligible for
existingg ‘refund baseed concessionn’.

ƒ Concessional duty raate of 5% on corrugated booxes whether or not pastedd with duplex sheet
on theirr outer surface.

ƒ Concessional duty rate of Rs.2000 per 10 gram mbered gold bars manufacctured
m serially num
by refin
ning of gold dore
d bar also.

ƒ Concessional duty raate of Rs.3000 per 10 gram

m serially num
mbered gold bars, other thaan tola
bars, manufactured
m d
during the proocess of copper smelting.

ƒ A duty at the rate off Rs.1500 perr kg on silverr manufactureed during golld refining starting
from orre/concentratee stage from gold
g dore bar or during thee process of copper smeltinng.

ƒ A duty at the rate off 1% is on branded jewellarry and brandeed articles of precious
p metaals.

iii) Reduction in Excisee Duty Rate

ƒ From 10% to 5% on specified texxtile machinerry.

ƒ From 10% to 5% onn hybrid kits for conversion of fossil fuel

f vehicles to hybrid vehhicles
includin
ng parts of suuch kits.

ƒ From 10% to 1% with w no Cenvaat credit on saanitary napkinns, baby & clinical diaperrs and
adult diiapers along with
w similar articles
a of texttile wadding.

ƒ Excise duty is being reduced from

m 8% to 4% on
o LED lightss/lighting fixtuures.

ƒ From 10% to 5% on greaseproof paper and glaassine paper.

ƒ From Rs.280
R per 10 gram to Rs.2200 per gram per 10 gram on serially nuumbered goldd bars,
other to
ola bars, madee starting from
m the ore/conncentrate stagee in the same factory.

iv)) Exemptio
ons – New & Revised

ƒ On air conditioningg equipments,, panels and refrigeration panels for innstallation off cold
chain in
nfrastructure for preservatiion & storagee of agriculturral, horticultuural, dairy, pooultry,
aquatic and marine produces.
p

ƒ On connveyor belt syystems for usee in cold storrage, transporrts or processiing of agriculltural,
horticulltural, dairy, poultry,
p a in mandiss & warehouses for
aquaatic and marinne produces and
storage of food grainns and sugar.

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ƒ On exppansion of mega/ultra
m p
power project under specified condittions at par with
D on the import of goods for
exempttion from CVD f expansionn of such project.

ƒ On speccific part of sewing machinne (other thann those with in-built motorrs).

ƒ To pow wer tillers when

w o the same manufacture for
cleared to anotheer factory of
manufaacturing poweer tillers.

ƒ Cotton silk particle boards

b are fullly exempted from excise duty.
d

ƒ Enzymaatic preparatiions used in leather induustry are beinng fully exem

mpted from excise
e
duty.

ƒ Excise duty payable on colour, unnexposed cineematographicc film in jumbbo rolls of 4000 feet
and 100
00 feet.

ƒ Excise Duty on Sofftwares (thosee on which retailr price iss not declaredd) allowed onn that
portion representing transfer of right to use; prrovided registtration of servvice tax is takken.

v) Exemptio
ons - Withd
drawal

ƒ On cleaarance upto 3500 metric toonne paper maanufactured from

f non-convventional material.
Now a general rate of
o excise dutyy will now be imposed on this
t item.

ƒ Microprocessors of computers, other than motherboards;

m floppy, hardd disk drive;; CD-
a DVD drrives/writers; flash memory & comboo drive for slotted
Rom, and s in cpuu and
laptops. Now a conccessional rate of 5% will bee levied on thhese items.

vi)) Cement and

a Bulk Cement
C

ƒ Conseq t standard rate, the rates of duty on cement havee also

quent to enhaancement of the
been revised upwardds suitably.

– In the case of packaged

p cem
ment manufacttured by unitss other than mini-cement
m p
plants,
ex
xcise duty hass been changeed to 10% ad valorem
v plus Rs.160 per toonne for cement of
deeclared retail sale
s price excceeding Rs.1990 per 50 kg bag
b or Rs.38000 per tonne.

– Onn packaged ceement of decllared retail saale price not exceeding

e Rs.190 per 50 kg
k bag
or Rs.3800 per tonne manuffactured by suuch units, thee rate of dutyy has been chaanged
to 10% ad velorrem plus Rs.880 per tonne.

