Budget2009Highlights
KPM G I N I N D I A
Foreword
TheHonorableFinanceMinisterpresentedtheUnion
TheclearmandategiventotheUnitedProgressiveAlliance
Budget,amidstgreatexpectationsthathewouldsignala
GovernmentledbytheIndianNationalCongress(INC)had
progressivewayforward,despitemajorchallengesoriginat-
alsoraisedhopesthatthisGovernmentwould:
inginIndiasexternalsector.
TheEconomicSurvey200809identifiedthefollowingchallenges:
1.Surgeincapitalinflowsinthelastquarterof2007-08
2.Inflationaryexplosioninglobalcommodityprices
3.Globalfinancialmeltdownandcollapseofinternational
tradeplungingtheworldintoafinancialcrisisreminiscent
ofthe1930sGreatDepression.
ThesechallengesadverselyimpactedtheIndianeconomy
whosegrowthratedeceleratedin200809to6.7percent
fromitsaveragegrowthrateof8.8percentoverthelast5
years(200304to200708).TheEconomicSurveyalsohighlightedtheneedtoreturntoafiscaldeficittargetof3percentoftheGDP--asenvisagedbytheFRBMAct--atthe
earliest.
1. Maintainthepathofhighgrowthwithfiscalprudence
andlowinflation
2. RaiseForeignDirectInvestmentlimitsinsectorssuchas
insuranceanddefense
3. Usheringreatertransparencyintaxes,bringinaunified
GoodsandServicesTaxbyApril1,2010;simplifyandrationalizethetaxstructurebyphasingoutsurcharges,
cessesandtransactiontaxesandoverhaultheregimeof
DividendDistributionTaxtoensurefullsingletaxationin
thehandsofthereceiver
4. AcceleratetheGovernmentsPublicSectorUnitsdisinvestmentprogramtomeetthegoalofaminimumofINR
25,000croresannually,toberaisedthroughthedisinvestmentprocess
5. Createasecondarymarketintheproposedauctioningof
the3GSpectrumwithcapitalgainsarisingfromafreelytradedspectrumbeingseparatelytaxed
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6. Focusoninclusivegrowthmeasurestostimulatede-
employeeincreasesthetaxburdenonthem.TheServiceTax
mandinthedomesticeconomyandtoensurethatthere
basetoohasbeenbroadenedbyincludingmostlegalserv-
ismorepurchasingpowerinthehandsofthepeople
icesandcosmeticandplasticsurgeryservices.
7. Guaranteemaximumpossiblesecuritytocitizens,ensure
Overall,iftheimmediatenegativereactionfromthestock
thehighestlevelofdefensepreparednesspossible,ac-
marketsisanyindication,thecorporatesectorandinvesting
celeratepolicereforms,buildonNationalRuralEmploy-
communityseemdisappointed,thisdevelopmentcould
mentGuaranteeAct,enactanationalFoodSecurityAct,
partlybeaconsequenceofunrealisticexpectations.The
guaranteehealthsecurityforall,ensureenergysecurity
Budgetseemstobewellintendedtoaddressthecon-
tothecountryandmakequalityeducationaffordablefor
stituencyofthecommonman,butdoeslittletorevertto
all.
thepathtofiscalrectitude,whichcouldhavenegativeeco-
TheFinanceMinisterhastriedtomeettheseexpectations
byexpendinghugeamounts,suchthattheoverallsizeofthe
BudgethasexceededINR10lakhcroresanincreaseof36
percentovertheBudgetEstimatesfor2008-09.Substantial
nomicconsequencesfortheeconomyinthelongterm.Corporatesingeneraldonotseemtohavemuchtocheerabout
especiallyastheMinimumAlternateTaxwouldresultinan
immediatecashoutflow.
increasesinallocationshavebeenmadetovariousschemes
Thesummarythatfollowshighlightsthesalientfeaturesof
providingwelfaremeasurestothecommonman.Thetax
theFinance(No.2)Bill2009,intermsofdirectandindirect
proposalshaveremainedlargelyrevenueneutral.
