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M.K.

GUPTA TAX CLASSES
9811429230/9212011367
AMENDMENTS ASSESSMENT YEAR -2011-12 PCC/IPCC MAY-2011/NOV-2011
(IN BRIEF)
1. SLAB RATE
Individual, Hindu Undivided Family, Association of Persons, Body of Individual
If total Income upto Rs.1,60,000 NIL
On next 3,40,000 10%
On next 3,00,000 20%
On Balance amount 30%
Resident woman below the age of 65 years
If total income is upto Rs.1,90,000 NIL
On next Rs.3,10,000 10%
On next Rs.3,00,000 20%
On Balance amount 30%
Resident individual of the age of 65 years or more
If total income is upto Rs.2,40,000 NIL
On next Rs.2,60,000 10%
On next Rs.3,00,000 20%
On Balance amount 30%
No surcharge is applicable for individual, HUF, AOP, BOI and partnership firm. Domestic Company has to
pay surcharge @ 7.5% if total income is exceeding `100 lakhs and foreign company has to pay surcharge @
2.5% if total income is exceeding `100 lakhs
2. Gratuity exemption limit has been increased from 3.5 lakh to 10 lakh. wef 24-05-2010(Section 10(10))
3. In case of RPF, interest upto 9.5% p.a. is exempt but wef 01-09-2010, interest upto 8.5% p.a. is exempt.
4. In case of donation for scientific research, deduction shall be allowed for 1.75 times of donation given and
in case of approved research by a company, deduction allowed shall be 2 times instead of 1.5 times. (Section
35).
5. In case of payments within India to the residents, TDS amount can be given to the Govt. upto the last date
of filing of return of income (Section 40(a)).
6. Under section 44AB limit for audit has been enhanced to `60 lakhs in business and `15 lakhs in
profession.
7. Section 44AF has been merged in 44AD and presumptive income in case of business also shall be 8% and
further section 44AD shall not be applicable in case of company and limited liability partnership firm. And
also the assessee should not claim deduction under any of the sections 10A, 10AA, 10B, 10BA or deduction
under any provisions of Chapter VIA under the heading “C. - Deductions in respect of certain incomes” in
the relevant assessment year i.e. the following deductions should not be taken.-
Section 80-IA, 80-IAB, 80-IB, 80-IC, 80-ID, 80-IE, 80JJA, 80JJAA, 80QQB, 80RRB.
8. Under section 44AE presumptive income for heavy goods vehicle shall be `5,000 p.m. or part of a month
and in case of light or medium goods vehicle shall be `4,500 p.m. or part of a month.
9. New deduction 80CCF has been introduced and deduction is allowed to the extent of investment in long
term infrastructure bonds but maximum deduction is `20,000.
10. Limit under section 194B is increased from `5,000 to `10,000 and under 194BB `2,500 to `5,000 and
under 194C `20,000 is increased to `30,000 and `50,000 is increased `75,000.
11. Limit under section 194D is increased from `5,000 to `20,000 and under section 194H from `2,500 to
`5,000 and under 194-I `1,20,000 has been increased to `1,80,000 and under 194J `20,000 to `30,000.
12.Under section 201, if any person has deducted tax at source but it has not been paid to the Govt., interest
rate shall be 1.5% instead of 1%.
13. Penalty for violation of audit provisions of section 44AB shall be 0.5% of turnover but maximum
`1,50,000.

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14. In case of outstation allowance exemption shall be 70% of allowance or `10,000 p.m. instead of `6,000
p.m. (amended through notification no. 85/2010 dated 22-11-2010 hence it should be applicable from Nov-
2011 examination and not from May-2011)
15. Cost Inflation Index for Financial Year 2010-11 is 711.
16. No capital gains in case of conversion of private limited company or non-listed public company into a
limited liability partnership firm. Similarly depreciation shall be apportioned between predecessor and
successor in the similar manner as in case of amalgamation etc.
Similarly unadjusted business losses and depreciation shall be considered to be losses of depreciation of
successor as if incurred in the year of succession, in the similar manner as in case of conversion of proprietor
concern or partnership firm into company.
17. Amendment in Section 200 Rule 30 Time allowed shall be 7 days from the end of the month in which
the tax was deducted, but if the tax has been deducted in the month of March, tax should be deposited on or
before 30th April.

Accordingly section 40(a)(i) shall also stand amended as given below:

Tax deduction at source for payment of interest, royalty etc. outside India Section 40(a)(i)
If any person has paid any interest, royalty or technical fee or other sum chargeable to income tax and the
amount is being paid outside India or it has been paid in India to a non-resident or to any foreign company
and such amount was subject to TDS but the person has not deducted tax at source during the relevant
previous year or after deducting the tax he has not paid it to the government during the previous year or in
the subsequent year within the time allowed under section 200(1), such payments shall not be allowed to be
debited to the profit and loss account.
If the tax has been deducted in the subsequent year or it was deducted in the previous year but was paid in
the subsequent year after the expiry of the time allowed under section 200(1), it will be allowed to be
debited in the year in which such tax has been paid.

Time allowed under section 200(1)
Time allowed shall be 7 days from the end of the month in which the tax was deducted, but if the tax has
been deducted in the month of March, tax should be deposited on or before 30th April.
Example
ABC Ltd. has paid a sum of `35 lakhs outside India on 10.02.2011 being the fee for using technology
without deducting tax at source, in this case, expenditure is disallowed, but if the tax has been deducted at
source in the relevant previous year and has been paid by the company upto 07.04.2011, expenditure shall be
allowed in the previous year 2010-11 otherwise expenditure is allowed in the year in which the tax has been
paid to the Government.

Example
Determine the year in which deduction shall be allowed in the following cases if the assessee is a
company
S. No. Nature of Expenditure Date of Actual date of Previous year in
payment deposit which deduction will
be allowed
1. Fees for Technical Services 22-01-2011 Not Deposited Not Allowed
2. Interest on loan 31-01-2011 29-03-2011 2010-11
3. Rent 31-03-2011 01-05-2011 2011-12
4. Interest 31-03-2011 15-04-2011 2010-11
5. Legal Fee 10-03-2011 10-04-2011 2010-11
6. Audit Fee 18-11-2010 07-03-2011 2010-11
7. Royalty 30-03-2011 30-04-2011 2010-11

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18. Section 2(15), “Charitable purpose” includes relief of the poor, education, medical relief, preservation of
environment (including watersheds, forests and wildlife) and preservation of monuments or places or objects
of artistic or historic interest, and the advancement of any other object of general public utility:
Provided that the advancement of any other object of general public utility shall not be a charitable purpose,
if it involves the carrying on of any activity in the nature of trade, commerce or business, or any activity of
rendering any service in relation to any trade, commerce or business, for a cess or fee or any other
consideration, irrespective of the nature of use or application, or retention, of the income from such activity:
Provided further that the first proviso shall not apply if the aggregate value of the receipts from the
activities referred to therein is ten lakh rupees or less in the previous year.

19. Optional Composition Scheme for payment of service tax in case of distributor or selling agents of
lotteries
A special mode of payment of service tax has been provided to a distributor or selling agent of lotteries by
inserting sub-rule (7C) in rule 6 of the Service Tax Rules, 1994.
The distributor or selling agents rendering the taxable service of promotion, marketing or
organising/assisting in organising lottery can discharge their service tax liability in the following rates
instead of paying service tax @10%:-
S. No. If the lottery / lottery scheme is one where Rate of service tax
1. Guaranteed prize payout > 80% `6000/- on every ` 10 Lakh (or part of `
10 Lakh) of aggregate face value of lottery
tickets printed by the organising State for a
draw
2. Guaranteed prize payout < 80% `9000/- on every `10 Lakh (or part of `
10 Lakh) of aggregate face value of lottery
tickets printed by the organising State for a
draw

20. Individual services for May/Nov-2011 shall 1. Legal consultancy services 2. Commercial training or
coaching services 3. Information technology software services 4. Cargo handling services 5. Customs house
agent’s services 6. Practising Chartered Accountant’s services 7. Consulting engineer’s services 8.
Manpower recruitment or supply agency’s services

1. CUSTOM HOUSE AGENT SECTION 65(105)(h)
(w.e.f. 15th June 1997, Notification No. 17/1997-ST dated 6th June 1997)

Custom House Agent means any person licensed by Custom Department to work as custom house agent and
such person renders services in connection with clearance of imported goods or clearance of export goods
and also renders services in connection with Entry or Departure of conveyances.

A custom house agent shall submit Bill of Entry on behalf of the importer and also Shipping Bill / Bill of
Export on behalf of the exporter.

Bill of entry is an important document which is submitted by the importer for release of imported goods.

Shipping Bill or Bill of Export is an important document submitted by the exporter for export of goods.

Entire amount charged by the CHA shall be subject to service tax, however, payments made by CHA on
behalf of the client, such as statutory levies (cess, customs duties, port dues, etc.) and various other
reimbursable expenses incurred are not to be included for computing the service tax.

Sometimes, CHAs sub-contract their work to CHAs located in other stations. In such cases, it is possible that
the sub-contracting CHA raises the bill on the main CHA who in turn raises the bill to the client, in such
cases, the sub-contracting CHA will not be required to pay service tax on the bills raised by him on the main

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CHA. The service tax will be payable by the CHA who provides the actual service to the client and raises
the bill to the client.

A CHA may have various branch offices located at different stations but all these branch office do not raise
the bills and only the main or central office will be raising the bills. In such cases, only the central office
should be registered with the department. (Conveyance means – Vehicle)

2. CONSULTING ENGINEER’S SERVICES SECTION 65(105)(g)
(w.e.f. 7th July 1997, Notification No. 23/1997-ST dated 2nd July 1997)

“Consulting engineer” means any professionally qualified engineer or any body corporate or any other firm
who, either directly or indirectly, renders any advice, consultancy or technical assistance in any manner to
any person in any disciplines of engineering.

Services rendered by a consulting engineer in connection with computer hardware engineering as well as
software engineering or only in connection with hardware engineering, shall be taxable as consulting
engineers services.

If services are rendered only for computer software engineering, it will be taxable as information technology
service.
The scope of the services of a consultant may include:
(i) Feasibility report;
(ii) Basic design engineering;
(iii) Detailed design engineering;
(iv) Construction supervision and project management;
(v) Supervision of commissioning and initial operation;
(vi) Post-operation and management;
(vii) Trouble shooting and technical services, including establishing systems and procedures for an existing
plant.
The services should be rendered to a person directly, and not in the capacity of a sub-consultant/associate
consultant to another consulting engineer, who is the prime consultant. In case services are rendered to the
prime consultant, the levy of the service tax does not fall on the sub-consultant but it falls on the prime or
main consulting engineer who raises a bill on his client (which includes the charge for services rendered by
the sub-consultant).
‘Consulting Engineer’ will not include those qualified engineers who act as ‘insurance surveyors and loss
assessor’ for insurance companies and therefore service tax levy on the consulting engineer in any discipline
of engineering will not cover the insurance surveying and loss assessment services rendered by a qualified
engineer.
As per Notification No. 23/2008-ST, Dated 10-5-2008
Central Government, hereby exempts the taxable services provided by a consulting engineer to any person
on transfer of technology from so much of the service tax leviable thereon under section 66 of the said Act,
as is equivalent to the amount of cess paid on the said transfer of technology under the provisions of section
3 of the Research and Development Cess Act, 1986.
(Section 3 of The Research and Development Cess Act, 1986
(1) There shall be levied and collected, for the purposes of this Act, a cess at such rate not exceeding five per
cent. on all payments made towards the import of technology, as the Central Government may, from time to
time, specify, by notification, in the Official Gazette.
(2) The cess shall payable to the Central Government by an industrial concern which imports technology on
or before making any payments towards such import and shall be paid by the industrial concern to any
specified agency.)

000 Consultancy services in computer hardware engineering 15.000 inclusive of service tax from ABC Ltd.2005. 1986 is exempt under Notification No.000 (ii) Consultancy services in computer hardware engineering 15. 2. 1986 5.00.. No. 1986 in respect of the above-mentioned services. Ramesh and is not included in any of the receipts mentioned above.000 was issued inclusive of service tax and payment of `3.000 (iv) Advice in relation to metallurgical engineering 10.000 (iii) Technical assistance in computer software engineering 25. Service tax has been charged separately by Mr.00.00. Ramesh is not entitled to the benefit of small service provider available under Notification No.18/2002 ST dated 16. Advice in relation to any branch of engineering is taxable 4.2002. a consulting engineering company? Solution: Computation of service tax payable:- Particulars ` Professional advice to one of his friend 5. Compute the service tax payable by Mr.000 Technical assistance in computer software engineering 25. Particulars ` (i) Professional advice to one of his friend 5.000 Add: Education cess @ 2% 100 Add: Secondary and higher education cess @ 1% 50 Service tax payable 5.000 has been paid by him as cess payable under section 3 of the Research and Development Cess Act.000 (v) Professional advice to his friend free of charge ` 5.000 Service tax @10% 5. A in October 2010 and a bill of `5.000 Value of taxable services 50. Consultancy and technical assistance in relation to both computer hardware and software engineering are taxable 3. a consulting engineer provides the following particulars in respect of various services rendered by him during the quarter ending December 2010: S. (ii) Rendered services to Mr. Cess payable under section 3 of the Research and Development Cess Act. 6/2005 ST dated 01. Mr.000 was received in February 2011 and balance is yet to be received. Presume all the payments have been received upto 31st Dec.000 Total 55. on 10th April 2010 and services were rendered in September 2010 and bill was issued in October 2010. Will your answer be different if the above services are rendered by AB Ltd.000 Less: Cess payable under section 3 of the Research and Development Cess Act. Ramesh.150 Notes: 1 Advice to friend is taxable as service rendered to any person is taxable. 5 Illustration: Mr. X is a Consulting Engineer’s who is liable to pay service tax has submitted information as given below: (i) Received advance `2.12. Services rendered free of charge are not liable to service tax 5. 2010.000 Advice in relation to metallurgical engineering 10. .03. Answer will not be different as consulting engineer inter alia means any body corporate as well. Ramesh for the quarter ending December. 2010. Illustration: Mr.