– Thhe composite rate of duty applicable

a to bulk cement manufacturedd by such uniits has
beeen changed too 10% ad valorem plus Rss.200 per tonnne.

– Thhe rate of dutty on cementt clinker willl now be 10%

% ad velorem
m plus Rs. 2000 per
ton
nne.

ƒ Corresp
ponding channges have been made to inccrease the rattes of duty appplicable to ceement
manufaactured by minni-cement plaants too.

25   
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– In the case of packaged

p cem
ment manufacttured, excise duty has beenn increased too 10%
ad
d valorem pluus Rs.30 per tonne for cem ment of declaared retail sale price exceeeding
Rss. 190 per 50 kg bag or 38000 per tonne.

– Onn packaged ceement of decllared retail saale price not exceeding

e Rs. 190 per 50 kg
k bag
or Rs. 3800 perr tonne manuufactured by such
s units, thee rate of dutyy has been chaanged
to 10% ad velorrem.

viii) Legal Metrology

M A 2009
Act,

ƒ Schedu
ule to the “M
Medicinal & Toilet
T Preparration Act (M
M&TP)” will be amendedd with
enactment of this finance bill to substitutte reference to Standardds of Weighhts &
Measurrements Act, 1976 with “L
Legal Metrology Act, 2009”.

ƒ “Standaards of Weights & Measuurements Act,, 1976 Act” is i being subsstituted with effect
from March
M 01, 2011 and replaceed by “Legal Metrology
M Acct, 2009”.

viiii) Additio
onal Excise Duty (goods of special importaance) Act, 1957
1

ƒ Additioonal duty on goods

g “Sugarr and textile items”
i will noot be levied w.e.f.
w enactmeent of
this finaance bill.

ix)) Taxi Saviing Schemee

ƒ As a paart of further extension

e of the
t scheme reefund of 20% of excise dutty paid on vehhicles
(other than
t three whheeled motor vehicles)
v carrrying up to 133 persons (including the driver)
d
registerred as a taxi iss allowed.

x) Major ch
hanges in Central
C Exccise Act, 19944

Following amendmentt in Financee Act, 1994 will come into effect from a date to be
notified afteer the enactm
ment of the finance bill 2011:-

ƒ Where the person liiable to pay excise

e duty, pays
p duty in full or part along
a with innterest
before issue
i of SCN
N, the penalty shall be reduuced to 1% p.m. (not exceeeding 25 % of o the
duty).

ƒ Creation of first charrge on the prooperty of the defaulter for recovery of central
c excisee dues
from suuch defaulter subject to chaarge of preferrential creditoors as termed in section 529A of
the Commpanies Act, the Recoveryy of Debt duee to Bank andd Financial Institution Act, 1993
a Reconstruuction of Finnancial Assetss and Enforccement of Security
and Seccuritisation and
Interestt Act, 2002.

xi)) Major ch
hanges in Central
C Exccise Tariff Act,
A 1985

Following amendmentt in Financee Act, 1994 will come into effect from a date to be
notified afteer the enactm
ment of the finance bill 2011:-

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ƒ Liabilitty to pay Exciise duty undeer Chapters 611 to 63 (whichh include articcles of appareel and
clothingg accessories) shall devolvve upon the principal
p mannufacturer whhere such prinncipal
manufaacturer engagges job workkers for manuufacture of such s goods. Alternativelyy, the
principaal manufactuurer may authhorise the jobb workers to obtain registrration and coomply
with oth her formalitiees including thhe payment of
o duty on their behalf.

ƒ Credit reversal
r on writing
w off inpputs and capiital goods exttended to casses where vallue of
such inp
puts and capiital goods is partially
p writteen off in the books
b of accoounts.

xiii) Cenvat credit Rulles, 2004

ng amendmeent in ruless and notifiications willl come intoo effect from 1st
Followin
Apr’2011
1:-

ƒ Definitiions of “Inpu uts” will incclude: - (a) goods

g used inn the factory of manufactuure of
final prroduct, accesssories and gooods used forr providing frree warranty for final prodducts,
(b) goods used for geeneration of electricity/stre
e eam for captivve consumptiion.

ƒ But exccludes (a) gooods used for construction of building oro civil structuure (b) goodss used
for lyin
ng of foundatiion or makingg structure foor support of capital goodss (c) Capital goods
g
other th
han those usedd as parts or components
c i the manufaacture of finall product (d) goods
in g
which are
a used prim marily for perssonal use or consumption byb employeess (e) goods with no
relation
nship with thee manufacturee of final prodduct.