taxes.Unlessotherwiseindicated,theproposedamend-
Whatisreassuringisthedirectionalstanceinre-iteratingthe
GovernmentscommitmenttobringinginauniformGoods
andServicesTaxregimeby1April,2010andanewDirect
TaxesCode,mergingtheAuthoritiesforAdvanceRulingon
DirectandIndirecttaxes,thepromisetosetupanAlternativeDisputeResolutionMechanismintheIncome-taxDe-
mentsrelatingtodirecttaxeswillapplyfromtheassessmentyear2010-11andunlessotherwiseindicated,the
changesrelatingtoCentralExciseandCustomsDuties
comeintoeffectimmediately.ChangesinServicetaxwill
comeintoeffectfromadatetobenotified,aftertheenactmentoftheFinance(No2)Bill,2009.
partmentforTransferPricingcasesandempowermentofthe
CentralBoardofDirectTaxestoformulatesafeharborrules
forTransferPricingininternationaltransactions.
TheremovalofFringeBenefitstaxinthehandsofcorporatesisapositivestepandreducesthecomplianceburden
butre-introducingESOPsasaperquisiteinthehandsofthe
2009KPMG,anIndianPartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffiliatedwithKPMGInternational,aSwiss
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TableofContents
DirectTax
Corporatetax
Taxholidays
Non-residentrelatedprovisions
Capitalgains
Personaltaxation
Otherdirecttaxprovisions
IndirectTax
10
Customsduty
10
Centralexcise
12
Servicetax
14
Goodsandservicestax
18
Glossary
19
DirectTax
CorporateTax
TheCorporateTaxrateremainsunchanged
TheFBTisabolished
TheMATrateisraisedto15percentfrom10percent.Thecarryforwardand
set-offofcreditforMATisextendedto10fromsevenyears.Further,forthe
purposeofcomputingMAT,Bookprofitistobeincreasedbyprovisionfor
diminutioninthevalueofanyassetifdebitedtotheprofitandlossaccount.
ThelatteramendmentisproposedretrospectivelyfromAY1998-99
Weighteddeductionattherateof150percentavailabletospecificindustries
inrespectofapprovedin-housescientificresearchanddevelopmentfacilityis
extendedtoallcompaniesengagedinthebusinessofmanufactureor
productionofanyarticleorthingfallingoutsidethenegativelist
Deductioniseligibleinrespectofentirecapitalexpenditure(otherthanthe
acquisitionofanylandorgoodwillorfinancialinstrument)incurredbythe
taxpayerengagedinthefollowingbusinesses:
- settingupandoperatingcoldchainfacilitiesforspecifiedproducts
- warehousingfacilitiesforstorageofagriculturalproduce
- laying/operatingcross-countrynaturalgasorcrudeorpetroleumoilpipeline
networkfordistribution/storageasspecified.
Consequentialchangeshavebeenmadeinprovisionsforcomputingcapitalgains
onsaleofsuchcapitalassets,carryforwardofsuchlosses,etc.
2009KPMG,anIndianPartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffiliatedwithKPMGInternational,aSwisscooperative.
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Inthecaseofnon-lifeinsurancecompanies,anyamountcreditedonaccount
ofappreciation/gainsontherealizationofinvestmentsshallbetaxedas
income,andanyamountwrittenofforprovidedfordiminutionorlosson
realizationofinvestmentsshallbeallowedasadeduction.Thisamendment
willapplyfromAY2011-12
Deductioninrespectofamounttransferredtospecialreservebyspecified
entitiesnowextendedtoentitiesengagedinthebusinessofprovidinglong
termfinance(includingrefinance)forthedevelopmentofhousinginIndia
Incomputingtheincomeofacompositebusinesscomprisingpartlyfrom
agricultureandpartlyfromincomechargeabletotax,thetaxWDVofassetsis
tobecomputedbydeductingthetotaldepreciationattributabletothe
compositebusiness,includingthatforanagriculturalbusinessasifitwerea
taxablebusiness
CashpaymentsasspecifiedexceedingINR35,000inadayforplying,hiringor
leasinggoodscarriagestobedisallowedfortransactionseffectedonorafter
October1,2009asagainstthecurrentceilingofINR20,000inaday
A100percentdeductionforcontributionstoapprovedElectoralTrusts.
