7th Term - Legal Frameworks of Construction

Legal Framework of Construction
Income Tax and Professional Tax
Finance Area
Backdrop
1. A tax that is levied on income of individuals / corporations / legal entities is known as
Income Tax.
2. The Central Board for Direct Taxes (CBDT) governs the Indian Income Tax department.
3. Income tax is imposed by Govt. of India on taxable income of individuals, Hindu Undivided
Families (HUFs), companies, firms, co-operative societies and trusts (Identified as body of
Individuals and Association of Persons) and any other artificial person.
4. Levy of tax is different for different entities and it is governed by the Indian Income Tax Act,
1961.
Tax Rates FY 2010 – 11 (A.Y 2011 – 12)
The new and revised income tax slabs and rates applicable for the financial year (FY) 2010-11
and assessment year (AY) 2011-12 are mentioned below:
For Individual and HUF (Below 65)
1. Up to 1,60,000 NIL
2. 1,60,001 to 5,00,000 10%
3. 5,00,001 to 8,00,000 20%
4. Above 8,00,000 30%
For Women Resident (Below 65)
1. Up to 1,90,000 NIL
2. 1,90,001 to 5,00,000 10%
3. 5,00,001 to 8,00,000 20%
4. Above 8,00,000 30%
In case of an individual resident who is of the age of 65 years or more at any time during the
previous year:-
1. Up to 2,40,000 NIL
2. 2,40,000 to 5,00,000 10%
3. 5,00,001 to 8,00,000 20%
4. Above 8,00,000 30%
S.R.P** 7TH TERM- LEGAL FRAMEWORKS OF CONSTRUCTION. Page 1

A resident who was not present in India for 730 days during the preceding seven years or who
was nonresident in nine out of ten preceding years is treated as not ordinarily resident. In effect,
a newcomer to India remains not ordinarily resident.
For tax purposes, an individual may be resident, nonresident or not ordinarily resident.
Non-Residents and Non-Resident Indians

 Residents are on worldwide income. Nonresidents are taxed only on income that is
received in India or arises or is deemed to arise in India. A person not ordinarily resident is
taxed like a nonresident but is also liable to tax on income accruing abroad if it is from a
business controlled in or a profession set up in India.
Status Indian Income Foreign income
Resident and ordinarily resident Taxable Taxable
Resident but not ordinary resident Taxable Not Taxable
Non-Resident Taxable Not Taxable
Benefits to NRI’s
 Bank Deposits investment in shares, units of Mutual Funds etc. are exempt from wealth tax
in India.
 Interest earned on NRE (Non-resident (external) Rupee Account) and FCNR (Non-resident
Foreign Currency Account) accounts is completely tax-free.
 Gift tax has been abolished for all types of gifts from the 1st October 1998.
 However, gifts received on the occasion of marriage or from relative or under will or
inheritance would not be subject to tax.
Residence Rules
An individual is treated as resident in a year if present in India
 for 182 days during the year or
 for 60 days during the year and 365 days during the preceding four years. Individuals
fulfilling neither of these conditions are nonresidents. (The rules are slightly more liberal for
Indian citizens residing abroad or leaving India for employment abroad.)
 Income from Salary
Under this head, income received as salary under Employer-Employee relationship is taxed. If
income exceeds minimum exemption limit, then Employers must withhold tax compulsorily as Tax
Deducted at Source (TDS). The employees should also be provided with a Form 16 which shows
the tax deductions and net paid income. Form 16 also contains any other deductions provided
from salary as follows:
Medical reimbursement / Medical Insurance Premium up to Rs. 15,000 per year is tax
exempt (u/s 80D) provided bills / Premium Payment receipts are given.

