Budget 2011-2012


Contents



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Foreword


Dear Reader,

Finance Minister Pranab Mukherjee while unwrapping this year's union budget invoked the heavenly intervention of Lord Indra for good rain and Goddess Laxmi for good fortune and attempted a tricky balancing act between populism, good fiscal housekeeping and a push to reforms. This Budget comes in the backdrop of high inflation, tight liquidity and rising current account deficit. Unsustainable subsidies and a sense of policy paralysis as far as major reforms are concerned have been a drag on the economy. He saw this Budget as a transition to a more transparent and result-oriented economic management.

He began by saying that the economy had bounced back, industry was regaining ground and he projected a double-digit service growth in "the near future". The economy is expected to grow at 9% in 2011-12. The GDP has grown at 8.6 per cent, the agriculture sector has grown at 5.6 per cent, industries at 8.1 per cent and the services sector at 9.6 per cent. Target of fiscal deficit of 4.6% in next fiscal appears to be achievable.

Agriculture and infrastructure are two who got the attention from FM but longer term productivity-enhancing changes were not laid out. The allocation for the infrastructure sector saw an increase of 23% over the previous year. Key positives for the sector were the increased FII limit for investment in corporate bonds with a residual maturity of over five years issued by companies in infrastructure sector by US $ 20Bn, announcement of creation of special vehicles in the form of notified infrastructure debt funds in the coming months, reduction in withholding tax for foreign investors to 5% from 20% and the raising of tax free bonds by several infra entities.

In agriculture, raising credit target for the agriculture sector by Rs. 1 lakh crore to Rs. 4.75 lakh crore, bonanza to the farming community by announcing series of incentives in bank loans and announcing various schemes for promoting production of vegetables, pulses, oilseeds, fodder and nutritionrich crops like millets and maize and higher allotment under Rashtriya Krishi Vikas Yojana of Rs 7,860 crore could see more support for this agriculture sector.

The government has upped to maintain the momentum on disinvestment with target of Rs 40,000 crore in 2011-12 from Rs 22,144 crore raised during the current fiscal

On governance, there seems to be a firm commitment to plug leakages (direct transfer of cash subsidy), reduce black money, tackle corruption, monitor performance of ministries as well as continue fiscal consolidation. Without over-stretching itself, this Budget includes a decent set of measures without compromising on its fiscal deficit position.

Direct Taxes Code (DTC), which will replace the Income Tax Act, is proposed to be implemented from April 1, 2012.

The government opted to not roll back the Central excise duty to levels prevailing in November 2008 with a view of transition towards GST in the near future and to ensure that the growth momentum continues unabated. It has thus maintained the standard rate of Central excise duty at 10 per cent. Certain changes have been made in the Central Excise rate structure to prepare the ground for the transition to GST, beginning with a reduction in the number of exemptions. A nominal Central Excise duty of 1 per cent has been imposed on 130 items that are entering the tax net. The peak rate of customs duty has been left unchanged at 10%. Further, the standard rate of Service Tax has also been retained at 10 per cent. In order to achieve a closer fit between the present service tax regime and its GST successor, the government has brought in a few new services into the tax net to expand the tax base.

Sometimes saying nothing can be very significant. Silent on cutting duties or some additional support for the oil industry may lead to price rise in petrol and diesel.

Also, given the shortage of funds in the domestic banking sector, several measures are included to increase fund availability from other sources, pertinently FII investments in corporate bonds being increased to US$40bn, withholding tax reduced, Tax-free bond limits increased, etc.

Together with new bank licenses and increased foreign bank participation over the course of next year, the gap between savings and investments should get narrowed, keeping interest rates also in check – a positive for banks, infrastructure and the overall economy.

Though the Budget reinforced the government's pro-growth agenda with increased allocations for infrastructure, farm & social sectors and continued fiscal stimulus on the indirect tax front, overall, it is a budget more of tinkering around the edges without ushering in radical reforms, a lackluster and not spectacular reformist budget. But as India is already in the overdrive of global competitiveness which gets a further fillip by the budget, which, in turn, will drive more M&As for domestic consolidation. Concurrently, India's attractiveness as a major centre for technology, intellectual capital and consumption will strongly drive cross border M&As.


Publication Team
Agarwal & Dhandhania

Economic Survey 2010-2011


The pre-budget Economic Survey 2010-11 was tabled by the Ministry of Finance, Government of India, on February 25, 2011. This has been a classic year of economic recovery for India and growth story. This year has been remarkable by any standards. The economy remained on the path of rapid resurgence which began in 2009-10 and has virtually returned to the high growth path that it had achieved during 2005-07, before the global financial crisis and economic meltdown during 2007 to 2009. What makes it even more significant is that this is happening on the heels of a year in which growth was a robust 8 per cent; so there is no base effect to lay claims on this year's achievement. However, as often happens with strong recovery, the economy has come under strain from high inflation. Inflation, especially when it is centered on food, as has been the case in recent times in India, can be a cause of considerable distress for the common man and woman. The economic survey has been very positive on growth which says that India's GDP is likely to have a growth rate of around 8.5% to 8.75% in 2010-11. A growth of 9% in 2011-12 is also expected and with such a recovery, scope for a gradual pullback of stimulus is created. India is now on the path of becoming the fastest growing nation in the world with 32.5% savings and 34.9% investment of GDP in the year 08-09.

Growth is strong in 2010-11 with a rebound in Agriculture and continued momentum in manufacturing, though there was a deceleration in services caused mainly deceleration in community, social and personal services, reflecting the base effect of fiscal stimulus in the previous two years. That there has been deceleration in industry and manufacturing, in particular, as indicated by index of industrial production (IIP) data pertaining to Nov.'2010, is a matter of some concern. However buoyancy in other indicators of industrial performance and the short-run nature of the IIP slowdown suggest that the deceleration is more in the nature of road bumps than indication of any long-run problem. On the demand side, a rise in saving and investment and pickup in private consumption have resulted in strong growth of the Gross Domestic Product (GDP) at constant market prices at 9.7 percent in 2010-2011.

However the survey that covered 1,900 and 1,933 entities during the first two quarters of 2010-11 pointed out that rising commodity prices, higher staff costs and increased interest outgo have impacted the profitability of Indian companies during the first six months of 2010-11. Sales in July-September and October-December quarters jumped by 28.8 per cent and 21.2 per cent, respectively over the same periods last fiscal. On the other hand, the expenditure in the quarters under review were up by 34.5 per cent and 22.5 per cent, respectively compared to the year-ago periods.

Projecting a nine per cent GDP growth for 2011-12, survey identifies Reforms and Convergence in schemes as the key takeaways and stresses on the need of “vision”, “long-term plan” and “bold decisions”. Streamlining environment clearance & land acquisition for infrastructure projects, early introduction of Good and Service Tax and second Green Revolution are among the over a dozen reforms outlined by the Survey for accelerating economic growth. The survey has also expressed concern over project delays due to tussle between various ministries like coal and power, where the Ministry of Environment and Forest has raised certain issues.

While recognizing the contribution of agriculture sector in the overall development, especially to check food inflation, the Survey has asked the government to work for a 'second Green Revolution' (to devise ways to reduce farmers' dependence on monsoon) with technological break-through in the sector. The agriculture growth is expected to be 5.4 per cent for the current financial year as against just 0.4 per cent in the previous fiscal.

Besides, there is need to explore avenues for increasing investment in infrastructure through Public Private Partnerships and occasionally exclusive private investment wherever possible.

The survey advocates to grant to business houses and non-banking finance companies (NBFCs) full banking license with provision for avoiding conflict of interest issues. Presently, India has 27 public sector banks, seven new private sector banks, 15 old private sector banks, 31 foreign banks, 86 regional rural banks, 4 local area banks, 1,721 urban cooperative banks, 31 state cooperative banks, and 371 district central co-operative banks.


At a Glance - Economic Survey 2010-11


  • The growth rate has been 8.6 percent in 2010-11 and is expected to be around 9 percent in the next fiscal year despite the risks of global events, such as volatility in commodity prices like crude oil exacerbated by political turmoil in the Middle-East
  • The growth has been broad based with a rebound in the Agriculture sector which is expected to grow around 5.4 per cent with a relatively good monsoon . Growth in the first four years of the 11th Plan (2007- 12) is estimated at 2.87 per cent.
  • Manufacturing and Services sector have registered impressive gains. Savings and investment are looking up while exports are rising
  • The Survey has observed that a rise in savings and investments and pick up in private consumption has resulted in 9.7 per cent growth of GDP at market prices (constant) in 2010-11.
  • Savings rate has gone up to 33.7 percent while the investment rate is up to 36.5 percent of GDP in 2009-10.
  • The food grain production went up to 232.1 billion tonnes from 218.1 billion tonnes in 2009-10.
  • Inflation is expected to be 1.5 percent higher than what would be if the country was not on the growth curve. Food inflation, higher commodity prices and volatility in global commodity markets have been a cause of concern underscoring the need of fiscal consolidation and stronger reserves. Need for a larger investment in agriculture enroute to the second green revolution.
  • To check food inflation, Delivery mechanisms to be improved.
  • Industrial output growth rate was 8.6 per cent while the manufacturing sector registered a growth rate of 9.1 per cent in 2010-11.
  • During April-November 2010 telecom, crude oil production, civil aviation sectors performed well while the power generation, cement and fertilizer production, railway freight traffic and cargo handling at major ports have grown at comparatively lower rates.
  • Six core industries registered a growth of 5.3 per cent (provisional) in April-December, 2010 as against 4.7 per cent during the same period in 2009-10.
  • Increasing role of infrastructure services which have been deepening rapidly with rising investments. Large and accelerated investments will be needed in the next Plan period for addressing delays, cost overruns and regulatory and pricing impediments.
  • The telecommunications sector has done exceedingly well as the tele density has increased from 20.74 per cent in 2004 to 143.95 per cent in 2010 in urban areas. While in the rural areas it has gone up from 1.57 per cent in 2004 to 30.18 per cent in 2010.
  • Lauding the role of services sector as the potential growth engine, the Survey to promote further opportunities in new areas in global demand such as accounting, legal, tourism, education, financial and other services beyond the IT and business process sectors.
  • Exports in April-December 2010 went up by 29.5 per cent while the imports during the same period registered a growth rate of 19 per cent.
  • The inclusive growth agenda of the Government is reflected in the 59 per cent rise in Net Bank Credit.
  • The expenditure on Social sector programs has been stepped up by 5 percent point of GDP over the past five years.
  • Gross Fiscal Deficit is 4.8% of GDP in 2010-11 as against 6.3 percent of GDP in the previous year.
  • The Revenue deficit in the current financial year has been 3.5 percent of GDP as against 5.1 percent in the previous year.
  • To call for efficient taxation of goods and services by a new GST, raising revenues, installing stronger safeguards and measures to accelerate financial inclusion.
  • To focus on coverage, spending and monitoring on specific schemes for Scheduled Castes, Tribes, OBCs and the regions such as North-East, expansion of Mahatma Gandhi NREGA, Sarva Shiksha Abhiyan and National Rural Health Mission.
  • Stress on public private partnership for higher education without diluting the regulatory oversight of the Government.
  • Expanded financing of programs and better policies for climate change.
  • The potential engines of growth for the country in the long run - Skill development and Innovative activity.

Sector wise Performance


Agriculture & Allied Sectors

Agriculture is the primary sector of Indian economy and agriculture along with the ancillary sectors like forestry, horticulture, and fishing employed over 50% of the country's total population. Although in the GDP, the share of agriculture is constantly falling, still it remains the largest economic sector and plays a major role in the socio-economic development of India. In India, the state governments are responsible for the output of agriculture and the financial policies are formulated by the central government. India is the largest producer in the world of milk, cashew nuts, coconuts, tea, ginger, turmeric and black pepper.

Challenges of every kind are being faced by the agricultural sector for which serious policy methods are to be initiated to achieve the growth of 4% in agriculture. Government has adopted methods like availability of credit at reasonable rates for more private investments in the field of agriculture.

The food safety net for each and every of the over a billion citizens—a number that is growing— requires enhanced agricultural production and productivity in the form of a Second Green Revolution like the first one in 1960s. The agriculture and allied sector accounted for 14.2 per cent of the gross domestic product (GDP), at constant 2004-05 prices. During the period 2004-05 to 2007-08, the GDP for agriculture and allied sectors had increased from Rs. 5,65,426 crore to Rs.6,55,080 crore, at constant 2004-05 prices; thereafter it stagnated at this level for two years (2008-09 to 2009-10). In 2009-10, it accounted for 14.6 per cent of the GDP compared to 15.7 per cent in 2008-09. Its share in GDP has thus declined rapidly in the recent past. This is explained by the fact that whereas overall GDP has grown by an average of 8.62 per cent during 2004-05 to 2010-11, agricultural sector GDP has increased by only 3.46 per cent during the same period.

