Finance Bill 2010

Proposals and analysis

Highlights

 The Hon’ble finance Minister announced two major steps towards tax reforms:

Income - A mention tat the process for building a simple tax system with minimum exemptions
Tax and low rates is now nearing completion. Also, he stated that the Direct Tax Code will
be implemented from April 1, 2011.

- Regarding Goods and Services Tax, it was mentioned that ministry is finalizing the
Excise
structure and implementation modalities of GST with different stakeholders and with
all hopes, it should be effective in April, 2011.

Customs  The other tax reforms mentioned by the Hon’ble Finance minister are as follows:
- Two more Centralised Processing Centre to be set up during the year
- "Sevottam” to extend to four more cities
- Automation of Central Excise & Service Tax (ACES), has already been rolled out
Service throughout the country. Commercial taxes to follow suit.
Tax
- Income tax department to notify SARAL-II form for individual salaried taxpayers
Income Tax Proposals
 Rate of Tax/ Interest /
Income Exemptions Computation
TDS Penalties

Highlights

 Scope of the term ‘income’ expanded:

Section 9 read with Section 56 has been expanded for a firm and company not being a
Income
company in which public are substantially interested. For the two assessee income would
Tax include fair market value of shares received without consideration. In case there is any
consideration paid for such shares by these assessees, the same shall be deducted for the
purpose of determining the above income.

Excise
However, only shares of a company not being a company in which public is substantially
interested are only considered for the above inclusions

Customs Exclusions:
The above addition shall exclude from its ambit receipt of shares by way of any of the
following transactions:
o In a scheme of amalgamation of a foreign company provided under section 47(via)
o In a scheme of demerger of a foreign company provided under section 47(vic)
Service
Tax o In a scheme of business reorganization of a cooperative bank as provided under
section 47(vicb)
o In a scheme of demerger as provided under section 47(vid)
o In a scheme of amalgamation as provided under section 47(vii)
 Rate of Tax/ Interest /
Income Exemptions Computation
TDS Penalties

Highlights

 The requirement of establishing the territorial nexus for taxing the income of a non resident
has been proposed to be removed retrospectively from 1976.

Income
 Section 56 has been amended to include stamp duty value of only those properties which
Tax have been received by the assessee without consideration. The section has been
amended to remove properties sold for a consideration (but sold at value less than stamp
duty value) from the ambit of Section 56. This amendment is proposed to be retrospective
with effect from October 1, 2009.
Excise
 Section 56(2) has been amended to cover only transfer of capital assets and not stock-in-
trade.
 Income on transfer of property propsed to be amended as under:.

Customs Period Provisions under Section 56

Earlier provision (since October 1, 2009) Gift of Cash, immovable property (without
consideration or at a consideration less
than the stamp duty value) and specified
properties*.
Service
Tax Proposed provision Gift of Cash, immovable property (without
consideration) and specified properties
including bullion. Also definition restricted
to capital assets.

*“property” means immovable property being land or building or both; shares and
securities; jewellery; archaeological collections; drawings; paintings; sculptures; or any
work of art
 Rate of Tax/ Interest /
Income Exemptions Computation
TDS Penalties

Highlights

 Investment in Research and Development (R&D) to enhance the competitive ability of the
economy

Income
- The exemption as applicable to a scientific research association has now been
Tax made available to research association engaged in social science or statistical
research as well.
- In order to promote the corporate sector to invest in in-house research, it is
proposed to increase this weighted deduction from 150 per cent to 200 per cent
Excise
incurred on scientific research on an approved in-house research and development
facility.
- In order to encourage more contributions to such approved entities for the purposes
of science, social science or statistical research, it is proposed to increase this
Customs weighted deduction from 125 per cent to 175 per cent.
 Provision of proportionate exemption to units in Special Economic Zone has been made
retrospective from AY 2006-07. This shall restrict the credit available to such units.
 Change in the exemption provisions for Trusts

