Union Budget Indirect Tax

Indirect Tax proposal
Indirect Tax Budgetary Proposal Highlights
Goods & Services Tax
Goods and Services Tax expected to be introduced on 1st April, 2011

Service Tax
Rate of tax on services retained at 10% to create foundation for GST
Service tax net widened by adding eight new services (mentioned below)
o Promotion, Marketing or Organising of Games of Chance (including lottery, Bingo, Lotto) Service
o Health Service
o Maintenance of Medical Records of Employees of a Business Entity
o Promotion of a ‘brand’ of goods, services, events, business entity, etc. service
o Permitting Commercial Use or Exploitation of Any Event Service
o Electricity Exchange Service
o Services of Transferring Temporarily or Permitting the Use or Enjoyment of any Copyright
o Special services provided by builder to the prospective buyers such as providing preferential location or external or internal development of complexes on extra charges.

Amendment in expansion in scope of eleven existing services
Ø Air Passenger Transport Service
Ø Information Technology Software Service
Ø Commercial Training or Coaching Service
Ø Sponsorship Service
Ø Construction of Complex service Commercial or industrial construction service
Ø Renting of immovable property\
Ø Airport Services Port Services Other Port Services
Ø Auctioneer’s Service
Ø Management of Investment under ULIP Service

Withdrawal of existing exemption in below taxable service
Ø Transport of Goods by Rail Service
Ø Commercial Training or Coaching Service
Ø General Insurance Service

There are few other amendment in service tax for those update pl leave comments I will update you


Central Excise
Standard rate of excise duty partially hiked from 8% to 10% on all nonpetroleum products

Customs
Peak Customs Duty rate maintained at 10%

Union Budget Direct Tax 80 IB

Deduction in respect of profits and gains from undertakings engaged in developing and building housing projects

According to the existing provisions of section 80-IB(10), 100 % deduction is available in respect of profits derived by an undertaking from developing and building housing projects approved by a local authority before 31st March, 2008. This benefit is available if the following conditions are fulfilled:

The project has to be completed within 4 years from the end of the financial year in which the project is approved by the local authority.

The built-up area of the shops and other commercial establishments included in the housing project should not exceed 5% of the total builtup area of the housing project or 2,000 sq. ft. whichever is less.

I n order to get the tax benefit of the above provisions during the slowdown in the housing sector due to global recession, it is proposed to increase the period allowed for completion of a housing project from existing 4 years to 5 years from the end of the financial year in which the housing project is approved by the local authority and a further relaxation is proposed to be given in the current norms for built-up area of shops and other commercial establishments in housing projects at 3 percent of the aggregate built-up area of the housing project or 5,000 sq. ft. whichever is higher for projects approved on or after 1st April, 2005 which are pending for completion.

Union Budget 2010-11 Direct Tax

Direct Tax proposal

Corporate Tax
Corporate income-tax rates remain unchanged for both domestic as well as foreign companies, except for an increase in the effective rate of Minimum Alternative Tax (MAT) from 15% to 18%.

The applicable rates of income-tax are as under:

Particulars Tax Tax Rate (%) *

Domestic Company
Normal Tax Rate 30%
Minimum Alternative Tax 18%

Foreign Company
Normal Tax Rate 40%

Currently the surcharge on income tax @10% is payable by a domestic company having total income exceeding one crore rupees. It is proposed to reduce the surcharge on income-tax from 10% to 7.5%.

I n case of companies, other than domestic companies, having total income exceeding one crore rupees, the surcharge on income-tax will continue to be levied @ 2.5%.

The marginal relief in tax will continue to be allowed in the cases where income is more than one crore rupees.

The Education Cess shall continue to be levied @ 3%.

Personal Tax
Tax Rate
At present, the income upto Rs.1,60,000/- is exempt in respect of individuals (other than women below the age of sixty-five years and senior citizens), Hindu Undivided Families (HUF), Association of Persons (AOP), Body of Individuals (BOI) etc. In respect of women below the age of sixty-five years and senior citizens resident in India, the income upto Rs. 1,90,000/- and upto Rs. 2,40,000/- respectively is exempt.