51 Rounded off under section 37D = 28.00.015 Last date for making payment shall be 31st March 2011.3 = 18. Services provided to any person.00. 6 (iii) Rendered services to United Nations in December 2010 and payment of `7.000 / 110. Solution: (i) April to June 2010 Taxable value of services = 2.00. (iii) Services provided to United Nations or an international organization is exempt from service tax.000 was received in March 2011 without service tax.000 was received in December 2010.e. (iv) Services provided to a developer of SEZ or a unit of SEZ is exempt from service tax. Recruitment or supply of manpower includes services in relation to pre-recruitment screening.000 Amount not received = 2.014.3 = 28.676. 23/1997-ST dated 2nd July 1997) “Manpower recruitment or supply agency” means any person engaged in providing any service. in any manner for recruitment or supply of manpower.000 was received in August 2010. (v) Rendered services to the Reserve Bank of India in April 2010 and payment of `9.34 Rounded off under section 37D = 18. No service tax has been collected.00.000 Less: Amount received = 3. directly or indirectly. verification of the credentials and antecedents of the candidate and authenticity of documents submitted by the candidate.000 was received in January 2011 without service tax. (vi) Services provided to foreign diplomatic mission are exempt from service tax. temporarily or otherwise. .00.50. last date shall be 6th July 2010.000 Since amount charged is inclusive of service tax hence amount of service tax shall be = 3.000 Service tax payable = 2. No service tax has been collected.000 / 110. to any other person. Notification No.00.f.3 x 10. (vi) Rendered services to foreign diplomatic mission and `5. by a manpower recruitment or supply agency in relation to the recruitment or supply of manpower. (vii) Services provided to family members of diplomatic agents are exempt from service tax.00.3 x 10.000 was received in October 2010 without service tax. 3. 7th July 1997. (ii) January to March 2011 Total bills raised = 5. (v) Services provided to the Reserve Bank of India are exempt from service tax.00. (vii) Rendered services to family members of diplomatic agents and `1.00.676 Last date for making payment shall be 5th July 2010 and if payment is through internet banking. in any manner. temporarily or otherwise. (iv) Rendered services to a unit in SEZ and `3. MAN POWER RECRUITMENT OR SUPPLY AGENCY SECTION 65(105)(k) (w.50.

subject to the condition that the invoice issued by such service provider. in such cases also service tax is payable. providing services should mention the name and address of the goods transport agency and also the name and date of the consignment note.000 × 2% 4. compute the service tax payable by Parsvnath Consultants under the category of ‘manpower recruitment and supply agency’s services’ for the financial year 2010-11. (Credentials means – Qualifications/Testimonial.26.000 Supply of contractual employees to big business houses 9.00. its aggregate value of taxable services amounted to ` 23 lakh in the financial year 2009-10. Further.000 Amount received for manpower recruitment services provided to Bindu Transporters-a 1.01.00. For the financial year 2010-11. 7 Educational institutes such as IITs. Solution: Computation of service tax payable by Parsvnath Consultants under the category of ‘manpower recruitment and supply agency’s services for the financial year 2010-11:- Particulars Amount (`) Pre-recruitment screening of the prospective candidates 8.2009 has exempted the services provided by a manpower recruitment or supply agency in relation to the recruitment or supply of manpower.00.00.000 Service tax @ 10% = ` 22. in such cases service tax shall be payable.000 × 1% 2. 2. Notification No. issued in his behalf.000 Amount received for verification of the credentials of the candidates 5. PRACTISING CHARTERED ACCOUNTANT SECTION 65(105)(s) . the amount of service tax has been charged separately.000 goods transport agency On the basis of the above information. who come to the institutes for recruiting candidates through campus interviews. 4.000 Amount received for supply of contractual employees to big business houses 9.400 Add: Secondary and education cess payable @ 1% = ` 2. Note: Parsvnath Consultants enjoys a good reputation among its clients.000 would not be included in the value of the taxable services. Therefore. by whatever name called.2005 is not available to Parsvnath Consultants for the financial year 2010-11 because the aggregate value of taxable services exceeds ` 10 lakh in the preceding financial year 2009-10. Notification No.200 Amount of service tax payable 2.20.000 Verification of the credentials of the candidates 5.00.2009 has exempted the services provided by a manpower recruitment or supply agency to a goods transport agency for transportation of goods by road.20. Resultantly. Exemption from service tax under Notification No. Business or industrial organisations engage services of manpower recruitment or supply agencies for temporary supply of manpower which is engaged for a specified period or for completion of particular projects or tasks.00. ` 1. 1/2009 ST dated 05.000 Value of taxable services 22.00.03. 1/2009 ST dated 05. temporarily or otherwise provided to a goods transport agency for transportation of goods by road in the said goods carriage from the whole of the service tax. 6/2005-ST dated 01. following information is available:- Particulars Amount (`) Amount received for pre-recruitment screening of the prospective candidates 8. IIMs charge a fee from prospective employers like corporate houses/MNCs.00.20.600 Note: 1. Antecedents means – Experience/Background) Illustration: Parsvnath Consultants is engaged in providing manpower recruitment and supply agency’s services.00.00.000 × 10% 2.000 Add: Education cess payable @ 2% = ` 2.01.

8 (w. Compute amount of service tax payable for each quarter and also the last date upto which tax should be paid for the financial year 2010-11. 53/1998-ST dated 7th Oct 1998) th “Practising Chartered Accountant” means a person who is a member of the Institute of Chartered Accountants of India and is holding a certificate of practice granted under the provisions of the Chartered Accountants Act.f. (v) Rendered services to different clients in the month of January 2011 and bills of `7.e.000 inclusive of service tax. 16 October 1998.691 . Services rendered by Chartered Accountants by way of representing any person before any statutory authority in the course of proceedings initiated under any law.84 Rounded off under section 37D = 46.003. 1949 and includes any concern engaged in rendering services in the field of chartered accountancy.000 / 110.000 was received in the same month in full and final settlement.000 in advance inclusive of service tax in March 2011 for services to be rendered in April 2011. in any manner shall be chargeable to service tax. Illustration: Mr.63 Rounded off under section 37D = 7. by a practising chartered accountant in his professional capacity.20.00. X a Chartered Accountant.00. (iv) Represented one client in the court of Commissioner (Appeals) in September 2010 and a bill of `1.00.000 was issued and payment was received on 3rd October 2010.000 was received by a cheque on 10th August 2010 and balance on 3rd March 2011. Notification No. last date shall be 6th October 2010 October to December 2010 Nil January to March 2011 Since amount charged is inclusive of service tax hence amount of service tax shall be = 5.3 = 7.) (ii) Rendered services in the month of June 2010 in connection with scrutiny assessment and a bill of `75. (vi) Received `70.000 / 110.000 was issued inclusive of service tax but only `5.690.000). (Out of which `75. who is liable to pay service tax has submitted particulars as given below: (i) Rendered services in May 2010 and issued bill for `1. Solution: April to June 2010 Nil July to September 2010 Since amount charged is inclusive of service tax hence amount of service tax shall be = 75. (iii) Rendered free services in July 2010 (market value `20.00.3 = 46.000 was issued. shall be exempt from service tax. Services rendered to any person.004 Last date for making payment shall be 5th October 2010 and if payment is through internet banking.3 x 10.3 x 10.

202. Solution: If the return for the half year ending September 2010 was filed on 18th October’ 2010.3 = 4.18 Rounded off under section 37D = 4.3 x 10. the penalty shall be `500.000 Penalty liable to be paid is `2. Revised return can be submitted within a period of 90 days from the date of submission of the original return. If return for the half year ending March 2011 was filed on 27th April’2011.430 x 10/30 = 382. (b) If in the above case there is a delay of 10 days in payment of tax.19 Penalty calculated @ `200 per day for 10 days = `2. Solution: April to June 2010 Nil July to September 2010 Interest Payable under section 75 7. 9 Since amount charged is inclusive of service tax hence amount of service tax shall be = 45.000 / 110.71 Rounded off under section 37D = 6.537 Last date for making payment shall be 31st March 2011.000 (c) If the return for the half year ending September 2010 was filed on 18th October 2010 return for half year ending March 2011 was filed on 27th April 2011.54 Penalty payment under section 76 2% of the amount of default for 10 days = 2% x 57.430 x 13% x 10/365 = 204.000 Service tax payable = 70.004 x 13% x 10/365 = 24.000 x / 110.95 Penalty payment under section 76 2% of the amount of default for 10 days = 2% x 7.000 October to December 2010 Nil January to March 2011 Interest Payable under section 75 57. Revised return can be submitted within a period of 90 days from the date of submission of the original return.87 Penalty calculated @ `200 per day for 10 days = `2.202 Amount received in the month of March 2011 = 70.004 x 10/31 = 45. Compute interest payable under section 75 and penalty payable under section 76.000 Penalty liable to be paid is `2.536. there is no penalty because return is filed within prescribed time period. .3% = 6. compute penalty payable for each of the return and also determine the last date upto which revised return can be filed.3 x 10.

2011:- Particulars Amount (`) Amount (`) Certification of documents under Export and Import 2.000 Receipts for tax consultancy provided in the month of December.066 December.00. the activities mentioned above do not come within the purview of cargo handling services.— (a) cargo handling services provided for freight in special containers or for non-containerised freight. unloading. CARGO HANDLING SERVICES SECTION 65(105)(zr) (w. Empty containers cannot be treated as cargo.43.f. calculate the value of taxable services for the quarter ended on March. 2011.30 4. packing or unpacking of cargo and includes. Since the receipts are not exclusive of service tax value of taxable service will be calculated by making back calculations. 2010 10. Notification No. his receipts are as follows:- Particulars Amount (`) Certification of documents under Export and Import Policy of Government of India 2. 16th August 2002.07. .81. (iv) services in relation to agricultural produce (v) for goods meant to be stored in cold storage Sometimes. It is exempt in the following cases: (i) handling of export cargo (ii) passenger baggage including unaccompanied baggage (iii) mere transportation of goods. unloading. 8/2002-ST dated 1st Aug 2002) Cargo handling services provided to any person. 2010 Value of taxable services 6.000 x 100 / 110. relating to representing the client before any statutory authority in the course of proceedings initiated under any law for the time being in force.324 Policy of Government of India Preparation of the financial statement of ABC Ltd. As per Notification No. Therefore. 2011.000 x 100 / 110. by a cargo handling agency in relation to cargo handling services shall be chargeable to service tax.00. 5.2006. 2. 10 Illustration: Rajul is a qualified Chartered Accountant.699 Note: 1.000 x 100 / 110. 2010.00. He acquired the certificate of practice from the ICAI in November. by way of issue of notice.00. services provided by a container freight terminal or any other freight terminal.30 1. 5. for all modes of transport. and cargo handling service incidental to freight. unpacking.000 Representation of the client before ITAT 50. and (b) service of packing together with transportation of cargo or goods. 5.000 Using the above information. with or without one or more of other services like loading. such agency undertake storing/washing/repairing and handling of empty containers for the shipping lines for which they charge the shipping lines. 25/2006 ST dated 13.000 Preparation of the financial statement of ABC Ltd. the taxable services provided by a practising Chartered Accountant in his professional capacity. to a client. Solution: Calculation of the value of taxable services for the quarter ended on March. is exempt from the whole of service tax leviable thereon. For the quarter ended on March.53.e.30 9. “Cargo handling service” means loading.309 Representation of the client before ITAT (Note-1) Nil Receipts for tax consultancy provided in the month of 10.

providing services should mention the name and address of the goods transport agency and also the name and date of the consignment note. by whatever name called. 2011:- Particulars ` Total receipts for services rendered 1. Charges received for packing together with transportation of cargo. the proceeds of the auction goes first to the cost of auction. it received an amount of `1. Hence.00.000 Value of taxable services under cargo handling services 30.00.00.00.000 for the services rendered.00.000 4) 3. The definition of ‘cargo handling service’ under section 65(23) specifically excludes handling of export cargo or passenger baggage.00. In June. issued in his behalf. `5. 10.11/1/2002-TRU dated 1/8/2002 clarifies that activity of storing/washing/repairing and handling empty containers for the shipping lines does not come within the purview of “cargo handling services”. 3.000 Less : Exemptions:- 1. Charges received for mere transportation of cargo (Note-5) 5.00. is engaged in providing ‘cargo handling services’.000 2. 1/2009 ST dated 05. It is clarified that no cargo handling service can be said to have been rendered in such cases. Circular No. Calculate the value of taxable service under ‘cargo handling services’ providing brief reasons where required with suitable assumptions based on the following break-up of the total receipts for the month of June. then towards customs duties and then to the custodian of the goods. Notification No.01. CLARIFICATIONS REGARDING SERVICE TAX ON CARGO HANDLING SERVICES . The definition of ‘cargo handling service’ under section 65(23) specifically excludes mere transportation of goods. In the case of auctioned goods. B. the sale proceeds shall not be subjected to service tax. 10/2002 ST dated 01. of empty containers of shipping lines (Note. Notification No. 4. Illustration: Shankar Cargo Ltd.000 Notes: 1.000 are taxable as per section 65(23). 11 If any person hires labour/labourer for loading or unloading of goods in their individual capacity. 2011: Receipts ` (in lakh) Services in relation to export cargo and handling of passenger baggage 50 Storage and cleaning of empty containers of shipping lines 10 Packing and transport of cargo 5 Handling of agricultural produce 5 Mere transportation of cargo 5 Other receipts for providing cargo handling services 25 Note: The above receipts are exclusive of service tax Solution: Calculation of the value of taxable service under ‘cargo handling services’ of Shankar Cargo Ltd.00. they do not form part of taxable services. for June. 2011. it will not come under the purview of service tax as a cargo handling agency.00. Hence. Charges received in relation to handling of agricultural produce (Note-3) 5.000 4.08.2009 has exempted the services provided by a Cargo Handling Agency to a goods transport agency for transportation of goods by road. washing etc. 5. Sometimes the cargo is abandoned in that case it will be auctioned by Container Freight Stations. Charges received for storage.2002 exempts the taxable service provided to any person by a cargo handling agency in relation to agricultural produce or goods intended to be stored in a cold storage from payment of service tax.00. they do not form part of taxable services. therefore service tax is not leviable. 2. subject to the condition that the invoice issued by such service provider. Receipts in relation to export cargo & handling baggage of passenger (Note-1) 50.