Service
- Power of Commissioner to cancel the exemption of a trust are proposed to be
Tax enhanced to include all registrations granted under Section 12A with effect from
June 1, 2010. This amendment propose to rectify the technicals and remove the
limitation on the power of Commissioner since the registration under 12A and 12AA
are not for specific period and are enjoyed by the trusts until the registration is
cancelled.
- It is proposed that the test of commercial activity should not be allowed on small
Trusts having receipts of 10 Lakhs or less from the performance of any activity in the
nature of advancement of any other object of general public utility.
 Rate of Tax/ Interest /
Income Exemptions Computation
TDS Penalties

Highlights

 Provision of proportionate exemption to units in Special Economic Zone has been made
retrospective from AY 2006-07

Income
Tax  Hotel Industry
It is proposed to provide investment linked incentive to the hotel sector, irrespective of
location, under section 35AD of the Income-tax Act. The investment-linked tax incentive
Excise allows 100 per cent deduction in respect of the whole of any expenditure of capital nature
(other than on land, goodwill and financial instrument) incurred wholly and exclusively, for
the purposes of the “specified business” during the previous year in which such
expenditure is incurred. Currently, such “specified business” means the business of setting
up and operating cold chain facilities, warehousing facilities for storage of agricultural
Customs produce and laying and operating a cross-country natural gas or crude or petroleum oil
pipeline network. It is now proposed to include the business of building and operating a
new hotel of two-star or above category, anywhere in India, which starts functioning after
1.4.2010 within the purview of “specified business”.

Service  Housing Sector

Tax
- Time limit for completion for an approved housing project is proposed to be increased
from 4 years to 5 years
- With effect from April 1, 2009, The norms of built up area of shops and other
commercial establishments in housing projects has been amended from 5% of the total
built up area or 2,000 sq ft whichever is lower to 3% of the total built up area or 5,000 sq
ft whichever is higher
 Rate of Tax/ Interest /
Income Exemptions Computation
TDS Penalties

Highlights

 Relief to LLP
Section 47 has been expanded to provide relief on conversion of private company or an
Income
unlisted public company into a LLP, provided the following conditions are satisfied:
Tax (a) all the assets and liabilities of the company immediately before the conversion
become the assets and liabilities of the LLP;
(b) all the shareholders of the company immediately before the conversion become the
Excise partners of the LLP and their capital contribution and profit sharing ratio in the LLP
are in the same proportion as their shareholding in the company on the date of
conversion;
(c) the shareholders of the company do not receive any consideration or benefit, directly
or indirectly, in any form or manner, other than by way of share in profit and capital
Customs contribution in the LLP;
(d) the aggregate of the profit sharing ratio of the shareholders of the company in the
LLP shall not be less than fifty per cent. at any time during the period of five years
from the date of conversion;

Service (e) the total sales, turnover or gross receipts in business of the company in any of
Tax the three previous years preceding the previous year in which the conversion
takes place does not exceed sixty lakh rupees; and
(f) no amount is paid, either directly or indirectly, to any partner out of balance of
accumulated profit standing in the accounts of the company on the date of conversion for
a period of three years from the date of conversion.
Where any of the conditions are not satisfied, the capital gains arising on the transaction
shall be deemed to be the profits and gains chargeable to tax of the successor LLP
 Rate of Tax/ Interest /
Income Exemptions Computation
TDS Penalties

Highlights

 However, the provisions of section 115 JAA granting credit for MAT paid shall not
apply upon conversion into LLP

Income
Tax

Excise

Customs

Service
Tax
 Rate of Tax/ Interest /
Income Exemptions Computation
TDS Penalties

Highlights

 Proposed rate of tax in case of an indiviual assesse is as under:

Upto Rs. 1,60,000 Nil.

Income Rs. 1,60,001 to Rs. 5,00,000 10 per cent.

Tax Rs. 5,00,001 to Rs. 8,00,000 20 per cent.
Above Rs. 8,00,000 30 per cent.
No Surcharge. Education cess @ 3%
Excise

 The basic exemption limit for a woman assessee remains at 190,000 and that for an
assessee above the age of sixty five remains at 240,000

Customs  Surcharge reduced from 10% to 7.5% on a total income of Rs 1 Crore or more (effective
rate – 33.22%). The reduced surcharge to apply on Dividend Distribution tax as well
(effective DDT – 16.61%).

