Simplified Supplement to Finance Act 2009.

[KAUSHIK]

Supplement Income Tax Act as Amended by the Finance Act, 2009

(As Applicable for Assessment Year 2010-11 )

Finance Act, 2009.

Tax Rates  The Income Tax Rates for the Assessment Year 2010-11 (Previous Year 1 April, 2009 to 31 March, 2010) is as follows: For Individuals and Hindu Undivided Families  Income Tax Rates Up to Rs.1,60,000 Nil Rs.1,60,000 Up to Rs.3,00,000 10% Rs.3,00,000 Up to Rs.5,00,000 20% Above Rs.5,00,000 30% For Resident Women below 65 years Income Tax Rates Up to Rs.1,90,000 Nil Above Rs.1,90,000 Up to Rs.3,00,000 10% Above Rs.3,00,000 Up to Rs.5,00,000 20% Above Rs.5,00,000 30% For Senior Citizens (who are 65 years or more) Income Tax Rates Up to Rs.2,40,000 Nil Above Rs.2,40,000 Up to Rs.3,00,000 10% Above Rs.3,00,000 Up to Rs.5,00,000 20% Above Rs.5,00,000  30% For Partnership Firms Tax shall be levied at a flat rate of 30% of total income. For Local Authorities Tax shall be levied at a flat rate of 30% of total income. For Co-operative Societies Income Tax Rates Up to Rs.10,000 10% Above Rs.10,000 Up to Rs.20,000 20% Above Rs.20,000 30% For Companies In case of a Domestic company                   30% In case of a Foreign company                      40% (However, for certain royalty or fee for rendering technical services, the rate of tax in case of a foreign company is 50%). Minimum Alternate Tax (Section 115JB) The rate of Minimum Alternate Tax (MAT) is raised from 10% to 15% on the book profits computed in accordance with Section 115JB of the Act.  The time limit for carry forward and set off of MAT credit is extended to 10 years from the existing period of 7 years.  Calculation of Book Profit [Section 115JB] Surcharge for Assessment Year 2010-11 Surcharge @ 10% is abolished for all non-corporate tax payers from financial year 2009-10.  Surcharge is levied @ 10% if income is in excess of Rs.1,00,00,000 (Rs.1 crore) in case of domestic companies. Surcharge is levied @ 2.5% if income is in excess of Rs.1,00,00,000 (Rs.1 crore) in case of foreign companies. Surcharge @ 10% shall be levied on the Corporate Dividend Tax (‘CDT’) and Mutual funds irrespective of whether the total income of the company/firm is up to Rs.1,00,00,000 or more. Education Cess Education Cess @ 3% shall be levied on all assesses over and above the tax and surcharge.  BASIC CONCEPTS AND EXEMPTIONS  Charitable Purpose: Section 2(15): The definition of charitable purpose has been amended retrospectively from AY 2009-10 to include organizations engaged in the preservation of environment (including watersheds, forests and wildlife) and preservation of monuments or places or objects of artistic or historic interest. Firm Section 2(23) The definition of firm has been amended with effect from AY 2010-11 to include a “Limited Liability Partnerships” (LLP). Electoral Trust: Section 2(22AAA) This section has been inserted with effect from AY 2010-11. Electoral trust means a trust so approved by the board in accordance with the scheme made in this regard by the Central Government.  Income Section 2(24) The definition of income has been amended with effect from AY 2010-11, so as to include therein the voluntary contribution received by electoral trusts.  Manufacture Section 2(29BA)  To eliminate the disputes and conflicts amongst judicial cases the Finance Act, 2009 defines manufacture as “a change in a non-living physical object or article or thing resulting in transformation of the object or article or thing into a new and distinct object or article or thing having a different name, character and use, or bringing into existence of a new and distinct object or article or thing with a different chemical composition or integral structure.” Henceforth to be entitled to various tax benefits in respect of manufacturing activity, an assessee will have to satisfy the definition of manufacture to be eligible for tax incentives. This amendment takes effect with retrospective effect from AY 2009-2010. Power to issue Zero Coupon Bonds Section 2(38) Under the existing provision only infrastructure capital companies or infrastructure capital funds or public sector companies are empowered to issue zero coupon bonds, when they are authorized to do so. On or after April 1, 2009, this section has been amended so as to include the scheduled banks as an eligible person to issue zero coupon bonds. Therefore from April1, 2009, Scheduled Banks can also issue Zero coupon bonds. Exemption of Income from New Pension Scheme Section 10(44)  This section has been inserted so as to provide that any income received by any person on behalf of the New Pension System Trust established on 27th day of February, 2008 under the provisions of the Indian Trust Act of 1882 shall be exempt from income tax. Extension of Tax Holiday for EOU and FTZ units Section 10A/10B Tax holiday currently enjoyed by Export Oriented Units (EOUs), and Free Trade Zones (FTZ) under section 10A/10B of the Income Tax is extended upto March 31, 2011. Therefore deduction of 100% would be available for First 10 years upto financial year 2010-11 (AY 2011-2012).  