A point has been raised as to what would be the value of service tax in a case where transport and cargo handling service is provided in a composite manner. goods are packed say at Agra for transportation to Bhopal where it is transhipped and ultimately reaches Mumbai. The measure of tax is the gross amount charged by the cargo handling agency from the customer. the service provided in a port in relation to handling of goods would be appropriately covered under port service and no separate levy will be attracted under the category of cargo handling agency service. 8. 4. Container Freight Stations. is any service provided. the relevant documents should show that the goods are for export. Well known examples of cargo handling service are services provided in relation to cargo handling by the Container Corporation of India. for all modes of transport. Inland Container Depot. Cargo handling services are provided in the port also. and any other service incidental to freight. to any person. There may be cases where goods may be transhipped at a place other than the place of packing before reaching a place from where it is exported. 12 CIRCULAR F. 3. NO. 7. loading and unloading of goods meant to be transported by any means of transportation namely truck. 2 Mere transportation of goods is not covered in the category of cargo handling and is therefore not liable to service tax. 2002. All goods meant for export are excluded from the scope of this levy. This is only an illustrative list. 2. DATED 1-8-2002 [ANNEXURE II] 1. 3 Cargo handling service provided in relation to storage of agricultural produce (scope of the term “agricultural produce” is given under the storage and warehousing service) or for goods meant to be stored in cold storage have been exempted from the levy of service tax. as per sub-clause (zr) of clause (90). In this context it may be mentioned that port services cover any service provided in relation to goods or vessels by a port or a person authorized by the port. However since port services covers all the services in relation to goods and vessels and therefore more specific to port. would not be taxable irrespective of the fact that it reaches the place of export after transhipment. Passenger baggage has been excluded from the levy of service tax. 6. 5. Therefore. 10/2002- ST). unloading. For example. 1994 as amended by the Finance Act. The services which are liable to tax under this category are the services provided by cargo handling agencies who undertake the activity of packing. In this regard a point has been raised as to whether unaccompanied baggage of a passenger attracts service tax under the category of passenger baggage.11/1/2002-TRU. B. The section referred to hereinafter are the sections or clauses of the Finance Act. (See Notification No. packing or unpacking of cargo and includes cargo handling services provided for freight in special containers or for non- containerised freight. Similar would be the case in respect of service provided for storage of goods in the port premises. from where it is exported. by a cargo handling agency in relation to cargo handling services. ship or aircraft. 2002. 1994 as amended by the Finance Act. There are several other firms that are engaged in the business of cargo handling services. Reference to sub-clause or clause means clause or sub-clause of section 65 of the Finance Act. 1 The services provided in relation to export cargo and passenger baggage are excluded from tax net. A doubt has been raised as to whether service tax would be leviable on cargo handling service at Agra. On the other hand. However. the term “cargo handling service” means loading. A point has been raised by Airports Authority of India (AAI) as to whether service tax will be leviable in respect of handling of transhipment of export cargo from one international carrier to another international . This includes the cargo handling service provided within the port premises. services provided by a container freight terminal or any other freight terminal. if the bill indicates the amount charged for cargo handling and transportation separately on actuals basis (verifiable by documentary evidence). rail. the tax will be payable on the entire amount. but does not include handling of export cargo or passenger baggage or mere transportation of cargo. As per clause (21). unpacking. Airport Authority of India. The taxable service. It is clarified that service provided in relation to any cargo which is meant for export. then the tax would be leviable only on the cargo handling charges. Whether such service will be covered in the category of port services or cargo handling service. if lump sum amount is charged for both transportation and cargo handling. It is clarified that unaccompanied baggage of a passenger will not be leviable to service tax. Therefore to this extent there may be an overlap in cargo handling service and the port service.

which seems to range from 5% to 15% of the freight. 11. whatever charges. storage and processing charges. terminal charges. 12. etc. . The CHA does not pay service tax on the handling charges charged by the CFS. terminal handling charges. It is stated that the service rendered by them should be held as exempted and it merely relates to transportation of goods. CFSs also sometimes undertake storing/washing/repairing and handling of empty containers for the shipping lines for which they charge the shipping lines. 9. If the cost of transportation is claimed on actuals basis. The question is if the cost of transportation is shown separately in the bill raised. the proceeds of the auction goes first to the cost of auction. I. 7/2003-ST dated 20th June 2003) Section 65(26) – “Commercial training or coaching” means any training or coaching provided by a commercial training or coaching centre. 10. Another point raised by them is that they undertake transhipment of import cargo from international to domestic carrier which will be ultimately cleared at the final domestic destination. 15. Thus there is no double taxation. statutory levies. It is the CHA who claims all the charges from the importer including the charges made by the CFS on CHA and remit to the CFS. 6. hazardous cargo. will it be excluded from the levy of service tax. This is not factually correct. It is clarified that no cargo handling service can be said to have been rendered in such cases. They are not supposed to levy any transportation charges. the cargo handling agency charges from any person (including the CHA) is liable to service tax. Hence no service tax is payable under the category of cargo handling service.e. For example. 13. the activities mentioned above do not come within the purview of cargo handling services. which includes transportation and handling in respect of imported laden containers from Port to CFS. issued under the International Airports Authority Act. In the case of CHAs. The above contention is not correct. Cargo/13519/Pt. Under the Notification No. The question is whether service tax is payable on this. Further. if someone hires labour/labourer for loading or unloading of goods in their individual capacity.f. Another point raised relates to cases where the CFS offers a total package rate. Therefore whatever charges they levy in this regard would be only towards handling charges and accordingly. In the case of auctioned goods. Since services of a CHA is already covered under the tax net. It is clarified that so long as the cargo is for export. Some of the cargo handling agencies may also act as marketing agents for individual airlines for which they get a commission. radioactive cargo and cargo requiring strong room facilities. 13 carrier or from a domestic carrier to an international carrier. 1993. 1st July 2003. no service tax on handling of such cargo is leviable. Empty containers cannot be treated as cargo. Notification No. the AAI can levy charges towards demurrage. It has been pointed out that Container Freight Stations that they do not have any direct contact with the importer and they only provide facility to the Customs House Agents (CHA) to handle the container and import cargo for which they have a contract on a mutually agreed rate. It is clarified that such activities will not come under the purview of service tax as a cargo handling agency. Therefore. the service tax is levied only on the agency or agency and attendance charges and not on the reimbursible expenses (on actuals basis) such as port fees. therefore service tax is not leviable. special charges for live animals. as per the law. landing and container charges. then towards customs duties and then to the custodian of the goods. 1973. A clarification has been sought as to whether service tax is payable on abandoned cargo which are auctioned by the CFS as no service is rendered to any person. whether he would be liable to service tax as a cargo handling agency. COMMERCIAL TRAINING OR COACHING SECTION 65(105)(zzc) (w. For domestic cargo service tax will be applicable. Marketing or canvassing for cargo for airlines does not come within the ambit of cargo handling services. service tax would be leviable. otherwise there will be double taxation. dated the 4th June. Another doubt raised in relation to cargo handling services is that whether individuals undertaking the activity of loading or unloading of cargo would be leviable to service tax. examination charges. 14. then it will not be includible in the taxable value of cargo handling services. handling charges. dock fees. the CFS service providers should be exempt from tax when the billing is done on CHAs.

5. INFORMATION TECHNOLOGY SOFTWARE SERVICE SECTION 65(105)(zzzze) (w. Mason (Building Constructor) 8. - (i) development of information technology software. Beautician 10. Individual imparting home coaching in their independent capacity i. offering courses in designated trades as notified under the Apprentices Act. “Recreational training institute” means a commercial training or coaching centre which provides training or coaching relating to recreational activities such as dance. 1961. Programming and systems Administration Assistant 3. In-house training provided to the employees by their employer in his independent capacity. 6. However. Auto Electrician 5. Some such trades are as given below: 1. Electrician 3. if the employer avails the services of a Commercial Training or Coaching Centre for the purpose of imparting training to his employees. Pre-school Training or Coaching.e. Services rendered by Vocational training institute. Services rendered by Recreational Training Institute. Furniture and Cabinet Maker 9. 7. then employer (in his capacity as Service Recipient) will be liable to pay Service Tax to the concerned Commercial Training or Coaching Centre. implementation and other similar services related to information technology software. Wireman 4. Notification No. enhancement. Training or Coaching in respect of Sports. Plumber 7. martial arts or hobbies. “Vocational training institute” means an Industrial Training Institute or an Industrial Training Centre affiliated to the National Council for Vocational Training. Commercial Training which forms an essential part of course leading to issue of a certificate/diploma/degree recognized by law for the time being in force in our country. Services not liable to be taxed 1. Hair Dresser 11. with or without issuance of a certificate and includes coaching or tutorial classes but does not include preschool coaching and training centre or any institute or establishment which issues any certificate or diploma or degree or any educational qualification recognised by law for the time being in force. Desk Top Publishing Operator 14. upgradation. Health and slimming Assistant 12. analysis. Welder (Gas and Electric) 2. 4. (ii) study. 16th May 2008. Data Preparation & Computer Software 13. consultancy and assistance on matters related to information technology software. (iv) providing advice. 18/2008-ST dated 10th May 2008) Information Technology software service includes. specifications for . 7. 14 Section 65(27) – “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. Carpenter 6. (iii) adaptation. not on behalf of a Commercial Training or Coaching Centre. singing.f.e. design and programming of information technology software. including conducting feasibility studies on implementation of a system. 2.

140 Add: Secondary and higher education cess @ 1% (`1. 2000 . guidance and assistance during the startup phase of a new system.000 electronically Receipts for programming of information technology software 3.000 Receipts for providing the right to use information technology software supplied 6. Section 2(1)(v) of the Information Technology Act.02.50. and capable of being manipulated or providing interactivity to a user.“information” includes data.20. 17/2010 CE dated 27. it has provided the taxable services of value of `15 lakh. The receipts during financial year 2010-11 are as under:- Particulars Amount (`) Receipts for development of information technology software 1.07.000 × 10%) 1.000 excise duty has been paid and benefit under Notification No. recorded in a machine readable form.20.000 Receipts for providing the right to use information technology software supplied 6.07.00. CSS has a good track record.000 × 1%) 1. (v) providing the right to use information technology software for commercial exploitation including right to reproduce.210 Note: . (vi) providing the right to use information technology software supplied electronically.70. 15 a database design. advice on proprietary information technology software. codes.10.070 Service tax payable 1. The amount of service tax has been charged separately. specifications to secure a database. data. software and databases or micro film or computer generated micro fiche. Section 65(53a) . computer programmes. by means of a computer or an automatic data processing machine or any other device or equipment.700.2010 has not been availed Determine the value of taxable services and amount of service tax payable by CSS for the financial year 2010-11.000 Add: Education cess @ 2% (`1.000 Total value of taxable services 10.000 Receipts for providing right to use the packaged software on which the amount of 6.00.07. Solution: Computation of the value of taxable services and amount of service tax payable by CSS for the financial year 2010-11:- Particulars Amount (`) Receipts for development of information technology software 1. text.000 electronically Receipts for programming of information technology software 3. Illustration: Cladion Software Systems (CSS) is an information technology software company. voice. images. In financial year 2009-10.000 Service tax @ 10% (`10. 2000 (21 of 2000). distribute and sell information technology software and right to use software components for the creation of and inclusion in other information technology software products. Section 65(53) – "information" has the meaning assigned to it in clause (v) of sub-section (1) of section 2 of the Information Technology Act. sound.00. including source code and object code."information technology software” means any representation of instructions. sound or image.000 × 2%) 2.50.

by any other business entity. consultancy or assistance in any branch of law.2010 has not been availed are exempt from service tax vide Notification No. Notification No. “Business entity” includes an association of persons. (ii) the importer has paid the appropriate duties of customs on the entire amount paid by the buyer. VAT. Services provided to a business entity. the Central Government. all Criminal laws. 2009) st 1.e. receipts of `6..00. Services shall be taxable in the manner given below: Status of Service Provider Status of Service Recipient Taxability Individual Individual Non-Taxable Individual Business Entity Non-Taxable Business Entity Individual Non-Taxable Business Entity Business Entity Taxable 5. Tribunal or Authority shall not amount to taxable service. if any. 17/2010 CE dated 27. consultancy or assistance in all branches of law without any exception will attract service tax for example all Civil laws.S. by whatever name called. (E).02. is packed along with the software. 02/2010 dated 27. Customs. LEGAL CONSULTANCY SERVICES SECTION 65(105)(zzzzm) (w.In exercise of the powers conferred by sub-section (1) of section 93 of the Finance Act. 26/2009-ST dated 19th Aug. in any manner: 2. and (iii) the benefit under notification No. 3. 17/2010-Service Tax G. Excise. 6. Some Examples of Services which are taxable • Services of Drafting of reply to Show Cause Notice • Services of Giving Legal Opinion in respect of queries raised in any branch of law such as Income Tax. company or firm. [F. from the whole of service tax. namely:- (i) document providing the right to use such software. 2010 No. Any advice.f 1 Sept 2009. 16 1. 4. 2010 is not availed of by the importer.R.000 are not liable to service tax. the 27th February. Therefore.2010. for the purpose specified in item (v) of clause (zzzze) of sub-section 105 of section 65 of the said Finance Act. 31/2010– Customs dated the 27th of February. Receipts for providing the right to use the packaged software on which the excise duty has been paid and benefit under Notification No. on being satisfied that it is necessary in the public interest so to do. hereby exempts the taxable service providing packaged or canned software. all Taxation laws etc. but does not include an individual. body of individuals. Notification New Delhi.02. subject to the following conditions. The services provided by way of appearance before any Court. No. intended for single use and packed accordingly. 334/1/2010-TRU] (Prashant Kumar) Under Secretary to the Government of India 8. in relation to advice. Service Tax. Company Law etc. . 1994 (32 of 1994).

000* (*includes `50.000) – `50.000 Consideration received for services rendered in earlier year [`5.2011: ` (i) Free services rendered to poor people (Value of the service computed on comparative basis) 40.. 17 • Any advice in respect of Tax Planning • Any advice. 2010 (excluding service tax at applicable rates and TDS under section 194-J of the IT Act.000 (iv) The firm has received the following amounts during the year: Relating to taxable services rendered in March.20. is providing taxable legal consultancy services and is liable to pay service tax. 1961 to the tune of `1. amounts received relating to this service. 1961 to the tune of `45. consultancy or assistance in respect of compliance matters of any branch of law.2011 and the service tax payable.20.80.000 (ii) Advances received from clients for which no taxable services has been rendered so far 5.000 + 10.40.00.50. briefly explaining the treatment of each item above.000 Service tax payable [`21.320) 5.680 Relating to taxable services rendered in current year 2010 (excluding Service tax at applicable rates and TDS under section 194-J of the IT Act.000) 9. the firm follows mercantile system of accounting. Solution: Computation of value of taxable services and service tax payable thereon: Particulars ` Free services rendered to poor people (Note (i)) - Taxable advances received from clients 5. a partnership firm.90.40.000 x 10.44.44.80.00. for the year ended 31.420 Notes:- .00.20. You are required to compute the value of taxable services for the year ended 31. bills raised.000 Consideration received for taxable services rendered in current year[(`9.03.680 + `45.000 (iii) Services billed to clients 12.000] (Note (ii)) Fee for appearing before Labour Courts (Note (iii)) - Total value of taxable services 21.000 `1. The firm furnishes the following information relating to the services rendered.3%] 2.000 for appearances fee before Labour Court received from another firm) Service tax has been charged separately in all the bills. Illustration: Virat Kohli & Co.320] 5.03.

has approached you for advice. Hence. 2009.611. Legal consultancy services provided to a service recipient who is an individual (including sole proprietorship) are not taxable.2010.042.11 × 2%) 2. consultancy or assistance in any branch of law.261. service tax is not payable in case of free services as there is no consideration in such case.000 Amount received for services provided to sole proprietorship concerns 1. is liable to pay service tax and if so. by any other business entity.00.50. what shall be the amount of service tax payable by it? Note: Assume that exemption available to small service providers is not available to Luthra Consultants Ltd.00 Note: 1. Luthra Consultants Ltd. Thus. the details of the transactions are as follows:- Particulars Amount (`) Amount received for appearance before any court. Any income tax deducted at source is included in the charged amount.07. the statutory liability does not get extinguished if the service provider fails to realize or charge the service tax from the service receiver. Examine whether Luthra Consultants Ltd. (ii) Service tax is payable on the value of taxable services charged by the assessee.04. . Tribunal or authority. for the financial year 2010-11 would be computed as follows:- Particulars Amount (`) Gross amount received for tax consultancy to private companies 10.11 Add: Education cess @ 2% (` 1. will be taken to be inclusive of service tax and accordingly tax payable will be calculated by making back calculations.000 is not liable to service tax.42.000 represents only TDS. In these cases. the amount recovered from the client. has not collected any service tax from its clients because it is of the view that legal consultancy services are not subject to service tax. (iii) The definition of taxable legal consultancy service specifically excludes the services provided for appearance before any Court.20.261. tribunal or authority are not taxable.000 Amount received for tax consultancy to private companies 11. service tax is to be paid on TDS also.04.30 Value of taxable service 10. Further.50. are subject to service tax.04. the amount of ` 1. Illustration: Luthra Consultants Ltd. started providing the legal consultancy services in Rajasthan on 01.000 Luthra Consultants Ltd.00. in relation to advice.06 × 10%) 1. services provided by Luthra Consultants Ltd.50.261. Therefore.000 is not liable to service tax. Hence.50.10. tribunal or authority 5.611.61 Service tax payable (rounded off) 1. Legal consultancy services provided by way of appearance before any court. Thus. Solution: Service provided to a business entity. in lieu of having rendered the service. in any manner has been brought into the service tax net with effect from 1 st September.389.000 × 100 / 110.085.06 = 11. the amount of service tax payable by Luthra Consultants Ltd. 18 (i) Service tax is chargeable on the value of service. It is presumed here that amount of `1.22 Add: Secondary and higher education cess @ 1% (` 1. For the financial year 2010-11.42.611.11 × 1%) 1.06 Service tax @ 10% (` 10. the amount of ` 5.42. Hence. 2.