I t is proposed to increase the limit of income under each slab keeping the threshold limit of exemption at the same level. The proposed changes have been tabulated below

Existing Limit Proposed Limit Tax Rate
Upto 1,60,000 Upto 1,60,000 Nil
Upto 1.6 to 3 Lakh Upto 1.6 to5 Lakh 10%
Upto 3 to 5 Lakh Upto 5 to 8 lakh 20%
5 Lakh & Above 8Lakh & above 30%

No surcharge will be levied in case of individuals, HUF, AOP & BOI, co-operative society, local authority and firms

The education cess shall continue to be levied at the rate of 3%.

This budget have also offer some other benefits/relaxation as explain below

I n order to promote the investment in infrastructure sector, it is proposed to allow deduction in respect of subscription made by an individual or a Hindu undivided family in long-term infrastructure bonds (as may be notified by the Central Government) during financial year 2010-11, to the extent of Rs. 20,000/-, in computing the total income in addition to normal 100000 investment as explain under section 80C.

Total medical health insurance premium limit have increase from 15000 to 20000 in case of senior citizen under section 80D

Enhancement of threshold limit for applicability of tax audits for business or profession

Section 44AB of the Act deals with audits of accounts of every person carrying on business or profession, if his total sales or turnover exceeds Rs. 40 lakhs in the previous year or gross receipts in profession exceeds Rs. 10 lakhs

Such threshold limits for the applicability of tax audits have been enhanced to Rs. 60 lakhs and Rs. 15 lakhs respectively. This would help reduce the compliance burden on the small taxpayers.

While the threshold limits have been increased, it is proposed to also increase the maximum penalty leviable, from Rs. 1 lakh to Rs. 1.5 lakhs in case of failure to get books of account audited u/s 44AB or to furnish a report on such audit.

Union Budget 2010-11 Revenue & Expenditure

Below are source of revenue for UPA Gov for FY 2010-11

Ø Dis-investment in PSUs to yield more than Rs. 25,000 Crores
Ø Increase in MAT from 15% to 18%
Ø Increase in Excise Duty from 8% to 10%
Ø Inclusion of new services in the Service tax net
Ø Increase in Excise by Rs.1 per liter and custom duty from 2.5% to 7.5% for petrol and diesel. Restoration of basic custom duty of 5% on crude petroleum

Below are Expenditure plan

Ø The plan and non-plan expenditure for 2010-11 are estimated at Rs. 3,73,092 crore and Rs. 7,35,657 Crores respectively.
Ø Out of the plan expenditure allocation to infrastructure at Rs. 1,73,552 crore at 46% followed by Rs. 1,37,674 crore at 37% are the highest
Ø Energy and MSME sectors are allocated Rs. 5,130 crores and Rs. 2,400 crores


The Finance Minister aims at withdrawing stimulus eventually and focuses on inclusive and sustainable growth through infrastructure development, rural and agricultural development and promotion of exports through Special Economic Zones. He has laid emphasis on governance, I. T. enabled functions and efficiency measures which will put India among the most attractive countries of the world

In my opinion that Government has treaded towards fiscal consolidation. The reduction in personal tax rates will increase the disposable income which will further propel the consumption in the economy. In addition to this, Government spending plans will also increase the flow of capital formation.

Union Budget 2010-11 Objective

Soon after the newly elected UPA government took charge, the regular budget of February, 2010 was eagerly awaited. The Finance Minister has in his masterly style presented a well balanced growth oriented Budget in the Parliament on 26th February, 2010 to achieve the following objectives:

Ø To quickly revert to the higher GDP growth of 9% and ultimately, cross the double digit as against the estimated growth rate of 7.2% for financial year 2009-10.

Ø To harness economic growth to make development more inclusive and sustainable.
Ø To address the weaknesses in the Government system.
Ø Improving investment environment by taking special initiative to simplify Foreign Direct Investment.
Ø Taking special initiative to address the entire value chain in the agriculture sector by introducing Green Revolution, conversation of farming, storage and food processing.
Ø Substantial allocation to infrastructure and social sector
Ø Emphasis on clean energy and renewable energy
Ø Target of explicit reduction in the domestic public debt-GDP ratio
Ø Aim to introduce Goods and services Tax (GST) and Direct Tax Code (DTC) regime with effect from 1st April, 2011\

To achieve these objectives, the Finance Bill provides for the revenue mop up measures and expenditure plans: for more please refer Union Budget 2010-11 Revenue Plan