ƒ Definitiion of capitaal goods wiill include capital goods used outsidde the factorry for
generattion of electriccity for captivve consumption.

ƒ Interestt rate on non--payment, shoort payment, delayed paym

ment, etc. hass been increassed to
18% fro om existing 13%.

B-3) Customs
C
i) Basic Rattes

The Basic Custom Dutyy rates of 2% %, 2.5% and 3% are uniffied at a meddian rate of 2.5%.
2
Although, the
t peak rates of basic custtom duty remain same at itts current leveel of 10%.

ii)) Special ecconomic Zones (SEZ))

ƒ Exemptiion of SAD (Special

( addittional duty onn customs) foor all clearancces from SEZZ into
Domestiic Tariff Areaa (DTA) is grranted with a condition thaat they are noot exempt from the
levy of VAT
V and Salees Tax.

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ƒ Moreoveer, the exempption of CVD D (Countervaailing Duty) on o plastic gooods reprocesssed in

India, ou
ut of scraps or the waste iss extended forr SEZ also inn the same maanner as appliicable
for DTAA.

iii) Exemptions 

ƒ Full exeemption fromm basic custom m duty is proovided for cootton waste, cash
c dispenseer and
parts, ad
dditional speccified capitall goods and raw material for manufaccture of electtronic
items annd specific parts
p of hybbrid vehicless, PC conneccting cable. Furthermoree, full
exemptioon in regard to
t excise dutyy is provided ono iron ore paallets.

ƒ Basic Cu
ustom Duty reduced on the t imports of various item ms of agricultture, textile, capital
c
goods, electronics,
e m
metals and heealth sector. Moreover,
M thhe optional leevy of excisee duty
made maandatory@100% on readym made garmentss and other teextile industryy.

ƒ Extensioon of Full exemption of SAD onn parts, com mponents andd accessoriees for
manufaccture of mobile handsets and cellular phone for one o year i.e. 31st March 2012,
which iss in the present scenario available upp till 31st Maarch 2011.Fuurthermore, foor the
specified
d goods for manufacture of electroniic items full exemption of o custom duuty is
extendedd.

iv)) Other Ch
hanges

ƒ The concept of “self assessment” is being introoduced for deetermination of

o duty payabble by
the assesssee in order to
t expedite thhe clearance of
o goods.

ƒ Time limmit for claiminng refund of duty and inteerest is increassed to 1 year from 6 monthhs for
all categ
gories of impoorters.

ƒ Presently
y, the power to
t release seizzed goods vessts with the Commissioner
C r of Customs.. Now
the adjud
dicating authoority will be empowered
e too release seizeed goods.

B-4) Central
C Sa
ales Tax
ƒ Central saless tax rate willl continue to remain samee. i.e. central sales againstt ‘Form C’ will
w be
taxable @ 2%%.

ƒ Section 15 ofo Central Sales Tax Act; amended

a to ennhance the maximum
m rate of tax form 4%
4 to
5% that can be levied onn ‘Declared gooods’ as speccified under section
s 14 of the Act, Bassed on
this, States would
w be emppowered to inccrease the VAAT rate of decclared goods.

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B-5) Goods
G & Service
S Taax
ƒ 1sts Apr’ 2011, date of impplementation of ‘Goods and
a Service tax Act’ (GS
ST), missed. New
im
mplementation date yet to be
b announcedd.

ƒ As a step towaards roll out of GST, Consttitution Amenndment Bill proposed

A p to bee introduced in
i this
seession of Parlliament.

ƒ D
Drafting of Mo
odel legislatioon for central and state GS
ST is under pippeline.

ƒ Significant pro
ogress in esttablishing GS ST Network (GSTN), whhich will servve as Inform
mation
T
Technology (IT
T) infrastructture for introdduction of GS
ST.

ƒ National Secu
N urities Depository Limiteed (NSDL) has been appointed
a foor establishinng IT
innfrastructure for
f GST.

ƒ Before implem
B mentation of GST, NSDL expected to set up pilot portal in colllaboration wiith 11
sttates by June 2011.

   

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Contactt: 

Plot No. 421, IInd Floor 
Udyog VVihar , Phaase IV
Gurgaon 122016 
1 124 481 4
Tel: +91 444 
 
www.m mazars.co.inn  

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