90. 85/2010 dated 22-11-2010 hence it should be applicable from Nov-2011 examination and not from May-2011) . (amended through notification no. Domestic Company has to pay surcharge @ 7. or (ii) the non-resident has rendered services in India.40.00. whether or not.2.000 p.60. SLAB RATE • Individual.1.— (i) the non-resident has a residence or place of business or business connection in India.40. HUF.1. Body of Individual Income shall be taxable at the slab rates given below: If total Income upto Rs.000 NIL On next 3. BOI and partnership firm. 4.6.10.000 20% On Balance amount 30% No surcharge is applicable for individual.000 NIL On next Rs. Hindu Undivided Family.10. 3.3.000 p.60.00.000 10% On next Rs.5% if total income is exceeding `100 lakhs and foreign company has to pay surcharge @ 2.3.2.000 10% On next Rs. it is hereby declared that for the purposes of this section. to Rs.00. Provided further that the first proviso shall not apply if the aggregate value of the receipts from the activities referred to therein is ten lakh rupees or less in the previous year. Outstation allowance exemption limit raised from Rs.3. Section 2(15) charitable purpose. income of a non-resident shall be deemed to accrue or arise in India under clause (v) or clause (vi) or clause (vii) of sub-section (1) and shall be included in the total income of the non-resident.m.000 10% On next 3. new proviso have been inserted.000 NIL On next Rs. 19 AMENDMENTS FINANCE ACT 2010 ASSESSMENT YEAR -2011-12 (IN DETAIL) APPLICABLE FOR PCC/IPCC MAY-2011/NOV-2011 1.000 20% On Balance amount 30% • Resident woman below the age of 65 years If total income is upto Rs.000 20% On Balance amount 30% • Resident individual of the age of 65 years or more If total income is upto Rs. Association of Persons. AOP.m. As per explanation of section 9.5% if total income is exceeding `100 lakhs 2.

Upto Rs.75% p. (2) Car Loan : - New Vehicles SBI EZEE Car Loan Scheme Period Term loan Overdraft First year 8.a. Upto Rs.4 lacs and upto Rs.a. 10 lakhs.a. For 6th & 7th year 11.a.50% p.a.50 12.a. SBI Advantage Car Loan Scheme Period Term loan Overdraft First year 8.5 Lacs 61 month onwards 10.50% to girl student availing student loan (4) Upto 3 years 12. weighted deduction of 1.00% p. In case of RPF. 8.a.75 times of any sum paid to an approved research association or to an approved university.a.4 lacs 11. is exempt but wef 01-09-2010.50 Lacs Next 2 years 9.50% p.a.00% p.a.a.75 times shall be allowed where the assessee pays any sum to a National Laboratory or a University or an Indian Institute of Technology or a specified person.3.5 lakhs to Rs. Above Rs. (3) Loan upto Rs.50 Lacs Next 2 years 8. . For 4th & 5th year 11. Weighted deduction shall be allowed 200 per cent instead of 150 per cent.a. For 2nd & 3rd year 10.75% p.5% p.00% p. college. 10.50% p. 6. Upto 1st year 8.50 lacs 11. SBI lending rates as on 01.a.5% p.50% p. 10. 8. 12.7.a. Above Rs.25% p.a. As per section 35.a. 9.a.75% p.00% p.75% p. For 2nd & 3rd year 10.00% p.04. other Institution or Indian company shall be allowed.a. Personal Loan: - More than 3 years and upto 6 years 12.a.00% p. For 4th & 5th year 11. interest upto 8.a.a.a. After 3 years 10.a. After 3 years 11. interest upto 9.a. donation or contribution to research association. Gratuity amount payable under Payment of Gratuity Act enhanced from Rs.50% p. Upto 1 year 8. 11.25% p. As per section 35(2AA).a.a.00% p.50% p. 20 5. 11.50% p.a. 7.a.00% p.25% p. 11.a. Education Loan : - lacs Above Rs. An interest rate concession of 0.7.00% p.a.a.00% p. an amount equal to 1.00% p.50% p.50% p.00% p. is exempt.00% p. For 6th & 7th year 11.2010 are as follows: (1) Housing Loan : - First 60 months 8. 8.

or has been deducted during the previous year but paid after the due date specified in sub-section (1) of section 139.500 shall be taken as Rs. 17. 13. and notified by the Board in this behalf in accordance with the guidelines as may be prescribed. as the case may be. As per section 47(xiiib). a new hotel of two-star or above category as classified by the Central Government.500. If in respect of any such sum. a new hospital with at least one hundred beds for patients. anywhere in India. tax has been deducted in any subsequent year. As per section 35(2AB).60 lakhs. weighted deduction of 2 times shall be allowed only in case of assessees engaged in business of bio-technology or manufacturing of any product except articles mentioned in eleventh schedule. every person carrying on business/profession. As per section 40(a)(ia). 2008: Provided that— (a) all the assets and liabilities of the company immediately before the conversion become the assets and liabilities of the limited liability partnership. As per section 44AD. if his total sales. (ii) building and operating.3.3. no disallowance will be made if after deduction of tax during the previous year.150 shall be taken as Rs. specified business shall also be included the following business: (i) building and operating. 16.60 lakhs and in profession exceeds Rs. As per section 35AD.000 and Rs. 14. If a deduction under this section is claimed and allowed in respect of the specified business for any assessment year. such sum shall be allowed as a deduction in computing the income of the previous year in which such tax has been paid. As per section 44AB. Section 44AF shall be omitted and all the business shall know be covered under section 44AD. In respect of these three business. Under section 44AE. profit and gains of civil construction contracts. 15. anywhere in India. Rs. the gain will be estimated equal to 8% if the gross receipts in the construction business do not exceed Rs. turnover or gross receipts in business exceeds Rs. 11. any transfer of a capital asset or intangible asset by a private company or unlisted public company to a limited liability partnership as a result of conversion of the company into a limited liability partnership in accordance with the provisions of section 56 or section 57 of the Limited Liability Partnership Act.15 lakhs during the previous year.—Deductions in respect of certain incomes” in relation to such specified business for the same or any other assessment year. (iii) developing and building a housing project under a scheme for slum redevelopment or rehabilitation framed by the Central Government or a State Government. 2010. (b) all the shareholders of the company immediately before the conversion become the partners of the limited liability partnership and their capital contribution and profit sharing ratio in the limited liability partnership are in the same proportion as their shareholding in the company on the date of conversion. 18. 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. .4. 12. Cost Inflation Index for Financial Year 2010-11 is 711. the deduction under this section would apply if the operations are commenced on or after 1st April. 21 10. no deduction shall be allowed under the provisions of Chapter VI-A under the heading “C. in such cases the person have to get their accounts audited.5.

000. 20. 19. As per section 47A(4). where there has been reorganisation of business whereby a private company or unlisted public company is succeeded by a limited liability partnership fulfilling the conditions laid down in the proviso to clause (xiiib) of section 47. 22 (c) the shareholders of the company do not receive any consideration or benefit. as subscription to long- term infrastructure bonds as may. 22. where a firm or a company not being a company in which the public are substantially interested. during the previous year relevant to the assessment year. directly or indirectly. As per section 56(2)(viia). In computing the total income of an assessee. As per section 72A(6A). either directly or indirectly. there shall be deducted. the aggregate fair market value of which exceeds fifty thousand rupees.— (i) without consideration. (d) the aggregate of the profit sharing ratio of the shareholders of the company in the limited liability partnership shall not be less than fifty per cent at any time during the period of five years from the date of conversion. in any form or manner. 23. the set off of loss or allowance of depreciation made in any previous year in the hands of the successor limited liability partnership. paid or deposited. the amount of profits or gains arising from the transfer of such capital asset or intangible asset not charged under section 45 by virtue of conditions laid down in the said proviso shall be deemed to be the profits and gains chargeable to tax of the successor limited liability partnership for the previous year in which the requirements of the said proviso are not complied with. to the extent such amount does not exceed Rs. notwithstanding anything contained in any other provision of this Act. any property. 21. in any previous year. (e) the total sales. turnover or gross receipts in business of the company in any of the three previous years preceding the previous year in which the conversion takes place does not exceed sixty lakh rupees.20. . shall be deemed to be the income of the limited liability partnership chargeable to tax in the year in which such conditions are not complied with. then. being shares of a company not being a company in which the public are substantially interested. for the purposes of this section. 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. the aggregate fair market value of such property as exceeds such consideration: Provided that this clause shall not apply to any such property received by way of a transaction not regarded as transfer under clause (via) or clause (vic) or clause (vicb) or clause (vid) or clause (vii) of section 47. be notified by the Central Government. Rate of corporate dividend tax – 15% + surcharge @ 7. being an individual or a Hindu undivided family. (ii) for a consideration which is less than the aggregate fair market value of the property by an amount exceeding fifty thousand rupees. and (f) no amount is paid. deduction in respect of subscription to long term infrastructure bonds. receives. Insert new section 80CCF. other than by way of share in profit and capital contribution in the limited liability partnership. from any person or persons. 2010. the accumulated loss and the unabsorbed depreciation of the predecessor company. on or after the 1st day of June. shall be deemed to be the loss or allowance for depreciation of the successor limited liability partnership for the purpose of the previous year in which business reorganisation was effected and other provisions of this Act relating to set off and carry forward of loss and allowance for depreciation shall apply accordingly: Provided that if any of the conditions laid down in the proviso to clause (xiiib) of section 47 are not complied with. the whole of the amount.5% + education cess @ 2% + SHEC @ 1%. where any of the conditions laid down in the proviso to clause (xiiib) of section 47 are not complied with. the whole of the aggregate fair market value of such property.

deduct income-tax thereon @ 30%. he or it shall be liable to pay simple interest. 32. the person responsible for paying to any person any income by way of winnings from any lottery or crossword puzzle or card game and other game of any sort in an amount exceeding Rs. every person responsible for making payment of rent for plant & machinery shall deduct tax at source @ 2% and rent for land & building shall deduct tax at source @ 10% provided the amount paid or payable during a particular year to a particular person is exceeding Rs. any person responsible for making payment to a resident contractor for carrying out any work including supply of labour for carrying out any work shall deduct tax at source @ 2% and in case of payment to individual or Hindu Undivided Family.000.000 shall. 34. the terminal date for functioning of hotels and construction of convention centre has been extended from 31. This benefit will be available to projects approved on or after the 01. As per section 194BB. from the existing 4 years to 5 years from the end of the financial year in which the housing project is approved by the local authority.5.2010 to 31.000. every person responsible for making payment of causal income shall deduct tax at source @ 30% but if the amount paid or payable to a particular person during a particular year is exceeding Rs. This extension will be available for housing projects approved on or after 01. every person responsible for making payment of commission shall deduct tax at source @ 10% provided the amount paid or payable during a particular year to a particular person is exceeding Rs. 23 24. 30. 25. the rate of TDS shall be 1% provided the amount being paid is exceeding Rs.2010 in order to give more time for the facilities to be set up in the light of the Commonwealth Games in October. As per section 194D. 2005. principal officer or company does not deduct the whole or any part of the tax or after deducting fails to pay the tax as required by or under this Act. 28. 33. which are pending for completion. ft. As per section 194C. no tax shall be deducted at source. whichever is higher.07. and .03.80.000.000.5. at the time of payment thereof. As per section 194J. 29.2005. if any person. in respect of their income relating to assessment year 2010-11 and subsequent years.— (i) at 1% for every month or part of a month on the amount of such tax from the date on which such tax was deductible to the date on which such tax is deducted.000.. 2010 27.04. As per section 80D. The built-up area of the shops and other commercial establishments included in the housing project is proposed to be three per cent of the aggregate built-up area of the housing project or 5000 sq.75. 26.04. deduction can also be available if any contribution made to the Central Government Health Scheme. 31. As per section 80-ID. As per section 80IB(10).000. every person responsible for making payment for professional or technical services shall deduct tax at source @ 10% provided the amount paid or payable during a particular year to a particular person is not exceeding Rs.10.1.30.30.000 or the amount paid or payable during the financial year exceeds Rs. the period allowed for completion of a housing project in order to qualify for availing the tax benefit under the section.20. As per section 194H. As per section 194B. As per section 194I. As per section 201(1A). every person responsible for payment of commission in connection with insurance business shall deduct tax at source @ 10% provided the amount paid or payable during a particular year to a particular person is exceeding Rs.

24 (ii) at 1. No. 37. Optional Composition Scheme for payment of service tax in case of distributor or selling agents of lotteries A special mode of payment of service tax has been provided to a distributor or selling agent of lotteries by inserting sub-rule (7C) in rule 6 of the Service Tax Rules.000. Amendment in Section 200 Rule 30 Time allowed shall be 7 days from the end of the month in which the tax was deducted. tax should be deposited on or before 30th April.5% for every month or part of a month on the amount of such tax from the date on which such tax was deducted to the date on which such tax is actually paid. if any person fails to get his accounts audited as per the provisions of this section. marketing or organising/assisting in organising lottery can discharge their service tax liability in the following rates instead of paying service tax @10%:- S. 38. 1994. As per section 271B. penalties may be imposed equal to ½% of total turnover or gross receipt subject to a maximum of Rs. and such interest shall be paid before furnishing the statement in accordance with the provisions of section 200(3).on every ` 10 Lakh (or part of ` 10 Lakh) of aggregate face value of lottery tickets printed by the organising State for a draw 2. Section 203.50. Guaranteed prize payout < 80% `9000/. 35. TDS certificate shall be continued.1. If the lottery / lottery scheme is one where Rate of service tax 1.on every `10 Lakh (or part of ` 10 Lakh) of aggregate face value of lottery tickets printed by the organising State for a draw . Guaranteed prize payout > 80% `6000/. The distributor or selling agents rendering the taxable service of promotion. 36. but if the tax has been deducted in the month of March.