Computation of Exemption in Case of SEZ units Section 10AA  Under the existing provisions, the profits of the unit eligible for deduction under Section 10AA, should be in the same proportion, which the export turnover of the unit has with total turnover of the assessee. With effect from FY 2009-10 the word ‘assessee’ is replaced with the word ‘undertaking’. Therefore, after the amendment, deduction under this section shall be computed only with reference to the total turnover of the undertaking.  Restriction of Tax Benefits in Respect of VRS by Amending Section 10(10C) and Section 89 Tribunals have taken the view an assessee after claiming exemption u/s 10(10C) can claim relief u/s 89 of Income Tax Act. The Finance Act, 2009 has made it clear stating that assessees claiming exemption u/s 10(10C) cannot claim relief u/s 89 and vice versa. This amendment takes effect from AY 2010-2011. Exemption to Electoral Trust Section 13B  This section has been inserted with effect from AY 2010-11 to provide that any voluntary contributions received by Approved Electoral Trust functioning as per its rules is to be exempt if it distributes 95% thereof to specified political parties. INCOME FROM SALARIES Fringe Benefit Tax (FBT):  FBT is abolished from the AY 2010-11. As a result of this Section 17(2) has been amended to restore taxation of fringe benefits as perquisite in the hands of employees. As a result of this, ESOPs on exercise date [new sub-clause (vi) of Section 17(2)], contribution to Superannuation Fund in excess of Rs.1,00,000 [new sub-clause (vii) of Section 17(2)], and other fringe benefits and amenities [new sub-clause (viii) of Section 17(2)], are taxable in the hands of employees as perquisites. Income from Business or Profession Income from Profits and Gains [Section 28]  This section has been amended by inserting a new clause (vii) from the assessment year 2010-11. It provides that any sum received or receivable in cash or kind on account of any capital asset being demolished, destroyed, discarded or transferred, shall be treated as income of the assessee and chargeable to tax under the head “Profits and gains of business or profession ” . However, it shall be charged only if the whole of expenditure on such capital asset has been allowed as deduction under section 35AD. Depreciation Section 32 Explanation 3 to Section 32(1) has been amended with effect from the AY 2010-11, so as to delete the definition of “ block of assets” provided therein. From now onwards the “block of assets” will derive its meaning only from section 2(11). Expenditure on Scientific Research: Section 35(2AB) The earlier benefit of 150 percent weighted deduction under this section is extended to companies engaged in the business of manufacture or production of article or thing except those specified in the Eleventh Schedule with effect from AY 2010-11 onwards. This amendment is with a view to promoting research and development in all sectors of the economy. Expenditure on Specified Business Section 35AD  A new section 35AD has been inserted in the IT Act with effect from FY 2009-10, which relates to deduction in respect of capital expenditure on Specified Business.  The specified business has been defined to mean the business of  setting up and operating cold chain facilities for specified products; setting up and operating warehousing facilities for storage of agricultural produce; and laying and operating a cross-country natural gas or crude or petroleum oil pipeline network for distribution, including storage facilities being an integral part of such network.  Amount of Deduction: 100% of capital expenditure incurred wholly and exclusively, during the year for specified business (other than expenditure incurred on the acquisition of any land or goodwill or financial instrument). The salient features of the new regime of investment-linked tax incentives are as follows: The assessee shall not be allowed any deduction in respect of the specified business under the provisions of chapter VI A. No deduction in respect of the expenditure in respect of which deduction has been claimed shall be allowed to the assessee under any other provisions of the IT Act. All capital expenditure (other than on land, goodwill and financial instrument) incurred before the commencement of the business will be allowed in the year of commencement of the specified business, if the amount is capitalized in the books of account of the assessee. This will be available in addition to any other capital expenditure (excluding land, goodwill and financial instrument) incurred during such financial year. If operation of the business of laying and operating a cross country natural gas pipeline network for distribution, commences during April 1, 2007 and April 1, 2009 the capital expenditure (other than on land, goodwill and financial instrument) incurred before April 1, 2009( to the extent not allowed as deduction under any section earlier) will be allowed as additional deduction under this section for the AY 2010-11.  