2009KPMG,anIndianPartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffiliatedwithKPMGInternational,aSwisscooperative.
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TaxHolidays
A100percenttaxholidayisextendedfor1moreyearuptoMarch31,2011to
undertakingslocatedinafreetradezoneunderSection10AandforEOU
underSection10B
Thestartdateofthespecifiedactivityisextendedfor1moreyearupto
March31,2011forthoseengagedinthefollowingundertakings:
- engagedinthegenerationoforgenerationanddistributionofpower
- forthetransmissionanddistributionofpowerbylayinganetworkofnew
transmissionordistributionlines
- carryingoutsubstantialrenovationandmodernizationoftheexisting
networkoftransmissionordistributionlines.
A100percentdeductionofprofitsincaseofunitslocatedinSEZistobe
computedwithreferencetothetotalturnoveroftheundertakinginsteadof
thetotalturnoverofthecompany
InrespectofataxpayerwhoisengagedinsoftwaredevelopmentinanSTP
unitorexportofanarticle/thinginanEOUorfromaspecialeconomiczone
ortheenterprisewhichiseligiblefordeductionorclaimsdeductionunderits
respectivesection,thennofurtherdeductioninrespectofthesameamount
shallbeallowedunderanyotherprovisionsinthesameassessmentyear
Further,theaggregateofthedeductionsundertheaforesaidprovisionsshall
notexceedtheprofitsorgainsoftheundertakingorunitorenterpriseofthe
business.Deductionsundertheaforesaidprovisionsshallbeallowedonlyif
thedeductionhasbeenclaimedinthereturnofincome.Theseamendments
areretrospectivefromtheAY2003-2004
Whilecomputingprofitsandgainsoftheeligibleundertakingorunitor
enterprise,transferpriceinrespectoftransactionsenteredintowithanyother
undertakingorunitorenterpriseofthetaxpayershallbeconsideredatthe
marketvalueasdefined.ThisamendmentisapplicablefromtheAY2009-2010
Thestartdateofthespecifiedactivityisextendedfor3moreyearsupto
March31,2011forundertakingsset-upforthereconstructionorrevivalofa
powergeneratingplant
Startdateofrefiningofmineraloilextendedfor3moreyearsuptoMarch31,
2012forprivatesectorundertakings
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Allrightsreserved.
Taxholidaydiscontinuedforundertakingscarryingonthebusinessoflaying
andoperatingacrosscountrynaturalgasdistributionnetwork.Instead,all
capitalexpenditure(otherthanexpenditureonland,goodwillandfinancial
instruments)willbefullyallowedasadeductionwhilecomputingbusiness
income
Taxholidayinrespectofspecifiedinfrastructurefacilityshallnotbeavailableto
anyundertakingorenterprisewhichhasbeenawardedaworkscontractby
anyperson(includingCentral/StateGovernment)andexecutedbythe
undertakingorenterprise.ThisamendmentisretrospectivefromtheAY20002001
A100percenttaxholidayfor7yearsisallowedforundertakingsengagedin
thecommercialproductionofnaturalgasonorafterApril1,2009inblocks
licensedundertheNELP-VIII
AllblockslicensedunderasinglecontractawardedunderNELP-VIIIorin
pursuanceofanylaworbytheCentralorStateGovernmentinanymanner,
shallbetreatedasasingleundertakingforthepurposeofataxholiday
availabletoanundertakingengagedinthebusinessofcommercialproduction
orrefiningofmineraloilandnaturalgas.Thisamendmentisretrospectivefrom
AY2000-2001
Adeveloperwillnotbeentitledtoataxholidayinrespectofahousingproject,
ifmorethanoneresidentialunitisallottedtoanypersonotherthanan
individualandincaseofanindividualtohisspouseorminorchildrenorakarta
ofHUForanypersonrepresentingsuchspecifiedpersons
Further,thetaxholidaywillnotbeavailabletoanyundertakingwhichexecutes
housingprojectsasaworkscontractawardedtoanyentity(includingthe
CentralorStateGovernment).ThisamendmentisretrospectivefromAY20012002
Anynewundertakingengagedintheproductionormanufactureofitemsin
thepaperindustrylocatedinHimachalPradeshandUttaranchalwillnotbe
eligibleforataxholiday
Taxexemptionhasbeenextendedtothemutualfundset-upbyanyother
publicsectorbankspecifiedbytheRBI.