Commercial training or coaching services 3. Cargo handling services 5. Customs house agent’s services 6. Practising Chartered Accountant’s services 7. 25 SERVICE TAX Applicability of services for May 2011 and November 2011 examinations:- Professional Competence Examination It is clarified that in Part –II : Service tax and VAT of Paper 5 : Taxation. Manpower recruitment or supply agency’s services . Consulting engineer’s services 8. Legal consultancy services 2. students will not be tested on specific questions covering individual taxable services Integrated Professional Competence Examination It is clarified that in Part –II : Service tax and VAT of Paper 4 : Taxation. Information technology software services 4. students will be examined only in respect of the following taxable services: 1.

2010. dated 26-8-2010 In exercise of the powers conferred by clause (b) of rule 6 of Part A of the Fourth Schedule to the Income-tax Act. 6. Section 10(10) – Gratuity Date of enforcement of Payment of Gratuity (Amendment) Act.O. as the date on which the said Act shall come into force.—For the removal of doubts. . 1976.5% rate notified under rule 6(b) of Part A of IVth Schedule to the Income-tax Act. or (ii) the non-resident has rendered services in India. whether or not. namely :— 1. the Central Board of Direct Taxes hereby makes the following rule further to amend Income-tax Rules. the Central Government hereby fixes. S. S. 484(E). figures and words. 2010.5 per cent. 1961 (43 of 1961). 69/2010. in column 4. 2010 Notification No. income of a non-resident shall be deemed to accrue or arise in India under clause (v) or clause (vi) or clause (vii) of sub-section (1) and shall be included in the total income of the nonresident.”.O. 5. with effect from the 1st day of September. 4. Section 9 In section 9 of the Income-tax Act..No. it is hereby declared that for the purposes of this section.Amendment in Rule 2BB NOTIFICATION NO. 3. 142/14/2010-SO (TPL)]. namely:— Provided further that the first proviso shall not apply if the aggregate value of the receipts from the activities referred to therein is ten lakh rupees or less in the previous year. the following proviso shall be inserted and shall be deemed to have been inserted with effect from the 1st day of April. against serial number 4.000 per month” shall be substituted. 2. Section 2(15) Charitable Purpose In clause (15). 8. 1962. Section 10(14)Rule 2BB Income-tax (Eighth Amendment) Rules. as the rate referred to in the said clause. “Rs. for letters. 1217(E). in sub-rule (2). 26 ORIGINAL TEXT 1. 2.— (i) the non-resident has a residence or place of business or business connection in India. after the proviso. the following Explanation shall be substituted and shall be deemed to have been substituted with effect from the 1st day of June.O. 10. figures and words “Rs. and in supersession of the notification of the Government of India in the Ministry of Finance (Department of Revenue) number S. [F. dated 30-5-2001 Notification No. 1961 -Supersession of Notification No. the Central Government hereby appoints the 24th day of May. 2009. In the Income-tax Rules.000 per month” the letters. (2) They shall be deemed to have come into force retrospectively with effect from 1st day of September. 2008. namely:— “Explanation. 2001. 2010. Recognised Provident Fund Recognised Provident Fund : 8. for the Explanation occurring after sub-section (2). 149/45/2010-SO (TPL)]. 85/2010 [F. in the Table. dated the 30th May. 2010 . (1) These Rule may be called the Income-tax (Eighth Amendment) Rules. NO. 1961 (43 of 1961). 1962. 2010 (15 of 2010). dated 24-5-2010 In exercise of the powers conferred by sub-section (2) of Section 1 of The Payment of Gratuity (Amendment) Act. DATED 22-11-2010 In exercise of the powers conferred by section 295 read with clause (14) of section 10 of the Income- tax Act. in rule 2BB. 484(E).

(ii) after clause (a). 2011. the following clauses shall be inserted. brackets and figures “such proportion of its total pipeline capacity as specified by regulations made by the Petroleum and Natural Gas Regulatory Board established under sub-section (1) of section 3 of the Petroleum and Natural Gas Regulatory Board Act. the words “one and three-fourth” shall be substituted. 9. (B) in the proviso. with effect from the 1st day of April. (c) in clause (iii). namely :— “(aa) on or after the 1st day of April.— (a) for the words “scientific research association”. 2010. the words “research association” shall be substituted. no deduction shall be allowed under the provisions of Chapter VI-A under the heading “C. occurring at the end. in clause (iii). 2010. (b) in clause (ii). at both the places where they occur.— (a) in sub-section (2). 2010. for the words “one-third of its total pipeline capacity”. the word “and”. where the specified business is in the nature of building and operating a new hospital with at least one hundred beds for patients. the word “two” shall be substituted. for the words “one and one-half”. 2011. (c) in sub-section (5). shall be omitted. 7. in sub-clause (c). 2006 (19 of 2006)” shall be substituted. for the words “such university”. Section 35AD In section 35AD of the Income-tax Act. in clause (1). where the specified business is in the nature of building and operating a new hotel of two-star or above category as classified by the Central Government. university” shall be substituted. Section 35(2AA) In sub-section (2AA).’. for the words “one and one-fourth”. the following sub-section shall be substituted with effect from the 1st day of April. for the words “one and one-fourth”. and”.— (i) in sub-section (1). the words “one and three- fourth” shall be substituted. where the specified business is in the nature of developing and building a housing project under a scheme for slum redevelopment or rehabilitation framed by the Central Government or a State Government. the words “any sum paid to a research association which has as its object the undertaking of research in social science or statistical research or to a university” shall be substituted. 27 6. the words “such association. (ab) on or after the 1st day of April. Section 35 In section 35 of the Income-tax Act. as the case may be. 2011. the words. wherever they occur.— (i) in clause (a). (b) for sub-section (3). and which is notified by the Board in this behalf in accordance with guidelines as may be prescribed. (ac) on or after the 1st day of April. .— (A) for the words “any sum paid to a university”.—Deductions in respect of certain incomes” in relation to such specified business for the same or any other assessment year. Section 35(2AB) In sub-section (2AB). namely:— ‘(3) Where a deduction under this section is claimed and allowed in respect of the specified business for any assessment year. 8. with effect from the 1st day of April. in clause (a).

— (a) for the portion beginning with the words “has not been paid. (d) in sub-section (8). Section 44AD Special provision for computing profits and gains of business on presumptive basis. .”. or has been deducted during the previous year but paid after the due date specified in subsection (1) of section 139. in clause (c). (b) in clause (b). for the purposes of sub- section (1). the words. a sum equal to eight per cent of the total turnover or gross receipts of the assessee in the previous year on account of such business or. 12. the words.. a new hospital with at least one hundred beds for patients. after sub-clause (iii). be deemed to have been already given full effect to and no further deduction under those sections shall be allowed : Provided that where the eligible assessee is a firm. (2) Any deduction allowable under the provisions of sections 30 to 38 shall. in sub-clause (ia). clause (ab) and clause (ac)” shall be substituted. the following sub-clauses shall be inserted with effect from the 1st day of April. 11. as the case may be. (1) Notwithstanding anything to the contrary contained in section 28 to 43C.—” and ending with the words “the last day of the previous year”. for the word. as the case may be.”. the words “sixty lakh rupees” shall be substituted. in the case of an eligible assessee engaged in an eligible business. 2011. with effect from the 1st day of April. such sum shall be allowed as a deduction in computing the income of the previous year in which such tax has been paid. for the words “forty lakh rupees”. clause (aa). (3) The written down value of any asset of an eligible business shall be deemed to have been calculated as if the eligible assessee had claimed and had been actually allowed the deduction in respect of the depreciation for each of the relevant assessment years. brackets and figures “has not been paid on or before the due date specified in sub-section (1) of section 139” shall be substituted. namely :— “(iv) building and operating. (b) for the proviso. a new hotel of two-star or above category as classified by the Central Government. Section 44AB In section 44AB of the Income-tax Act. the following proviso shall be substituted. (4) The provisions of Chapter XVII-C shall not apply to an eligible assessee in so far as they relate to the eligible business. a sum higher than the aforesaid sum claimed to have been earned by the eligible assessee. (vi) developing and building a housing project under a scheme for slum redevelopment or rehabilitation framed by the Central Government or a State Government. tax has been deducted in any subsequent year. Section 40(a)(ia) In section 40 of the Income-tax Act. 28 (iii) in clause (b). the salary and interest paid to its partners shall be deducted from the income computed under sub-section (1) subject to the conditions and limits specified in clause (b) of section 40. for the words “ten lakh rupees”. shall be deemed to be the profits and gains of such business chargeable to tax under the head “Profits and gains of business or profession”. anywhere in India. anywhere in India. in clause (a). the words “fifteen lakh rupees” shall be substituted.— (a) in clause (a). brackets and letter “clause (a)”. 2011. and notified by the Board in this behalf in accordance with the guidelines as may be prescribed. namely:— ”Provided that where in respect of any such sum. 10. (v) building and operating. brackets and letters “clause (a).

2009. 2010 In exercise of the powers conferred by clause (v) of the Explanation to section 48 of the Income-tax Act.—For the purposes of this section. after serial number 29 and the entries relating thereto. 10B. 2011. namely:- In the said notification. 2292(E).Dated: July 21. namely:— . whichever is higher. the following sub-section shall be inserted. Central Board of Direct Taxes number S. namely :- “30 . 10AA.".O. Explanation.2010-2011 . the Central Government hereby makes the following amendment in the notification of the Government of India in the Ministry of Finance (Department of Revenue). the following shall be inserted with effect from the 1st day of April. shall be required to keep and maintain such books of account and other documents as required under sub-section (2) of section 44AA and get them audited and furnish a report of such audit as required under section 44AB.711 16. 29 (5) Notwithstanding anything contained in the foregoing provisions of this section. and (ii) whose total turnover or gross receipts in the previous year does not exceed an amount of sixty lakh rupees. 2011. Hindu undivided family or a partnership firm. Section 44AE In section 44AE of the Income-tax Act.— (a) “eligible assessee” means. namely:— "(2) For the purposes of sub-section (1).Deductions in respect of certain incomes” in the relevant assessment year. Cost Inflation Index NOTIFICATION NO 59/2010. who is a resident. the profits and gains from each goods carriage. dated the 9th September. and (ii) who has not claimed deduction under any of the section 10A. after sub-section (5).". shall be an amount equal to five thousand rupees for every month or part of a month during which the heavy goods vehicle is owned by the assessee in the previous year or an amount claimed to have been actually earned from such vehicle. Section 44AF In section 44AF of the Income-tax Act. . after clause (xiiia). hiring or leasing goods carriages referred to in section 44AE. (b)“eligible business” means. shall be an amount equal to four thousand five hundred rupees for every month or part of a month during which the goods carriage is owned by the assessee in the previous year or an amount claimed to have been actually earned from such vehicle.— (i) being a heavy goods vehicle. 2008 (6 of 2009). 13. the following sub-section shall be substituted with effect from the 1st day of April. 14. 2011. 1961 (43 of 1961). for sub-section (2). 10BA or deduction under any provisions of Chapter VIA under the heading “C. the following serial number and entries shall be inserted.— (i) any business except the business of plying. (ii) other than a heavy goods vehicle. namely:— "(6) Nothing contained in this section shall apply to any assessment year beginning on or after the 1st day of April.— (i) an individual. in the Table. whichever is higher. but not a limited liability partnership firm as defined under clause (n) of sub-section (1) of section 2 of the Limited Liability Partnership Act. an eligible assessee who claims that his profits and gains from the eligible business are lower than the profits and gains specified in sub-section (1) and whose total income exceeds the maximum amount which is not chargeable to income-tax. 15. Section 47(xiiib) In section 47 of the Income-tax Act.

Explanation.—For the purposes of this clause. the expressions “private company” and “unlisted public company” shall have the meanings respectively assigned to them in the Limited Liability Partnership Act. turnover or gross receipts in business of the company in any of the three previous years preceding the previous year in which the conversion takes place does not exceed sixty lakh rupees. Section 47A(4) In section 47A of the Income-tax Act. 2008. being shares of a company not being a company in which the public are substantially interested. the following sub-section shall be inserted with effect from the 1st day of April. directly or indirectly. namely:— “(4) Where any of the conditions laid down in the proviso to clause (xiiib) of section 47 are not complied with. and (f) no amount is paid. the aggregate fair market value of such property as exceeds such consideration: . (b) all the shareholders of the company immediately before the conversion become the partners of the limited liability partnership and their capital contribution and profit sharing ratio in the limited liability partnership are in the same proportion as their shareholding in the company on the date of conversion. from any person or persons. the amount of profits or gains arising from the transfer of such capital asset or intangible asset not charged under section 45 by virtue of conditions laid down in the said proviso shall be deemed to be the profits and gains chargeable to tax of the successor limited liability partnership for the previous year in which the requirements of the said proviso are not complied with. 17. 30 ‘(xiiib) any transfer of a capital asset or intangible asset by a private company or unlisted public company (hereafter in this clause referred to as the company) to a limited liability partnership as a result of conversion of the company into a limited liability partnership in accordance with the provisions of section 56 or section 57 of the Limited Liability Partnership Act. in any form or manner. 2011. other than by way of share in profit and capital contribution in the limited liability partnership. after sub-section (3). (d) the aggregate of the profit sharing ratio of the shareholders of the company in the limited liability partnership shall not be less than fifty per cent. 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. on or after the 1st day of June. Section 56(2)(viia) (viia) where a firm or a company not being a company in which the public are substantially interested. at any time during the period of five years from the date of conversion. in any previous year. 2008: Provided that— (a) all the assets and liabilities of the company immediately before the conversion become the assets and liabilities of the limited liability partnership. receives. any property. (e) the total sales. (ii) for a consideration which is less than the aggregate fair market value of the property by an amount exceeding fifty thousand rupees.’.” 18. 2010. the whole of the aggregate fair market value of such property. (c) the shareholders of the company do not receive any consideration or benefit. either directly or indirectly.— (i) without consideration. the aggregate fair market value of which exceeds fifty thousand rupees.