The National Agricultural Insurance Scheme will continue from the previous year. In the plantation sector of agriculture a special purpose Tea Fund is to be setup, expected contribution of Rs.100 crore in 2006-07. While in the horticultures and fisheries segment under the agriculture, terminal markets are to be established on PPP model-Rs.150 crore set aside for this in 2006-07 under National Horticulture Mission. Moreover, Central Institute of Horticulture to be established in Nagaland and National Fisheries Development Board to be appointed.


Industry

Growth in the industrial sector was buoyant during the first two quarters (April-June, July-September) of the current financial year. The manufacturing sector, in particular, showed a remarkable robustness, growing at rates of 12.6 percent and 9.9 percent respectively, during these two quarters. Thereafter industrial output growth has begun to moderate. This matches with the same global trends. Due to poor performance of the basic goods and consumer non-durables segments, which constitute about 59 per cent of the index of industrial production (IIP), a sizeable chunk of the industrial sector has not contributed significantly towards overall IIP growth. The growth has mainly been driven by the capital goods and the consumer durables segments. Weighted contribution of capital goods and consumer durables during April- December 2010 was about 29 per cent and 21 per cent as against their weights of 9.26 per cent and 5.37 per cent respectively in the IIP. The basic goods segment, which has a weight of 35.57 per cent in the IIP, contributed only 20 per cent during April- December 2010. The manufacturing sector, which has a weight of 79.36 per cent in the IIP, is its key driver. Manufacturing output growth has dipped from a peak of 18 per cent in April 2010 to 1.0 per cent in December 2010, as a result of which IIP growth has also come down from 16.6 per cent in April 2010 to 1.6 per cent in December 2010. However, this slowdown is in a large part driven by the base effect. Despite wide fluctuations, the April–December 2010 cumulative growth rate has remained at a robust 9.1 per cent for the manufacturing sector and 8.6 per cent for the IIP.

There has been tremendous growth in FDI inflows to India since 2003-04. Equity inflows have risen nearly thirteen-fold, from US$ 2.23 billion in 2003-04 to US$ 27.31 billion in 2008-09 and US$ 25.89 billion in 2009-10. Total FDI inflow into India since the onset of the liberalization process (August 1991- May 2010) is nearly US$ 136.86 billion. This represents only the equity capital component.

Post 1990s have seen a sea of change in the policy drafting of Indian Industry. The highly insulated Indian Markets were opened to foreign companies and investors. Thus Indian Industry registered an impressive growth during the last decade and half. The number of industries in India have increased substantially in the last fifteen years. Though the main occupation has been agriculture for the majority of the Indian population, it was realized that India would become a prosperous and a modern state only with proper industrialization. Therefore different policy were drafted, modified and initiated to build up an adequate infrastructure for rapid industrialization and improve the Indian industry.

Industry Policy of India evolves around the core parameters like -

  • Industrial Licensing.
  • Industrial Entrepreneurs Memorandum.
  • Locational Policy.
  • Policy Relating to Small Scale Undertakings.
  • Environmental issues.

The newly drafted Industry policy fueled rapid increase in the various sectors in all verticals. But the astronomical growth was observed in the IT, Telecommunication and Pharmaceutical Industry. The Indian software industry has grown at a massive rate from a mere US $ 150 million in 1991-92 to a staggering US $ 5.7 billion (including over $4 billion worth of software exports) in 1999-2000. No other Indian industry has performed this well against the ever increasing global competition. The telecommunication industry also marked stupendous growth, so is the pharmaceutical industry. The newly drafted Industry policy of India has helped Indian industry to grow at a rapid pace.

The central Government's liberalized Industry outlook envisages rapid and substantial economic growth and integration with the global economy and earns a major share in the international market. The Industry policy reforms have reduced the industrial licensing requirements, removed restrictions on investment and expansion and facilitated easy access to foreign technology and foreign direct investment.


Foreign Exchange

India has the fourth largest foreign exchange reserves in the world. The reserves have touched $ 297.3 bn in December, 2010 from $ 279.1 bn in March, 2010 which helped the nation to tide and insulate over global financial crisis.

At the same time, the foreign exchange reserves of Japan and Russia stood at $ 1.12 trillion and $ 479.4 billion, respectively. Neighboring China's foreign exchange reserves was at $ 2.45 trillion in June, 2010. Country's reserves mainly comprise portfolio investment (FII), "which are more vulnerable to sudden stops and reversals and borrowings from abroad".

India's foreign exchange reserves have increased over the years from just $ 5.8 billion in March, 1991. "The reserves reached a peak at $ 314.6 billion at Mayend, 2008 before declining to $ 252 billion at the end of March 2009. The decline in reserves in 2008-09 was inter alia a fallout of the global crisis and strengthening of US dollar vis-a-vis other international currencies," the Survey said.

Export and import rate in India during the months of April-December, 2009 is lowered by 20.3% and 23.6% respectively.

India stands out for the size and dynamism of its services sector. The contribution of the services sector to the Indian economy has been manifold: a 55.2 per cent share in gross domestic product (GDP), growing by 10 per cent annually, contributing to about a quarter of total employment, accounting for a high share in foreign direct investment (FDI) inflows and over one-third of total exports and recording very fast (27.4 per cent) export growth through the first half of 2010-11.

The share of services in India's GDP at factor cost (at current prices) increased rapidly: from 30.5 per cent in 1950-51 to 55.2 per cent in 2009-10. If construction is also included, then the share increases to 63.4 per cent in 2009-10. The ratcheting up of the overall growth rate (compound annual growth rate [CAGR]) of the Indian economy from 5.7 per cent in the 1990s to 8.6 per cent during the period 2004-05 to 2009-10 was to a large measure due to the acceleration of the growth rate (CAGR) in the services sector from 7.5 per cent in the 1990s to 10.3 per cent in 2004- 05 to 2009-10. The services sector growth was significantly faster than the 6.6 per cent for the combined agriculture and industry sectors annual output growth during the same period. In 2009-10, services growth was 10.1 per cent and in 2010-11 (advance estimates—AE), it was 9.6 per cent. India's services GDP growth has been continuously above overall GDP growth, pulling up the latter since 1997- 98. It has also been more stable.

India now stands at 2nd largest position in terms of wireless network with 525.1 million mobile users and every second Indian having an access to phone. To bring in new technology and innovations for the existing and foreign players, an auction for 3G spectrum is to be held.


International Trade

The sudden and sharp decline in world trade from US $ 16 trillion in 2008 to US$ 12.4 trillion in 2009 was followed by an impressive recovery in 2010. World trade reached US$ 7.03 trillion in the first half of 2010, with a value growth of 24 per cent. World trade volumes which fell by an unprecedented 10.7 per cent in 2009 have quickly recovered with a growth of 12 per cent in 2010 as per the International Monetary Fund's (IMF), World Economic Outlook (WEO), January 2011. While this recovery is partially due to the base effect, the pickup in world output from the negative territory of (-) 0.6 per cent in 2009 to a positive 5.0 per cent in 2010 backed by the fiscal stimulus of different countries helped. As stated by the IMF, world trade remains below its pre-crisis trend and for some economies, particularly those hit by a banking crisis, it remains below pre-crisis levels. Growth in trade volumes of emerging and developing economies in 2010 was more robust than that of advanced economies, just as the fall in 2009 had been less severe.



Budget Highlights


  • Fiscal deficit for next fiscal estimated to be 4.6% of GDP, compared with a likely 5.1% in the current fiscal.
  • Economy to grow at 9 per cent in 2011.
  • The Direct Tax Code will be effective from April 1, 2012.
  • Rs 40,000 crore disinvestment target for 2011-12.
  • FIIs allowed to invest in mutual funds.
  • Constitution Amendment Bill to introduce GST (Goods and Services Tax legislation) in this session; GST Bill this year.
  • Government to move towards direct transfer of cash subsidy as regards kerosene, LPG and fertilizers.
  • Income tax exemption raised from Rs 1.6 lakh to Rs 1.8 lakh.
  • I-T exemption for senior citizens increased from Rs 2.4 lakh to Rs 2.5 lakh; age bracket reduced from 65 years to 60 years.
  • New bracket of 'very senior citizens' created (80 years and above), having an I-T exemption of Rs 5 lakh.
  • The government's net market borrowing will be lower than expected –3.43 trillion rupees. 3.58 trillion rupees will be raised through short-term borrowing in the next fiscal year.
  • It is crucial to sustain agricultural production, a key political issue now with food inflation drawing protests across the country. The government will provide 3 billion rupees each to raise the output of coarse cereals, pulses and palm oil. "Maybe 3 will be my lucky number," Mr. Mukherjee said.
  • Other measures to help the agricultural sector include: A plan to set up 4 million tons of additional foodgrain storage space by March 2012, a 4.75 trillion rupees farm loans target for the fiscal year and setting aside 78.6 billion rupees for the country's farmer development program.
  • 300 billion rupees of tax-free bonds will be issued to help fund infrastructure Development.
  • India will aim to raise 400 billion rupees by selling stakes in state-owned companies in the fiscal year, but the government will retain least 51% ownership and management control.
  • A net revenue loss of 115 billion rupees from changes in direct taxes and a net revenue gain of 113 billion rupees from amendments to indirect taxes. The overall net tax revenue is likely to be 6.64 trillion rupees.
  • The limit for investment in corporate bonds by foreign investors will be doubled to $40 billion, with the entire additional investment to be eligible only in bonds issued by infrastructure companies.
  • Iron ore export tax rate would be increased to 20%.
  • Sarva Shiksha Abhiyan outlay increased by 40 per cent to Rs 21,000 cr.
  • Allocation for education sector hiked to Rs 57,057 cr.
  • Rs 8,000 cr allocated for North-East development and Rs 28,000 cr for J&K.
  • Rs 200 crore for development of IIT Kharagpur.
  • International award of Rs 1 crore instituted for promoting universal brotherhood in memory of Rabindranath Tagore.
  • Capital infusion of Rs 20,157 cr in PSU banks.
  • Rs 58,000 cr allocated for Bharat Nirman projects.
  • Credit flow for farmers increased from 3.75 lakh cr to Rs 4.75 lakh cr.
  • Some categories of salaried people exempted from filing I-T returns.
  • Housing loan limit raised from Rs 20 lakh to Rs 25 lakh from priority sector lending.
  • Subvention of 1 per cent on home loans up to Rs 15 lakh.
  • RBI's final guidelines for new bank licences to private players by Marchend.
  • Bills on insurance amendment, LIC and Pension Development Authority, Banking Laws Amendment, SBI subsidiaries and BIFR to be table during the current session of Parliament.
  • Financial Sector Legislative Reforms Commission to be headed by former Supreme Court judge B Srikrishna; Commission to overhaul financial sector regulations; to complete work in 24 months.
  • New Companies Bill to be introduced in current session.
  • Discussions ongoing to further liberalise FDI policy.
  • Standard rate of excise duty held at 10 percent
  • Service tax rate held at 10 percent
  • Scope of service tax to be widened
  • Minimum alternate tax raised to 18.5 percent from 18 percent

Sector wise highlights and allocation in Central Plan 2011-2012


AGRICULTURE, ANIMAL HUSBANDRY, DAIRYING AND FISHERIES
  • Lending to Agricultural sector increased from Rs. 3,75,000 cr to Rs. 4,75,000 cr.
  • Subvention of Interest on Loan increased to 3%
  • Cash Subsidies
  • 7811 Cr for Rashtriya Krishi Vikas Yojana (State Plan)
  • 1700 Cr for National Horiculture Mission including 500 Crore for North East and Himalayan States
  • 1350 Cr for National Food Security Mission.
  • 1150 Cr for National Mission on Micro Irrigation
  • 780 Cr for macro management of agriculture
  • 700 Cr for National Agriculture Insurance Scheme, including 150 crore for Modified National Agriculture Insurance Scheme
  • 550 Cr for Integrated Oilseeds, Oil Palm, Pulses and Maize Development.
  • 450 Cr for Weather based Crop Insurance
  • 400 Cr for development and strengthening of seed infrastructure facilities, including Rs. 50 crore for National Mission on Seed (New)
  • 657 Cr for Agricultural Education, upgrade infrastructure etc. including 150 crore for Climate Resilient Agriculture Initiative
  • 454 Cr for addressing the research issues in crop science
  • 432 Cr for Agricultural Extension programmes to disseminate frontline technologies
  • 485 Cr for Veterinary Services and Animal Health including 72.20 crore for containment of Avian Influenza
  • 215 Cr for Cattle & Buffalo Breeding including 20.96 crore for NER
  • 99 Cr for special package to farming population in 31 suicide prone districts in the country
  • 127.56 lakh MT of Nitrogenous Fertiliser production targeted.
  • 49.24 lakh MT of Phosphatic Fertiliser production targeted.