Any loss computed in respect of the specified business shall not be set off except against profits and gains, if any, of any other specified business. To the extent the loss is unabsorbed, the same will be carried forward for set-off against profits and gains from any specified business in the following assessment year and so on. The assessee shall be required to fulfill prescribed conditions in order to claim benefit under this section. Transfer to Special Reserve Section 36  The benefit of the deduction under section 36(1)(viii) is extended to the National Housing Bank. In view of this, explanation to Section 36(1)(viii) has been amended with effect from AY 2010-11 to substitute the word “housing development” in place of the words “construction or purchase of houses in India for residential purposes.” Also, on or after April 01, 2009, zero coupon bonds can also be issued by the Scheduled Banks.  Remuneration to partners in a firm including limited liability partnership firm: Section 40(b) This section has been amended with effect from AY 2010-11 to revise monetary limits for allowing expenditure on account of salary, bonus, commission or remuneration to a working partner of both professional and non-professional firm.  Book Profits/Losses Amount Allowed as Deduction In case of loss or book profit is negative Rs.1,50,000 In case book profit is positive: On first Rs.3,00,000 of book profit. On the balance of the book profit.    Rs.1,50,000 or 90% of book profit, whichever is higher 60% of the book profit.  Enhancement of Limit for Disallowance of Expenditure Made in the case of Transporters Section 40A (3)  With effect from October 1, 2009, the monetary limit of Rs. 20,000 has been raised to Rs. 35,000 in case of payment made in respect to plying, hiring, leasing of goods carriages. However the limit of Rs. 20,000 will continue in respect to other payments.  Special Provision for Computing Business Profits on Presumptive Basis Section 44AD The present section 44AD and 44AF will be omitted from the AY 2011-12. With effect from AY 2010-11 a new section has been incorporated to provide for special provisions for computing business profits of any business (whether it is retail trading or civil construction or any other business) on presumptive basis. If the total turnover/gross receipts in the previous year of the eligible business does not exceed Rs.40 Lakh, then the income from the eligible business is estimated at 8% of the turnover or gross receipts.  Computation of Income on Estimated basis in case of Assessee Engaged in Business of Plying, Hiring or Leasing Goods Carriages in Section 44AE:  This section has been amended with effect from AY 2010-11 to increase the present limits as follows: Owner of Light goods vehicles Minimum Rs.4,500 per month Owner of Heavy goods vehicles Minimum Rs.5000 per month Computation of Profits and Gains of Retail Business Section 44AF In view of the substitution of new section 44AD, section 44AF is omitted with effect from AY 2010-11.  INCOME FROM CAPITAL GAINS Cost Inflation Index (CII) The Central Board of Direct Taxes (CBDT) has pegged the cost inflation index for the financial year 2009-10 at ‘632’. Cost of Acquisition Section 49 This section has been amended with effect from the AY 2010-11, so as to provide that where the capital gain arises from the transfer of specified security or sweat equity shares (referred to in Section 17(2)(vi)), the cost of acquisition of such security or shares shall be the fair market value on the date on which the option is exercised by the employee.  Computation of Capital Gains in the case of Slump Sale Section 50B ( W.e.f October 1st) Explanation 2 to section 50B has been amended with effect from AY 2010-11. As per this for computing the net worth of the undertaking, which is transferred, the aggregate value of the total assets of such an undertaking shall be : Different situation Different situation Amount to be included in the aggregate value of total assets. In case of depreciable assets The written down value of block of assets determined in accordance with the provisions contained in section 43(6)(c)(i). In case of capital assets in respect of which the whole of the expenditure has been allowed or is allowable as a deduction under section 35AD Nil. In case of any other assets Book value. Computation of Capital Gains in the case of Land and Building 50C: ( w.e.f October 1st) Under the current law when a capital asset being land, building or both is transferred then the value adopted by the State stamp authority is deemed to be the sale value if the same is higher than the declared consideration. However Tribunals have held that where there is a transfer without registration of document the value adopted by the State stamp authority cannot be applied. This section has been amended to widen its scope and provide that where transfer is by means of unregistered documents also the value adopted by the State stamp authority shall be deemed to be the sale value if the same is higher then the declared consideration. Such amendment shall be difficult to implement specially it shall not be possible for the assessee to obtain value of a property under the Stamp Act especially when the document.  