Budget 2011-12- Significant proposals related to Direct and Indirect Taxes Honble Finance Minister presented budget for

FY 2011-12. Significant proposal are as follows; General: GDP is expected to grow in the region of 8.75% to 9.25%. The Minister spoken about fiscal consolidation and put up a target of 4.6% fiscal deficit. Government is also mooting liberalizing the FDI policy in the country, however no details was presented. A host of new bills to bring reforms in the financial sector to be introduced in the current parliamentary session including Pension Bill, LIC Bill, Banking Laws Amendment Bill and SBI Subsidiaries Bill. Bill to allow RBI to grant more banking licenses under consideration. Government to introduce GST (Goods and Service Tax Bill) in the current Parliamentary session. Government to move to direct tax subsidy for kerosene and fertilizer. Subsidies to reach BPL families directly now under a new scheme, the modalities of which will be worked out by Nandan Nilekani. Standard of of Weights & Measure Act is being repealed and replaced by Legal Metrology Act from 01.03.2011. Direct Taxes: o Personal Income Tax limit have been increased to 180,000. o Surcharge on corporate taxation have been reduced to 5%. o MAT has been increased to 18.5%. Indirect Taxes: Custom: o Self assessment in custom is being introduced. o There is no change in the peak rate of basic custom duty. o Assessment of postal import is being simplified with two rates, @35% and 10%. o Aircrafts will attract custom duty @ 2.5%. o Export duty on Iron ores have been increased to 20%. o There shall be no export duty on Ore pellets. o Export duty of 10% have been imposed on de-oiled rice bran cake. o Sub-section (1) of section 27 is being substituted so as to enhance the time limit for claiming refund of duty and interest from six months to one year for all categories of importers. This would unify the provisions with regard to raising of demands and claiming of refund. Central Excise: o The standard rate of 10% has been maintained. o Goods attracting 4% of Central Excise duty shall attract an enhanced rate of 5%. o Exemptions have been withdrawn from 130 items. These items will attract a duty of 1% without Cenvat benefit.

Rationalisation of duty rate on Cement has been made. Now the Cement shall attract a duty to 10% ad velorem plus specific rate of Rs.30-180 PMT. o Ready made garments and made up article of textile, bearing a brand name has been brought under Central Excise net with imposition of duty @ 10%. These products shall attract duty on MRP basis with an abatement of 40%. A new Rule [Rule 4(1A) of Central Excise Rules] is being added so as to make complying with central excise procedure a responsibility of the Brand name owners, and not of the job workers. o Sugar, Textile and Textile product is being removed from the schedule of Additional Duties of Excise Act. Now there products will be subject to States VAT. o Welcome legal changes have been proposed to clarify the provisions and reduce dispute. The maximum penalty under Section 11A has been reduced to 50% if the transaction have been recorded in the books. o Rate of interest on delayed payment of duty is being raised to 18%. o Power to authorize searches is being given to Joint/Additional Commissioner in place of Assistant/Deputy Commissioner. o Cenvat Credit Rules is being amended to clarify the definition of inputs and input services. o The definition of deemed manufacture is being amended and now conversion of ores into concentrates, refining of gold dole bars, galvanization etc. shall amount to manufacture. In respect to products falling under Chapter 22, packing, labeling etc. amounts to manufacture. Service Tax: o The existing rate of 10% has been retained. o Service Tax is being proposed on air conditioned restaurants having bar license, and short term accommodation in hotels/clubs/guest houses etc. Air travel will attract higher service tax. o Scope of various services have been extended. o Definition of Commercial coaching and training is being expanded to include all coaching/training not recognized by law irrespective of the fact that whether the institute is providing any course recognized by law. o The scope of the Club & Association service is proposed to be expanded to include service provided to non-members as well. o The scope of Business Support service is being expanded to include operational or administrative assistance of any kind. o Scope of Legal consultancy services is being expanded to include Services of advice, consultancy or assistance provided by a business entity to individuals as well; Representational services provided by any person to a business entity and Services provided by arbitrators to business entities.
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The scope of heath services, insurance services etc. has also been expanded. Legal compliance system has been proposed to be revamped. A new rule 5B has been introduced to provide that the applicable rate of tax shall be the rate prevailing at the time when the services are deemed to have been provided. It has also been provided that when an invoice has been issued or a payment received for a service which is not subsequently provided, the assessee may take the credit of the service tax earlier paid when the amount has been refunded by him to the recipient or by the issue of credit note, as the case may be. The amount stated in rule 6(4B)(iii) for adjustment of excess amount paid by an assessee is being enhanced to Rs. 2 lakhs. Export and Import of Service rules are being amended and there is a movement towards destination-based levy in respect of B2B services while origin-based levy is largely applicable to B2C services. There is proposal of enhanced penalty and prosecution in Service Tax offences.

