Bimal Jain

ContentsContents

Highlights Highlights1.1.

Economic Highlights Economic Highlights5.5.

3.3.

Overall Impact - Income Tax Overall Impact - Income Tax6.6.

Budget – 2008

Service Tax Service Tax4.4.

Overall Impact - Indirect Tax Overall Impact - Indirect Tax2.2.

Direct Tax - Corporate Direct Tax - Corporate7.7.

Direct Tax - Individual Direct Tax - Individual8.8.

Excise Duty

Custom Custom99

Electronic & Electrical goods

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Excise Duty:- Excise duty rate change from 16% to 14%.

Abatement rate also changed for MRP based products.

NCCD (National Calamity contingent duty) on Cellular GSM 1.03% on MRP payment through PLA.

Excise duty rate increased for Packaged software from 8% to 12%.

Excise duty rate decreased for small cars & Two Wheelers from 16% to 12%.

Sales Tax:-

CST reduced from 3% to 2% w.e.f 1st April 2008 ( Subject to Notifications).

Brief Roadmap provided for GST by April, 2010.

Excise Duty/Sales Tax

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Service Tax rate No Change 12.36%.

Exemption limit for small service provider increased from Rs. 8 -10 Lacs. (Registration required if receipts exceeds Rs.9 Lakhs.)

Cenvat Credit on Secondary Freight i.e WH to Customer’s place :- withdrawn.

Any Amt DR/CR w.r.t taxable services with Associated enterprises – payment on accrual basis – U/S 67.

Service tax rate increased for WCT contracts from 2% to 4%.

Scope of Service Tax extended to:- Right to use goods Tangible Goods No Transfer of Possession

& Effective control Where ever VAT is not applicable. Assets management Services under ULIP. Services provided to Stock & Commodity Exchanges. Customized Software.

Service Tax

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Self adjustments of excess service tax from 50K to 100K Rule 6 (4B)(iii).

Revision in time limits for Revised Return from 60 days to 90 days. Rule 7B.

Resolution Schemes Disputes up to Rs.25K (as on 1/3/2008) – 1/7/2008 to 30/9/2008 Small Service Provider.

Packing including loading, unloading etc under cargo handling services.

Services in relation to promotion/Marketing of Games of chance.

IT related services

• Consulting Engineer Services: Consultancy on Computer Hardware/Software.

• Repairs, Maintenance & Management services for IT software.

• Business Auxiliary Services: IT related services – software developments, up gradations, right to use of IT software, commercial exploitations.

Service Tax

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New Excise Duty rate & abatements for Electronic & Electrical Goods

CENVAT CESS1 NCCD

1 Compressor 84143000 14% 3% 0% Advolerm2 Air Conditioner (Less than 3 Tons) 84151010 14% 3% 0% MRP 30% 28%

Air Conditioner (CAC) (More than 3 Tons) 84158210 14% 3% 0% AdvolermAir Conditioner Parts 84159000 14% 3% 0% Advolerm

3 Refrigerators, household type, Compression type84182100 14% 3% 0% MRP 40% 38%Parts of Refrigerators 84189900 14% 3% 0% Advolerm

4 Washing Machines. 84501100 14% 3% 0% MRP 40% 38%Parts of Washing Machines 84509010 14% 3% 0% Advolerm

5 Colour Monitor 84716030 14% 3% 0% MRP 25% 23%Parts of Colour Monitor 84735000 14% 3% 0% Advolerm

6 Computer System 84713010 12% 3% 0% MRP 22.5% 22.50%7 Microwave Oven 85165000 14% 3% 0% MRP 40% 36.50%8 Colour Television 85281211 14% 3% 0% MRP 35% 33%

Parts of Colour Television 85299090 14% 3% 0% Advolerm9 Cellular Telephone (GSM) 85170000 0% 3% 1% MRP 40% 38%10 Optical Drive Device 84717090 0% 0% 0% Advolerm

DVD player 85219020 14% 3% 0 MRP 40% 38%

New Abatement

Rate of Duty

Excise Duty Structure wef 1/3/2008

ValuationOld

Abatement

S.No. Description of Commodity CETSH No.

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Impacts of reduction in Excise Duty before & after Budget on CTV

Particulars Before After Before After

RM 1500.00 1500.00Labour 600.00 600.00All Other O/H 600.00 600.00Costs of goods sold 2700.00 2700.00

Manufacturer's Margin 500.00 500.00 5000 5000 MRP - CTV

Assessable Value 3200.00 3200.00 1750 1650Less:abatement @ 35%/33%

Excise Duty @16.48%/14.42% 535.60 483.07 3250 3350Basic Price 3735.60 3683.07VAT @ 12.5% 466.95 460.38Dealer Price 4202.55 4143.45MRP 5000.00 5000.00% reduction in price on BP 1.4%