INCOME FROM OTHER SOURCES  Section 56(2) Widening of taxability of Gifts from non-relatives: Under the existing provision money gifts from non-relatives in excess of Rs.50,000 are liable to be assessed as income, however gifts in kind are still exempted .This section has been amended with effect from October 1, 2009 by inserting a new clause 56(2)(vii) so a to provide that, gifts in kind having fair market value in excess of Rs.50,000 received from non relatives are taxable. It further says that the fair market value of the gift made in kind shall be assessed to tax. The fair market value in case of immovable property shall be value of the property under the Stamp Act and in case of movable property shall be as per rules prescribed for determination of fair market value. Also, Section 49 includes value as cost of such assets. Similarly new clause 56(2)(viii) has been inserted so as to provide that income by way of interest received on compensation or enhanced compensation shall be assessed under the head “Income from other sources” in the year in which it is received.  Deductions Section 57  This section has been amended to provide that in case of interest received on compensation or enhanced compensation, a deduction of 50% of such income shall be allowed. However, no other deduction will be available.  CARRY FORWARD AND SET OFF OF LOSSES  Carry Forward and Set off of Losses by Specified Business Section 73A This new section has been inserted from AY 2010-11 to provide carry forward and set off of losses by specified business. Loss of specified business under section 35(AD) shall be set off only against profits and gains, if any, of any other specified business.  The unadjusted losses if any can be carried forward only for 8 years and can be setoff only against income from the business referred to in section 35(AD).  Income-Tax returns of the year in which the losses have been incurred should be submitted on or before the due date of submitting the return of income  DEDUCTIONS FROM GROSS TOTAL INCOME  Deductions to be made in Computing Total Income Section 80A  Section 80A(4) is amended to provide that, if the assessee has already claimed the deduction for profits and gains under section 10A, 10B, 10BA or under section 80H to 80RRB, then no further deduction shall be allowed under any other provisions in the same assessment year. Further, the aggregate of the deductions under the above provisions shall not exceed the profits or gains of the undertaking or unit or enterprise of the business. Deductions under the above provisions shall be allowed only if the deduction has been claimed in the return of income.  These amendments are retrospective from the AY 2003-2004 80A(6) is amended to provide that, for the purpose of claiming deduction under section 10A,10B or 80H to 80RRB the transfer price of the goods and services in respect of transactions entered into with any other undertaking or unit or enterprise of the taxpayer shall be computed at the market value on that date of transfer. This amendment is applicable from the AY 2009-2010.  Deduction in Respect of Maintenance and Medical Treatment of a Dependent with Disability [section 80DD] From the AY 2010-11 the present limit for deduction of Rs.75,000 available for maintenance of dependant suffering from a severe disability is increased to Rs. 100,000.  Deduction in Respect of Interest on Loan taken for Higher Education [Section 80E] The existing provision of Section 80E permit deduction in respect on interest paid on loan for education in some select fields. This section has been amended with effect from AY 2010-11, to extend the deduction in respect of interest on loan taken for higher education to all fields of studies including vocational studies after passing the Senior Secondary Examination or its equivalent from any recognized School, Board or University.  Also the expression ‘relative’ is extended to cover the student for whom the taxpayer is the legal guardian.  Deduction in Respect of Donations to Certain Funds, Charitable Institutions, etc. [Section 80G] The current provisions of Section 80G require an eligible institution to obtain a renewal of the certificate from the commissioner for every five year . This section has been amended with effect from October 1, 2009 to do away with the renewal of certificate u/s 80G. Therefore from October 1, 2009, the certificate u/s 80G once issued by the commissioner shall be valid till the same is not cancelled. Similarly certificates expiring on or after October 1,2009, shall be deemed to be extended for perpetuity unless specifically withdrawn. Deduction for Contributions made to Political Parties by Corporate and Non-corporate Assesses [Section 80GGB and 80GGC]  These sections have been amended from the AY 2010-11 to provide that donations made to electoral trusts shall be eligible for 100% deduction under section 80GGB or 80GGC in the computation of the income of the donor.  