Service  It has been proposed that the rate of Minimum Alternate Tax (“MAT”) be increased from
Tax 15% to 18% (effective 19.9305%). This is the second consecutive time when the rate of
MAT has been increased
 Rate of Tax/ Interest /
Income Exemptions Computation
TDS Penalties

Highlights

 With effect from July 1, 2010, it is proposed to increase the threshold limit for withholding
taxes as under:

Income Sl. Section Nature of Existing threshold limit of Proposed threshold limit of
Tax No. Payment payment (Rupees) payment (Rupees)
1. 194B Winnings from 5,000 10,000
lottery or
crossword puzzle
Excise 2. 194BB Winnings from 2,500 5,000
horse race
3. 194C Payment to 20,000 30,000
contractors (for a single transaction) (for a single
transaction)
Customs
      50,000 75,000
(for aggregate of (for aggregate of transactions
transactions during during financial year)
financial year)
4. 194D Insurance 5,000 20,000
Service
commission
Tax
5. 194H Commission or 2,500 5,000
Brokerage
6. 194-I Rent 1,20,000 1,80,000
7. 194J Fees for 20,000 30,000
professional or
technical services
 Rate of Tax/ Interest /
Income Exemptions Computation
TDS Penalties

Highlights

 Threshold limit of turnover for tax audit in case of business increased from Rs 40 Lakhs to
Rs 60 Lakhs and for professionals from 10 Lakhs to 15 Lakhs

Income
Tax  It is proposed that the deductor/collector will continue to furnish TDS/TCS certificates to the
deductee/ collectee even after 1st April, 2010

Excise  It is proposed that the High Court may admit an appeal after the expiry of the allowed
period of one hundred and twenty days, if it is satisfied that there was sufficient cause for
not filing the appeal within such period

Customs  It is proposed that no disallowance will be made if after deduction of tax during the
previous year, the same has been paid on or before the due date of filing of return of
income specified in sub-section (1) of section 139

 Deduction not exceeding 20,000 has been provided on purchase of long term infrastructure
Service
Tax bonds to an individual / HUF

 Provisions for settlement commission changed to include search cases. The limit of
additional income tax payable is proposed to be enhanced to INR 10 Lakhs in the cases to
be admitted before the Settlement commission. This limit is proposed at INR 50 Lakhs in
search cases. Time limit for disposal of cases is also proposed to be enhanced from 12
months to 18 months.
 Rate of Tax/ Interest /
Income Exemptions Computation
TDS Penalties

Highlights

 Increase in rate of interest in case of non – deduction / non deposit of TDS

TDS non compliance Rate of interest

Income
Tax
Non deduction of TDS from the date on which 1% for every month or part of the month
such tax was deductible to the date on which
such tax is actually deducted
Non payment of TDS from the date on which 1.5% for every month or part of the
Excise such tax was deducted to the date on which month
such tax is actually paid

Customs
 Penalty for non filing of audit report has been enhanced to Rs 150,000

 It is proposed to increase the rate of interest for non-payment of tax after deduction from
the present one per cent to one and one-half per cent for every month or part of month
Service
Tax
 It is proposed that no disallowance will be made if after deduction of tax during the
previous year, the same has been paid on or before the due date of filing of return of
income specified in sub-section (1) of section 139
Excise Proposals
 Change in
Change in Policy
Rates

Highlights

 Peak excise duty rate for most non petroleum products from 8% to 10%.

Income  Small units having home consumption clearances not exceeding INR 4 lakhs will be eligible
Tax to avail full cenvat credit on receipt of capital goods and will have the facility to pay excise
duty on quarterly basis.

Excise  Cenvat credit allowed in respect of jigs, fixtures, moulds and dies sent by one manufacturer
to another manufacturer for production of goods

 Ambit of exemption in relation to transfer of right to use canned or packaged software is

Customs extended to all transfer of right to use including transaction where transfer of right to use is
not for commercial exploitation.