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Non-residentrelatedprovisions
TheCentralGovernmenthasbeenempoweredtoenterintoagreementwith
theGovernmentofanyspecifiedterritoryoutsideIndiaforthepurposeof
doubletaxreliefandspecifiedpurposesinthesamemanneraswiththe
GovernmentofanycountryoutsideIndia
Inaninternationaltransaction,wheremorethanonepriceisdeterminedby
themostappropriatemethod,thearmslengthpriceisthearithmeticalmean
ofsuchprices.Incaseswherethevariationbetweenthepricesodetermined
andpriceatwhichthetransactionhasbeenundertakendoesnotexceed5
percentofthelatter,thetransactionpricewillbedeemedtobethearms
lengthprice
TheCBDThasbeenempoweredtomakeSafeHarborRulestominimize
disputesrelatingtotransferpricingmatters
AnAlternateDisputeResolutionMechanismwillbeformulatedtofacilitatethe
expeditiousresolutionoftransferpricingmattersandothermattersofforeign
companies.Underthismechanism,theAOisrequiredtoforwardthedraft
assessmentordertothetaxpayerforacceptanceorlodginganobjection
within30daystotheDisputeResolutionPanel(DRP)[acollegiumcomprising
ofthreeCommissionersofIncome-tax].Afterhearingfrombothsides,within
ninemonths,theDRPwillissuenecessarydirectionswhichshallbebinding
ontheAObutcanbechallengedbythetaxpayerinanappealtotheIncome
TaxAppellateTribunal.
CapitalGains
ThevalueassessedorassessablebyanyStampDutyAuthoritydeemedtobe
thefullvalueofconsiderationforcomputingcapitalgainsontransferofland
and/orbuildings.
2009KPMG,anIndianPartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffiliatedwithKPMGInternational,aSwisscooperative.
Allrightsreserved.
PersonalTaxation
BasicExemptionLimitshavebeenincreased:
Limits for:
To (INR):
From (INR):
ResidentWomenbelow65years
190,000
180,000
ResidentIndividualsof65yearsandabove 240,000
225,000
OtherIndividuals
150,000
160,000
Surchargeof10percentabolishedforallnon-corporatetaxpayers
PursuanttoabolitionofFBT,EmployeeStockOptions(ESOPs)onexercise
date,contributiontoSuperannuationFund(inexcessofINR100,000)and
otherfringebenefits/amenitiesaretaxableinthehandsofemployeesas
perquisites
Deductionformedicaltreatmentofadependentsufferingfromsevere
prescribeddisabilityincreasedtoINR100,000fromINR75,000
Deductioninrespectofinterestonloantakenforhighereducationextended
toallfieldsofstudies(includingvocationalstudies)afterpassingtheSenior
SecondaryExaminationoritsequivalent,fromanyrecognizedSchool,Boardor
University
AnysumofmoneyreceivedincashorkindexceedingINR50,000byan
individualorHUFwithoutanyorinadequateconsiderationshallbetaxableas
otherincome.Propertyincludesimmovableproperty,land,buildings,shares&
securities,jewellery,archaeologicalcollections,drawings,paintings,sculptures
oranyworkofart.ThisamendmentwillapplyfromOctober1,2009
Taxrelieftobeeligibleonvoluntaryretirementcompensationonlyifemployee
hasnotclaimedtaxexemptiononthesame
TaxbenefitinrespectofinvestmentinNewPensionScheme(NPS)iscurrently
availabletosalariedemployeesonly.Thesameisproposedtobeextendedto
allindividualsfromAY2009-10
TimelimitforcompliancebyprivateProvidentFundTrusttoreceiveorretain
recognitionextendedfromMarch31,2009toDecember31,2010.
