THE “THE “10/1010/10”” BUDGET BUDGET

CENTRAL EXCISE

@ …@ … Excise duty increased to 10% across board

(except – Petroleum products) – Wallace flour Cement & tobacco to cost more. Chewing tobacco & branded unmanufactured

under compounded levy – w.e.f 08/03/10 Large cars, multi-utility vehicles and sports

utility vehicles and tobacco products to cost more.

Clean Energy CESS on coal, lignite and peat produced in India.

@ …@ … Exemption for supari, menthol by-products, toy

balloons, articles of bedding made of quilt. Goods supplied to mega power products exempted. Re.1 per litre on petrol and diesel. 4% duty on corrugated boxes, micro-processors,

FDD, HDD, CDD etc. 10% on baby clinical diapers & sanitary napkins,

OTS, sun/ style goggles. 4% rate unified for starch, umbrella/parts & 10%

for ceramic tiles.

SKELETAL CHANGES … Process of cutting or sawing or sizing or polishing or any

other process, for converting of stone blocks into slabs

or tiles, shall amount to “manufacture” – Ch 6802 &

6810.

Parts, components and assemblies of automobiles is

replaced with parts, components and assemblies of

vehicles including chassis fitted with engines - Ch 87

(excluding vehicles under 8712, 8713, 8715 & 8716.)

EASTER ON “GOOD” FRIDAY

Settlement Commission resurrected ! To settle clandestine / smuggling cases - Sec 32 E of

CEA & Sec 127 B of CA amended Time limit extended to 1 year – Sec 32 F (6) of CEA

& Sec 127 C (6) of CA amended OTS becomes MTS – Bar in Sec 32 O (2) of CEA &

Sec 127 L (2) removed

“small” IS BEAUTIFUL …

Quarterly payment of duty – Rule 8 of CER amended

100% CENVAT credit on Capital goods on the year of receipt – Rule 4 of CCR amended

Quarterly return (ER-1) filing date advanced to 10th – Rule 12 of CER amended

Any person with turnover < 400 lakhs “eligible” Plastic bottles out of “brand” mischief – glass

bottles?

MISCELLANEA …

Accelerated depreciation in CENVAT removals for Computers & Peripherals

Jigs, fixtures, moulds & dies can be removed to vendors too

Clumsy clemency – Explanation to Sec 11A(2B) of CEA & Sec 73(3) of FA - Sec 28(2B) of CA !

Rule 6 of CCR – Retro amendment for recovery - Chandrapur Magnet ratio – 24 % interest

CUSTOMS

@ …@ … Peak rate remains unchanged. Duty on Petroleum goods raised. Project import status - monorail, coal storage,

mechanized handling systems in warehouses. CVD on MRP basis for goods falling under

Medicinal and Toilet Preparations (Excise Duty) Act.

Increase in rate of duty for precious metals. Electrical energy supplied from SEZ to DTA and

non-processing areas of DTA to attract 16% from 26.06.2009.

NOT SO SAD !!!

Goods imported in pre-packaged form with MRP mandate and intended for re-sale exempt from 4% SAD.

Mobile phones, watches and readymade garments exempt from SAD.

Status quo for all other goods - Refund in terms of Notification No.1/2007

SERVICE TAX

NEW SERVICES …( w.e.f a notified date)

HEALTH CHECK-UP Sec. 65(105)(zzzzo) proposes to tax hospitals,

nursing homes or multi-specialty clinics when health checkup or preventive care is provided to an employee of a business entity - Corporate health check–up, pre – flight check-up, etc.

Applicable to services provided by a hospital / nursing home / multispecialty clinics to a person covered by a health insurance scheme for any health checkup or treatment.

ONLY if payment must be made “directly” to the hospital, etc. by the business entity / insurance company

MED – RECORD KEEPING

Sec. 65(105)(zzzzp) seeks to tax services providedto any business entity by any other person inrelation to storing, keeping or maintaining ofmedical records of employees of a businessentity by designated hospitals, individual recordkeepers, etc.

GAMES OF CHANCE

Sec. 65(105)(zzzzn) proposes to tax services for promotion, organizing or in any other manner assisting in-organizing games of chance, including lottery, bingo or lotto whether or not conducted through internet or other electronic networks.

Explanation to BAS definition inserted by Finance Act, 2008 deleted

BRAND PROMOTION … Sec. 65(105)(zzzzq) seeks to tax promotion or

marketing of a brand of goods, service, event or endorsement of name of a business entity by appearing in advertisement/promotional or by carrying out any promotional activity.

Service is taxable if provided through a business entity or otherwise, under a contract for promotion.

PERMITTING COMMERCIAL USE /

EXPLOITATION OF ANY EVENT Sec. 65(105)(zzzzr) proposes to tax granting the

right or permitting the commercial use or exploitation of any event relating to art, entertainment, business, sports or marriage organized by such other person.