 In case of pending disputes of Cenvat credit attributable to exempt goods cleared between
September 1, 1996 and March 31, 2008, manufactuer is allowed to reverse the same basis
Service
Tax a certificate from a Chartered Accountant

 Penalty not be imposed in case demand is paid with interest before the issuance of
demand notice
 Change in
Change in Policy
Rates

Highlights

 Relaxation in requisites and conditions for relief from Settlement commission:

- applications in misdecalaration, suppression etc allowed
Income - Option to increase time limit of settlement for further 3 months
Tax
- relaxation of only one time settlement condition

Excise  Accelerated depreciation rates prescribed for computers and its peripherals, cleared after
use, while computing the amount to be paid on removal of such goods.
- for each quarter in the first year @ 10%
- for each quarter in the second year @ 8%
Customs - for each quarter in the second year @ 8%
- for each quarter in the fourth and fifth year @1%

 Provision of confiscation of input and capital goods in case of wrong availment or utilisation
Service of Cenvat credit on such goods
Tax
Customs Proposals
 Change in
Change in Policy
Rates

Highlights

 Retrospective removal of relief of customs duty provided from SEZ to DTA

Income  Relaxations granted in relation to Settlement Commission procedures as follows:

Tax
o Applications in case of misdeclaration, suppression, etc allowed.
o Restriction for assessees to seek only one time settlement relaxed.

Excise o Settlement Commission empowered to extend the time limit of 9 months for disposal
of applications by another 3 months

Customs

Service
Tax
 Change in
Change in Policy
Rates

Highlights

 Change in BCD

Present Rate of Basic Duty

Income Item New rate (%)
(%)
Tax
Crude Petroleum Nil 5

Petrol and Diesel 2.5 7.5

Excise
Serially numbered Gold bars / coins Rs 200 / 10gms Rs 300 / 10gms

Gold in any other form Rs 500 / 10 gms Rs 750 / 10 gms

Customs Silver in any form Rs 1000 / Kg Rs 1500 / Kg

Specified Agricultural machinery 7.5 5

Bio polymers / Bio plastics 10 Nil

Service
Tax
Service Tax Proposals
 Change in CENVAT
Scope New Export of
New Services Existing Credit
Extended Exemption Service
Exemption Rules, 2004
Highlights

Taxable Service : Games of chance including lottery

Service of Promoting, marketing or organising of games of chance,
Income including lottery is taxable under this category. Consequently, the
Tax corresponding addition to Business Auxiliary services has been
deleted.

Excise

Points to Ponder

• In the Sunrise Associates Case (2006) 5 SCC 603, lottery tickets have to be held to be
Customs actionable claims and accordingly does not fall in the ambit of the term ‘goods’
• State governments who are also organizing such games would be liable to pay service tax
• Lotteries come within the purview of Group 924 class 924(9) and sub−class 924(9)(0) of
NIC 2004 which is in the following terms :
“Other recreational activities includes fairs and shows of a recreational nature;
management and operation of lotteries (bulk and retail sale of lottery tickets are included
Service under wholesale and retail sale respectively); gambling and betting activities; activities of
Tax
casinos; booking agency activities in connection with theatrical productions or other
entertainment attractions, recreational fishing and other recreational activities”;
• Courts still to decide as to whether organizing games of chance are service for the purpose
of List I of the constitution.
• Valuation of the taxable service
 Change in CENVAT
Scope New Export of
New Services Existing Credit
Extended Exemption Service
Exemption Rules, 2004
Highlights

Taxable Service : Health Services

Health Service is taxable when provided or to be provided by hosiptal,
nursing homes or multi speciality clinics namely:
Income
Tax (i) Healths check up undertaken by hospitals or medical establishments
for the employees of business entity.
(ii) Health services provided under health insurance schemes offered by
the insurance company
Excise

Points to Ponder

• Individual doctors not having establishments are not covered

Customs
• The tax on the above mentioned health services would be payable only if and to the extent
the payment for such medical check up or treatment etc. is made directly by the business
entity or the insurance company to the hospital or medical establishment

• Pre-flight check ups covered under the present category

Service
Tax • ESI – whether taxable?
 Change in CENVAT
Scope New Export of
New Services Existing Credit
Extended Exemption Service
Exemption Rules, 2004
Highlights

Taxable Service : Maintaining of Medical Records

Service provided for storing, keeping or maintaining of medical records of
employees of a business entity is taxable under this category
Income
Tax

Excise

Points to Ponder

• Why are these not covered under Business Auxiliary or Business Support services
Customs
• Other record keeping not pertaining to main business of a person still out of service tax
ambit?