2009KPMG,anIndianPartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffiliatedwithKPMGInternational,aSwisscooperative.
Allrightsreserved.
Otherdirecttaxprovisions
WealthtaxexemptionlimitincreasedtoINR3millionfromINR1.5million
Themeaningofpartnershipandpartnerexpandedtoincludelimitedliability
partnershipandlimitedliabilitypartnersasdefinedintheLimitedLiability
PartnershipAct2008.Accordinglytheincome-taxtreatmentofpartnership
firmsandpartnersistoextendtolimitedliabilitypartnershipsandtheir
partners
TheCTThasbeenabolished
Themeaningofmanufacturehasbeenintroducedinthestatutewiththe
purposeofeliminatingdisputesandconflictsamongstjudicialcases.
Manufacturehasbeennowdefinedtomeanachangeinanynon-living
physicalobjectorarticleorthingresultinginitstransformationorbringinginto
existenceanewanddistinctobjectorarticleorthingwithdifferentname/
character/useorchemicalcompositionorintegralstructure
ZeroCouponBondscheme/provisionsextendedtoscheduledbanks
Interestreceivedoncompensationorenhancedcompensationisdeemedto
beincomeundertheheadIncomefromOtherSourcesoftheyearinwhichit
isreceived,irrespectiveofthemethodofaccountingregularlyfollowedbythe
taxpayer,andwillqualifyforadeductionof50percentthereon
FromOctober1,2009,thescopeoftheprovisionfortaxwithholdingon
paymentstocontractorshasbeenexpandedtoincludeacontractfor
manufacturingorsupplyingaproducttotherequirement/specificationofa
customerbyusingmaterialpurchasedfromsuchcustomer.Ifthecredits/
paymentsaremadetoIndividuals/HUF,thetaxesaretobewithheldat1
percentand2percentforallotherentities.Further,incaseofspecifieda
manufacturing/supplycontract,ifthematerialcomponenthasnotbeen
separatelymentionedontheinvoice,thetaxshallbewithheldonthefull
invoicevalue.Paymentstotransportcontractorwouldbenotbeliablefor
withholdingprovidedthetransportcontractorfurnisheshisPAN.The
withholdingtaxobligationsunderthisnewsectionareextendedevento
foreigngovernment/entitiesestablishedoutsideIndia
2009KPMG,anIndianPartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffiliatedwithKPMGInternational,aSwisscooperative.
Allrightsreserved.
Theratesforwithholdingtaxonrentalpaymentsareproposedtobereduced
witheffectfrom1October2009.Theproposedratesareasfollows:
Particulars
Proposed rate
(w. e. f. October 1, 2009)
Existing rate
Rentofplant,machineryorequipment
2percent
10percent
Rentofland,buildingorfurnituretoan
individualandHUF
10percent
15percent
Rentofland,buildingorfurnituretoa
personotherthananindividualor
HUFservice
10percent
20percent
SurchargeandEducationCessnotapplicableforwithholdingtaxonnon-salary
paymentstoresidenttaxpayers
ThethresholdlimitforpaymentofadvancetaxincreasedtoINR10,000from
INR5,000
SimpleanduserfriendlySaralformstobeintroduced
Variousamendmentsmadetoproceduralaspectsoffurnishingofquarterly
returnsforwithholdingtax,issuingcertificatesfortaxeswithheld,timelimits
forassessmentofwithholdingtax,etc
IncasethePANisnotquoted,taxwouldbewithheldatwhicheverrateis
highestfromamongstthefollowing:
- aspecifiedrate
- theratesinforce
- arateof20percent
Scopeofreassessmenthasbeenwidenedtoincludeanyincomewhichmay
cometotheattentionoftheAOduringreassessmentproceedings,
irrespectiveofwhetherornotanyreasonhasbeenrecordedforthesame
whilereopeningtheassessment.Thisamendmentiseffectiveretrospectively
fromApril1,1989
Inconcealmentpenaltyproceedings,incomepertainingtotheperiodpriorto
searchforwhichthereturnofincomehasbeenfiledbythetaxpayerbut
wheresuchincomehasnotbeendisclosedthereintobeliableforlevyofthe
penalty.TheamendmentiseffectiveretrospectivelyfromJune1,2007
ServiceofNoticebyapprovedcourierorelectronictransmissiontobe
consideredasvalid.Further,CBDTtomakerulesregardingaddresses
(includingelectronicmailorelectronicmailmessages)towhichsuch
communicationmaybedeliveredortransmitted
2009KPMG,anIndianPartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffiliatedwithKPMGInternational,aSwisscooperative.