(b) after sub-clause (ii). after the words. the set off of loss or allowance of depreciation made in any previous year in the hands of the successor limited liability partnership. 2011. within five years from the end of the financial year in which the housing project is approved by the local authority. Section 80CCF After section 80CCE of the Income-tax Act. Section 80-ID In section 80-ID of the Income-tax Act. 19. the accumulated loss and the unabsorbed depreciation of the predecessor company. figures and letters “the 1st day of April. with effect from the 1st day of April.”. shall have the meaning assigned to it in the Explanation to clause (vii).’. paid or deposited. the whole of the amount.— (a) in sub-clause (ii). during the previous year relevant to the assessment year beginning on the 1st day of April. be notified by the Central Government. whichever is less”. 2011. Section 80D In section 80D of the Income-tax Act. namely:— “(iii) in a case where a housing project has been approved by the local authority on or after the 1st day of April. 2011.— . Section 72A(6A) In section 72A of the Income-tax Act. 21.” shall be substituted. 22. namely:— “80CCF. the words. (ii) in clause (d). in sub-section (2). the words “five thousand square feet. there shall be deducted. 2004”. in clause (a).”. Section 80IB(10) In section 80-IB of the Income-tax Act. namely:— “(6A) Where there has been reorganisation of business whereby a private company or unlisted public company is succeeded by a limited liability partnership fulfilling the conditions laid down in the proviso to clause (xiiib) of section 47. the following section shall be inserted with effect from the 1st day of April.”. after the words “his family”. 20. the words “or any contribution made to the Central Government Health Scheme” shall be inserted with effect from the 1st day of April. figures and letters “but not later than the 31st day of March. In computing the total income of an assessee. notwithstanding anything contained in any other provision of this Act. then. shall be deemed to be the income of the limited liability partnership chargeable to tax in the year in which such conditions are not complied with. the following sub-clause shall be inserted. as subscription to long-term infrastructure bonds as may.— (a) after sub-section (6). 23. in sub-section (2). whichever is higher” shall be substituted.—For the purposes of this clause. the words “three per cent. 2011. the following shall be inserted. 2005” shall be inserted. being shares of a company not being a company in which the public are substantially interested. shall be deemed to be the loss or allowance for depreciation of the successor limited liability partnership for the purpose of the previous year in which business reorganisation was effected and other provisions of this Act relating to set off and carry forward of loss and allowance for depreciation shall apply accordingly: Provided that if any of the conditions laid down in the proviso to clause (xiiib) of section 47 are not complied with. 2011. for the purposes of this section. with effect from the 1st day of April. “fair market value” of a property. to the extent such amount does not exceed twenty thousand rupees. Explanation.— (a) for the words “five per cent. 2005. 31 Provided that this clause shall not apply to any such property received by way of a transaction not regarded as transfer under clause (via) or clause (vic) or clause (vicb) or clause (vid) or clause (vii) of section 47. being an individual or a Hindu undivided family. (b) for the words “two thousand square feet.— (i) in clause (a).”. in sub-section (10).

namely:— “(1A) Without prejudice to the provisions of sub-section (1). Section 194D In section 194D of the Income-tax Act. in sub-section (5). 32. 2010. 2010. 28. Section 194J In section 194J of the Income-tax Act. sub-section (3) shall be omitted. for sub-section (1A). figures and letters “the 31st day of March. Section 194I In section 194-I of the Income-tax Act. for the words. in the first proviso. Section 194BB In section 194BB of the Income-tax Act. 2010”. principal officer or company as is referred to in that sub-section does not deduct the whole or any part of the tax or after deducting fails to pay the tax as required by or under this Act. figures and letters “the 31st day of March. 24. the words “five thousand rupees” shall be substituted with effect from the 1st day of July. the words. 2010”. the words “twenty thousand rupees” shall be substituted with effect from the 1st day of July. for the words “five thousand rupees”. the words “ten thousand rupees” shall be substituted with effect from the 1st day of July. for the words “two thousand five hundred rupees”. 31. 30. the words “five thousand rupees” shall be substituted with effect from the 1st day of July. 2010” shall be substituted. figures and letters “the 31st day of July. for the words “one hundred and twenty thousand rupees”. with effect from the 1st day of July. 2010. for the words “fifty thousand rupees”. the following sub-section shall be substituted with effect from the 1st day of July. in the second proviso. the words “thirty thousand rupees” shall be substituted. 32 (a) in clause (i). the words “seventy-five thousand rupees” shall be substituted.— (a) for the words “twenty thousand rupees”. 29. in clause (B). Section 194C In section 194C of the Income-tax Act. for the words. 2010. figures and letters “the 31st day of July. Section 203 In section 203 of the Income-tax Act. for the words “two thousand five hundred rupees”. for the words “five thousand rupees”. and (ii) at one and one-half per cent. 25.”. (b) in clause (ii). in the first proviso to sub-section (1). 27. .— (i) at one per cent. 2010. for every month or part of a month on the amount of such tax from the date on which such tax was deductible to the date on which such tax is deducted. Section 201 In section 201 of the Income-tax Act. the words. Section 194H In section 194H of the Income-tax Act. for every month or part of a month on the amount of such tax from the date on which such tax was deducted to the date on which such tax is actually paid. (b) in the proviso. the words “one hundred eighty thousand rupees” shall be substituted with effect from the 1st day of July. for the words “twenty thousand rupees”. Section 194B In section 194B of the Income-tax Act. he or it shall be liable to pay simple interest. and such interest shall be paid before furnishing the statement in accordance with the provisions of sub-section (3) of section 200. 2010. if any such person. in the first proviso. the words “thirty thousand rupees” shall be substituted with effect from the 1st day of July. 26. 2010. wherever they occur. 2010. 2010” shall be substituted.

formats and standards for ensuring secure capture and transmission of data. 31st March 30th April. and (b) in any other case. with the prior approval of the Joint Commissioner. for the words “one hundred thousand rupees”. permit quarterly payment of the tax deducted under section 192 or section 194A or section 194D or section 194H for the quarters of the financial year specified to in column (2) of the Table below by the date referred to in column (3) of the said Table:‐ Table Sl. Quarter of the Financial Year ended on Date for quarterly payment (1) (2) (3) 1. the words “one hundred fifty thousand rupees” shall be substituted with effect from the 1st day of April. the amount of tax so deducted or collected shall be deposited to the credit of the Central Government by remitting it within the time specified in clause (b) of sub‐rule (1) or in sub‐rule (2) or in sub‐rule (3) into any branch of the Reserve Bank of India or of the State Bank of India or of any authorised bank. Section 271B In section 271B of the Income-tax Act. B. 33 33. 30th September 7th October 3. . on or before seven days from the end of the month in which‐ (i) the deduction is made. and shall also be responsible for the day‐to‐day administration in relation to furnishing the information in the manner so specified. in special cases. and (b) intimate the number (hereinafter referred to as the Book Identification Number) generated by the agency to each of the deductors in respect of whom the sum deducted has been credited. Rule 30 (1) All sums deducted in accordance with the provisions of Chapter XVII‐B by an office of the Government shall be paid to the credit of the Central Government ‐ (a) on the same day where the tax is paid without production of an income‐tax challan. (5) For the purpose of sub‐rule (4). (6) (i) Where tax has been deposited accompanied by an income‐tax challan. where tax has been paid to the credit of the Central Government without the production of a challan. (2) All sums deducted in accordance with the provisions of Chapter XVII‐B by deductors other than an office of the Government shall be paid to the credit of the Central Government ‐ (a) on or before 30th day of April where the income or amount is credited or paid in the month of March. No. the Director General of Income‐tax (Systems) shall specify the procedures. Mode of payment (4) In the case of an office of the Government. 30th June 7th July 2. 34. or (ii) income‐tax is due under sub‐section (1A) of section 192. where tax is paid accompanied by an income‐tax challan. the Pay and Accounts Officer or the Treasury Officer or the Cheque Drawing and Disbursing Officer or any other person by whatever name called to whom the deductor reports the tax so deducted and who is responsible for crediting such sum to the credit of the Central Government. the Assessing Officer may. (3) Notwithstanding anything contained in sub‐rule (2). 31st December 7th January 4. 24G within ten days from the end of the month to the agency authorised by the Director General of Income‐tax (Systems) in respect of tax deducted by the deductors and reported to him for that month. 2011. and (b) on or before seven days from the end of the month in which the deduction is made or income‐tax is due under sub‐section (1A) of section 192. shall‐ (a) submit a statement in Form No.

the provisions of this rule shall apply as they stood immediately before their substitution by the Income‐tax (Amendment) Rules. Part-II. and service tax shall be calculated in the manner specified in the said Table. Provided also that the distributor or selling agent shall exercise such option for financial year 2010-11. liable to pay service tax for the taxable service of promotion. ` 6000/. 2010 notified by the Government of India in the Ministry of Home Affairs published in the Gazette of India. 2010. the aggregate face value of lottery tickets for the purpose of this sub- rule shall be taken as the aggregate value of tickets sold. the amount deducted shall be electronically remitted into the Reserve Bank of India or the State Bank of India or any authorised bank accompanied by an electronic income‐tax challan.S. (1) (2) (3) 1. subject to the conditions specified in the corresponding entry in column (3) of the said Table. ORGANISING OR IN ANY OTHER MANNER ASSISTING IN ORGANISING LOTTERY The distributor or selling agent. instead of paying service tax at the rate specified in section 66 of Chapter V of the said Act: Table Sl.on every ` 10 Lakh (or part of ` 10 If the lottery or lottery scheme is one Lakh) of aggregate face value of lottery tickets where the guaranteed prize payout is more printed by the organising State for a draw than 80% 2. (8) Where tax is deducted before the 1st day of April. . or (b) debit card. Rate Condition No . the amount shall be construed as electronically remitted to the Reserve Bank of India or to the State Bank of India or to any authorised bank. 34 (ii) Where tax is to be deposited in accordance with clause (i). 2010 and shall include distributor or selling agent authorised by the lottery organising State. RULE 6(7C) PAYMENT OF SERVICE TAX BY PERSONS ENGAGED IN PROMOTION. if the amount is remitted by way of – (a) internet banking facility of the Reserve Bank of India or of the State Bank of India or of any authorised bank.on every ` 10 Lakh (or part of ` 10 If the lottery or lottery scheme is one Lakh) of aggregate face value of lottery tickets where the guaranteed prize payout is less printed by the organising State for a draw than 80% Provided that in case of online lottery. within a period of one month of the publication of this sub-rule in the Official Gazette or.. within one month of providing of service under the said sub-clause and such option shall not be withdrawn during the remaining part of that financial year. Sub-section (i) vide number G. in the case of new service provider. marketing. MARKETING. Provided further that the distributor or selling agent shall exercise such option within a period of one month of the beginning of each financial year and such option shall not be withdrawn during the remaining part of the financial year. Explanation. 2010.For the purpose of this sub-rule- (i) “distributor or selling agent” shall have the meaning assigned to them in clause (c) of the rule 2 of the Lottery (Regulation) Rules. Section 3. shall have the option to pay an amount at the rate specified in column (2) of the Table given below.R. by persons referred to in sub‐rule (1) of rule 125. ` 9000/. 35. referred to in sub-clause (zzzzn) of clause (105) of section 65 of the said Act. (7) For the purpose of this rule. organising or in any other manner assisting in organising lottery. 278(E) dated 1st April.

(iv) “organising state” shall have the meaning assigned to it in clause (f) of the rule 2 of the Lottery (Regulation) Rules.S.S.R. Part-II.S. 35 (ii) “draw” shall have the meaning assigned to it in clause (d) of the rule 2 of the Lottery (Regulation) Rules.R. 2010. Sub-section (i) vide number G. 278(E) dated 1st April. 2010 notified by the Government of India in the Ministry of Home Affairs published in the Gazette of India. Part-II. Sub-section (i) vide number G. NOTES ON CLAUSES . Sub-section (i) vide number G. 2010 notified by the Government of India in the Ministry of Home Affairs published in the Gazette of India. Section 3. 2010. Part-II. (iii) “online lottery” shall have the meaning assigned to it in clause (e) of the rule 2 of the Lottery (Regulation) Rules. Section 3. 278(E) dated 1st April. Section 3. 2010 notified by the Government of India in the Ministry of Home Affairs published in the Gazette of India. 278(E) dated 1st April.R. 2010.

2012 and subsequent years. Section 9 It is proposed to substitute the said Explanation so as to provide that the income of a non-resident shall be deemed to accrue or arise in India under clause (v) or clause (vi) or clause (vii) of subsection (1) and shall be included in the total income of the nonresident. Section 35(2AA) It is proposed to amend the said clause (a) so as to enhance the said weighted deduction from one hundred and twenty-five per cent. 3. whether or not. Section 35 Item (b) of sub-clause (i) proposes to amend the said clause (ii) so as to enhance the said weighted deduction from one hundred and twenty-five per cent. These amendments will take effect from 1st April. 2. no deduction shall be allowed under the provisions of Chapter VI-A under the heading “C.2012 and subsequent years. 6. 36 1. This amendment will take effect retrospectively from 1st April.2012 and subsequent years. which have as their object. 4. to two hundred per cent. These amendments will take effect from 1st April. and will. apply in relation to the assessment year 2011. 1976 and will. Sub-clause (c) proposes to amend sub-section (5) of the aforesaid section so as to insert a new clause (aa) to provide that the specified business in the nature of building and operating a new hotel of two- star or above category as classified by the Central Government should commence its operation on or after 1st April. accordingly. and will. accordingly. Section 35AD Sub-clause (b) proposes to substitute sub-section (3) of the aforesaid section so as to provide that where a deduction under this section is claimed and allowed in respect of the specified business for any assessment year. 2010. Item (c) of sub-clause (i) proposes to amend clause (iii) of the aforesaid sub-section to include research associations. apply in relation to the assessment year 2011. accordingly. retrospectively. . 2011. from 1st June. This amendment will take effect. 2011. apply in relation to the assessment year 1977-1978 and subsequent years. accordingly. to one hundred and seventy-five per cent. 5. 2011.– (i) the non-resident has a residence or place of business or business connection in India.. These amendments will take effect from 1st April. undertaking of research in social science or statistical research provided such research associations are approved and notified. accordingly. apply in relation to the assessment year 2009-2010 and subsequent years. Accordingly. any sum paid to such research associations shall be eligible for weighted deduction. 2009 and will. and will. Section 2(15) Charitable Purpose Sub-clause (a) proposes to amend the said clause (15) by inserting a second proviso therein to provide that the first proviso shall not apply if the aggregate value of receipts from the activities referred to in the first proviso is ten lakh rupees or less in the previous year.Deductions in respect of certain incomes” in relation to such specified business for the same or any other assessment year. apply in relation to the assessment year 2011. to one hundred and seventy-five per cent. Section 35(2AB) It is proposed to amend the said clause (1) so as to enhance the said weighted deduction from one hundred and fifty per cent. or (ii) the non-resident has rendered services in India.

This amendment will take effect retrospectively from 1st April. 2011. accordingly. Section 44AB It is proposed to enhance the said limit from forty lakh rupees to sixty lakh rupees. accordingly. This amendment will take effect retrospectively from 1st April. This amendment will take effect from 1st April. a new hotel of two-star or above category as classified by the Central Government within the purview of “specified business”. 8. 2011 and will. apply in relation to the assessment year 2011-2012 and subsequent years. Section 40(a)(ia) It is proposed to amend sub-clause (ia) of clause (a) of the aforesaid section to provide that disallowance under the said sub clause will be attracted. and will.2012 and subsequent years. accordingly. whichever is higher in the case of vehicles other than heavy goods vehicles. . 9. after deduction of tax during the previous year. apply in relation to the assessment year 2011-2012 and subsequent years. if. 7. apply in relation to the assessment year 2011. and will. the same has not been paid on or before the due date of filing of return of income specified in sub-section (1) of section 139. These amendments will take effect from 1st April. 11. Section 47(xiiib) It is proposed to amend the aforesaid section so as to insert a new clause (xiiib) in section 47 which provides that any transfer of a capital asset or intangible asset by a company shall not be treated as transfer under section 45 where a private company or unlisted public company (hereinafter referred to as the company) is converted into a limited liability partnership in accordance with the provisions of section 56 or 57 of the Limited Liability Partnership Act. These amendments will take effect from 1st April. apply in relation to the assessment year 2011-2012 and subsequent years. apply in relation to the assessment year 2010-2011 and subsequent years. 10. Section 44AD It is proposed to enhance the said limit from forty lakh rupees to sixty lakh rupees. accordingly. 2011. whichever is higher in the case of heavy goods vehicles and (b) from three thousand one hundred and fifty rupees to four thousand five hundred rupees per month or part of a month or the amount claimed to be actually earned by the assessee. 2009. 12. accordingly. 2010. This amendment will take effect from 1st April. Section 44AE It is proposed to enhance aforesaid amounts of profits and gains from (a) three thousand five hundred rupees to five thousand rupees per month or part of a month or the amount claimed to be actually earned by the assessee. Section 44AF It is proposed to insert sub-section (6) to the said section which provides that the provisions of the said section shall not apply to any assessment year beginning on or after 1st April. It is proposed to enhance the said limit from ten lakh rupees to fifteen lakh rupees. 2011 and will. 2008. in view of the substitution of section 44AD vide clause 20 of the Bill. 2011. 37 Sub-clause (d) proposes to amend clause (c) of sub-section (8) of the aforesaid section so as to bring the business relating to building and operating. anywhere in India. and will.