Service
Tax
 Change in CENVAT
Scope New Export of
New Services Existing Credit
Extended Exemption Service
Exemption Rules, 2004
Highlights

Taxable Service : Promotion of a brand of goods, services, events,

business entity etc.
Service is taxable when provided under a contract for promotion or
Income marketing of a brand of goods, service, event or endorsement of name,
Tax
including a trade name, logo or house mark of a business entity by
appearing in advertisement and promotional event or carrying out any
promotional activity for such goods, service or event
Excise

Points to Ponder

• Promotion of a brand name/ house mark etc by a celebrity without reference to any specific
Customs product or service of that company, is taxable under this category. Eg Tiger woods for
Accenture

• However, Promotion or marketing of a particular product or service provided by or

belonging to a client is still taxable under Business Auxiliary services (BAS).

Service
Tax
 Change in CENVAT
Scope New Export of
New Services Existing Credit
Extended Exemption Service
Exemption Rules, 2004
Highlights

Taxable Service : Commercial use or exploitation of any event

Taxable service is granting of the right or by permitting commercial use or
exploitation of any event including an event relating to art, entertainment,
Income business, sports or marriage organised
Tax

Excise

Points to Ponder

• Commercial exploitation of an event by a person other than the person organizing the
Customs event is subjected to service tax.

• When a person organizes / sponsors a cricket match and he allows the broadcasting or
recording of such match for their commercial exploitation in future, the sum received from
the broadcasters or recording companies, is taxable under this category.

Service • Would include broadcast on internet as well

Tax
 Change in CENVAT
Scope New Export of
New Services Existing Credit
Extended Exemption Service
Exemption Rules, 2004
Highlights

Taxable Service : Services provided by electricity Exchanges

Service provided by an electricity exchange in relation to trading,

Income processing, clearing or settlement of spot contracts, term ahead
Tax contracts, seasonal contracts, derivatives or any other electricity related
contract is taxable under this category

Excise

Points to Ponder

• Electricity exchanges authorized by Central Electricity Regulatory Commission are set up

Customs for transmission in electricity

Service
Tax
 Change in CENVAT
Scope New Export of
New Services Existing Credit
Extended Exemption Service
Exemption Rules, 2004
Highlights

Taxable Service : Copyrights on (a) cinematographic films and (b)

sound recording

Income Taxable service is the transferring temporarily or permitting the use or

Tax enjoyment of any copyright defined in the Copyright Act, 1957, except the
rights covered under subclause (a) of clause (1) of section 13 of the
Copyright Act

Excise

Points to Ponder

• As per Section 13 of Copyright Act, copyright subsists in original literary, dramatic, musical
Customs and artistic works, Recording of cinematographic films and sound recording. Under new
category of service, only the recording of cinematographic film and sound recording has
been brought under the tax net.

• Is the temporary transfer or permitting the use a one time act or a continuous one? In other
words, what would be the fate of copyright agreements entered prior to enactment and
Service continuing thereafter
Tax
 Change in CENVAT
Scope New Export of
New Services Existing Credit
Extended Exemption Service
Exemption Rules, 2004
Highlights

Taxable Service : Special services provided by a builder such as

providing preferential location or external or internal development of
complexes on extra charges
Income
Tax Taxable service is service provided to a buyer, by a builder of a residential
complex, or a commercial complex, or any other person authorised by
such builder, for providing preferential location or development of such
complex but does not include services covered under sub-clauses (zzg),
Excise (zzq), (zzzh) and in relation to parking place
Points to Ponder

• Service provided by the builder over and above the construction of building such as PLC or
Customs internal/ external development and charging separately for them are taxable under this new
category of service.