INFRASTRUCTURE
  • Budget allocation increases by 23% to Rs. 2,14,000 crores with additional funds by Infra-bonds worth Rs. 30,000 crores
  • Infra-debt with continuance of 80(IA) and Rs. 20,000 investment deduction by 1year
  • To further promote PPP
  • 10343 Cr For National Highways Development Programmes.
  • 1990 Cr For Special Accelerated Road Development Project in the North East Region, Border Roads Organisation, State Public Works Departments.
  • 575 Cr For National Highways and strategic roads under Border Roads Organisation (except NER).
  • 375 Cr For Tribal Sub-Plan outlay for roads
  • 68 Cr For ADB assisted North East States Road Project.
  • 60 Cr For North Eastern Development Finance Corporation.

INDUSTRY
  • 280 Cr for transport subsidy
  • 240 Cr for Indian Leather Development Programmes
  • 175 Cr for grants to Delhi Mumbai Industrial Development Corporation.
  • 15.87 Million tonnes of saleable steel production by Steel Authority of India Ltd. and Rashtriya Ispat Nigam Ltd. targeted.
  • 24 Million tonnes of Iron ore production targeted by National Mineral Development Corporation Ltd.
  • Increased MAT
  • Boost due to increased Infra/ Cold-storage facilities spending
  • Infra-demands and deduction in Import duty on Gypsum and Coal
  • As Iron Ore Duty, Ad Valorem increased @ 20%

ATOMIC ENERGY AND NUCLEAR POWER
  • 2735 Cr for Research and Development
  • 1047 Cr for Industries sector projects
  • 1025 Cr For investment in Bharatiya Nabhikiya Vidyut Nigam Ltd.

CHEMICALS AND PETROCHEMICALS
  • No Tax Structure changes in the sector
  • 676 Cr for establishment of Petrochemical Gas Cracker Project at Lepetkata, Assam.

PHARMACEUTICALS
  • Health Sector outlay increased by 20% at Rs. 26,760 crores
  • Increase in MAT and Inclusion of Units Operating under MAT
  • 100 Cr for establishment of 6 new National Institutes of Pharmaceutical Education & Research

CIVIL AVIATION
  • 1200 Cr for equity infusion in National Aviation Company India Limited
  • 280 Cr for Airports Authority of India

POSTS
  • 676 Cr for postal operations
  • 26000 Post Offices to be networked and linked to National Data Centre.
  • 180 Mails Business Centres to be set up.
  • 22 Post Offices to be constructed across the country.
  • 12 Vehicles will be provided for road transportation of mails by MMS.

TELECOMMUNICATIONS
  • 2100 Cr For schemes under Universal Services Obligation Fund
  • 1000Cr for OFC based Network for Defence Services
  • No relief from Service Tax on broadband

INFORMATION TECHNOLOGY
  • 1087 Cr for e-Governance programme.
  • 754 Cr for National Informatics Centre to improve infrastructure
  • 250 Cr for establishing National Knowledge Network

CONSUMER AFFAIRS
  • Increase in MAT and central excise on FMCG
  • Demand to increase due to Infra-agriculture spending
  • 128 Cr for Consumer Awareness and Consumer Protection
  • Duty increased by 10% on retail

CULTURE
  • 152 Cr For Archaeological Survey of India.
  • 70 Cr For celebration of 150th birth anniversaries of Rabindranath Tagore (50 crore) and Swami Vivekananda (20 crore).

CONSTRUCTION (REAL ESTATE)
  • As Priority Home Loan limit is raised to Rs. 25Lacs
  • 1% Housing loan interest subvention upto Rs. 15Lacs
  • Mortgage Risk Guarantee Corporation to ensure loans to poor

AUTOMOBILES
  • Excise remains unchanged (axe spared) and agro rural infra-spending will boost the demand.
  • Additional incentive for hybrid vehicles

FINANCE & BANKS
  • 500 Cr For recapitalization of Regional Rural Banks (RRBs)
  • 50 Cr For financial support to the banks for opening 'No Frills' accounts under 'Swabhiman Scheme'.
  • Allocation of Rs. 6,000 crores for maintaining tier on capital
  • 1% Housing loan interest subvention upto Rs. 15Lacs
  • Priority sector housing loan increase to Rs. 20Lacs
  • Allowing Foreign Investors to invest in Mutual Funds is a big reform in itself

HEALTH
  • 17840 Cr For National Rural Health Mission.
  • 5720 Cr For Health Sector.

INFORMATION AND BROADCASTING
  • 535 Cr For broadcasting sector.
  • 163 Cr For information sector.
  • No stimulus as no mention of STPI and deductions under sections 80(IA) & 80(IB)
  • MAT on SEZ

MICRO, SMALL AND MEDIUM ENTERPRISES
  • 1037 Cr For Prime Minister's Employment Generation Programme.
  • 790 Cr For National Small Industries Corporation Ltd.

POWER
  • 6000 Cr For Rajiv Gandhi Grameen Vidyutikaran Yojana.
  • 2034 Cr For Restructured Accelerated Power Development and Reforms Programme
  • 813 Cr For National Hydro-Electric Power Corporation Ltd.
  • 3540 MW Grid-interactive Power capacity addition from wind, small hydro, biomass power/cogeneration, industrial waste and solar power.
  • 500 Remote villages/hamlets to be provided with basic electricity/lighting facilities.
  • 554 million tonnes of domestic production of Coal.
  • 23.95 million tonnes of Lignite production estimated.
  • No excise duty on equipment for UMPP

SCIENCE AND TECHNOLOGY
  • 1500 Cr For assistance to Council of Scientific and Industrial Research National Laboratories.
  • 289 Cr For multi-disciplinary research in frontier areas of Science & Technology.

TEXTILES
  • 3100 Cr For Technology Upgradation Fund Scheme (TUFS).

SPORTS
  • 251 Cr For Sports Authority of India.
  • 225 Cr For the scheme of Panchayat Yuva Krida Aur Khel Abhiyan.

RAILWAYS
  • 3000 kilometres of track renewal.
  • 1300 kilometres of new lines.
  • 1017 kilometres of gauge conversion.
  • 1000 kilometres of route electrification.
  • 867 kilometres of Doubling and manufacturing of additional 580 locomotives

Direct Tax Proposals


Tax Rates

Companies
  • Corporate tax rates to remain unchanged. In case of Domestic Companies having total income exceeding INR I crore, the surcharge is proposed to be reduced from 7.5% to 5% and in case of other than domestic Company, the same rate is proposed to be reduced from 2.5% to 2%.
  • The effective MAT rate proposed to be increased from 19.93% to 20% in case of Domestic Companies and from 19% to 19.44% in case of Foreign Companies.

Individuals/HUFs/AOPs
  • The Tax Slabs for Individuals/HUFs/AOPs proposed to be revised as follows:

  • Existing Slab Rates Proposed Slab Rates
    Income (INR) Rate of Tax Income (INR) Rate of Tax
    0 - 1,60,000 Nil 0 - 1,80,000 Nil
    Above 1,60,000 - 5,00,000 10% Above 1,80,000 - 5,00,000 10%
    Above 5,00,000 - 8,00,000 20% Above 5,00,000 - 8,00,000 20%
    Above 8,00,000 30% Above 8,00,000 30%

    • In case of resident women (below 65 years of age), no change has been proposed this year. The exempted slab is Rs. 1,90,000
    • In case of resident senior citizens having age above 60 years to 80 years, the amount of Rs. 1,80,000 shall be replaced with Rs. 2,50,000 & further in case of senior citizens having age above 80 years, the exemption will be as follows:

Existing Slab Rates Proposed Slab Rates
Income (INR) Rate of Tax Income (INR) Rate of Tax
0 - 2,40,000 Nil 0 - 5,00,000 Nil
Above 2,40,000 - 5,00,000 10% Above 5,00,000 - 8,00,000 20%
Above 5,00,000 - 8,00,000 20% Above 8,00,000 30%
Above 8,00,000 30%

Co-operative Societies
  • In case of Co-operative societies, the rates of income – tax are as given below. The rates will be continued to be the same as those specified for Assessment year 2011-12. No surcharge will be levied.

Slab Rates
Income (INR) Rate of Tax
Up to 10,000 10%
Above 10,000 - 20,000 20%
Above 20,000 30%

Firms
  • In the case of firms, the rate of income – tax is @ 30%. Surcharge: Nil, Education Cess: 2% and Secondary and higher education cess: 1%. This rate will continue to be the same as that specified for A.Y. 2011-12. No surcharge will be levied.

Local Authorities
  • The rate of income – tax in case of every local authority is is @ 30%. Surcharge: Nil, Education Cess: 2% and Secondary and higher education cess: 1%. This rate will continue to be the same as that specified for the A.Y. 2011-12.

Section wise direct tax proposals


  • Ceiling of receipts from trade & commerce for Charitable institutes increased from existing Rs.10 lakhs to Rs.25 lakhs

    Section 2(15)
    Existing Provision:

    The advancement of any object of general public utility is not a charitable purpose if it involves the carrying on of any activity in the nature of trade, commerce, business or any activity of rendering any services in relation to any trade, commerce or business for cess, fees or any other consideration, irrespective of nature of use or application or retention of the income from such a activity and receipts from such activities is Rs. 10 lakhs or more in the previous year.

    Proposed Provision:
    It is proposed to amend Section 2(15) to enhance the current monitory limit in respect of receipts from such activities from Rs. 10 lakhs to Rs. 25 lakhs.

    Implication:-
    Entity established for Charitable Purpose can extend their activity in the nature of trade, commerce, business or any activity of rendering any services in relation to any trade, commerce or business for cess, fees or any other consideration up to Rs. 25 lakhs.
    W.E.F: 1st April, 2012, i.e A.Y 2012-13


  • Dividend Distribution Tax to the entity in SEZ too

    Section 115-O(6)
    Existing Provision

    Under the existing provision, an exemption is allowed from payment of Dividend Distribution Tax on distributed profit in respect of an undertaking or enterprise engaged in developing, operating and maintaining Special Economic Zone for any assessment year on any amount declared, distributed or paid by such developer or enterprise by way of dividend.

    Proposed Provision
    It is proposed to discontinue the availability of exemption in the case of entity established in SEZ from Dividend Distribution Tax on dividend declared, distributed or paid.

    Implication
    This amendment creates an extra tax liability for the entity established in SEZ
    W.E.F: 1st June, 2011, i.e A.Y 2012-13


  • Allowances/perquisite received by member of the Union Public Service Commission now exempt

    Section 10(45)
    Existing Provision

    No such provisions existing.

    Proposed Provision
    It is proposed to insert new clause in section 10 to exempt from tax, any allowances or perquisite, as may be notified by the Central Government in the Official Gazette in this behalf, paid to the Chairman or a Retired Chairman or any other member or retired member of the Union Public Service Commission.

    Implication
    Tax relief to the member of the Union Public Service Commission
    W.E.F: Retrospectively from 1st April, 2008 i.e A.Y 2008-09


  • Income of specified body or authority or trust or commission (working for the benefit of general public) now exempt

    Section 10(46)
    Existing Provision - No such provisions existing.

    Proposed Provision

    It is proposed to insert new clause in section 10 relating to exemption from tax on any specified income, which is notified by the central government in the Official Gazette, arising to a body or authority or trust or commission which

    • Has been established or consulted by or under central, state or provisional act or constituted by the central government or state government with the object of regulating or administering any activity for the benefit of the general public.
    • Is not engage in commercial activity and
    • Is notified by the central government in the official gazette for the purpose of this clause.

    Implication:
    The amendment will boost entities working for benefit of general public
    W.E.F: 1st June, 2011, i.e A.Y 2012-13


  • Income of prescribed Infrastructure Debt Fund now exempt

    Section 10(47)
    Existing Provision

    No such provisions existing

    Proposed Provision
    It is proposed to insert new clause in section 10 relating to exemption from tax on income of an Infrastructure Debt Fund, set up in accordance with the guidelines as may be prescribed, which is notified by the Central Government in the Official Gazette.

    Implication:
    Tax relief to the member of the Union Public Service Commission.
    W.E.F. 1st June, 2011, i.e A.Y 2012-13


  • Weighted deduction for the contribution made for approved scientific research programme increased from 175% to 200%.