Personal rights (right to privacy, easement right, right to secrecy) when given for exploitation is taxed.

Corporate sponsored cricket match or concert, film award events, celebrity marriages, beauty contests.

ELECTRICITY EXCHANGES

Sec. 65(105)(zzzzs) seeks to tax an electricityexchange by whatever name called approved bythe Central Electricity Regulatory Commissionunder the Electricity Act, 2003 in relation totrading, processing, clearing or settlement of spotcontracts, term ahead contracts, seasonalcontracts or any other electricity relatedcontracts.

COPYRIGHTS … Sec. 65(105)(zzzzt) seeks to tax temporary transfer or

permitting use or enjoyment of any copyright other than original literary dramatic, musical and artistic work.

Copyrights of cinematographic films and sound recordings are getting taxed.

Film producers who give this rights temporarily for a consideration is taxable.

Royalty payments on imported and indigenously produced films given by the producer to the distributor is taxable.

Companies distributing music, owners of copyrights and films would be taxable.

PREFERENTIAL LOCATION Sec. 65(105)(zzzzu) proposes to tax services provided or

to be provided to a buyer by a builder of a residential / commercial complex or any other person authorised by such builder, for providing preferential location or development of such complex.

Charges for SEA/PARK/EAST facing, VAASTU/ AURA enabled, preferred floors / direction/ door number etc.

Charges for development / maintenance charges for parks, laying of pipelines, access roads, common lighting, backup power, fire fighting, etc .

Charges for parking space, specifically excluded

(Buy a lemon and get a car free but the lemon is 10 lakhs!)

AMENDMENTS …( w.e.f a notified date)

AMENDMENTS … Airport services [ Sec 65 (105) (zzm)], Port services

[Sec 65 (105) (zn) ] & Other port services [ Sec 65 (105) (zzl)] amended to include all services provided entirely within the airport / port – Sec 65A inapplicable.

Authorisation from the respective authority is not required anymore.

Auctioneer’s services [ Sec 65 (105) (zzzr)] clarified to mean auction involving sale of government property by any auctioneer and not when the government is auctioneering any private property)

AMENDMENTS … Amendment to ULIP service to provide that value

shall be actual amount charged by insurer for management of funds or maximum amount of fund management charges fixed by IRDA, whichever is higher.

Sec. 65(105)(zzzo) is amended to expand the levy to all types of air travel in scheduled / non-scheduled air transport and to include both domestic journeys and international journeys, in any class;

Sec. 65(105)(zzzze) is amended in order to provide for tax on software services whether or not used in the course or furtherance of business or commerce.

AMENDMENTS … Commercial training or coaching services

[Sec 65 (105) (zzc) ] to include coaching or training for a consideration whether or not on a profit motive – w.e.f 1.7.2003.

“vocational training institute” – redefined. ‘Sponsorship service’ [ Sec 65 (105) (zzzn) ]not

to exclude sports anymore. Transport of goods by Rail – with specific

exemptions.

AMENDMENTS … The word ‘service’ stands omitted from Sec.65(105)

(zzq) - commercial or industrial construction. Construction / construction of a complex intended

for sale by the builder before or during or after construction to be deemed to be a service provided by the builder to the buyer except if the entire payment is paid by the buyer, after the completion of construction including certification by competent authority.

Circular No. 108 UNDONE?

AMENDMENTS … Export of Services Rules amended. Mandap services shifted to 1st category. Chartered Accountant, Cost Accountant, Company

Secretary services shifted to 3rd category. Condition that the service must be provided from

India and used outside India deleted. India includes the installations, structures and

vessels located in the Continental Shelf of India and Exclusive Economic Zone of India for the purposes of prospecting or extraction or production of mineral oil and natural gas and supply thereof.

AMENDMENTS … Vacant land leased for construction for furtherance of

business or commerce to be taxed.

Sec.65(105)(zzzz) amended to provide the renting per se or any other services in relation to renting is taxable.

Comes with a retro effect from 01.06.2007 and with a revalidation for recovery of tax, interest and imposition of penalty - Clause 76 of the Finance Bill, 2010.

Delhi HC decision of Home Retail India Ltd – UNDONE !!!

EXEMPTIONS …

EXEMPTIONS … Taxes charged by Government on air passenger. ECI of mechanized food grain handling systems,

equipment for coal storage, machinery equipment for processing of agricultural, apiary, horticultural, diary, poultry, aquatic, marine or meat products.

IT software, pre-packed in retail packages for single use if excise duty / customs duty has been paid on entire consideration.

GTA exemption to food grains and pulses. INA under BAS and online database services. Central and State seed testing laboratories and agencies. Transmission of electricity – Notification No.11/2010.

• EXEMPTIONS … Rule 5 Refund – Simplified (!!!)

THANKS