• Charges for providing parking space specifically excluded from the scope of this service.

• Services provided by the resident welfare associations or cooperative group housing

Service societies consisting of residents as its member is also not taxable
Tax
 Change in CENVAT
Scope New Export of
New Service Existing Credit
extended Exemption Service
Exemption Rules, 2004
Highlights

A. Taxable Service : ‘Air Passenger Transport Services’

Income Scope Extended:

Tax
To include domestic and international journeys in any class

Excise B. Taxable Service: ‘Information Technology software service’

Scope Extended:
Earlier IT software service was taxable only when them same were provided for
Customs commercial or business purposes, but now the scope has been extended to IT software
services provided for any purpose ie., whether or not used in the course or furtherance of
business or commerce.

C. Taxable Service: ‘Sponsorship Service’

Service
Tax
Scope Extended:
Scope expanded and sponsorship pertaining to sports is now subjected to service tax
 Change in CENVAT
Scope New Export of
New Service Existing Credit
extended Exemption Service
Exemption Rules, 2004
Highlights

D. Taxable Service : ‘Commercial training or Coaching service’

Income Scope Extended:

Tax
• Explanation added to the section clarifying that the word ‘commercial’ means any training
or coaching provided for a consideration irrespective of the presence or absence of any
profit motive.
Excise
• Amendment given retrospective effect from 01.07.2003.

Points to ponder
Customs • In the decision of the Constitution Bench in Keshavlal Jethalal Shah v. Mohanlal
Bhagwandas and Anr. [(1968) 3 SCR 623], it was opined that an Explanatory Act is
generally made to supply an obvious omission or to clear up doubts as to the meaning of
previous Act. Whether the term commercial to include non commercial entities is
clarificatory?
Service • .
Tax
 Change in CENVAT
Scope New Export of
New Service Existing Credit
extended Exemption Service
Exemptions Rules, 2004
Highlights

E. Taxable Service : ‘Construction of complex service’ and ‘Commercial or industrial

construction services’

Income
Tax Scope Extended:
• Explanation added to the section to provide that unless the entire payment for the
property is paid by the prospective buyer after the completion of construction (including
Excise the certification by the local authorities), the activity of construction would be deemed to
be a taxable service provided by the builder.

Points to ponder
Customs • This is the first deeming provision under the service tax as the explanation lay down that
it would be deemed to be a service.
• Artificial bifurcation of the value of Immovable property so as to tax the service portion in
case the buyer decides to pay the cost of building in installments.

Service
Tax
 Change in CENVAT
Scope New Export of
New Service Existing Credit
extended Exemption Services
Exemptions Rules, 2004
Highlights

F. Taxable Service : ‘Renting of Immovable Property’

Income Scope Extended:

Tax
• The activity of renting of immovable property or any other service in relation to such
renting, for use in the course of or, for furtherance of, business or commerce is per se
taxable service.
Excise • This amendment has been given retrospective effect from 01.06.2007.
• Further explanation has been added to provided that tax would be charged on rent of a
vacant land if there is an agreement between the lessor and lessee that a construction
on such land is to be undertaken for furtherance of business or commerce during the
Customs tenure of the lease.

Points to ponder
• The amendment has been brought to nullify the effect of the judgment passed by the
Hon’ble High Court of Delhi in the case of Home Solutions Retail India Ltd Vs UOI
Service
Tax wherein the Hon’ble Court had struck down this levy.
 Change in CENVAT
Scope New Export of
New Service Existing Credit
extended Exemption Service
Exemptions Rules, 2004
Highlights

G. Taxable Service : ‘Airport Service’, ‘port service’, ‘other port service’

Income Scope Extended:

Tax
• Amended to provide that all services provided entirely within the airport/ port premises
would be subjected to service tax.
• An authorisation by airport/ port authority would not be a precondition for taxing such
Excise services .
• Whether all activities which are otherwise not even taxable would be taxable under this
category?