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Everydocument,notice,order,letteroranyothercorrespondenceissuedor
receivedbytheIncomeTaxAuthorityonorafterOctober1,2010tobeara
computer-generatedDocumentIdentificationNumberwithoutwhichitwillbe
treatedasinvalid
Therevisedlimitsforallowingexpenditureonaccountofsalary,bonus,
commissionorremunerationtoaworkingpartnerofallpartnershipfirmsare
asunder:
Book-profit / Losses
Inthecaseoflossorbook-profituptoINR
300,000
HigherofINR150,000or90percentofthe
book-profit
Book-profitaboveINR300,000
60percentofbook-profit
Theschemeofpresumptivetaxationmadeapplicabletoallbusinesses(except
forthebusinessofplying,hiringorleasinggoodscarriagesorthoseclaiming
specifiedtaxbenefits)havingtotalturnoverorgrossreceiptoflessthanINR4
million.Theschemeappliestoindividuals,HinduUndividedFamiliesand
partnershipfirms(excludingLimitedLiabilityPartnerships).Underthis
Scheme,8percentoftotalturnover/grossreceiptswillbedeemedtobethe
taxableincomeofthetaxpayeronwhichentireincome-taxcanbepaidasselfassessmenttax.ThisschemewillapplyfromAY2011-12.Incasethetaxpayer
claimslowertaxableincomethenhewillberequiredtomaintainaccountsand
getthemaudited
ThemeaningofCharitablepurposeforthepurposeoftaxregistrationand
exemptionisexpandedtoincludethepreservationoftheenvironment
(includingwatersheds,forestsandwildlife)andpreservationofmonuments,or
placesorobjectsofartisticorhistoricinterest
AggregateanonymousdonationsreceivedbyRegisteredCharitableTrusts/
EntitiesnottaxabletotheextenttheydonotexceedINR100,000or5percent
oftheirtotalincome,whicheverishigher
VoluntarycontributionsreceivedbyApprovedElectoralTrustfunctioningasper
itsrulesistobeexemptifitdistributes95percentthereoftospecifiedpolitical
parties
IncomeoftheNewPensionSchemeTrustistobetaxexempt.Theprovisions
oftheDDTwillnotapplytodividendsreceivedbysuchaTrust.Nowithholding
taxwouldapplyonanyincomepaidtothem.Securitiessold/purchasedby
suchaTrustwillnotattractSTT.
2009KPMG,anIndianPartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffiliatedwithKPMGInternational,aSwisscooperative.
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10
IndirectTax
CustomsDuty
General amendments
Thegeneralratesofcustomsdutyunchanged
RetrospectiveamendmentwitheffectfromJuly1,2003hasbeenmade
empoweringHighCourtstocondoneadelayinfilingofappealsbeyondthe
prescribedperiod.Similaramendmentshavebeenmadeforapplications/
crossobjectionswitheffectfromJuly1,1999.Similaramendmentmadein
centralexciselaw.