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. and their capital contribution and profit sharing ratio in the limited liability partnership are in the same proportion as their shareholding in the company on the date of conversion. apply in relation to the assessment year 2011-2012 and subsequent years. 15. 2011 and will. allowance for depreciation of the successor limited liability partnership for the previous year in which business reorganisation was effected and the other provisions of the Act relating to set off and carry forward loss and allowance for depreciation shall apply accordingly. 2011 and will. Section 47A(4) It is proposed to amend the aforesaid section so as to insert a new sub-section (4) which provides that where any of the conditions stipulated in the proviso to clause (xiiib) of section 47 are not complied with. Section 56(2)(viia) It is proposed to insert a new clause (viia) in sub-section (2) of the aforesaid section so as to include the transactions undertaken in shares of a company not being a company in which the public are substantially interested where the recipient is a firm or a company not being a company in which the public are substantially interested. whereby. (c) the shareholders of the company do not receive any consideration or benefit. accordingly. apply in relation to the assessment year 2011-2012 and subsequent years. as the case may be. This amendment will take effect from 1st April. This amendment will take effect from 1st June. Section 72A(6A) Sub-clause (a) proposes to insert a new sub-section (6A) which provides that in case of succession of business. 14. in any form or manner. . turnover or gross receipts in business of the company in any of the three previous years preceding the previous year in which the conversion takes place does not exceed sixty lakh rupees. either directly or indirectly. 38 It is also proposed to insert a proviso to the said clause which provides that (a) all the assets and liabilities of the company immediately before the conversion become the assets and liabilities of the limited liability partnership. (b) all the shareholders of the company immediately before the conversion become the partners of the limited liability partnership. accordingly. 13. (d) the aggregate of the profit sharing ratio of the shareholders of the company in the limited liability partnership shall not be less than fifty per cent. at any time during the period of five years from the date of conversion. the set off of loss or allowance of depreciation which had been allowed shall be deemed to be the income chargeable to tax of the successor limited liability partnership for the previous year in which the conditions stipulated in the proviso to clause (xiiib) of section 47 are not complied with. accordingly. This amendment will take effect from 1st April. 2010. other than by way of share in profit and capital contribution in the limited liability partnership. directly or indirectly. the amount of profits or gains arising from the transfer of capital assets by the predecessor private company or unlisted public company to the successor limited liability partnership on succession shall be deemed to be the profits or gains chargeable to tax of the successor limited liability partnership for the previous year in which the conditions stipulated in the proviso to clause (xiiib) of section 47 are not complied with. (e) the total sales. the accumulated loss and the unabsorbed depreciation of the predecessor company shall be deemed to be the loss or. notwithstanding anything contained in any other provisions of the Act. a private company or unlisted public company is succeeded by a limited liability partnership fulfilling the conditions laid down in the proviso to clause (xiiib) of section 47. apply in relation to the assessment year 2011-2012 and subsequent years. and (f) no amount is paid. However. if the conditions stipulated in the proviso to clause (xiiib) of section 47 are not complied with. and will.

It is proposed to revise the existing limit to three per cent. 16. 2007 and ending on 31st March. 2011 and will. apply in relation to the assessment year 2011-2012 and subsequent years. if such convention centre is constructed at any time during the period beginning on 1st April. These amendments will take effect. 20. and will. of the aggregate built-up area of the housing project or 2. 2010. Section 80-ID It is proposed to extend the said period up to 31st July. accordingly. 2011 as subscription to long-term infrastructure bonds as may be notified by the Central Government. the built-up area of the shops and other commercial establishments included in the housing project should not exceed five per cent. retrospectively. Section 80CCF It is proposed to insert a new section so as to provide that a sum of rupees twenty thousand in addition to the existing limit of rupees one lakh for tax savings under the Income-tax Act may be allowed as a specific deduction in computing the total income of an assessee being an individual or a Hindu undivided family if such sum is paid or deposited at any time during the previous year relevant to the assessment year beginning on 1st April. from 1st April. Section 194B It is proposed to enhance the said limit from five thousand rupees to ten thousand rupees. 2011 and will. It is proposed to extend the said period up to 31st July. 2010. accordingly. located in the specified area. These amendments will take effect from 1st April. 2005. from four years to five years. This amendment will take effect from 1st April. whichever is higher. This amendment will take effect from 1st April. approved on or after 1st April. Section 80IB(10) It is proposed to increase the period for completion of a housing project. apply in relation to the assessment year 2011-2012. 2010. 2010. Section 80D It is proposed to amend the said clause (a) so as to also allow the benefit of the deduction in respect of a contribution made by the assessee during the previous year to the Central Government Health Scheme within the said limit.000 square feet. accordingly. The existing clause (ii) of sub-section (2) of the aforesaid section provides that the provisions of the said section apply to any undertaking engaged in the business of building. whichever is less. accordingly. This amendment will take effect from 1st July.2012 and subsequent years. 2010 and will. apply in relation to the assessment year 2011-2012 and subsequent years. accordingly. apply in relation to the assessment year 2010-2011 and subsequent years. 39 These amendments will take effect from 1st April. . of the aggregate built-up area of the housing project or 5. 2011 and will. apply in relation to the assessment year 2011.000 square feet. Under the existing provisions contained in clause (d) of subsection (10) of the aforesaid section. 18. 19. 2011. 17. owning and operating a convention centre.

26. 2010. 28. 25. 27. 2011. 2010. 22. Section 194BB It is proposed to enhance the said limit from two thousand five hundred rupees to five thousand rupees. apply in relation to the assessment year 2011-2012 and subsequent years. 2010. Section 203 It is proposed to omit the aforesaid sub-section (3) of section 203 of the Income-tax Act. 2010. Section 194H It is proposed to enhance the said limit from two thousand five hundred rupees to five thousand rupees. Section 194I It is proposed to enhance the said limit from one hundred and twenty thousand rupees to one hundred and eighty thousand rupees. . to one and one-half per cent for every month or part of a month for tax deducted but not paid. Section 271B It is proposed to enhance the said limit from one lakh rupees to one lakh fifty thousand rupees. Section 201 It is proposed to amend sub-section (1A) of the aforesaid section so as to increase the interest chargeable under that sub-section from one per cent. Section 194D It is proposed to enhance the said limit from five thousand rupees to twenty thousand rupees. This amendment will take effect from 1st July. 23. 29. Section 194C It is proposed to enhance the said limit from twenty thousand rupees for a single transaction to thirty thousand rupees and from fifty thousand rupees for the aggregate transactions during the financial year to seventy five thousand rupees. This amendment will take effect from 1st July. Section 194J It is proposed to enhance the said limit from twenty thousand rupees to thirty thousand rupees. 2010. This amendment will take effect retrospectively from 1st April. This amendment will take effect from 1st July. 2010. and will. 40 21. This amendment will take effect from 1st July. 2010. This amendment will take effect from 1st July. 24. These amendments will take effect from 1st July. accordingly. This amendment will take effect from 1st April. This amendment will take effect from 1st July. 2010.

1976. for any such income to be taxable in India. means that the situs of the rendering of services is not relevant. that in case of payments as mentioned under these clauses. It was provided. Vide Finance Act. by creating a legal fiction in section 9. (vi) and (vii) of sub section (1) of section 9. 2009 and will. royalty and fees for technical services. an Explanation was inserted below sub-section (2) of section 9 with retrospective effect from 1st June. even in cases where services are provided outside India as long as they are utilized in India. income would be deemed to accrue or arise in India to the non-resident under the circumstances specified therein. therefore. the Hon’ble Supreme Court. It is. accordingly. of the income from such activity. The absolute restriction on any receipt of commercial nature may create hardship to the organizations which receive sundry considerations from such activities. This interpretation was not in accordance with the legislative intent that the situs of rendering service in India is not relevant as long as the services are utilized in India. 1976 vide Finance Act. Section 2(15) Charitable Purpose For the purposes of the Income-tax Act. there must be sufficient territorial nexus between such income and the territory of India. commerce or business. However. does not do away with the requirement of rendering of services in India for any . “charitable purpose” has been defined in section 2(15) which.10 lakhs in the previous year. if it involves the carrying on of any activity in the nature of trade. among others. a source rule was provided in section 9 through insertion of clauses (v). It further held that for establishing such territorial nexus. in the case of Ishikawajima-Harima Heavy Industries Ltd. The intention of introducing the source rule was to bring to tax interest. inter alia. includes “the advancement of any other object of general public utility”. “the advancement of any other object of general public utility” is not a charitable purpose. or retention. 2. Section 9 Section 9 provides for situations where income is deemed to accrue or arise in India. The source rule. held that despite the deeming fiction in section 9. (vi) and (vii) in sub-section (1) for income by way of interest. therefore. 2007. to remove doubts regarding the source rule. regardless of whether the non-resident has a residence or place of business or business connection in India. irrespective of the nature of use or application. This amendment is proposed to take effect retrospectively from 1st April. for a cess or fee or any other consideration. has held that the Explanation. royalty or fees for technical services respectively. in a recent judgement in the case of Jindal Thermal Power Company Ltd. proposed to amend section 2(15) to provide that “the advancement of any other object of general public utility” shall continue to be a “charitable purpose” if the total receipts from any activity in the nature of trade. or any activity of rendering any service in relation to any trade. The Explanation sought to clarify that where income is deemed to accrue or arise in India under clauses (v). such income shall be included in the total income of the non-resident. the services have to be rendered in India as well as utilized in India.. Vs DIT (2007)[288 ITR 408]. or any activity of rendering any service in relation to any trade. the Karnataka High Court. in its present form. It is the situs of the payer and the situs of the utilization of services which will determine the taxability of such services in India. 41 MEMORANDUM 1. However. vs DCIT (TDS). However. commerce or business. apply in relation to the assessment year 2009-10 and subsequent years. This was the settled position of law till 2007. commerce or business. Therefore. commerce or business do not exceed Rs.

This amendment is proposed to take effect retrospectively from 1st June. The university. It has been held that on a plain reading of the Explanation. college or other institution to be used to carry on research in social science or statistical research. universities. These amendments are proposed to take effect from 1st April 2011 and will. The existing provisions of section 35(1)(ii) provide for a weighted deduction from business income to the extent of 125 per cent of any sum paid to an approved and notified scientific research association or to a university. This exemption will be subject to the same conditions under which an approved research association undertaking scientific research is entitled to exemption in respect of its income. . apply in relation to the assessment year 2011-12 and subsequent years. whether or not. Under section 10(21). (a) the non-resident has a residence or place of business or business connection in India. or (b) the non-resident has rendered services in India. The associations which are engaged in undertaking research in social science or statistical research are not currently covered by the provisions of section 35(1)(iii). 42 income to be deemed to accrue or arise to a non-resident under section 9. It is also proposed to amend section 10(21) so as to also provide exemption to such associations in respect of their income. 3. Section 35(2AA) / Section 35(2AB) Weighted deduction for scientific research and development Under the existing provisions of section 35(2AB) of the Income-tax Act. In order to remove any doubt about the legislative intent of the aforesaid source rule. it is proposed to substitute the existing Explanation with a new Explanation to specifically state that the income of a non-resident shall be deemed to accrue or arise in India under clause (v) or clause (vi) or clause (vii) of sub-section (1) of section 9 and shall be included in his total income. the criteria of rendering services in India and the utilization of the service in India laid down by the Supreme Court in its judgement in the case of Ishikawajima- Harima Heavy Industries Ltd. An amendment to include allowability of deductions for donations made to such associations is also proposed. Section 35 Section 35 of the Income-tax Act provides for deduction in respect of expenditure on research and development. 1976 and will. accordingly. accordingly. Such research associations are also not entitled to exemption in respect of their income. exemption is granted in respect of the income of a scientific research association which is approved and notified under section 35(1)(ii). 4. It is now proposed to amend section 35(1)(iii) so as to include an approved research association which has as its object undertaking research in social science or statistical research. apply in relation to the assessment year 1977-78 and subsequent years. etc. college or other institutions which are approved either under section 35(1)(ii) or under section 35(1)(iii) also qualify for exemption of their income under section 10(23C) of the Act subject to specified conditions. college or other institution to be utilized for scientific research.(supra) remains untouched and unaffected by the Explanation. Section 80GGA allows deductions for donations made to such association. a company is allowed weighted deduction of 150 per cent of the expenditure (not being expenditure in the nature of cost of any land or building) incurred on scientific research on an approved in-house research and development facility. Section 35(1)(iii) provides similar deduction if the sum is paid to an approved and notified university.

under section 35AD of the Income-tax Act. The investment-linked tax incentive allows 100 per cent deduction in respect of the whole of any expenditure of capital nature (other than on land. which start functioning before specified dates mentioned in the Act . is that the specified business ‘has made not less than one-third of its total pipeline capacity available for use on common carrier basis by any person other than the assessee or an associated person’. These amendments are proposed to take effect from 1st April. which starts functioning after 1. In view of the high employment potential of this sector. apply in relation to the assessment year 2011-12 and subsequent years. irrespective of location. The existing provisions of section 35(1)(ii) of the Income-tax Act provide for a weighted deduction from the business income to the extent of 125 per cent of any sum paid to an approved scientific research association that has the object of undertaking scientific research or to an approved university. by regulations. In order to encourage more contributions to such approved entities for the purposes of scientific research. under section 35(2AA) of the Act. 5.4. college or other institution to be used for scientific research. it is proposed to provide investment linked incentive to the hotel sector. it is proposed to increase this weighted deduction from 125 per cent to 175 per cent. apply in relation to the assessment year 2011-12 and subsequent years. National Capital Territory and adjacent districts. warehousing facilities for storage of agricultural produce and laying and operating a cross- country natural gas or crude or petroleum oil pipeline network. it is proposed to increase this weighted deduction from 150 per cent to 200 per cent. such “specified business” means the business of setting up and operating cold chain facilities. anywhere in India. It is now proposed to include the business of building and operating a new hotel of two-star or above category.2010 within the purview of “specified business”. 22 districts having World Heritage Sites and North-Eastern States. These amendments are proposed to take effect from 1st April. Currently. specified a common carrier capacity condition of ‘one-third’ for a natural . 2011 and will. One of the conditions for availing the benefit under section 35AD in the case of laying and operating a cross-country natural gas or crude or petroleum oil pipeline network for distribution. accordingly. Further. 2011 and will. accordingly. goodwill and financial instrument) incurred wholly and exclusively. no deduction shall be allowed under the provisions of Chapter VI-A under the heading “C. The Petroleum & Natural Gas Regulatory Board has.-Deductions in respect of certain incomes” in relation to such specified business for the same or any other assessment year. weighted deduction to the extent of 125 per cent is also allowed for any sum paid to a National Laboratory or a university or an Indian Institute of Technology (IIT) or a specified person for the purpose of an approved scientific research programme. Section 35AD Investment linked deduction for specified business Benefits of profit linked deduction under Chapter VI-A of the Income-tax Act are currently available to specified categories of hotels in Uttarakhand and Himachal Pradesh. It is also proposed to substitute sub-section (3) of section 35AD so as to provide that where a deduction under this section is claimed and allowed in respect of the specified business for any assessment year. for the purposes of the “specified business” during the previous year in which such expenditure is incurred. A similar amendment is proposed in section 80A. including storage facilities being an integral part of such network. 43 In order to further incentivise the corporate sector to invest in in-house research.