Customs
H. Taxable Service: ‘Auctioneer’s service’

Scope Extended:
• Explanation added to clarify that the phrase ‘auction by government’ means an auction
Service
involving sale of government property and not when the government acts as an
Tax
auctioneer for sale of the private property
 Change in CENVAT
Scope New Export of
New Service Existing Credit
extended Exemption Service
Exemptions Rules, 2004
Highlights

I. Taxable Service : ‘Management of Investment under ULIP Service’

Income Scope Extended:

Tax
• Amended to provide that the value of the taxable service for any year of the operation of
policy shall be the actual amount charged by the insurer for management of funds under
ULIP or the maximum amount of fund management charges fixed by the Insurance
Excise Regulatory and Development Authority (IRDA), whichever is higher

Customs

Service
Tax
 Change in CENVAT
Scope New Export of
New Service Existing Credit
Extended Exemptions Service
Exemptions Rules, 2004
Highlights

A. Notification No 4/2010-ST, dated 27.02.2010:

Income Transport of food grains and pulses by road by a good transport agency is exempted
Tax from service tax levy.

B. Notification No 10/2010-ST, dated 27.02.2010

Excise

Exemption provided from service tax to ‘Technical Testing and analysis service’ and
‘Technical Inspection and certification service’ provided by Central and state seed testing
laboratories and central and state seed certification agencies.
Customs

C. Notification No 11/2010-ST, dated 27.02.2010

Any person providing to any other person service for transmission of electricity is
Service
exempted from the levy of service tax.
Tax
 Change in CENVAT
Scope New Export of
New Service Existing Credit
Extended Exemptions Service
Exemptions Rules, 2004
Highlights

D. Notification No 12/2010-ST, dated 27.02.2010

Income Exemption from service tax is being provided to services relating to ‘Erection,
Tax Commissioning or Installation’ of: (a) Mechanized Food Grain Handling Systems etc (b)
Equipment for setting up or substantial expansion of cold storage (c)
Machinery/equipment for initial setting up or substantial expansion of units for processing
of agricultural, apiary, horticultural, dairy, poultry, aquatic, marine or meat products.
Excise

E. Notification No 13/2010-ST, dated 27.02.2010

Customs Exemption provided to Indian News Agencies under ‘online information and database
access or retrieval services’ and ‘business auxiliary service’ subject to certain conditions:
i) If such news agency is notified as a news agency set up inIndia solely for collection
and distribution of new:
Provided that this exemption shall be available to only new agencies which are specified
Service
Tax under clause (22B) of section 10 of Income Tax Act 1961, and
ii) such news agency applies its income or accumulates it for collection and distribution
of news and does not distributes its income in any manner to its members.
 Change in CENVAT
Scope New Export of
New Service Existing Credit
Extended Exemptions Service
Exemptions Rules, 2004
Highlights

F. Notification No 15/2010-ST, dated 27.02.2010:

Income Statutory taxes charged by any government (including foreign government) are being
Tax excluded from taxable value for levy of service tax under the Air passenger transport
service .

Excise G. Notification No 17/2010-ST, dated 27.02.2010

Pre-packaged I.T. software in retail packages for single use is exempted from service
tax, provided
Customs
(i)Document providing the right to use such software is packed alongwith the software.
(ii) The importer has paid the appropriate duty of customs on the entire amount received
from the buyer.
(iii) Benefits under Notification No 31/ 2010- Customs Dated 27.02.2010 is not availed of
Service by the importer.
Tax
 Change in CENVAT
Scope New Export of
New Service Existing Credit
Extended Exemptions Service
Exemptions Rules, 2004
Highlights

A.. Notification No 03/2010-ST, dated 27.02.2010:

Income The Government vide its notification no 24/2004-ST, dated 10.09.2004 has provided
Tax exemption on commercial training or coaching service provided by vocational training
institutes. Now the Governemnt has vide this notification amended the definition of
Vocation Training Institutes:
Excise Vocation training institutions means an industrial training institute or an industrial training
centre affiliated to National council for vocational training, offering courses in designated
trades as notified under the Apprentices Act, 1961.