Deduction in Respect of Profits and Gains from Industrial Undertakings or Enterprises Engaged in Infrastructure Development Etc.[Section 80IA] With effect from financial year 2009-10 the deduction under this section will be discontinued to undertakings carrying on business of laying and operating a cross-country natural gas distribution network and which has commenced operations on or after 1 April 2007. The deduction for the same is now available under Section 35(AD).  Tax holiday in respect of specified infrastructure facility shall not be available to any undertaking or enterprise which has been awarded a works contract by any person (including Central/State Government) and executed by the undertaking or enterprise. This amendment is retrospective from the AY 2000-2001. The terminal date for commencing the following activities has been extended from March 31, 2009 to March 31, 2011: Undertaking set up for the reconstruction or revival of a power generating plant. Undertaking engaged in refining of mineral oil.  Undertaking which develops and operates industrial park. The terminal date for commencing the following activities has been extended from March 31, 2010 to March 31, 2011. Undertaking engaged in the generation of or generation and distribution of power. Undertaking engaged for the transmission and distribution of power by laying a network of new. Undertaking engaged for Transmission or distribution lines. Undertakes substantial renovation and modernization of the existing. Undertaking engaged for Network of transmission or distribution lines. Deduction in respect of Profits and Gains from Certain Industrial Undertakings other than Infrastructure Development Undertakings [Section 80IB] Deduction for undertakings engaged in commercial production of mineral oil and natural gas Refineries in private sector which commence refining of mineral oil before April 1, 2012 are also eligible for 100% deduction. 100% deduction for 7 years is allowed for undertakings engaged in commercial production of natural gas, provided the blocks are licensed under NELP-VIII and the production commences on or after April 1, 2009. Deduction in respect of housing projects  Section 80(IB)(10) is retrospectively amended w.e.f. April 1.2001 to provide that the deduction will not be available to any undertaking which executes housing projects as a works contract awarded by any entity (including the Central or State Government). Further a developer will not be entitled to a deduction in respect of a housing project, if more than one residential unit is allotted to any person other than an Individual and in case of an individual to his spouse or minor children or a karta of HUF or any person representing such specified persons This amendment takes effect from AY 2010-2011. Deduction for undertaking engaged in the business of processing, preservation and packaging of fruits and vegetables The tax holiday benefit under Section 80IB(11A) has been extended to the business of processing, preservation and packaging of meat and meat products or poultry or marine or diary products if the undertaking begins to operate such business on or after April 1,2009. Deduction in the Case of a person with Disability or a Person with Severe Disability Section 80U From the AY 2010-11 the present limit for deduction of Rs. 75,000 available for person suffering from a severe disability is increased to Rs. 1,00,000.  Assessment Procedures  Reassessment [Section 147] This section has been amended by inserting an explanation to section 147 to provide that the AO may assess or reassess income in respect of any issue which comes to his notice subsequently in the course of proceedings under this section, notwithstanding that the reason for such issue has not been included in the reasons recorded under Section 148(2) of the IT Act. This amendment will take effect retrospectively from 1 April, 1989 and will, accordingly, apply in relation to assessment year 1989-1990 and subsequent years. Advance Tax From the AY 2010-11, the threshold limit of advance tax has been increased from Rs.5,000 to Rs.10,000.  Miscellaneous Provisions  Commodities Transaction Tax (CTT) CTT is abolished from the AY 2010-11.  Wealth Tax  From the AY 2010-11, the basic exemption limit of wealth tax has been increased from Rs.15,00,000 to Rs.30,00,000.  