Budget Highlights 2010 SNR

8/8/2019 Budget Highlights 2010 SNR

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Union Budget 2010

Direct and IndirectTax Proposals



Index

Page

Changes in Exemptions & Deductions

Chan es in Tax Rates

Numbers

. .

Income Tax

Changes in TDS Threshold limits

Other Amendments

3 - 61

Custom Duty Change in Duty Rates 7 - 92

Central ExciseDuty

Change in Duty Rates 10 - 133

Service TaxNew Services brought to Tax Net

14 - 174

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1. Income Tax

• Additional Deduction in respect of investment in Infrastructure Bonds as notifiedup to Rs.20,000/- is allowed U/s 80CCF.

deduction under section 80D.

• Weighted deduction of 200% on expenditure incurred on in-house R&D allowed inplace of earlier 150%.

Changesin

Exemptionsand

• Weighted deduction of increased to 175% from earlier 125% allowed in respect ofcontributions to National Laboratories, research associations, colleges,universities and other institutions for scientific research.

Deductions • e g e e uc on o per cen a owe o paymen s ma e o an approveassociation engaged in research in social sciences or statistical research. Furtherthe income of such approved research association shall be exempt from tax.

• Benefit of investment linked deduction under the Act extended to new hotels of

wo-s ar ca egory an a ove anyw ere n n a o oos nves men n e our smsector.

• Allow pending projects to be completed within a period of five years instead offour years for claiming a deduction of their profits, as a one time interim relief to

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t e ous ng an rea estate sector.

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Income Tax Continued…

Change in TaxRates

• n mum erna e ax o e ncrease o per cen o oo pro sfrom 15 per cent.

• No changes made in the Corporate Tax rates. However surcharge applicable toDomestic companies reduced to 7.5% from 10%.

Particulars Existing Proposed

Income up to Rs.1.6 lakh NIL NIL

Income above Rs.1.6 10% 10%

Income TaxSlabs for

Individual/HUFs

.

Income above Rs.3 lakh

and up to Rs.5 lakh

20% 10%

Income above Rs.5 lakh

and up to Rs.8 lakh

30% 20%

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.

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art cu ars x st ng m t ev se m t propose

from 01.07.2010)

194C - Contractor Payment

-

Changes inMinimumThreshold

-Aggregate in whole year

,

50,000

,

75,000

194H - Commission Brokerage 2,500 5,000

Limits for TDS- , , , ,

194B - Lottery Winnings 5,000 10,000

194BB - Horse Race Winning 2,500 5,000

194J - Professional/Technical 20 000 30 000Services

194D - Insurance Commission 5,000 20,000

Other Changesin TDS

• Disallowance U/s 40(a)(ia) would not be attracted if tax is paid beforethe due date of filing the return.

•


per cent to 18 per cent per annum with effect from 1st July, 2010.

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• Turnover Limit for tax audit enhanced to Rs. 60 lakh for businesses and to Rs. 15lakh for professions.

deemed to accrue or arise in India even if the Non-resident has a place of businessin India or not and has rendered services in India or not.

• Scope of presumptive taxation to be extended to all small businesses with a

Other

. .

• Receipts from business activities up to Rs.10 lakh in the year would not impact thecharitable status of an Institution

• o ac a e e convers on o sma compan es n o m e a y ar ners ps,transfer of assets as a result of such conversion not to be subject to capital gainstax.

• Amount of maximum penalty leviable under section 271B for non-adherence to the

prov s ons o sec on regar ng ax au ncrease rom a o . a .

• Power to condone delays in admitting appeals U/s 260A provided to High Courtswith effect from1st October, 1998.


• ower g ven to to w t raw reg strat on g ven s 12 o ct.

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2. Custom Duty

Petroleum

• On crude petroleum increased from Nil to 5%.

• On Motor Spirit (petrol) and HSD (diesel) increased from 2.5% to 7.5%.

• On some other specified petroleum products increased from 5% to 10%.

• On serially numbered gold bars (other than tola bars) and gold coinsincreased from Rs.200 per 10 gram to Rs.300 per 10 gram.

Precious

Metals

• On other forms of gold increased from Rs.500 per 10 gram to Rs.750per 10 gram.

. . .

• On platinum increased from Rs.200 per 10 gram to Rs.300 per 10gram.