    Section 35 (2AA), in clause (a)
    Existing Provisions:

    The weighted deduction is 175% for the amount contributed to National Laboratory or a University or an Indian Institute of Technology or a specified person for the purpose of an approved scientific research programme.

    Proposed Provisions:
    The amount of deduction has increased from 175% to 200% to encourage more contribution to such approved scientific research programmes.

    Implications:
    More contribution will result promotion to scientific research programme.
    W.E.F. 1st April, 2012 i.e. A.Y. 2012-13


  • Investment linked deduction now available for affordable housing and fertilizer production

    Section 35AD , clause (a) in sub-section (5)(2), sub clause (ad) & (ae)
    Existing Provisions:

    Currently for Investment linked deduction, the given list does not include assessees engaged in developing affordable housing or new fertilizer plants.

    Proposed Provisions:
    The above two businesses have now been inserted.
    The following are the two new clauses inserted:

    • Section 35AD (5)(2)(ad) :- If assessee commences its operations on or after the 1st day of April , 2011,where the specified business is in the nature of developing and building a housing project under a scheme for affordable housing framed by the Central Government or the State Government, as the case may be, and which is notified by the Board in this behalf in accordance with guidelines as may be prescribed;
    • Section 35AD (5)(2)(ae) :- If assessee commences its operations on or after the 1st day of April , 2011,in a new plant or in a newly installed capacity in an existing plant for production of fertilizer, and

    • Implications:
      Beneficial for the assessee engaged in the business of

    • developing and building a housing project under a scheme for affordable housing
    • production of fertilizer in a new plant or in a newly installed capacity in an existing plant.

    • W.E.F. 1st April, 2012 i.e. A.Y. 2012-13



  • Insertion of two new businesses in the definition of Specified Business.

    Section 35AD(8)(c)
    Existing Provisions:

    Only new hotel and new hospital are allowed for this deduction. The wording with their respective clause number of the provision is as given below.
    (iv) Building and operating, anywhere in India, a new hotel of two-star or above category as classified by the Central Government;
    (v) Building and operating, anywhere in India, a new hospital with atleast 100 beds for patients;

    Proposed Provisions:
    The word new has been deleted in the above two provisions which means that even old hotel and hospitals which otherwise meeting all the conditions are also eligible for the deductions of this provision.

    Implications:
    Beneficial for the assessee engaged in the business of

    • developing and building a housing project under a scheme for affordable housing
    • production of fertilizer in a new plant or in a newly installed capacity in an existing plant.

    • W.E.F. 1st April, 2012 i.e. A.Y. 2012-13



  • Now employer can claim deduction for the contribution made by him towards pension fund of his employees.

    Section 36(i)(iva)
    Existing Provisions:

    Currently the contribution made by the employer to pension fund on behalf of his employee is not allowed as deduction from his business income.

    Proposed Provisions:
    Any sum paid by the assessee as an employer by way of contribution towards a pension scheme shall be allowed as deduction in computing the income under the head "Profits and Gains of Business & Profession". This has reference to respective amendment in section 80CCD(2) on account of the employee.
    Further here the employer's contribution should not exceed 10% of the salary of the employee in the previous year.

    Implication:
    Employer Assessee: Contribution to Pension Scheme on behalf of employee is now a deductible expense for the employer u/s 36 while computation of business income.
    W.E.F. 1st April, 2012 i.e. A.Y. 2012-13


  • Now pension fund deduction limited to own contribution

    Section 80CCE
    Existing Provision:

    Currently in Section 80 CCD, an employee can claim deduction in respect of contributions (made by both himself as well as his employer on his behalf) to the Pension Scheme notified by the Central Government. And in view of the provision of Section 80 CCE, the aggregate deduction under Section 80C, 80 CCC, 80 CCD can not exceed Rs. 1 lakh.
    Currently the contribution made by the employer to such pension fund on behalf of his employee is not allowed as deduction from his business income.

    Proposed Amendment:
    The contribution made by the Central Government or any other employer to the pension scheme u/s 80CCD(2) shall be excluded from the limit of Rs. 1 lakh provided under Section 80CCE.
    Further here the employer's contribution should not exceed 10% of the salary of the employee in the previous year.

    Implication:
    On Employee Assessee:
    The amendment will withdraw the benefit of deduction in respect of contribution made by employer on behalf of employee.

    On Employer Assessee:
    Employer Assessee: Contribution to Pension Scheme on behalf of employee is now a deductible expense for the employer u/s 36 while computation of business income.
    W.E.F. 1st April 2012 i.e. A.Y. 2012-13


  • Deduction for Investment in long term Infrastructure bonds extended for one more year

    Section 80CCF
    Existing Provision:

    Under the existing provisions of section 80CCF a sum of Rs. 20,000/- (over and above the existing limit of Rs. 1lakh u/s 80CCE) is allowed as deduction in computing the total income of an individual or a HUF if that sum is paid or deposited during the previous year in long term infrastructure bonds as notified by Central Government.

    Proposed Amendment:
    The above mentioned deduction has been extended for a further period of one year, i.e. upto 31st March 2012.

    Implication:
    An additional deduction of Rs. 20,000/- will be available over and above the exiting limit of Rs. 1 lakh u/s 80CCE for tax savings.
    W.E.F. 1st April 2012 i.e. A. Y. 2012-13.


  • Sunset clause for tax holiday for power sector extended for one more year.

    Section 80-IA
    Existing Provision:

    Under the existing provisions of section 80-IA(4)(iv), a deduction of profits and gains is allowed to an undertaking which :-

    • Is set up for the generation and distribution of power if it begins to generate power at any time during the period beginning on 1st April 1993 and ending on 31st March 2011.;
    • Starts transmission or distribution by laying a network of new 33 Budget 2011 transmission or distribution lines at any time during the period beginning on 1st April, 1999 and ending on 31st March, 2011.;
    • Undertakes substantial renovation and modernization of existing network of transmission or distribution lines at any time during the period beginning on 1st April 2004 and ending on 31st March, 2011.

    • Proposed Amendment:
      It is proposed to amend section 80-IA(4)(iv) to extend the terminal date for a further period of one year, i.e. upto 31st March 2012.

      Implication:
      Extension of tax holiday will give momentum to installation of new power projects.
      W.E.F. 1st April 2012 i.e. A. Y. 2012-13.



  • Sunset of tax holiday for certain undertakings engaged in commercial production of mineral oil ceased for contracts after 31.03.2011

    Section 80-IB(9)(ii)
    Existing Provision:

    A seven year profit linked deduction of 100% is available to an undertaking , if it fulfils any of the following, namely:-

    • Is located in North- Eastern Region and has begun or begins commercial production of mineral oil before 1st April 1997;
    • Is located in any part of India and has begun or begins commercial production of mineral oil on or after 1st April 1997;
    • Is engaged in refining of mineral oil and begins such refining on or after 1st October, 1998 but not later than 31st March 2012.
    • Is engaged in commercial production of natural gas in blocks licensed under the VIII roung of bidding for award of exploration contracts (NELP-VIII).
    • Is engaged in commercial production of natural gas in blocks licensed under IV round of bidding for award of exploration contracts for Coal Bed Methane blocks.

    • An undertaking which is located in any part of India & is engaged in commercial production of mineral oil, is eligible for deduction.

      Proposed Amendment:
      It is proposed that the aforesaid deduction available for commercial production of mineral oil will not be available for blocks licensed under a contract awarded after 31st March, 2011, under the New Exploration Licensing Policy announced by the Government of India vide Resolution No. O- 19018/22/95-ONG.DO.VL, dated 10th February, 1999 or in pursuance of any law for the time being in force or by the Central or State Govt in any other manner.

      Implication:
      Amendment will affect the licensee taking contract of mineral oil and natural gas after 31.03.2011.
      W.E.F. 1st April 2012 i.e. A. Y. 2012-13.



  • Allowable variance between actual price and ALP now depends upon the government notification

    Section 92C
    Existing Provision:

    If variation between the actual price of the transaction and Arm's Length Price (ALP) does not exceed 5 % of the actual price then actual price shall be treated as ALP.

    Proposed Amendment:
    It is proposed to amend that instead of a variation of 5%, the allowable variation will be such percentage as may be notified by central government in the official gazette in this behalf.

    Implication:
    Depends upon the percentage notified by government on case to case basis.
    W.E.F: 1st April, 2012 i.e. A.Y 2012-13.


  • TPO can determine ALP of transactions other than referred transactions also

    Section 92CA
    Existing Provision:

    This section provides that the Transfer Pricing Officer (TPO) can determine the Arm's Length Price (ALP) only in relation to an international transaction given to him by Assessing officer (AO).

    Proposed Provision:
    It is proposed to amend that the Jurisdiction of TPO shall extend to the determination of the ALP in respect of other international transactions also, which is noticed by TPO subsequently in the course of proceeding before him. These transactions would be in addition to the international transaction referred by AO.

    Implication:
    This amendment enhances the jurisdiction of TPO to verify those international transaction which are not referred by AO.
    W.E.F: 1stJune, 2011 i.e. A.Y 2012-13


  • More powers to TPO

    Section 92CA(7)
    Existing Provision:

    For determining the ALP, the TPO can exercise power available to an AO u/s 131(1) and u/s 133(6) which are summoning or calling for details for the purpose of inquiry or investigation into the matter.

    Proposed Provision:
    It is proposed to amend section 92 CA (7) to enable the TPO to conduct on the spot enquiry, verification and exercise the power of survey conferred upon an income tax authority U/S 133A.

    Implication:
    This amendment enhances the powers of TPO to conduct on the spot enquiry.
    W.E.F: 1stJune, 2011 i.e. A.Y 2012-13


  • Counter Measurement of transaction with persons located in notified Jurisdictional area.

    Section 94A
    Existing Provision:

    No such provision Existing.

    Proposed Amendment:
    It is proposed to insert new section to specifically deal with transaction undertaken with persons located in such country or area.

    The proposed section provides-

    • An enabling power to the Central Government to notify any Country or territory outside India, having regard to the lack of effective exchange of information by it with India, as a notified jurisdictional area;
    • That if an assessee enters into a transaction, where one of the parties to the transaction is a person located in notified jurisdictional areas, then all the parties to the transaction shall be deemed to be associated enterprises and the transaction shall be deemed to be an international transaction and accordingly transfer pricing regulations shall apply to such transaction.
    • That no deduction in respect of any payment made to any financial institution shall be allowed unless the assessee furnishes an authorization, in the prescribed form, authorizing the board or any other income-tax authority acting on its behalf, to seek relevant information from the said financial institution.
    • That no deduction in respect of any other expenditure or allowance arising from the transaction with a person located in a notified jurisdiction area shall be allowed under any provision of the Act unless the assessee maintains such other documents and furnishes the information as may be prescribed.
    • That if any sum is received from a person located in the notified jurisdictional area, then the burden is on the assessee to satisfactorily explain the sources of such money in the hand of such persons or in the hands of beneficial owner, and in case of his failure to do so, the amount shall be deemed to be the income of the assessee.
    • That any payment made to a person located in the notified jurisdictional area shall be liable to deduction of tax at the higher of the rates specified in the relevant provision of the Act or rate in force or a rate of 30 per cent.

    • Implication:
      It restricts the resident assessee from entering into a transaction with person located in any country or jurisdiction which does not effectively exchange information with India.
      W.E.F: 1st June, 2011 i.e. A.Y 2012-13.



  • Lowered tax at 5% tax on interest received from an infrastructure debt fund for non resident (not being a company) or of a foreign company

    Section: 115A (1) (a):
    Existing Provision Section 115A (1) (a) (ii) :

    Where total income of a non resident (not being a company) or of a foreign company includes any income by way of Interest received from Government or an Indian concern on monies borrowed or debt incurred by Government or the Indian concern in foreign currency, then tax on such income is 20%.

    Proposed Amendment :-
    One more sub clause (iia) is inserted for interest received from an infrastructure debt fund (as described in section 10 (47)) by non resident (not being a company) or of a foreign company. This income of interest received from an infrastructure debt fund will be taxed at 5% (not at 20%).

    Implications :
    Tax would be levied at lower rate of 5 % for investment in infrastructure debt fund under section 10(47).
    W.E.F: 1st June 2011


  • Lowered tax at 15% on dividends received from a foreign subsidiary company

    Section : 115 BBD:
    New Provision:

    Where total income of an Indian Company for the previous year 2011-12 includes any income by way of dividends received from a foreign subsidiary company.

    Tax Rate : Dividend shall be taxable at the rate of 15 % (plus surcharge and cess) on the gross amount.