Customs B. Notification No 5/2010-ST, dated 27.02.2010

Notification No 01/2000—ST, dated 09.02.2000 is rescinded, ie., exemption from service

tax, presently available to Group Personal Accident Insurance Scheme provided by Govt.
of Rajasthan to its employees, under General Insurance Service is withdrawn .
Service
Tax
 Change in CENVAT
Scope New Export of
New Service Existing Credit
Extended Exemption Service
Exemptions Rules, 2004
Highlights

C. Notification No 07/2010-ST, dated 27.02.2010

Income Notification No 33/2009, dated 01.09.2009 is rescinded ie., exemption to transport of

Tax goods by rail is withdrawn.

D. Notification no 08/2010-ST, dated 27.02.2010

Excise

Notification No 28/2009, dated 31.08.2009 providing exemption to certain specified

goods transported by rail, which was subsequently withdrawn vide notification No
36/2009-ST, dated 09.09.2009 has been restored vide this notification.
Customs

E. Notification No 09/2010-ST, dated 27.02.2010

An abatement of 70% of the gross value of freight charged on goods (other than
Service
exempted goods) is being provided vide Notification No 09/2010-ST, dated 27.02.2010
Tax
by adding the service of ‘Transport of goods by rail’ in Notification No 01/2006-ST, dated
01.03.2006.
 Change in CENVAT
Scope New Export of
New Service Existing Credit
Extended Exemption Service
Exemptions Rules, 2004
Highlights

F. Notification No 14/2010-ST, dated 27.02.2010

Income Notification No 1/2002-ST dated 01.03.2002 is being superseded by Notification No

Tax 14/2010-ST, dated 27.02.2010 to provide that the construction and operation of
installations, structures and vessels for the purposes of prospecting or extraction or
production of mineral oils and natural gas in the Exclusive Economic Zone and the
Continental Shelf of India and for supply of any goods connected with these activities
Excise
would be within the purview of the provisions of Chapter V of Finance Act, 1994. Suitable
changes are being made in the Export of Services Rules, 2005 and Taxation of Services
(Provided from Outside India and Received in India) Rules, 2006.

Customs

Service
Tax
 Change in CENVAT
Scope New Export
New Service Existing Credit
Extended Exemption of Service
Exemptions Rules, 2004
Highlights

• Notification No 6/2010-ST-, dated 27.02.2010-

Income a) ‘Mandap Keeper Service’ shifted from Rule 3(ii) to Rule 3(i) of Export of Service Rules,
Tax 2005.

b) ‘Chartered Accountant services’, ‘cost accountant services’ and ‘company secretary

Excise services’ shifted from Rule 3(ii) to Rule 3 (iii) of Export of Service Rules, 2005.

c) Condition provided under Rule 2 (a) ie., ‘such service is provided from India and used
outside India’ is deleted.
Customs

• Definition of ‘India’ amended to include installations, structures and vessels in the entire
Continental Shelf of India and the Exclusive Economic Zone of India.

Service
Tax
Thank you
Annexure
 Change in CENVAT
Scope New Export of
New Service Existing Credit
Extended Exemption Service
Exemptions Rules, 2004
Highlights

• An Explanation to a statutory provision may fulfil the purpose of clearing up an ambiguity

in the main provision or an Explanation can add to and widen the scope of the main
section (See: Sonia Bhatia v. State of U.P. [(1981) 2 SCC 585 at 598]. If it is in its nature
Income clarificatory then the Explanation must be read into the main provision with effect from
Tax the time that the main provision came into force (See: Shyam Sunder v. Ram Kumar
[(2001) 8 SCC 24 (para 44)]; Brij Mohan Laxman Das v. CIT[(1997) 1 SCC 352 at 354],
CIT v. Podar Cement [(1997) 5 SCC 482 at 506]. But if it changes the law it is not
Excise
presumed to be retrospective irrespective of the fact that the phrase used are ’it is
declared’ or ’for the removal of doubts’.

Customs

Service
Tax