Calculation of Excise Duty under MRP system before & After Budget 2008Remarks

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Impacts on Excise Duty before & after Budget on GSM Mobile mfg:-

Particulars Before After Before AfterRM 1500.00 1500.00Labour 600.00 600.00All Other O/H 600.00 600.00Costs of goods sold 2700.00 2700.00Manufacturer's Margin 500.00 500.00 4000.00 4000.00 MRP

Assessable Value 3200.00 3200.00 0 1520

Less:abatement @ 40%/38%

Excise Duty @ 0%/1.03% 25.54 4000.00 2480.00 AVBasic Price 3200.00 3225.54VAT @ 4% 128.00 129.02Dealer Price 3328.00 3354.57MRP 4000.00 4000.00% increase in price on BP 0.79%

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Impacts of reduction in Excise Duty on RM in – Excise Free Zone (EFZ)

Items AC CTV

MRP 15000 9000

Dealer’s Price 12750 7650

Basic Price 11333 6800

Assessable Value 10800 6030

Raw Material 6347 3876

ED on Raw material

Before Budget @ 16.48% 1046 639

After Budget @ 14.42% 915 559

Net reduction in Duty 131 80

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Impacts of reduction in Excise Duty – Benefits of EFZ VS DTA

Items AC CTV

MRP 15000 9000

Dealer’s Price 12750 7650

Basic Price 11333 6800

Assessable Value 10800 6030

Raw Material 6347 3876

ED on Raw material @ 16.48% (Before Budget) 1046 639

ED on Raw Material@ 14.42% (After Budget) 915 559

ED on FG @ 16.48% (Before Budget) 1730 964

ED on FG @ 14.42% (After Budget) 1557 870

Impacts on Duty

Before Budget 684 325

After Budget 642 311

Net Loss in Benefits 42 15

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Tax to GDP Ratio from 9.5% (2004-05) to 12.5% (2007-08)

Fiscal Deficit estimated at 3.1% & Revenue Deficit at 1.4%.

One time Waiver of Loans to Farmers – Rs.60,000 Cr.

GDP forecast 8.7% in 2008.

Services & Manufacturing sector grow by 10.7% & 9.4% in 2008.

Inflation projected at 4.4%.

Rupee rose by 8.9% in Current Fiscal.

Capital inflows will rise by 7.7% in H1 of FY 08 as against 5.1% in FY 07.

Govt, RBI to jointly work to check capital inflow.

Education, health pillars of social sector reforms.

Major Economic Highlights

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Agricultural growth rate at 2.6%.

1 lakh broadband-enabled common service centres in villages.

Allow foreign equity in Retail Trade.

Meaning of Terms used in Budget :-

Fiscal Deficit:- Revenue Receipts less TTL Expenditure.

Revenue Deficit:- Revenue Receipts Less Revenue Expenditure

GDP:- Gross TTL of Goods & Services.

Major Economic Highlights

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No Change in Corporate Tax 33.99%.

FBT ( Fringed Benefits Tax):- Continue Some Changes

Excludes w.e.f 1st April 2009:-Guest House Expenses, Sponsoring Employee for Sports, Organizing Sports events for employees, Crèche Expenses, Non Transferable Electronic Meal Card etc.Festival celebration expenses ( slab changed from 50% to 20%)

Dividend distribution tax No Changes 16.99%.

Furnished information to IT deptt of any payment to Non – resident.

Banking cash Transaction Tax withdrawn w.e.f 1st April 2009 0.1% on Rs.1 Lacs & above withdrawn per day for Company.

Date of filling of Return of Income:- 30th September ( 31st Oct) F.Y 2007 - 08.

Direct Tax - Corporate

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Thresh hold Exemption limit of Individual Tax increased:- Men :- Rs.1.1 Lacs to 1.5 Lacs Women:- Rs.1.45 Lacs to1.80 Lacs Sr.CitiZen Rs.1.95 Lacs to 2.25 Lacs

(Surcharge @ 10% above Rs.10 Lacs & 3% Education & SHE cess –Continue).

Deductions:- 80D for Medi claim Insurance for Parents Additional Rs.15K.

STCG ( Short Term Capital Gains) rate increased 10% to 15% - Securities.