    Deduction : No deduction in respect of any expenditure or allowance shall be allowed to the assessee under this provision.

    Implications :
    Tax levied at lower rate of 15 % (plus surcharge and cess) for dividend received from foreign subsidiary company, this will promote bringing back the money lying in foreign but belonging to Indians.
    W.E.F.: 1st April 2012 i.e. A.Y. 2012-13


  • MAT rate increased by 0.50%

    Section 115JB:
    Existing Tax Rate :

    18% of Book Profit.

    Proposed Tax Rate :
    18.50% of Book Profit.

    Implication :
    Extra Tax burden on Companies.
    W.E.F.: 1st April 2012 i.e. A.Y. 2012-13


  • Alternate Minimum Tax for Limited Liability Partnership (LLP)

    • Tax Calculation for LLP Newly introduced Chapter XII-BA, Section 115JC :

    • Proposed Provision:

      Higher of regular income tax or Alternate minimum tax on adjusted total income will be payable by LLP.

      Alternate Minimum Tax: 18.50% of Adjusted total income.

      Adjusted total income shall be the total income before giving effect to this newly inserted Chapter XII-BA as increased by the deductions claimed under any section included in Chapter VI-A under heading "C - Deductions in respect of certain incomes" and deduction claimed under section 10AA.

      Regular Income Tax shall be the income tax payable for the previous year by a LLP on its total income in accordance with provisions of the act other than the provisions of this newly inserted Chapter XII-BA

      Obtaining Report in such form as may be prescribed from an accountant certifying that the adjusted total income and the alternate minimum tax have been computed in accordance with provisions of this Chapter and furnish such report before due date of filing of return under section 139(1).

      Implication:
      Higher burden of tax on LLP.
      W.E.F.: 1st April 2012 i.e. A.Y. 2012-13

    • Tax credit available for 10 years.

    • Section 115JD :
      Proposed Provision:
      Credit of tax paid by LLP shall be allowed to the extent of the excess of the alternate minimum paid over the regular income tax. This tax credit shall be allowed to be carried forward upto the tenth assessment year immediately succeeding the assessment year for which such credit becomes allowable. It shall be allowed to be set off for an assessment year in which the regular income tax exceeds the alternate minimum tax to the extent of excess of the regular income tax over the alternate minimum tax.

      Implication:
      Tax paid could be set off in subsequent years.
      W.E.F.: 1st April 2012 i.e. A.Y. 2012-13



  • Special Economic Zone (SEZ)

    • Section 115 JB

    • Existing Provision:

      Currently an undertaking or enterprise engaged in Special Economic Zone (SEZ) is not subject to MAT

      Proposed Provision:
      Now MAT will be applicable

      Implications :
      Tax burden on SEZ
      W.E.F.: 1st April 2012 i.e. A.Y. 2012-13

    • Section 115 O (6):

    • Existing Provision:
      Currently an undertaking or enterprise engaged in Special Economic Zone (SEZ) is not subject to tax on distributed profits in respect of its total income.

      Proposed Provision:
      Now tax is levied.

      Implications :
      Tax burden on SEZ
      W.E.F. : 1st June 2011



  • Higher tax rate on income distribution on units by UTI/Mutual Funds in case of person other than Individual/HUF

    Section 115R:

    The status of the existing and proposed rates are tabulated as below.

    Nature of Fund Amount distributed to
    Individual/HUF Any other person
    Existing Rates Proposed Rates Existing Rates Proposed Rates
    Money Market MF/Liquid Fund 25% 25% 25% 30%
    Other than Money Market MF/Liquid Fund 12.5% 12.5% 20% 30%

    Implications :
    Tax burden on person other than Individual / HUF
    W.E.F. : 1st June 2011


  • Power to the officers not below the rank of Assistant Commissioner of Income Tax increased to match civil court powers for certain actions

    Sec.131(1)
    Existing Provision

    Certain income tax authorities have been conferred the same powers as are available to civil court while trying a suit in respect of discovery and inspection, enforcing the attendance of any person, including any officer of any banking company and examining him on oath , compelling production of books of accounts and other documents and issuing commission.

    Proposed Provision:
    This section provides that for the purpose of making an enquiry or investigation in respect of any person or class of persons in relation to an agreement referred to in sec 90 or 90A , it shall be competent for any income tax authority , not below the rank of Assistant Commissioner of Income Tax, as notified by board in this behalf , to exercise the powers currently conferred on the income authorities referred to in sec 131(1) . The authority so notified by the board shall be able to exercise the powers u/s 131(1) whether or not any proceedings with respect to such person or class of person are pending before it or any income tax authority

    Implications
    Power has been extended to the officers not below the rank of Assistant Commissioner of Income Tax
    W.E.F. : 1st june,2011


  • Power to the officers not below the rank of Assistant Commissioner of Income Tax increased to match civil court powers for certain actions

    Sec 131(3)
    Existing Provision

    The authority has power to impound and retain books and documents produced before it for such period as it thinks fit.
    The Assessing Officer/Assistant Director/Deputy Director/AO (with prior approval)shall not

    • Impound without reasons for doing so; and
    • Retain for a period exceeding 15 days without prior permission of Chief Commissioner/Commissioner/Director General/Director of Income Tax

    • Proposed Provision:
      This section provides that for the purpose of making an enquiry or investigation in respect of any person or class of persons in relation to an agreement referred to in sec 90 or 90A , it shall be competent for any income tax authority , not below the rank of Assistant Commissioner of Income Tax, as notified by board in this behalf , to exercise the powers currently conferred on the income authorities referred to in sec 131(3)

      Implications:
      Power has been extended to the officers not below the rank of Assistant Commissioner of Income Tax
      W.E.F. : 1st june,2011



  • Power to the officers not below the rank of Assistant Commissioner of Income Tax increased to match civil court powers for certain actions

    Sec.133
    Existing Provision

    The Assessing Officer, Joint Commissioner, Commissioner of Appeals may require several details from the assessee

    Proposed Provision:
    This section provides that for the purpose of making an enquiry or investigation in respect of any person or class of persons in relation to an agreement referred to in sec 90 or 90A , it shall be competent for any income tax authority , not below the rank of Assistant Commissioner of Income Tax, as notified by board in this behalf , to exercise the powers currently conferred on the income authorities referred to in sec 133

    Implications:
    Power has been extended to the officers not below the rank of Assistant Commissioner of Income Tax
    W.E.F. :1st june,2011


  • Power to exempt employer from filing of return for notified employees

    Sec 139(1)
    Existing Provision

    Every person if his total income during the previous year exceeds the maximum amount which is not chargeable to income tax, is required to furnish the return of income

    Exception to this section
    Individual who is chargeable under the head salaries may file his return of income with his employer in accordance with scheme prescribed by the board. Then employer is bound to file the return of income within the due date if the same is received by him within the due date.

    Proposed Provision:
    A new provision Sec 139(1C) is inserted which makes it compulsory for the employer to file the return of the employee if his entire tax liability is discharged by the employer through deduction of tax at source and complete details of such tax payers are also reported by the employer through TDS statement.
    This section also empowers the Central Government to exempt, by notification in the official gazette, any class or classes of persons from the requirement of furnishing return of income having regard to such conditions as may be specified in the notification

    Implications:
    Reduce compliance burden on small tax payer
    W.E.F. :1st june,2011


  • Power to direct assessment processing extended further by one year.

    Sec.143(1B)
    Existing Provision

    Central Government may, for the purpose of giving effect to the scheme made u/s 143(1A), direct that any of the provisions of the Income Tax Act relating to processing of returns shall not apply and shall apply with such exceptions, modifications and adaptations as may be specified in that notification. However , no direction shall be issued after 31st March, 2011

    Proposed Provision:
    Time limit for issue of notification is extended upto 31st March, 2012

    Implications
    Set up like central processing office at Banglore may further be opened at other locations as proposed in Pune, kolkata etc.
    W.E.F. : Retrospectively from1st April, 2011


  • Extension of time limit u/s 153 and 153B

    Existing Provision

    This Sec provides the time limits for completion of assessments and reassessments under sec 153A.

    Proposed Provision:
    It provides that period commencing from the date on which reference for exchange of information is made by an authority competent under an agreement referred to u/s 90 or 90A and ending with on the date on which the information so requested is received by the commissioner or a period of 6 months whichever is less, shall be excluded from the time limit as calculated as per earlier provision.

    Implications
    More time to the Assessing officer for completion of assessment
    W.E.F. : 1st June, 2011


  • 5% TDS on interest on Infrastructure Debt Fund

    Section: 194LB
    Existing:

    Newly inserted

    Proposed:
    Any income payable to non-resident, not being a company or to a foreign company, by an infrastructure debt fund referred to in clause (47) of section 10 shall at the time of credit of such income to the account of payee or at the time of payment thereof, in cash or by issue of cheque or draft or by any other mode, whichever is earlier, deduct income-tax thereon at the rate of five percent.

    Implication:
    It will take the non residents also in tax net.
    W.E.F.: 01/06/2011


  • Broadened scope of filing an application before the Settlement Commission

    Section: 245C (1)(ia)
    Existing:

    An application to the Settlement Commission can be made under section 245C(1) if

    • If the proceedings have been initiated against the applicant under section 153A or 153C as a result of search or a requisition of books of account, as the case may be and the additional amount of Income Tax payable on the income disclosed in the application exceeds Rupees Fifty Lakh.
    • In other case, if the additional amount of income tax exceeds Rupees Ten Lakh.

    • Proposed:

      To widen the scope of filing the application to the Settlement Commission, it is proposed to insert a new clause (ia) in above section. Now following person can also make application


    • Where the applicant is related to the person in whose case proceedings have been initiated as a result of search and who have filed an application; and
    • Where applicant in whose case proceedings have been initiated as a result of search

    • However the if applicant is a tax payer who is subject matter of search can file application if additional income tax payable on the income disclosed exceeds Rupees Fifty Lakh and for entities related to such tax payer if additional income tax payable in their application exceeds Rupees Ten Lakh.

      Implication:
      Broadening the scope of filing of application would help in fast resolving of cases and help to generate more revenue to the Government.
      W.E.F.: 01/06/2011.



  • Power of the Settlement Commission to rectify its orders

    Section: 245D (6B)
    Existing: Newly inserted

    Proposed:

    The Settlement Commission may, at any time within a period of six months from the date of the order, with a view to rectify any mistake apparent from the record, amend any order passed by it. However, if the rectification has the effect of modifying the liability of the applicant, the Settlement Commission has to give an opportunity being heard to the applicant and the Commissioner of Income Tax, otherwise it would be null and void.

    Implication:
    Help to provide correct decision and to rectify any error in the order passed by Settlement Commission.
    W.E.F.: 01/06/2011


  • No more DIN

    Section: 282B
    Existing:

    As per existing provision every income-tax authority shall allot a computer generated Document Identification Number in respect of every notice, order, letter or any correspondence issued by him to any Income Tax Authority or assessee or any other person. If such notice or letter does not bear DIN such notice or letter shall be treated as invalid and shall deemed never to have been issued. Any document, letter or any correspondence received by income tax authority shall be accepted only after allotting and quoting of computer generated DIN.

    Proposed:
    As due to the lack of infrastructure facility to implement such system all over India, it is proposed to drop the section.
    W.E.F.: Retrospectively from 1st April, 2011.


  • Submission of statement by a non-resident having liaison office in India.

    Section: 285
    Existing: Newly introduced.

    Proposed:

    Every person, being a non-resident having a liaison office in India set up in accordance with the guidelines issued by the Reserve Bank of India under the FEMA, 1999, have to submit such statement in such form and containing such particulars as prescribed, in respect of its activities in a financial year to the Assessing Officer having jurisdiction over him within sixty days from the end of such financial year

    Implication:
    It will help the Income Tax Authority to keep control on activities carried out by such non-resident from such liaison office in India.
    W.E.F.: 01/06/2011.


  • Extension of time limit for obtaining exemption from Employees Provident Fund Organization (EPFO)

    Section: Rule 3 and 4 of the Income Tax Act, 1961
    Existing:
    Rule 4 in part A of the Fourth Schedule lays down condition that establishment shall obtain exemption under section 17 of the Employees Provident Fund and Misc. Provision Act, 1952.

    As per Rule 3 in Part A of the Fourth Schedule every provident fund has to accord recognition of Chief Commissioner or the Commissioner of Income Tax. However if the provident fund to whom recognition accorded on or before 31st March, 2006, does not satisfy condition laid down under Rule 4 or any other condition on or before 31st December,2010 the recognition granted shall be withdrawn.

