Finance Bill 2010 - Passed by Lok Sabha - FM announces more concessions
INCOME Tax
++ Section 35AD of the Income Tax Act is further amended to provide for investment linked deductions to specified business which is in the nature of building and operating a new hospital with at least one hundred beds for patients.
++ Similar benefit is extended to specified business which 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, as the case may be, and which is notified by the Board in this behalf in accordance with guidelines as may be prescribed.
++ Further, any transfer of a capital asset or intangible asset by a private company or unlisted public company to a limited liability partnership including transfer of shares held in the company by a shareholder as a result of conversion of the company into a limited liability partnership would be out of the purview of capital gains tax.
Service Tax
++ An explanation was inserted in the definitions of commercial or industrial construction service and construction of complex service to provide that unless the entire payment for the property is paid by the prospective buyer after completion of construction, activity of construction would be deemed to be a taxable service provided by the builder/developer/promoter and service tax is payable accordingly in such instances. So irrespective of whether there is a transfer of property or not, even transactions under an agreement to sell a flat to prospective buyer against payment of instalments would also be liable to service tax. Now for these types of transactions, an abatement of 75% is proposed to be provided. This abatement is in addition to the existing abatement of 67% already available to transactions other than those mentioned above.
++ Low cost housing schemes for the urban poor provided under the JNNURM and Rajiv Awas Yojana are exempted from levy of service tax.
++ Exemption available to vocational training institutes under commercial training or coaching service is also extended to ‘modular employment skill development courses provided by training institutes registered under ‘skill development initiative of the Ministry of Labour.
Customs
++ An export duty of Rs. 2500 per tonne was imposed on export of raw cotton w.e.f April 9, 2010. The second schedule to the Customs Tariff Act, 1975 is amended to enhance the statutory export tariff to Rs. 10,000 per tonne. However the effective rate of duty would remain at Rs. 2500/- per tonne. The statutory tariff rate is enhanced only to meet future exigencies.
When we flashed that export duty was enhanced from Rs. 2500/- to Rs. 10000/- per tonne we were inundated with calls from Maharashtra and Gujarat asking us to clarify about the proposed enhancement and its effective date. As of now we can only say that the enhancement is in the tariff rate and the effective rate would be kept at the current level of Rs. 2500/- per tonne as mentioned by the Finance Minister on the floor of the Lok Sabha.
++ Tunnel boring machines meant for hydro-electric projects including parts and components thereof exempted from customs duty.
++ Export duty on iron ore lumps is also enhanced to 15%.
Excise
++ Exemption from excise duty extended to scented supari as well.
++ SSI exemption was extended to specified packing materials bearing a brand name. Now this is extended to all types of packing materials.
++ Since RSP based assessment is extended to parts, components and assemblies of vehicles (including chassis fitted with engines) falling under Chapter 87 excluding vehicles falling under headings 8712, 8713, 8715 and 8716, which also includes earth moving machinery, like loaders and excavators, parts, components and assemblies of these machineries are also brought into the purview of RSP based assessment.