The budget is taking important steps towards tax reforms. The Minister promised that Constitutional amendment bill for implementation of GST shall be introduced in this session of Parliament. Raodmap to various tax reforms was stated, and it is a welcome step. Direct Taxes Proposals 1. Income tax slabs for individual taxpayers is Given at here Deduction of an additional amount of Rs. 20,000 allowed, over and above the existing limit of Rs.1 lakh on tax savings, for investment in long-term infrastructure bonds as notified by the Central Government 2. Besides contributions to health insurance schemes which is currently allowed as a deduction under the Income-tax Act, contributions to the Central Government Health Scheme also allowed as a deduction under the same provision. 3. Current surcharge of 10 per cent on domestic companies reduced to 7.5 per cent. 4. Rate of Minimum Alternate Tax (MAT) increased from the current rate of 15 per cent to 18 per cent of book profits. 5. 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.

6. Payment made to an approved association engaged in research in social sciences or statistical research to be allowed as a weighted deduction of 125 per cent. The income of such approved research association shall be exempt from tax. 7. Benefit of investment linked deduction under the Act extended to new hotels of two-star category and above anywhere in India to boost investment in the tourism sector. 8. Allow pending projects to be completed within a period of five years instead of four years for claiming a deduction of their profits, as a one time interim relief to the housing and real estate sector. Norms for built-up area of shops and other commercial establishments in housing projects to be relaxed to enable basic facilities for their residents. 9. Limits for turnover over which accounts need to be audited enhanced to Rs. 60 lakh for businesses and to Rs. 15 lakh for professions. Limit of turnover for the purpose of presumptive taxation of small businesses enhanced to Rs. 60 lakh. 10. If tax has been deducted on payment by way of any expense and is paid before the due date of filing the return, such expenditure to be allowed for deduction. Interest charged on tax deducted but not deposited by the specified date to be increased from 12 per cent to 18 per cent per annum. 11. To facilitate the conversion of small companies into Limited Liability Partnerships, transfer of assets as a result of such conversion not to be subject to capital gains tax. 12. 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 . 13. Proposals on direct taxes estimated to result in a revenue loss of Rs. 26,000 crore for the year. Lowest rates Home Loan. Apply Now! Lowest rates on personal loan.Apply Now! Lowest rates on car loan Apply now!. Indirect Taxes 1. Rate reduction in Central Excise duties to be partially rolled back and the standard rate on all non-petroleum products enhanced from 8 per cent to 10 per cent ad valorem. 2. The specific rates of duty applicable to portland cement and cement clinker also adjusted upwards proportionately. Similarly, the ad valorem component of

excise duty on large cars, multi-utility vehicles and sports-utility vehicles increased by 2 percentage points to 22 per cent. 3. Restore the basic duty of 5 per cent on crude petroleum; 7.5 per cent on diesel and petrol and 10 per cent on other refined products. Central Excise duty on petrol and diesel enhanced by Re.1 per litre each. 4. Some structural changes in the excise duty on cigarettes, cigars and cigarillos to be made coupled with some increase in rates. Excise duty on all non-smoking tobacco such as scented tobacco, snuff, chewing tobacco etc to be enhanced. Compounded levy scheme for chewing tobacco and branded unmanufactured tobacco based on the capacity of pouch packing machines to be introduced. Tags :India Budget 2010, India budget 2010-11,India Budget Live, Budget 26.02.2010,budget 10,budget Live, live budget,Budget Highlights,tax rate changes, direct tax changes,indirect tax changes,personal income tax changes,direct tax code, Gst ,change in excise duty and change in service tax ,Budget important changes,Budget tv, India budget.nic.in, India gov., Indian budget 2010,India budget live on desk top,increase in excise duty ,change in custom duty,inflation , GDP,fiscal deficit ,new schemes in budget ,money control,economics times,budgets 2010 provisions,gratuity limit,Pranave Mukharjee,Finance Minister , Budget 2010 Live speech,budget 2010 on-line,latest news on budget,live stream budget on computer