    Proposed:
    In order to provide further time to EPEO to process the application made by establishment seeking exemption u/s 17 the time limit has been extended from 31st December'2010 to 31st March, 2012.

    Implication:
    Extended time limit will provide comforts to Provident Fund to fulfill the condition laid down in Rule 4 and claim exemption under section 17 the Employees Provident Fund and Misc. Provision Act, 1952. W.E.F.: Retrospectively from 01/01/2011.



Indirect Tax Proposals


Excise Duty


Major Proposals:
  • The concessional rate of excise duty of 4 % on prepared foodstuff, article of paper, textile intermediaries, textile goods, drugs, medical equipment etc has been increased to 5%.
  • On about 130 fully exempted specified items or nil rated excise duty specified items, an excise duty of 1% without Cenvat credit facility is proposed to be introduced.
  • On readymade garments and textile made ups bearing a brand name or sold under a brand name, a mandatory excise duty of 10 % is being imposed. SSI scheme is proposed to be extended to readymade garments and textile made up articles.
  • An excise duty of 5% is being imposed on automatic looms and projected looms.
  • Full exemption from excise duty on paper manufactured form nonconventional material is being withdrawn.
  • A concessional rate of 5% of excise duty is being imposed on micro processor fro computers.
  • Full Exemption from excise duty has been extended to AC equipment, panel and refrigeration panels for installation of cold chain infrastructure and conveyor belt systems for use in the cold storage used for specified products.
  • Full Exemption from excise duty has been extended to goods required for extension of existing mega power project and specified parts of sewing machine.
  • On specified textile machinery and hybrid kits for conversion of fossil fuel vehicles to hybrid vehicles excise duty is proposed to reduce from 10 % to 5 %.
  • The rate of duty on cement and cement clinker is proposed to be revised.
  • Excise duty on some health product is proposed to be reduced from 10 % to 1% without Cenvat credit facility.
  • Full exemption from excise on is being extended to pipes fitting of pipes required for supply drinking water and concessional rate of excise duty of 1% is being extended to some specified water filter.
  • Concessional rate of excise duty of 10 % is being extended to factory built ambulance. The scope of Taxi refund scheme is being extended to include vehicle carrying 13 passenger including driver.
  • Cotton stalk Particle board is being fully exempted from excise duty. Concessional rate of 5% excise duty is being extended to corrugated boxes and excise duty is being reduced from 10 % to 5% on greaseproof paper and glassine paper.
  • Some concessional excise duty is being extended to serially numbered gold bars. Excise duty of 1% is being imposed on branded jewellery and branded article of precious metal.
  • Excise duty of Rs. 1500 per kg is being imposed on silver manufactured during gold refining starting from ore/concentrate stage or from gold dore bar or during the process of copper smelting.
  • Enzymatic preparations used in leather industry are being fully exempted from excise duty.
  • Full exemption from excise duty is being provided to colour, unexposed cinematographic film in jumbo rolls of 400 feet and 1000 feet.

Section wise Amendment in Central Excise Act 1944


  • Valuation of excisable goods with reference to retail sale price

    Section 4A (1)
    Existing Provision:
    The Central Government may specify any goods for which it is required to declare on the package thereof the retail sale price of such goods under the provisions of the standards of Weights and Measures Act, 1976 by notification in the Official Gazette.

    Proposed Amendment:
    It is proposed to substitute the words "Standards of Weights and Measures Act, 1976" by the words "Legal Metrology Act, 2009".

    Implication:
    Standards of Weights and Measures Act, 1976 shall be replaced by a new act Legal Metrology Act, 2009.
    W.E.F. : 1st March 2011(A.Y. 2011-2012)


  • Recovery of duties not levied or not paid or short levied or short paid or erroneously refunded

    Section 11A
    Existing Provision :
    This section provides the manner and time period etc. for issue of show cause notice in case of duties not levied or not paid short levied or short paid or erroneously refunded.

    Proposed Amendment :
    It is proposed to redraft the section for the sake of simplicity.

    Implication :
    Redrafted section will be applicable


  • Interest on delayed payment of duty

    Section 11AA & 11AB
    Existing Provision :
    This section provides for payment of interest when duty is not paid or for delayed payment of duty.

    Proposed Amendment :
    It is proposed to replace these sections by redrafted section 11AA for the sake of simplicity.

    Implication:
    Redrafted section will be applicable


  • Penalty for short levy or non- levy of duty in certain cases

    Section 11AC
    Existing Provision :
    Where any duty of excise has not been levied or paid or short levied or short paid or erroneously refunded by reason of fraud etc., then a penalty equivalent to duty so determined shall be payable.
    However if the duty along with interest is paid within 30 days of communication of the order of Central Excise Officer, then a reduced penalty of 25 % is payable.

    Proposed Amendment:
    It is proposed to introduce a new penalty equivalent to 50 % of duty determined under section 11A (10).

    Implication:
    Penalty shall be paid 100%, 25% or 50 % as the case may be.


  • Liability under the act to be the first charge

    Section 11E
    Existing Provision :
    Newly inserted Section

    Proposed Amendment:
    Any amount of duty, penalty, interest or any other sum payable by an assessee or any other person shall save as otherwise provided in section 529A of the companies Act, 1956, the recovery of Debts Due to Banks and the Financial Institutions Act, 1993 and the Securitisation and Reconstruction of Financial Assets and the Enforcement of Security Interest Act, 2002 be the first charge on the property of the assessee or the person.

    Implication :
    On the property of the assessee liability under the act will be the first charge.


  • Application of the provisions of Custom Act 1962 to Excise Duties

    Section 12
    Existing Provision :
    The Central government has power to apply any provisions of the Customs Act relating to the levy of customs duties and exemption from customs duties, drawback of duty, warehousing, offences and penalties, confiscation, and procedure relating to offences and appeals, to the duties imposed by section 3(Levy of Excise Duties) of the Central Excise Act, 1944.

    Proposed Amendment :
    It is proposed to cover section 3A (Levy of Excise Duty on the basis of capacity of production) along with existing section 3 of the Central Excise Act, 1944.

    Implication :
    The Central government can also apply the provisions of the Customs Act, 1962 in respect of duty imposed by section 3A of the Central Excise Act, 1944.
    W.E.F. : 10th May 2008 (A.Y. 2009-10). However the provisions relating to offences and penalties shall be applied only after the Finance Bill, 2011 has taken the assent of president of India.


  • Power to Search and Seize any documents, books or things

    Section 12F
    Existing Provision :
    Newly inserted section

    Proposed Amendment:
    It is proposed to give search and seizer power to JC/AC or any authorised Central Excise officer by such JC/AC in writing, when they have reasons to believe that any books, documents or things, which is relevant/useful for making any proceeding under this Act, if secreted in any place.

    Implication:
    New provisions to give Search and Seizer power


  • Newly inserted section giving power to CBEC to issue order, instruction or direction for fixing monetary limits for filing appeal by Central Excise Officer

    Section 35R
    Existing Provision :
    Newly inserted section

    Proposed Amendment:
    It is proposed that CBEC may issue order, instruction or direction for fixing monetary limits, as it may deem fit, for regulating the filing of appeal, application, revision or reference by Central Excise Officer.

    Implication :
    New provision to give power to CBEC to fix monetary limits for appeal etc. filed by Central Excise Officer.
    W.E.F. : 20th October 2010.


  • Publication of rules and notification and laying of rules before Parliament

    Section 38
    Existing Provision :
    Every rules made under this Act, every notification issued under section 3A, 4A, 5A (1), 11C of this Act and every order issued under section 5A (2) shall be laid before each House of Parliament.

    Proposed Amendment:
    It is proposed to insert section 5B (Non Reversal of Cenvat Credit) after 5A (1).

    Implication :
    Notification issued under section 5B shall also require to be laid before each House of parliament.


  • Cenvat Credit

    Rule 3 of Cenvat Credit Rules, 2004
    Existing Provision :
    Describe the different type of duty on which Cenvat Credit can be taken.

    Proposed Amendment:
    Rule 3 is being amended retrospectively with effect from 18.04.2006 to provide that the credit of service tax paid under section 66A of the Finance Act, 1994 shall also be permissible.

    Implication:
    Credit of service tax paid is available from 18.04.2006.



Amendment in Central Excise Tariff Act, 1985


  • Amendment in First and Third Schedule of CETA

    Schedule First and Third Schedule
    Existing Provision:
    Describe the different rate of duty for different excisable product

    Proposed Amendment:
    The First Schedule shall be amended in the manner specified in the Tenth Schedule and also be amended in the manner specified in the Eleventh Schedule with effect from the 1st January 2012. The Third schedule shall be amended in the manner specified in the Twelfth Schedule.

    Implication:
    The First and Third Schedule shall be amended by Tenth, Eleventh and Twelfth Schedule.



Customs



  • Change in the definition of Assessment

    Section 2(2)
    Existing:
    "Assessment" includes provisional assessment, re-assessment, re-assessment and any order of assessment in which the duty assessed is nil.

    Proposed:
    "Assessment" includes provisional assessment, self - assessment, reassessment, re-assessment and any order of assessment in which the duty assessed is nil.
    W.E.F:- Will come into force on enactment of the Finance Bill.


  • Removal of Deputy Commissioner of Customs from the list of classes of officer

    Section: 3
    Existing:

    Earlier there was 6 classes of officers of Customs which includes Deputy Commissioner of Customs

    Proposed:
    In Section 3 of the Customs Act, in clause (e), the words "Deputy Commissioner of Customs" shall be omitted.
    W.E.F:- Will come into force on enactment of the Finance Bill.


  • Substitution of new section for "Assessment of Duty"

    Section 17
    Existing:

    As per existing provision the goods are first examined and the assessment is made on the basis of the documents presented along with the Shipping Bill or Bill of Entry. The proper officer is empowered to call for such additional information or documents as are necessary for a proper assessment of good.

    Proposed:
    Section 17 is being amended to replace the existing system of assessment with 'self-assessment' of duty on imported and export goods by the importer or exporter. The revised provisions empower customs officers to verify the self - assessment and if required, reassess duty on the imported or export goods. It is being further provided that the officers may conduct audit in certain situations either in their own office or at the premises of the importer or exporter.
    W.E.F:- Will come into force on enactment of the Finance Bill.


  • Provisional Assessment of Duty for self assessment of duty

    Section 18
    Existing:

    If the importer or exporter is unable to produce any document or furnish any information necessary for assessment of duty on imported goods or exported goods, to the satisfaction of proper officer.

    Proposed:
    Section 18 in being amended to make the provisions relating to provisional assessment of duty applicable in case of an importer or exporter is unable to make self - assessment with the proposed scheme of 'self-assessment'.
    W.E.F:- Will come into force on enactment of the Finance Bill.


  • Determination of rate of duty where goods consists of articles liable to different rates of duty:

    Section: 19
    Existing:

    If the importer produces to the satisfaction of the proper officer documents regarding the value of any of the articles liable to different rates of duty, such article shall be chargeable to duty, such article shall be chargeable to duty separately at the rates applicable to it.

    Proposed:
    Section 19 is being amended to align the provisions relating to determination of duty where goods consist of articles liable to different rates of duty with the proposed scheme of 'self-assessment' under section 17 and it would be done on the basis of documents or "the evidences available".
    W.E.F:- Will come into force on enactment of the Finance Bill.


  • Enhancement of time limit for claiming refund of duty and interest

    Section: 27
    Existing:

    As per existing clause an application in prescribed form to Assistant Commissioner/ Deputy Commissioner before the expiry of 6 months from the date of payment of such duty or interest.

    Proposed:
    Sub-section (1) of section 27 is being substituted so as to enhance the limit for claiming refund of duty and interest from 6 months to 1 year. This will bring uniformity for both demanding duty and claiming refund.
    W.E.F:- Will come into force on enactment of the Finance Bill.


  • Enhancement of time limit for recovery of duties and interest

    Section: 28
    Existing:

    Where any duty has not been levied or has been short-levied or erroneously refunded or any interest payable has not been paid, part-paid or erroneously refunded for any reason other than the reasons of collusion or any willful misstatement or suppression of facts, the notice regarding should be issued by proper officer within six months from relevant date.

    Proposed:
    As per proposal the time limit in above case has been extended to 1 year
    W.E.F:- Will come into force on enactment of the Finance Bill.


  • Interest on delayed payment of duty

    Section: 28AA
    Proposed:

    Section 28AA and 28AB are being substituted with a revised section 28AA so as to make the provisions relating to interest more coherent and clear.
    W.E.F:- Will come into force on enactment of the Finance Bill.