EnvironmentFriendly

Items

Full exemption from basic customs duty and special additional duty ofcustoms is being extended to specified parts relating to environment – friendly items




Custom Duty Continued…

•expansion of, a cold storage, cold room (including farm pre-coolers) forpreservation or storage or an industrial unit for processing of agricultural,apiary, horticultural, dairy, poultry, aquatic & marine produce and meat.These projects would attract concessional rate of basic customs duty of

Food/ AgroProcessing

5%.

• Project imports status is being granted to installation of MechanizedHandling Systems & Pallet Racking Systems, in mandis or warehouses for

, .Such systems are also being exempted from additional duty of customs(CVD) and special additional duty of customs.

• Truck Refrigeration units for the manufacture of refrigerated vans / trucks isbeing fully exempted from basic customs duty. Such units are alreadyexempt from excise duty.

Agriculture/Horticulture

.

• On ‘asafoetida’ (heeng) reduced from 30% to 20%.

• Full exemption from basic customs duty is being provided to bio-polymer/bio-

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plastics (HS Code 39139090) used for manufacture of bio-degradable agromulching films, nursery plantation & flower pots.

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Custom Duty Continued…

• On Rhodium reduced from 10% to 2%.

• The current limit of Rs. 1 lakh per annum for duty free import of samplesis being enhanced to Rs. 3 lakh per annum

Promotion

• At present specified components, raw materials and accessories for themanufacture of sports goods are exempt from basic customs duty.Some additional items are being added to the list of exemption.

Goods imported in pre-packaged form and intended for retail sale andcertain specified goods namely, ready-made garments, mobile phones and

AdditionalDuty of

wa c es are e ng prov e an ou r g exemp on rom a ona u y ocustoms of 4%. In addition, outright exemption from this duty is also beingprovided to Carbon Black Feedstock, waste paper and paper scrap. Theexisting exemption by way of refund would continue on other items.

us oms o4%

(SpecialCVD)




3. Central Excise Duty

GeneralThe standard rate of excise duty of 8% on non-petroleum products is beingincreased to 10% with a few exceptions where exemptions/concessionshave been given.

CENVAT

Rate for non-petroleum

goods

Cement

Consequent to enhancement of the standard rate of duty from 8% to 10%,the specific rates of duty on cement and cement clinker have also been alsobeing revised upwards.

AutomobileSector

Ad-valorem component of excise duty on large cars, Multi Utility Vehicles

and Sports Utility Vehicles etc. and chassis thereof is being increased from20% to 22%. There is no chan e in the s ecific com onent which willcontinue to be levied as applicable.

The existing slab of filter cigarettes of length not exceeding 70 mm is beingbroken up into two slabs: filter cigarettes of length not exceeding 60 mm;

Products and filter cigarettes of length exceeding 60 mm but not exceeding 70 mm.

The rates of every slab except for the cigarettes not exceeding 60 mm havebeen substantially increased.




Central Excise Duty Continued….

Clean EnergyCess

Clean Energy Cess is being imposed on coal, lignite and peat produced inIndia. This cess would be levied and collected as a duty of excise with effectfrom a date to be notified after the enactment of the Finance Bill, 2010.

A uniform concessional rate of duty of 4% is being prescribed for parts,namely batteries including battery chargers, electric motors and AC or DCmotor controllers required for manufacture of all categories of electrical

EnvironmentFriendly and

EnergySaving

vehicles including cars, two wheelers and three wheelers (like‘Soleckshaw’) subject to actual user condition. This concession will beavailable till 31.03.2013. Such vehicles will also be charged to excise duty

@ 4%.

GoodsExcise duty is being reduced from 8% to 4% on LED lights/lightingfixtures.

Full exem tion from excise dut is bein rovided to additional s ecified

raw materials for the manufacture of rotor blades for wind operatedelectricity generators.




Central Excise Duty Continued…

Relevant Changes are being made to provide certain facilities to Small ScaleIndustrial (SSI) units eligible for availing benefit under Notification No. 8/2003-CE as under:

a) full Cenvat credit on capital goods in one installment in the year of

receipt of such goods.b) facility of payment of excise duty on quarterly basis.

MSME/Small

e a ove c anges come n o e ec rom s pr , an w eapplicable even if an eligible unit opts not to avail of the SSI exemption.

While retaining the system of filing quarterly returns, the due date for filing of

ScaleSector

following the quarter.

The relaxation from brand name restriction under the general SSI exemptionscheme is bein extended to lastic bottles and lastic containers used as

packing material.




Central Excise Duty Continued…

1) Full exemption from excise duty on following items is beingwithdrawn. They will now attract excise duty of 4%.

a) Mosquito nets impregnated with insecticides;v gas;

c) Microprocessor for computers (other thanmotherboard), Floppy disk drive, Hard disk drive, flashdrive, CD/DVD and Combo Drive meant for external

.