SIGNIFICANT CHANGES IN INDIRECT TAXES Customs Act, 1962  Customs Duty  The general rate of customs duty of 10% is unchanged. Changes in Basics Customs Duty Rates Items Prior to 1 June 6, 2009 w.e.f June 6, 2009 Specified Life saving drugs/vaccine   10% 5% Artificial heart devices (left ventricular Assist device)  7.5%  5% Gold bars other than tola bars, and gold coins  Rs.100 per  10 gram  Rs. 200 per  10 gram Gold in any form, other than those Specified  Rs. 250 per  10 gram  Rs. 500 per 10 gram Silve in any form  Rs. 500  per kg  Rs. 1,000  per kg Permanent magnets for use in wind Operated electricity generators   75% 5% Set top boxes  Nil  5% LCD panels for manufacture of LCD TV’s  10%  5% Parts, components and accessories of Mobile handsets including cell phones (ADC)  4% (ADC)  Nil Extension of Exemption  On packaged or canned software, CVD exemption has been provided on the portion of the value which represents the consideration for transfer of the right to use such software, subject to specified conditions. Exemption from 4% special CVD on parts for manufacture of mobile phones and ccessories has been reintroduced for 1 year i.e. upto 6 July, 2010. Concessional duty of 5% on specified machinery for tea, coffee and rubber plantations, which was earlier available till 30 April, 2009 has been re-introduced for 1 year i.e. upto 6 July, 2010. Customs Act, 1962 Refund of import duty paid on unused, identifiable imported goods if they are found to be defective or not conforming to the specifications agreed upon between the importer and the seller subject to certain conditions. Benefit of rebate can be claimed for goods locally procured under the Duty Free Import Authorization Scheme. Retrospective amendments have been made with effect from 1 July, 2003 so as to make an express provision to empower High Courts to condone delay in filing of appeals beyond the prescribed period. Retrospective amendments have been made with effect from 1 July, 1999 so as to make an express provision to empower High Courts to condone delay in filing of applications or memorandum of cross objections beyond the prescribed period.  Customs Tariff Act, 1975 For the purpose of calculation of CVD the Tariff value fixed under the central Excise law should be adopted for similar imported articles.  Central Excise Act, 1944 Excise Duty The general rate of excise duty of 8 % is unchanged. Reduction in excise duty (effective from July 7, 2009) Item Prior to July 6, 2009 w.e.f July 7, 2009 Naphtha, special boiling point spirits   14% + Rs.15 per litre 14% Branded jewellery  2%  Nil Motor Vehicles Engine Capacity exceeding 1999cc  20% + Rs.20,000Per unit  20% + Rs.15,000 per unit Petrol driven motor vehicles for Transport of goods  20%  8% Motor chassis for petrol driven Vehicles  20% + Rs. 10,000 Per chassis  8% +Rs.10,000 per chassis Increase in Excise Duty (effective from July 1, 2009) Item Prior to  July 6, 2009 w.e.f July 7, 2009 Polyester Chips  4%  8% Articles of wood  4%  8% Manmade Filament Yarn/Fibres  (tow and staple fibre)  4%  8% MRP-based Rate Changes (effective from July 7, 2009) Item Upto to July 6, 2009 W.e.f July 7,2009 Central Excise duty rate Abatement  Central Excise duty rate  Abatement Ceramic Tiles, Manufactured in a Factory not using Electricity for firing the kiln  4%    43% 8% 45% LPG Gas Stoves  4%    33% 8% 35% MP3/ MP4 or MPEG4Players with or without radio/ video reception facility 4%   33%   8% 35% General Amendments (effective from July 7, 2009) The existing rate of 4 percent increased to 8 percent to align with the mean rate. Certain items like food, drugs, pharmaceuticals etc. have been spared. Exemption from excise duty to such value of packaged software attributable to transfer of right to use for commercial exploitation. Process of adding or mixing cardamom, copra, menthol, spices, etc. other than lime, katha or tobacco to betel nut shall amount to manufacture. Benefit of SSI exemption scheme to be extended to printed laminated rolls bearing the brand name of another person. Books of accounts or other documents seized by the Central excise officer and not relied for issue of notice, to be returned within 30 days of the issue of the notice. Amendments in Central Excise Act, 1944 (‘Excise Act’) (effective from July 7, 2009) Section 35G of the Excise Act is being amended retrospectively with effect from 1 July, 2003 so as to make an express provision to empower High Courts to condone delay in filing of appeals beyond the prescribed period. (similar change has been made in the Customs Act also). Section 35H of the Excise Act is being amended retrospectively with effect from 1 July, 1999 so as to make an express provision to empower High Courts to condone delay in filing of applications or memorandum of cross objections beyond the prescribed period. (similar change has been made in the Customs Act also) Chartered Accountants can be nominated by Chief Commissioner of Central Excise for conducting special audits. Amendments in Cenvat Rules (effective from July 7, 2009) An explanation is being inserted in Rule 2 of Cenvat Rules so as to clarify that 'inputs' shall not include cement, angles, channels, CTD or TMT bars and other items used for construction of shed, building or structure for support of capital goods. Rule 6(3) of the Cenvat Rules is being amended to prescribe that a manufacturer of both dutiable and exempted goods, who does not maintain separate accounts of inputs, shall pay an amount equal to 5% of the total price of the exempted goods instead of 10%. Central Sales Tax (‘CST’) The current rate of CST @ 2% will continue in respect of inter-state transactions.

Best Regards, Kaushik.J.