  • Electronic filing of Bill of Entry

    Section: 46
    Existing:

    The importer while importing goods will submit a bill of entry to custom authorities giving particulars of such goods and the port or place from where it has been imported.

    Proposed:
    Section 46 is being amended to provide that an entry of imported goods shall be presented electronically and to empower the Commissioner of Customs to allow filing of entry in any other manner when it is infeasible to present electronically.
    W.E.F:- Will come into force on enactment of the Finance Bill.


  • Electronic filing of Bill of Export

    Section: 50
    Existing:

    The exporter of goods shall make the entry of exported goods by presenting a shipping bill or bill of export in manual form to the proper officer in the prescribed form giving prescribed details of goods.

    Proposed:
    Section 50 is being amended to provide that an entry of export goods shall be presented electronically and to empower Commissioner of Customs to allow filing of entry in any other manner when it is infeasible to present electronically.
    W.E.F:- Will come into force on enactment of the Finance Bill.


  • Allowance of drawback of custom duty even remittances not received within the time limit specified in FEMA

    Section: 75
    Existing:

    The sale proceeds in respect of imported goods used in the manufacture of exported goods, on which the drawback has been allowed, have to be received by the exporter or by any person on his behalf within the period as specified in the FEMA, 1999.

    Proposed:
    Section 75 is being amended to enable the Central Government to prescribe circumstances under which drawback would not be disallowed even though the export remittances are not received within the period specified in the Foreign Exchange Management Act.
    W.E.F:- Will come into force on enactment of the Finance Bill.


  • Empowerment to Adjudicating Authority to release seized goods

    Section: 110A
    Existing:

    Any goods, documents or things seized under seized under 110 may pending the order of the Adjudicating officer be released to the owner on taking a bond in proper form with such security and condition as Commissioner of Custom may require

    Proposed:
    Section 110A is being amended to empower the adjudicating authority to allow release of seized goods instead of taking orders from Adjudicating officer and Commissioner of Custom.
    W.E.F:- Will come into force on enactment of the Finance Bill.


  • Prior approval of officer not below Assistant Commissioner of Custom for issuing Show Cause Notice

    Section: 124
    Existing:

    Any show cause noticed to the assessee shall be issued with the prior approval of officer not below the rank of Deputy Commissioner of Custom

    Proposed:
    Section 124 is being amended to provide for issuance of a show cause notice with prior approval of an officer not below the rank of an Assistant Commissioner of Customs.
    W.E.F:- Will come into force on enactment of the Finance Bill.


  • Appeal not to be filed in certain cases

    Section: 131BA
    Existing: Newly inserted

    Proposed:

    A new section 131D is being inserted retrospectively with effect from 20.10.2010 to empower the Board to issue instructions relating to non-filing of appeal in certain in line with National Litigation Policy.

    • Board will issue from time to time orders to relating to filing of appeals, revision, and application to Commissioner
    • With pursuance of orders or instructions or directions referred above if Commissioner of Customs has not filed appeal, revision it will not preclude him for filing any appeal, application, revision in any other case involving the same or similar issues or question of law.
    • No person being a party in appeal, revision, application or reference shall contend that the commissioner of customs has acquiesced in the decision on the disputed issue by not filing appeal, revision as on above facts.
    • The Appellate Tribunal or court hearing an appeal, revision or revision shall have regard to the circumstances under which the appeal, revision was not filed by Commissioner.

    • W.E.F:- Will come into force on enactment of the Finance Bill.



  • Liability under Act to be first charge

    Section: 142A
    Existing: Newly inserted

    Proposed:

    It has been inserted so as to create first charge on the property of the defaulter for recovery of the customs dues from such defaulter's subject to provisions of Section 529A of the Companies Act, the Recovery of Debt due to Bank and Financial Institution Act, 1993 and Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002.
    W.E.F:- Will come into force on enactment of the Finance Bill.


  • Payment of balance of unclaimed sale proceeds to Central Government

    Section: 150
    Existing:

    Where any goods not being confiscated goods, are to be sold under any provision of the Custom Act, the payment are made to respective parties to whom liability exists and if any payment left would be provided to the owner of the goods.

    Proposed:
    Where it is not possible to pay the balance of sale proceeds, if any , to the owner of the goods within a period of six months from the date of sale of such goods or such further period as the Commissioner of Customs may allow, such balance of sale proceeds shall be paid to the Central Government.

    Implication:
    This will help to settle unclaimed portion of sale proceed by depositing the same in Central Government Account.
    W.E.F:- Will come into force on enactment of the Finance Bill.


  • Enhancement of powers of CBEC relating to issue of direction to Custom Authorities

    Section: 151A
    Existing:

    As per Existing Law, Board was empowered to issue direction to custom authorities only related to Custom Act.

    Proposed:
    Section 151A is being amended so as to empower the Board to also issue instruction to customs authorities on any other matters under the Customs Act or any other Act for the time being in force so far as they relate to prohibition, restriction or procedure relating to import or export of goods.
    W.E.F:- Will come into force on enactment of the Finance Bill.


  • Manner of conducting audit

    Section: 157(2)(d)
    Proposed:

    Section 157 is being amended to empower the Board to prescribe regulations for specifying the manner of conducting audit at the office of the proper officer of customs or at the premises of the importer.
    W.E.F:- Will come into force on enactment of the Finance Bill.



Amendments in Customs Tariff Act, 1975



  • Substitution of word Standards of Weight & Measures by Legal Metrology Act, 2009

    Section: 3
    Proposed:

    Section 3 is being amended to substitute the reference to Standards of Weight & Measures Act, 1976 with Legal Metrology Act, 2009.
    W.E.F.:- 01/03/2011


  • Reduction of antidumping duty

    Section: 9A
    Proposed:

    Section 9AA is being amended so as to enable the Central Government to reduce the anti-dumping duty imposed under the provision of sub-section (1) of section 9A on an importer where such importer proves to the satisfaction of the Central Government that he has paid anti-dumping duty in excess of his actual margin of dumping.
    W.E.F:- Will come into force on enactment of the Finance Bill.


  • Aligning Custom Tariff Act with Article 11 of the WTO Agreement

    Section: Rule 23
    Proposed:

    Customs Tariff (identification, Assessment and collection of Anti dumping duty on Dumped Articles and for Determination of Injury) Rules, 1965 is being so as to revise provision of rule 23 so as to align the same with Article 11 of the WTO Agreement on anti dumping and also to insert Annexure - iii containing principles to determine the non-injurious price.
    W.E.F:- Will come into force on enactment of the Finance Bill.



Amendments in the schedule to the Customs Tariff Act, 1975



  • The First Schedule is being amended to include editorial changes in the Harmonized System of Nomenclature (HSN) in certain chapters, which would be effective from 1.2.2012.
  • Description of heading 9804 in the First is being amended to cover all dutiable items intended for personal use, imported by post or air and to prescribe a tariff rate of 35% for tariff items under the heading.
  • The second schedule is being amended so as to align the entries with the Harmonized System of Nomenclature (HSN) and introduce a new entry for de-oiled rice barn cake. The effective rates of export duty on all items other than iron ores lumps, fines and pellets; and de-oiled rice barn cake are being maintained.
  • W.E.F:- Will come into force on enactment of the Finance Bill.



Service Tax


2 New services covered

  • Section 65(105) (5) (f) (zzzzv):

    Service provided by air-conditioned restaurant having a license to serve alcoholic beverages in relation to serving of food and beverages.


  • Section 65(105) (zzzzw):

    Short term accommodation provided by a hotel, inn, guesthouse, club or campsite, or any other similar establishment for a continuous period of less than three months.

    The above services will come into effect from the date to be notified, after the enactment of Finance bill, 2011.


Expansion in Existing services

  • Section 65 (105) (zx)-Life Insurance Service

    Service tax is payable only on the risk cover component of the premium It is being expanded to cover all services provided to policy holder or any person by the insurer, including re-insurer. It is also being provided that tax shall be on the portion of the premium other than what is allocated for investment, when the break-up of premium is shown separately in any document given to the policy holder.

    Further, the composition Rate is also being increased from 1% to 1.5%.


  • Section 65 (105) (zzze) - Club or Association services

    Service provided or to be provided to its members by any club or association in relation to provision of services, facilities or advantages for a subscription or any other amount.

    It is being expanded to include service provided to non-member within its ambit too.


  • Section 65 (105) (zo) - Authorized Service Station's Services

    Taxable service means any services provided or to be provided to any person by an authorized service station in relation to any service repair, reconditioning or restoration of motor cars, light motor vehicles or two wheeled motor vehicles, in any manner.

    It is being expanded to:


    • includes services provided by any person
    • cover all motor vehicles other than those meant for goods carriage and three-wheeler scooter auto-rickshaws
    • cover the services of decoration and similar services in respect of vehicles along with the services already cover.


  • Section 65 (104c) - Business Support Service

    “support services of business or commerce" means services provided in relation to business or commerce and includes evaluation of prospective customers, telemarketing, processing of purchase orders and fulfillments services, information and tracking of delivery schedules, managing distribution and logistics, customer relationship management services, accounting and processing of transactions, operational assistance for marketing, formulation of customer service and pricing policies, infrastructural support services and other transaction processing.

    The definition of Business Support Service is being amended to include the services provided by way of operational or administrative assistance in any manner


  • Section 65 (105) (zzzzm)- Legal Consultancy Services

    Taxable service means any service provided or to be provided to a business entity, by any other business entity, in relation to advice, consultancy or assistance in any branch of law in any manner.

    The scope of Legal consultancy services is being expanded by bringing within its ambit the:


    • service provided by a business entity to individual in relation to advice, consultancy or assistance in any branch of law in any manner
    • representational service provided by any person to any business entity (representational service provided to individual will continue to be exempt)
    • services of arbitration provided by an arbitral tribunal to any business entity.


  • Section 65 (105) (zzc) - Commercial Training or Coaching Service

    Commercial Training or Coaching centre means any institute or establishment providing commercial training or coaching for imparting skill or knowledge or lessons on any subject or field other than the sports, with or without issuance of a certificate and includes coaching or tutorial classes but does not include pre-school coaching and training centre or any institute or establishment which issue any certificate or diploma or degree or any educational qualification recognize by law for the time being in force.

    This service is being amended the portion beginning with the words "but does not include" and ending with the words "time being in force" is being omitted.


  • Section 65(105)(zzzzo) - Health check-up and treatment service

    Taxable Service means any service provided or to be provided by any hospital, nursing home or multi-specialty clinic,-

    • to an employee of any business entity, in relation to health check-up or preventive care, where the payment for such check-up or preventive care is made by such business entity directly to such hospital, nursing home or multi-specialty clinic; or
    • to a person covered by health insurance scheme, for any health checkup or treatment, where the payment for such health check-up or treatment is made by the insurance company directly to such hospital, nursing home or multi-specialty clinic.

    • The scope of health service is being expanded by including:

    • All service, including diagnostic services provided, by a centrally air conditioned (wholly or partially) clinical establishment having more than 25 beds for in-patient treatment during any part of the year
    • Diagnostic service being provided by clinical establishment with aid of laboratory or other medical equipment and
    • Service provided by a doctor, not being employee of a clinical establishment, from premises of such establishment.

    • Further it is amended that the existing health service where payments are required to be made directly by insurance company or business entity would no longer be operational.



Exemptions newly introduced :

  • Exemption is being provided to services provided by an organizer of business exhibitions in relation to business exhibitions held outside India.
  • An abatement of 25% from the taxable value is being provided for the purpose of levy of service tax under transport of goods through coastal and inland shipping.
  • Exemption is being provided to Works Contract services provided for construction or finishing of new residential complex under "Jawaharlal Nehru National Urban Renewal Mission" and "Rajiv Awaas Yojana".
  • Exemption is being provided to services within a port or other port or an airport under the "Works Contract" service for specified purpose.
  • Exemption is being provided to "Rashtriya Swasthya Bima Yojana" under the General Insurance service.
  • Value of air freight included in the assessable value of goods for charging custom duties is being excluded from taxable value for the purpose of levy of service tax under the " Transport of goods by air" service.
  • Services related to transportaion of goods by road, rail or air when both the origin and destination are located out side india is being exempted from service tax.
  • A modified scheme is being introduce to refund service tax to SEZ units and developers and notification no 9/2009-ST is being superseded. In the modified scheme, "Wholly Consumed" services are being defined in the notification in order to extent "outright exemption" and to permit refund of all other services in the proportionate basis.

  • The changes at serial No (1) to (5) and (8) will come into effect immediately. Changes at serial No (6) and (7) will come into effect from 1st April, 2011.