TheofficersofDirectorateGeneralofCentralExciseIntelligence(DGCEI)have
beenempoweredasofficersofCustomswithallIndiajurisdictionwith
retrospectiveeffectfromMay9,2000.
2009KPMG,anIndianPartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffiliatedwithKPMGInternational,aSwisscooperative.
Allrightsreserved.
11
Items
SpecifiedLifesavingdrugs/vaccine
10%
5%
Artificialheartdevices(leftventricular
assistdevice)
7.5%
5%
Goldbars,otherthantolabars,bearing
manufacturersorrefinersengravedserial
numbersandweightexpressedinmetric INR100per10gram
units,andgoldcoins(subjecttospecified
conditions)
INR 200per10gram
Goldinanyform,otherthanthose
specifiedabove,includingliquidgoldand
tolabars(subjecttospecifiedconditions)
INR 250per10gram
INR 500per10gram
Silverinanyform(subjecttospecified
conditions)
INR 500perKg
INR 1000perKg
Permanentmagnetsforuseinwind
operatedelectricitygenerators
7.5%
5%
Set-topboxes
Nil
5%
LCDpanelsformanufactureofLCDTVs
10%
5%
Parts,componentsandaccessoriesof
mobilehandsetsincludingcellphones
(ADC)(subjecttotheprocedure
prescribed)
4%(ADC)
Nil
2009KPMG,anIndianPartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffiliatedwithKPMGInternational,aSwisscooperative.
Allrightsreserved.
12
CentralExcise
General
Thegeneralrateofexcisedutyof8percentisunchanged.
2009KPMG,anIndianPartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffiliatedwithKPMGInternational,aSwisscooperative.
Allrightsreserved.
13
Naphtha,specialboilingpoint
spirits
14%+INR15perlitre
14%
2%
NIL
20%+INR20,000
perunit
20%+INR15,000perunit
Petroldrivenmotorvehiclesfor
transportofgoods,except
dumpersofspecificcategories
20%
8%
Motorchassisforpetroldriven
vehiclesfittedwithengines
whetherornotwithcab
20%+INR10,000
perchassis
8%+INR10,000perchassis
Brandedjewellery(brandname
ortradenameindeliblyaffixed
orembossed)
MotorVehiclesEngine
capacityexceeding1999cc
PolyesterChips
4%
8%
Articlesofwood
4%
8%
ManmadeFilamentYarn/Fibres
(towandstaplefibre)
4%
8%
Item
Central Excise
Abatement
duty rate
Central Excise
duty rate
Abatement
CeramicTiles,
manufacturedina
factorynotusing
electricityforfiringthe
kiln
4%
43%
8%
45%
LPGGasStoves
4%
33%
8%
35%
MP3/MP4orMPEG4
Playerswithorwithout
radio/videoreception
facility
4%
33%
8%
35%
2009KPMG,anIndianPartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffiliatedwithKPMGInternational,aSwisscooperative.
Allrightsreserved.
14
ServiceTax
Rateofservicetaxremainsunchanged
AuthorityforAdvanceRulingsnotifiedforITA,toactastheAuthorityforthe
purposesofcustoms,centralexciseandservicetaxfromadatetobenotified.
Amendments
Toincludeservicesprovidedbygovernmentrailways
Transportofgoodsbyrailservice andtransportofgoodswhetherincontainersor
otherwise
Businessauxiliaryservice
Toexcludeonlythoseactivitiesthatresultin
manufactureofexcisablegoods.Earliertheconditionof
excisablegoodswasnotprescribed
Stock-brokersservice
Toexcludeservicesofsub-broker
Informationtechnologysoftware
services
RetrospectiveamendmentwitheffectfromMay16,
2008tosubstitutethetermacquiringwithproviding
inclauses(v)and(vi)whichapplyforrighttouseIT
softwareforcommercialexploitation/supplied
electronically
2009KPMG,anIndianPartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffiliatedwithKPMGInternational,aSwisscooperative.