NET TAXABLE INCOME TAX RATE

UPTO 1.1 LACS NILABOVE 1.1 LACS - 1.5 LACS 10%ABOVE 1.5 LACS - 2.5 LACS 20%ABOVE 2.5 LACS 30%

NET TAXABLE INCOME TAX RATE

UPTO 1.5 LACS NILABOVE 1.5 LACS - 3 LACS 10%ABOVE 3 LACS - 5 LACS 20%ABOVE 5 LACS 30%

BEFORE

AFTERTax Slabs

Direct Tax - Individual

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Basic surcharge cess Basic surcharge cess120,000 1,000 - 30 1,030 - - 1,030 150,000 4,000 - 120 4,120 - - 4,120 170,000 8,000 - 240 8,240 2,000 - 60 2,060 6,180 250,000 24,000 - 720 24,720 10,000 - 300 10,300 14,420 300,000 39,000 - 1,170 40,170 15,000 - 450 15,450 24,720 400,000 69,000 - 2,070 71,070 35,000 - 1,050 36,050 35,020 500,000 99,000 - 2,970 101,970 55,000 - 1,650 56,650 45,320 510,000 102,000 - 3,060 105,060 58,000 - 1,740 59,740 45,320 520,000 105,000 - 3,150 108,150 61,000 - 1,830 62,830 45,320 550,000 114,000 - 3,420 117,420 70,000 - 2,100 72,100 45,320 600,000 129,000 - 3,870 132,870 85,000 - 2,550 87,550 45,320 700,000 159,000 - 4,770 163,770 115,000 - 3,450 118,450 45,320

1,000,000 249,000 - 7,470 256,470 205,000 - 6,150 211,150 45,320 1,500,000 399,000 39,900 13,167 452,067 355,000 35,500 11,715 402,215 49,852 2,000,000 549,000 54,900 18,117 622,017 505,000 50,500 16,665 572,165 49,852

BUDGET 2008-09 - All Individual

Taxable Income

Total Total Benefits BEFORE AFTER2007-08 2008-09

Direct Tax - Individual

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Basic surcharge cess Basic surcharge cess145,000 - - - - - - - 150,000 500 - 15 515 - - 515 170,000 4,500 - 135 4,635 - - - - 4,635 180,000 6,500 - 195 6,695 - - - - 6,695 250,000 20,500 - 615 21,115 7,000 - 210 7,210 13,905 300,000 35,500 - 1,065 36,565 12,000 - 360 12,360 24,205 400,000 65,500 - 1,965 67,465 32,000 - 960 32,960 34,505 500,000 95,500 - 2,865 98,365 52,000 - 1,560 53,560 44,805 510,000 98,500 - 2,955 101,455 55,000 - 1,650 56,650 44,805 520,000 101,500 - 3,045 104,545 58,000 - 1,740 59,740 44,805 550,000 110,500 - 3,315 113,815 67,000 - 2,010 69,010 44,805 600,000 125,500 - 3,765 129,265 82,000 - 2,460 84,460 44,805 700,000 155,500 - 4,665 160,165 112,000 - 3,360 115,360 44,805

1,000,000 245,500 - 7,365 252,865 202,000 - 6,060 208,060 44,805 1,500,000 395,500 39,550 13,052 448,102 352,000 35,200 11,616 398,816 49,286 2,000,000 545,500 54,550 18,002 618,052 502,000 50,200 16,566 568,766 49,286

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BUDGET 2008-09 - WOMEN

Taxable Income Total Total BenefitsBEFORE AFTER2007-08 2008-09

Direct Tax - Individual

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Budget Highlights :: CustomsBudget Highlights :: Customs

No change in peak rate of customs duty, BCD remains 10%, 7.5%, 5% & 0%No change in peak rate of customs duty, BCD remains 10%, 7.5%, 5% & 0%

EOU,STP,EHTP sale to DTA – Duty abatement reduced from 75%->50%EOU,STP,EHTP sale to DTA – Duty abatement reduced from 75%->50%

Convergence products i.e. MP3/ MP4 or MPEG 4 Players with radio/video reception facility – Convergence products i.e. MP3/ MP4 or MPEG 4 Players with radio/video reception facility – 10% 10% 5% (Without Radio/Video already 5%) 5% (Without Radio/Video already 5%)

Duty reduced to nil, on some additional items for mfg. of Set Top Box i.e. SMPS, power board, Duty reduced to nil, on some additional items for mfg. of Set Top Box i.e. SMPS, power board, IR module.IR module.

NCC duty 1% imposed on Mobile phone. So, total duty on mobile increased from 4% to 5.07%.NCC duty 1% imposed on Mobile phone. So, total duty on mobile increased from 4% to 5.07%.

Time limit for re-export u/section 74(2) reduced from 36 month to 18 months.Time limit for re-export u/section 74(2) reduced from 36 month to 18 months.

BCD exempted on RM and Components required for mfg. of Connectors, relays, CRT, Part of BCD exempted on RM and Components required for mfg. of Connectors, relays, CRT, Part of CRT, Semiconductor, Plasma display panel and Module.CRT, Semiconductor, Plasma display panel and Module.

Wireless data cards with PCMCIA/USB/ PCI (G-TRAN) express ports are exempted from excise Wireless data cards with PCMCIA/USB/ PCI (G-TRAN) express ports are exempted from excise dutyduty

Excise duty on heat resistant rubber tension tape ( HRRTT) reduced from 16% to 8%Excise duty on heat resistant rubber tension tape ( HRRTT) reduced from 16% to 8%

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Thanks