in case the deduction of tax is made during the last month of the previous year. 7. brokerage. However. commission. apply in relation to the assessment year 2010-11 and subsequent years. This amendment is proposed to take effect retrospectively from 1st April. a person carrying on a profession is required to get his accounts audited if the gross receipts in profession exceed ten lakh rupees in the previous year. it is proposed to increase the aforesaid threshold limit from forty lakh rupees to sixty lakh rupees in the case of persons carrying on business and from ten lakh rupees to fifteen lakh rupees in the case of persons carrying on profession. Section 40(a)(ia) The existing provisions of section 40(a)(ia) of Income-tax Act provide for the disallowance of expenditure like interest. no disallowance is made if the tax is deposited on or before the due date of filing of return. 9. 8. The proposed amendment will take effect from 1st April. accordingly. 2011 and will. 6. apply in relation to the assessment year 2010-11 and subsequent years. Similarly. In order to rationalise the existing condition regarding common carrier capacity. 2011 and will. It is proposed to amend the said section to provide that no disallowance will be made if after deduction of tax during the previous year. or after deduction was not paid during the previous year. This amendment is proposed to take effect retrospectively from 1st April. 2011. . 2010 and will. Section 44AF The existing section 44AF is proposed to be made inoperative for the assessment year beginning on or after 1st day of April. 2010 and will. the threshold limit of total turnover or gross receipts would be increased from forty lakh rupees to sixty lakh rupees. every person carrying on business is required to get his accounts audited if the total sales. etc. turnover or gross receipts in business exceed forty lakh rupees in the previous year. accordingly. accordingly. apply in relation to the assessment year 2011-12 and subsequent years. 2011 and will. These amendments are proposed to take effect from 1st April. it is proposed to amend sub-section (2) of section 35AD to provide that the proportion of the total pipeline capacity to be made available for use on common carrier basis should be as specified by the said regulations. accordingly. professional fees. apply in relation to the assessment year 2011-12 and subsequent years. if tax on such expenditure was not deducted. apply in relation to the assessment year 2011-12 and subsequent years. Section 44AB Under the existing provisions of section 44AB. These amendments are proposed to take effect from 1st April. 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. 44 gas pipeline network and ‘one-fourth’ for petroleum product pipeline network. In order to reduce compliance burden of small businesses and professionals. Section 44AD It is also proposed that for the purpose of presumptive taxation under section 44AD. accordingly.

hiring or leasing goods carriages.per month. a fixed amount of income per vehicle is taken at the rate of Rs.5. The proposed amendment will take effect from the 1st April. It is proposed to enhance the presumed income per vehicle for the owners of– (i) heavy goods vehicle to Rs.per month. accordingly. 11. apply in relation to assessment year 2011-12 and subsequent years. a presumptive scheme is available to assessees engaged in business of plying. (ii) the shareholders of the company become partners of the LLP in the same proportion as their shareholding in the company. Section 56 and section 57 of the Limited Liability Partnership Act. (iv) the erstwhile shareholders of the company continue to be entitled to receive at least 50 per cent of the profits of the LLP for a period of 5 years from the date of conversion.500/.150/.per month per vehicle for the owners of light goods vehicles. who owns not more than 10 goods carriages at any time during the previous year. 2009 provided for the taxation of LLPs in the Income-tax Act on the same lines as applicable to partnership firms. . and (ii) other than heavy goods vehicles to Rs. Under the existing provisions of Income-tax Act. which is optional to the assessee. to any partner out of the accumulated profit of the company for a period of 3 years from the date of conversion. (iii) no consideration other than share in profit and capital contribution in the LLP arises to partners. Similarly.4. It is further proposed to provide an anti-avoidance clause stating that a prescribed fixed sum or a sum higher than the aforesaid sum claimed to have been earned by the assessee shall be deemed to be profits and gains of such business. carry forward of losses and of unabsorbed depreciation is not available to the successor LLP. 2011 and will. It is proposed that the transfer of assets on conversion of a company into an LLP in accordance with section 56 and sectionb57 of the Limited Liability Partnership Act. 2008 shall not be regarded as a transfer for the purposes of capital gains tax underbsection 45. It is also proposed to allow carry forward and set-off of business loss and unabsorbed depreciation to the successor LLP which fulfills the above mentioned conditions. Section 47(xiiib) / Section 47A(4) / Section 72A(6A) Conversion of a private company or an unlisted public company into a limited liability partnership (LLP) The Finance (No.per month per vehicle for owners of heavy goods vehicle. either directly or indirectly. and Rs. turnover or gross receipts in business of the company do not exceed sixty lakh rupees in any of the threebpreceding previous years. These conditions are as follows: (i) the total sales. Section 44AE Presumptive income for truck owners under section 44AE Under the existing provisions of section 44AE.bconversion of a company into an LLP has definite tax implications. An assessee opting for this scheme is exempted from maintaining books of account to substantiate the income. and (vi) no amount is paid. (v) all assets and liabilities of the company become the assets and liabilities of the LLP. subject to certain conditions. 2008 allow conversion of a private company or an unlisted public company (hereafter referred as company) into an LLP. Transfer of assets on conversion attracts levy of capital gains tax.3.000/. The scheme applies to an assessee.3. Under this scheme. 2) Act. 45 10.500/.

accordingly. proposed to amend clause (vii) of section 56(2) so as to provide that it would apply only if the immovable property is received without any consideration and to remove the stipulation regarding transactions involving cases of inadequate consideration in respect of immovable property.000. apply in relation to the assessment year 2010-11 and subsequent years. In several cases of immovable property transactions. It is further proposed that the actual cost of the block of assets in the case of the successor LLP shall be the written down value of the block of assets as in the case of the predecessor company on the date of conversion. . It is proposed to clarify that the tax credit under section 115JAA shall not be allowed to the successor LLP. 20. Section 80CCF Deduction in respect of long-term infrastructure bonds In tune with the policy thrust of promoting investment in the infrastructure sector. It is. Section 56(2)(viia) The provisions of section 56(2)(vii) were introduced as a counter evasion mechanism to prevent laundering of unaccounted income under the garb of gifts. the depreciation calculated at the prescribed rates as if the conversion had not taken place. 2010 and will. to the extent of Rs. the benefit availed by the company shall be deemed to be the profits and gains of the successor LLP chargeable to tax for the previous year in which the requirements are not complied with. These amendments are proposed to take effect from 1st April. This deduction will be over and above the existing overall limit of tax deduction on savings of upto Rs. 2009 and will. shall be allowed as deduction in computing the income of an individual or a Hindu undivided family. 46 It is also proposed that if the conditions stipulated above are not complied with. the profits of which are taxable under specific head of income. apply in relation to the assessment year 2011-12 and subsequent years. Credit in respect of tax paid by a company under section 115JB is allowed only to such company under section 115JAA. in any previous year. 13. raw material and consumable stores of any business of such recipient. This amendment is proposed to take effect from 1st June. which results in a taxable differential. The provisions were intended to extend the tax net to such transactions in kind. 80CCC and 80CCD of the Act. apply in relation to the assessment year 2011-12 and subsequent years. It is. The intent is not to tax the transactions entered into in the normal course of business or trade. It is also provided that the cost of acquisition of the capital asset for the successor LLP shall be deemed to be the cost for which the predecessor company acquired it. therefore. 12. accordingly. accordingly. particularly after abolition of the Gift Tax Act. therefore. It is also proposed that the aggregate depreciation allowable to the predecessor company and successor LLP shall not exceed. proposed to amend the definition of property so as to provide that section 56(2)(vii) will have application to the ‘property’ which is in the nature of a capital asset of the recipient and therefore would not apply to stock-in-trade. These amendments are proposed to take effect retrospectively from 1st October.1 lakh under section 80C. it is proposed to insert a new section 80CCF in the Income-tax Act to provide that subscription during the financial year 2010-11 made to long-term infrastructure bonds (as may be notified by the Central Government). there is a time gap between the booking of a property and the receipt of such property on registration. 2011 and will.

The deduction will be limited to the current aggregate as mentioned in the section. 15.2008.000 in both cases if the person insured is of age of 65 years or above.4. the following conditions: (a) the project has to be completed within 4 years from the end of the financial year in which the project is approved by the local authority.000 sq. deduction in respect of premium paid towards a health insurance policy upto a maximum of Rs. Further. 15. 15.2005. This facility is similar to the facilities available through health insurance policies. it is also proposed to enhance the current norms for built-up area of shops and other commercial establishments in housing projects in order to enable basic facilities for the residents. These amendments are proposed to take effect retrospectively from 1st April. (b) the built-up area of the shops and other commercial establishments included in the housing project should not exceed 5 per cent of the total built-up area of the housing project or 2. inter alia. ft. The built-up area of the shops and other commercial establishments included in the housing project is proposed to be three per cent of the aggregate built-up area of the housing project or 5000 sq. 2010 and will.. This extension will be available for housing projects approved on or after 1. This benefit is available subject to.000 is also allowed for buying an insurance policy in respect of dependent parents. accordingly. 2005. accordingly. apply in relation to the assessment year 2011-12 and subsequent years. The deduction is enhanced to Rs. 2011 and will.3. from the existing 4 years to 5 years from the end of the financial year in which the housing project is approved by the local authority. This amendment is proposed to take effect from 1st April. It is. 2011 and will. 20. This benefit will be available to projects approved on or after the 1. . spouse and dependent children.4. apply in relation to the assessment year 2011-12. whichever is higher. whichever is less. Section 80IB(10) Deduction for developing and building housing projects Under the existing provisions of section 80-IB(10). proposed to also allow deduction in respect of any contribution made to CGHS by including such contribution under the provisions of section 80D. A further deduction of Rs. in respect of their income relating to assessment year 2010-11 and subsequent years. apply in relation to the assessment year 2010-11 and subsequent years. accordingly. 47 This amendment is proposed to take effect from 1st April. 100 per cent deduction is available in respect of profits derived by an undertaking from developing and building housing projects approved by a local authority before 31.000 is available for self. therefore.ft. Section 80D Deduction in respect of contribution to the Central Government Health Scheme Under the existing provisions of section 80D. To allow for extraordinary conditions due to the global recession and the resultant slowdown in the housing sector. it is proposed to increase the period allowed for completion of a housing project in order to qualify for availing the tax benefit under the section. 14. which are pending for completion. The Central Government Health Scheme (CGHS) is a medical facility available to serving and retired Government servants.

000 (for a single contractors transaction) transaction) 50.000 professional or technical services These amendments are proposed to take effect from 1st July.80.4. it is proposed to amend clauses (i) and (ii) of section 80-ID to extend the date by which the hotel has to start functioning or the convention centre has to be constructed. accordingly. three-star or four-star category hotel or from the business of building.20. This amendment is proposed to take effect from 1st April. 17.000 20. Gautam Budh Nagar and Ghaziabad.000 30.000 (for a single 30.000 7. 194H Commission or 2.000 10. To provide some more time for these facilities to be set up in light of the Commonwealth Games in October. 48 16.500 5. 194BB. of profits derived by an undertaking from the business of a two-star.000 lottery or crossword puzzle 2. . 2010. apply in relation to the assessment year 2011-12 and subsequent years. it is proposed to raise the threshold limit for payments mentioned in sections 194B.000 horse race 3. 194D. Gurgaon.000 1. 194C Payment to 20. 2011 and will.000(for 75. from the present 31st March.000 Brokerage 6. 194C. However. 194-I Rent 1. 194-I and 194J as under: Section Nature of payment Existing threshold Proposed threshold limit of payment limit of payment (Rupees) (Rupees) 1.3.2007 to 31. 2010 to 31st July. every person responsible for payment of any specified sum to any person is required to deduct tax at source at the prescribed rate and deposit it with the Central Government within the specified time. Section 80-ID Deduction of profits of a hotel or a convention centre in the National Capital Territory Section 80-ID of the Income-tax Act provides for 100 per cent deduction for five years. no deduction is required to be made if the payments do not exceed prescribed threshold limits. 2010.500 5. 2010.2010. provided such hotel has started functioning or such convention centre is constructed during the period 1. owning and operating a convention centre located in the National Capital Territory of Delhi and the districts of Faridabad. 194B Winnings from 5. 194H.000 (for aggregate of aggregate of transactions during transactions during transactions during transactions during financial year) financial year) 4. 194J Fees for 20. Section 194B / Section 194BB / Section 194C / Section 194D / Section 194H / Section 194I / Section 194J Rationalisation of provisions relating to Tax Deduction at Source (TDS) Under the scheme of deduction of tax at source as provided in the Income-tax Act.000 commission 5. 194D Insurance 5. In order to adjust for inflation and also to reduce the compliance burden of deductors and taxpayers. 194BB Winnings from 2.

Considering the fact that the TDS/TCS certificate constitutes an important document for the deductee/collectee. accordingly. These amendments are proposed to take effect from 1st April. 20. 2011 and will. from one lakh rupees to one lakh fifty thousand rupees. 2010. a collector of tax at source will also not be required to issue tax collection certificate to the person from whom tax has been collected on or after 1st April. Section 203 Certificate of Tax Deduction at Source (TDS) and Tax Collection at Source(TCS) The existing provisions of section 203(3) of the Income-tax Act dispense with the requirement of furnishing of TDS certificates by the deductor to the deductee on or after 1st April. Similarly. leviable under section 271B for failure to get accounts audited under section 44AB or to furnish a report of such audit. . it is proposed that the deductor/collector will continue to furnish TDS/TCS certificates to the deductee/collectee even after 1st April. These amendments are proposed to take effect retrospectively from 1st April. Section 271B In view of the amendment proposed above. a person is liable to pay simple interest at one per cent for every month or part of month in case of failure to deduct tax or payment of tax after deduction. 19. 2010. 49 18. This amendment is proposed to take effect from 1st July. 2010. under section 206C(5) of the Act. it is also proposed to increase the maximum penalty. 2010 . apply in relation to the assessment year 2011-12 and subsequent years. With a view to discourage the practice of delaying the deposit of tax after deduction. 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. Section 201 Under the existing provisions of section 201(1A) of the Act. 2010.