2) Full exemption from excise duty on baby & clinical diapers and

sanitary napkins is being withdrawn. These items will nowattract dut at 10%.

of

Exemptions/

Concessions

3) Concessional rate of excise duty on open tin sanitary (OTS) cansis being withdrawn. OTS cans will now attract duty at 10%.

4) Concessional rate of excise duty on goggles is being withdrawnexcept those used for correcting vision. These items will nowattract duty at 10%.




4. Service Tax

1) Service of permitting commercial use or exploitation of any event organizedby a person or organization.

2) Copyrights on cinematographic films and sound recording are being broughtun er t e am t o serv ce tax

3) Service tax on the following health services:(a) health check up undertaken by hospitals or medical establishments for the

employees of business entities; andNew(b) health services provided under health insurance schemes offered by insurance

companies.

4) Service provided for maintenance of medical records of employees of abusiness entity.

ServicesAdded inTax Net

5) Service provided by Electricity Exchanges.

6) Certain additional services provided by a builder to the prospective buyers suchas providing preferential location or external or internal development of

complexes on extra charges. However, service of providing vehicle-parkingspace would not be subjected to tax.

7) Service of promoting of a ‘brand’ of goods, services, events, business entity

8) The promotion, marketing or organizing of games of chance, including lottery, isbeing introduced as a separate service.




Service Tax Continued…

1) The scope of air passenger transport service is being expanded to

include domestic journeys, and international journeys in any class.

2) At present, in the case of Information Technology Software

software is used for furtherance of business or commerce. The

scope of the taxable service is being expanded to cover allcases irrespective of its use.

Amendmentin

Definitions/Covera e

3 n t e case o ‘ ommerc a tra n ng or coac ng serv ce, anExplanation is being added to clarify that the term ‘commercial’ inthe context of this service would mean any training or coaching,

which is provided for a consideration, whether or not for profit.This chan e is bein iven retros ective effect from 01.07.2003.

4) In the definition of ‘Sponsorship Service’, the exclusion relating tosponsorship pertaining to sports is being removed.

‘ ’,unless the entire consideration for the property is paid after thecompletion of construction (i.e. after receipt of completioncertificate from the competent authority), the activity ofconstruction would be deemed to be a taxable service providedby the builder/promoter/developer to the prospective buyer andthe service tax would be charged accordingly.





6) Amendments are being made in the definition of the ‘Rentingof immovable property service’ to,-

(i) provide explicitly that the activity of ‘renting’ itself is a taxableservice. The chan e has been iven retros ective effectfrom 01.06.2007; and

(ii) levy service tax on rent of vacant land where there is anagreement or contract between the lessor and lessee forundertaking construction of buildings or structures on such

Amendmentin

Definitions/

land for furtherance of business or commerce during thetenure of the lease.

7) Definitions of ‘Airport Services, ‘Port services’ and ‘Other’overage por serv ces are e ng amen e o prov e a ,-

(a) all services provided entirely within the airport/port premiseswould be classified under these services; and

(b) an authorization from the airport/port authority would not be- .

8) An explanation is being added in ‘Auctioneer’s service’ toclarify that the phrase ‘auction by government’ means anauction involvin sale of overnment ro ert and not whenthe government acts as an auctioneer for sale of the privateproperty.





9) Definition of ‘Management of Investment under ULIP Service’ isbeing amended to provide that the value of the taxable servicefor any year of the operation of policy shall be the actual amountcharged by the insurer for management of funds under ULIP or

in

Definitions/Coverage

Insurance Regulatory and Development Authority (IRDA),whichever is higher.

,the enactment of Finance Bill, 2010.




For any discussions on the provisions of Finance Bill 2010, you may please contact Mr. DineshSinghal on [email protected] or contact us at our following offices:

Head Office:

A-15, Second Floor, Hauz Khas, New Delhi – 110 016 (India)Tel. 91 11 26856421, 41655801, 26855884, Fax: 91 11 26567540Email ID : [email protected] , website : www.snr.net.in

Mumbai Branch Office:

-65, 1s oor, ro t entre, a av r agar, an va est ,Mumbai – 400 067 Tel. 91 22 40109287Email ID : [email protected]

G.N. Residency, 7, Church Street,Murugeshpalya, Bangalore – 560 017Email ID : snr.ban alore snr.net.in

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Budget Highlights 2010 SNR

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