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Commentary on 2010 Budget

No firm commitment on early implementation of GST

It was expected that the Finance Minister would set the tone for introduction of GST. But his statement that the Government would “endeavor” to implement GST from April 1, 2011 appears to convey that there are many areas of difference between the Centre and States and even the deadline of April 1, 2011 may not happen.

As an affirmation of the Central Government to implement GST from April 1, 2011 it would have been appropriate to reduce the CST rate of tax to 1% with effect from April 1, 2010. 

Harmonisation of CENVAT and Service Tax Rate

By raising the CENVAT Rate to 10%, same as that of Service Tax, the Finance Minister has taken the first step towards harmonizing tax on Goods and Services.

While the present rate of 10% may not necessarily be the Standard rate of Central GST, CENVAT and Service Tax will hereafter move in unison till GST is implemented.

To dispel the expectation that the CSGT rate may be 10%, the Finance Minister has in an interview stated that the RNR ( Revenue Neutral Rate) of CGST is yet to be finalised and the CGST Standard Rate may not necessarily be 10%

Renting of Immovable Property Service

As was expected the Finance Minister has retrospectively amended the definition of taxable service if Renting of Immovable Property Service retrospectively with effect from 01/06/2007 so as to nullify the decision of the Delhi High Court. The Government has filed an appeal to the Supreme Court against the decision.

The last hope for the tax payers is a decision on the constitutional validity of levy of service tax on Rent. 

We have presented the Budget changes under the following heads

New Services Liable to Tax

Amendment to presently Taxable Services

New Exemptions

 Present Exemptions withdrawn / Modified

 Import / Exporter of Services

 Refund to exporters rationalised

Click to view the brief commentary on Budget changes.

See also

Click to view the sectionwise commentary on Budget changes.

Scope of Newly taxable services

Click to view the new serivcewise commentary on Budget changes.