Withdrawal or amendments of exemption:

  • The rates of service tax on travel by air are being revised as follows:

  • Existing Amended
    Domestic travel (economy class) Rs. 100 per journey Rs. 150 per journey
    International travel (economy class) Rs. 500 per journey Rs. 750 per journey
    Domestics travel (other than economy class) 10% (Standard Rate)

  • Withdrawal of exemption from service tax on the membership fees under "Club or Association service" is being given to the association or chambers representing industry or commerce for the period from 16.06.2005 to 31.03.2008
  • Retrospective effects is being given to notification number 20/2009-ST dated 07.07.2009 exempting service tax on inter state or intra state transportation o passengers in a vehicle bearing contract carriage permit or a tourist vehicle permit for the period from 01.04.2000 to 06.07.2009.

  • The changes at serial No (1) will come into effect from 1st April, 2011. Changes at serial No (2) and (3) are being given effect through the Finance Bill, 2011 and will come into effect from the date of enactment of the Bill



Amendments in Rules and Notification: Service Tax Rules

  • Monetary limit for adjustment of excess payment between quarters raised from 1.00 lac to 2.00 lac

    Rule 6(4B)(iii)
    Existing:

    In cases other than specified in clause (ii) above, the excess amount paid may be adjusted with a monetary limit of Rs. 1 lakh for relevant month or quarter as the case may be.

    Proposed:
    The monetary of Rs. 1,00,000/- for adjustment under rule 6(4B)(iii) of the Service Tax Rules, 1994 is being raised to Rs. 2,00,000.
    WEF: 1st April, 2011.


  • Method to calculate ST liability for life insurance business amended

    Rule 6(7A)
    Existing:

    An insurer carrying on life insurance business liable for paying the service tax in relation to the risk cover in life insurance provided to a policy holder shall have the option to pay an amount calculated at the rate of one percent of the gross amount of premium charged by such insurer towards the discharge of his service tax liability instead of paying service tax at the rate specified In section 66 of chapter V of the act:

    Provided that such option shall not be available in cases where -

    • The entire premium paid by the policy holder is only towards risk cover in life insurance; or
    • The part of the premium payable towards risk cover in life insurance is shown separately in any of the documents issued by the insurer to the policy holder.

    • Proposed:
      The same is being amended to provide that an insurer carrying on life insurance business shall have the option to pay tax -

    • On the amount of gross premium charged from a policy holder reduced by the amount allocated for investment, where the breakup of the amount allocated for investment is shown separately to the policy holder;
    • On an amount calculated @1.5% of the gross amount of premium charged from policy holder in cases other than (a) above Towards the discharge of his service tax liability instead of paying service tax at the rate specified in Section 66 of Finance Act, 1994

    • Such option shall not be available in cases where the entire premium paid by the policy holder is only towards risk cover in life insurance.
      WEF: 1st April, 2011



  • Method to calculate ST liability for Foreign currency business amended

    Rule 6(7B)

    Existing: The person liable to pay service tax in relation to purchase or sale of foreign currency, including money changing, provided by a foreign exchange broker referred to in section 65(105) of the Act, shall have the option to pay an amount calculated at the rate 0.25% of the gross amount of currency exchanged towards discharge of his service tax liability instead of paying service tax at the rate specified in section 66 of chapter V of the Act: Provided that such option shall not be available in cases where the consideration for the services provided or to be provided is shown separately in the invoice, bill or as the case may be, challan issued by the service provider:

    Proposed:
    Clause (B) of Rule 6(7) of the service tax rules, 1994 pertaining to sale and purchase of foreign exchange is being amended to

    • Omit the proviso as well as the illustration; and
    • Reduce the composition rate from 0.25% to 0.1% of the gross amount of currency exchanged towards discharge of service tax liability.

    • WEF: 1st April, 2011



  • New definition of value of the money changing services:

    Rule 6(6A) is being inserted in Service Tax Rules, 1994 to provide that if any amount of service tax has been self-assessed and not paid, the same shall be recoverable with interest u/s 87 of the Act. Thus, there shall be no need to resort to provision of section 73.

    It is being defined in Service Tax (Determination of Value) Rules, 2006 that the money changing service:

    • For currency exchanged either from or to Indian Rupees, shall be equal to the units of currency exchanged multiplied by the difference in the buying rate or the selling rate, as the case may be, and the RBI reference rate for that currency for that day.
    • For a currency where the RBI reference rate is not available, shall be 1% of the gross amount of Indian rupees provided or received, by the person changing the money.
    • Where neither of the currencies exchanged is Indian rupees shall be equal to 1% of the lesser of the two amounts the person changing the money would have received by converting any of the two currencies into Indian rupees on that day.

    • WEF: 1st April, 2011



  • Explanation for Telecommunication services

    Rule 5(1) Service Tax (Determination of Value) Rules, 2006
    An explanation is being added to rule 5(1) of Service Tax (Determination of Value) Rules, 2006 to clarify that for the purpose of Telecommunication services, the value of the taxable service shall be gross amount charged by the telegraph authority from the service receiver.
    WEF: 1st April, 2011


  • Explanation for Works Contract

    A sub rule (2A) is being inserted in rule 3 of the Works Contract (Composition Scheme for payment of Service Tax) Rules, 2007 to provide that the credit of tax on input services of 'erection, commissioning or installation', 'commercial or industrial construction' and 'construction of complex' services as available to a person providing 'Work Contract Service' shall be restricted to 40% of tax paid, when such tax has been paid on full value of the service after availment of Cenvat credit on inputs.
    WEF: 1st March, 2011


  • Omission of Section 73(1A) and insertion of section 73(4A)

    Existing: Where any service tax has not been levied or paid or has been short-levied or short-paid or erroneously refunded by reason of fraud, collusion or any willful mis-statement or suppression of facts, or contravention of any of the provisions of this chapter or the rules made thereunder, with intent to evade payment of service tax, by such person or his agent, to whom the notice is served under the proviso to sub section (1) by the Central Excise Officer, such person or agent may pay service tax in full or in part as may be accepted by such person within 30 days of the receipt of the notice.

    Amendment:
    Omit sub section (1A) of section 73 together with both the provisos to sub section (2) of section. As a result, the benefit of reduction of penalty available in cases of fraud, collusion, etc. under proviso to section 73(1A) shall not be available.

    A new sub section 4A is being inserted in section 73 to provide for reduced penalty in cases where during the course of audit, verification or investigation it is found that the transactions not reported to the department are available in the records in invoices. Moreover, penalty is being reduced to 1% per month of the tax amount upto a maximum of 25%.

    WEF: The above changes will come into effect from a date to be notified after the enactment of the Finance Bill, 2011.


  • Reduction in Penalty for failure to pay service tax:

    Section 76
    Existing:

    Any person liable to pay service tax in accordance with the provisions of section 68, who fails to pay tax, shall pay a penalty on such delayed period Rs. 200 per day or 2% of such tax per month, whichever is higher, starting with the 1st day after the due date till the date of actual payment of the outstanding amount of service tax.

    Proposed reduction:
    Reduce the penalty for delayed payment u/s 76 from 2% to 1% p.m. or Rs. 100 per day, whichever is higher. Maximum penalty reduced to 50% of the tax amount.

    WEF: The above changes will come into effect from a date to be notified after the enactment of the Finance Bill, 2011.


  • Increase in Maximum penalty for contravention:

    Section 77
    Existing:

    Any person who is liable to comply with the provisions of section 69 or rules of this chapter shall be liable to pay a penalty which may extend to Rs. 5,000 or Rs. 200 for every day during which such failure continues, whichever is higher, starting from day after the due date, till date of actual compliance.

    Proposed increment:
    Increase the maximum penalty u/s 77 from Rs. 5,000 to Rs. 10,000.
    WEF: The above changes will come into effect from a date to be notified after the enactment of the Finance Bill, 2011.


  • Penalty for suppressing value of taxable services:

    Section 78
    Existing:

    Where any service tax has not been levied or paid or has been short-levied or short paid or erroneously refunded, then such person in default is liable to pay such service tax and interest thereon, if any, payable by him, which shall not be less than, but which shall not exceed twice, the amount of service tax so not levied or paid or short - levied or short - paid or erroneously refunded.

    Proposed amendment:
    Penalty will be hereafter mandatory and equal to tax evaded. Moreover, in situations covered u/s 4A, the penalty shall be 50% of the tax amount. Further, the penalty is being reduced to 25% if the tax dues are paid within 30 days together with interest and reduced penalty. For assesses having a turnover of upto Rs. 60 lakhs in any of the years covered in the show cause notice or in the preceding year, the period of 30 days shall be revised to 90 days.

    WEF: The above changes will come into effect from a date to be notified after the enactment of the Finance Bill, 2011.


  • Interest reduced on amount collected in excess:

    Section 73B

    Existing: Where an amount has been collected in excess of the tax assessed of determined and paid for any taxable service under this chapter, the person who is liable to pay the amount as determined u/s 73(4) shall be liable to pay interest @ 10% to maximum 24% p.a., on amount collected in excess, from the 1st day of the succeeding month in which amount ought to have been paid under this chapter.

    Proposed amendment:
    Reduce the rate by 3% for assesses with a turnover upto Rs. 60 lakhs, both under section 73B and section 75.

    WEF: The above changes will come into effect from a date to be notified after the enactment of the Finance Bill, 2011.


  • Penalty increased for defaults in Furnishing of Returns:

    Section 70
    Existing:

    Every person who defaults in furnishing return as per provisions of the Act, will be imposed with penalty of Maximum Rs. 2,000.

    Proposed Increment:
    Increase the maximum penalty u/s 70 from Rs. 2,000 to Rs. 20,000. However, the existing rate of penalty for the first 15 days and for the subsequent 15 days as well as the daily penalty of Rs. 100 per day thereafter under rule 7C of the Service Tax Rules, 1994 are being retained without any change.

    WEF: The above changes will come into effect from a date to be notified after the enactment of the Finance Bill, 2011.


  • Penalty not to be imposed in certain cases:

    Section 80
    Existing:

    Notwithstanding anything contained in the provisions of section 76, 77 or 78 no penalty shall be imposable on the assessee for any failure referred to in the said provision if the assessee proves that there was reasonable cause for the said failure.

    Proposed Increment:
    Amend the power to waive penalty u/s 80. While penalties u/s 76 and 77 are being retained, penalty u/s 78 is being waived only in cases where the transactions are captured in the specified records.

    WEF: The above changes will come into effect from a date to be notified after the enactment of the Finance Bill, 2011


  • Power to JC to issue search warrant

    Section 82
    Existing:

    If the Commissioner of Central Excise has reason to believe that any documents or books or things which in his opinion will be useful for or relevant to any proceeding under this chapter are secreted in any place, he may authorize any Assistant Commissioner of Central Excise or as the case may be, Deputy Commissioner of Central Excise to search for and seize or may himself search for and seize such documents or books or things.

    Proposed Amendment:
    Give power to issue search warrant u/s 82 at the level of Joint Commissioner and the execution of such warrant at the level of Superintendent.

    WEF: The above changes will come into effect from a date to be notified after the enactment of the Finance Bill, 2011.


  • Application of certain provisions of Act 1 of 1944

    Section 83

    Existing: The provisions of the following sections of the Central Excise Act, 1944, as in force from time to time, shall apply, so far as may be, in relation to service tax as they apply in relation to a duty of excise:

    9C, 9D, 11B, 11BB, 11C, 12, 12A, 12B, 12C, 12D, 12E, 14, 14AA, 15, 33A, 35F, 35FF, to 35O, 35Q, 36, 36A, 36B, 37A, 37B, 37C, 37D, 38A, and 40.

    Proposed Amendment: Further section 9A, 9AA, 9B, 9E, 34A and new section 35R of the Central Excise Act, 1944 applicable to service tax u/s 83.

    WEF: The above changes will come into effect from a date to be notified after the enactment of the Finance Bill, 2011.


  • Charge creation on the property for service tax recovery

    Section 88:

    A new section 88 is being inserted so as to create 1st charge on the property of the defaulter for recovery of service tax dues from such defaulter subject to provisions of section 529A of the Companies Act, the recovery of Debt due to Bank and Financial Institution Act, 1993 and Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002.

    WEF: The above changes will come into effect from a date to be notified after the enactment of the Finance Bill, 2011.


  • Reintroduction of Section 89:

    The provision relating to prosecution u/s 89 as follows:

    • The prosecution shall apply in the following situations:
      • Provision of service without invoice;
      • Availment and utilisation of Cenvat credit without receipt of inputs or input services;
      • Submitting false information;
      • Non-payment of collected amount of service tax for a period of more than six months.
    • The sanctions for the prosecution will be granted at the level of Chief Commissioner.

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