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15
2009KPMG,anIndianPartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffiliatedwithKPMGInternational,aSwisscooperative.
Allrightsreserved.
16
2009KPMG,anIndianPartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffiliatedwithKPMGInternational,aSwisscooperative.
Allrightsreserved.
17
2009KPMG,anIndianPartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffiliatedwithKPMGInternational,aSwisscooperative.
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18
GoodsandServicesTax
GSTtransitiontimelineof2010reaffirmed
GSTstructurebasedonprinciplesoffiscalfederalism,comprisingofaCentral
GSTandaStateGST
TheCentreandtheStateswilleachlegislate,levyandadministertheCentral
GSTandStateGST,respectively.
2009KPMG,anIndianPartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffiliatedwithKPMGInternational,aSwisscooperative.
Allrightsreserved.
19
GlossaryofContents
AO
AssessingOfficer
BCD
BasicCustomDuty
CBDT
CentralBoardofDirectTaxes
CENVAT
CentralValueAddedTax
CTT
CommoditiesTransactionTax
CVD
CountervailingDuty
DDT
DividendDistributionTax
EOU
ExportOrientedUnit
FBT
FringeBenefitTax
FDI
ForeignDirectInvestment
FOB
Freeonboard
GST
GoodsandServicesTax
HUF
HinduUndividedFamily
ITA
IncomeTaxAct
MAT
MinimumAlternateTax
MRP
MaximumRetailPrice
PAN
PermanentAccountNumber
RBI
ReserveBankofIndia
SEZ
SpecialEconomicZone
SSI
SmallScaleIndustries
STP
SoftwareTechnologyPark
STT
SecuritiesTransactionTax
WDV
WrittenDownValue
in.kpmg.com
KPMGinIndia
KPMGContacts
Mumbai
KPMG House, Kamala Mills Compound
448, Senapati Bapat Marg
Lower Parel
Mumbai 400 013
Tel: +91 22 3989 6000
Fax: +91 22 3983 6000
Hyderabad
8-2-618/2
Reliance Humsafar, 4th Floor
Road No.11, Banjara Hills
Hyderabad - 500 034
Tel: +91 40 6630 5000
Fax: +91 40 6630 5299
Delhi
DLF Building No. 10,
8th Floor, Tower B,
DLF Cyber City, Phase 2, Gurgaon 122 002
Tel: +91 124 307 4000
Fax: +91 124 254 9101
Kolkata
Infinity Benchmark, Plot No. G-1
10th Floor, Block EP & GP, Sector V
Salt Lake City, Kolkata 700 091
Tel: +91 33 44034000
Fax: +91 33 44034199
Bangalore
Solitaire, 139/26, 3rd Floor,
Inner Ring Road, Koramangala,
Bangalore 560 071
Tel: +91 80 3980 6000
Fax: +91 80 3980 6999
Pune
703, Godrej Castlemaine
Bund Garden
Pune 411 001
Tel: +91 20 305 85764/65
Fax: +91 20 305 85775
Chennai
No.10 Mahatma Gandhi Road
Nungambakkam
Chennai 600 034
Tel: +91 44 3914 5000
Fax: +91 44 3914 5999
Kochi
4/F, Palal Towers
M. G. Road, Ravipuram,
Kochi 682 016
Tel: +91 484 309 4120
Fax: +91 484 309 4121
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orentity.Althoughweendeavortoprovideaccurateandtimelyinformation,therecanbenoguaranteethatsuchinformationis
accurateasofthedateitisreceivedorthatitwillcontinuetobeaccurateinthefuture.Nooneshouldactonsuchinformation
withoutappropriateprofessionaladviceafterathoroughexaminationoftheparticularsituation.
Pradip Kanakia
Executive Director
Head - Markets
e-Mail: pkanakia@kpmg.com
Tel: +91 80 3980 6100
Uday Ved
Executive Director
Head - Tax
e-Mail: uved@kpmg.com
Tel: +91 22 3983 5933
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