Conveyance allowance up to 9600 per year is tax free
Professional taxes which are usually a slabbed amount based on gross income are
deductible from income tax.
House rent allowance: the minimum of the following is available as deduction
• The actual HRA received
• 50%/40 % (metro/non-metro) of 'salary'
• Rent paid minus 10% of 'salary'
Income from House Property

Income from House property is calculated by considering the Annual Value. The annual
value (for a let out property) will be maximum of the following:
• HRA Rent received
• Municipal Valuation
• Fair Rent (as determined by the I-T department)
However if a house is not let out and not self-occupied, then annual value is assumed to
have accrued to the owner. In case of a self occupied house, annual value is to be taken as
NIL. But if there is more than one self occupied house then the annual value of the other
house/s is taxable. From this, Municipal Tax paid is deducted to arrive at the Net Annual
Value. From this Net Annual Value, the following are deducted:
• 30% of Net value as repair cost - mandatory deduction
• Interest paid or payable on a housing loan for the house
Income from Business or Profession
1. Income arising from profits and gains of any Business or Profession; income derived by a
Trade/ Professional/ similar Association by performing specific services for its members;
2. Any benefit from business whether convertible into money or not, incentives for exporters;
any salary, interest, bonus, commission or remuneration received by Partner of a firm;
3. Any amount received under a Key man Insurance Policy which also covers Bonus; income
from managing agency and speculative transactions; is taxable.
Income from Capital Gains

Under section 2(14) of the I.T. Act, 1961, Capital asset is defined as property of any kind held by
an assessee such as real estate, equity shares, bonds, jewellery, paintings, art etc. but does not
consist of items like stock-in-trade for businesses or for personal effects. Capital gains arise by
transfer of such capital assets.

Long term and short term capital assets are considered for tax purposes.
 Long term assets are those assets which are held by a person for three years except in
case of shares or mutual funds which becomes long term just after one year of holding.
 Sale of long term assets give rise to long term capital gains which are taxable as below:
 As per Section 10(38) of Income Tax Act, 1961 long term capital gains on shares/securities/
mutual funds on which Securities Transaction Tax (STT) has been deducted and paid, no
tax is payable. Higher capital gains taxes will apply only on those transactions where STT is
not paid.
 For other shares & securities, person has an option to either index costs to inflation and pay
20% of indexed gains, or pay 10% of non indexed gains.
 For all other long term capital gains, indexation benefit is available and tax rate is 20%
Income from other sources

There are some specific incomes which are to be taxed under this category such as income by
way of dividends, horse races, winning of bull races, winning of lotteries, amount received from
key man insurance policy.
Note – Please refer MS-word sheet on other tax.
 All about Sec – 80C
Section 80C replaced the erstwhile Section 88 with more or less the same investment mix
available in Section 88 but with a major change in the method of providing a tax benefit.
The limit
 The limit under this section is Rs 1,00,000.
 This is irrespective of how much you are earn and under which tax bracket you fall.
 Also, there are no sub-limits under this overall Rs 1,00,000 amount.
 So if you choose, you can invest 20,000 amount in infrastructure bonds (u/s 80CCF) to
derive additional tax benefit apart from u/s 80C.
 Or, if you are repaying a home loan and the principal repayment amounts to Rs 100,000,
then you can claim the entire amount as a deduction.
Education Cess - All taxes in India are subject to an education cess, which is 2% of the total tax
payable. With effect from assessment year 2008-09, Secondary and Higher Secondary Education
Cess of 1% is applicable on the subtotal of taxable income.
Investments under u/s 80C & 80D
The investments that fall under Section 80C.
 Provident Fund  Equity Linked Saving Schemes of
mutual funds
 Public Provident Fund
 Infrastructure bonds
 Life insurance premium
 National Savings Certificate
 Pension plans

Besides these investments, the payments towards the principal amount of your home loan are
also eligible for an income deduction.
Section 80D (Medical Insurance Premiums) - This deduction is additional to Rs.1,00,000
savings. For senior citizens, the deduction up to Rs. 20,000 is allowable and for non senior
citizens, the limit is Rs. 15000. This deduction is available for premium paid on medical insurance
for oneself, spouse, parents and children. It is also applicable to the cheques paid by proprietor
firms.
 Practical Problems
1. Let's take an example to better explain the tax working:
Salary income: Rs 3,20,000
Home loan interest payment: Rs 1,20,000
Home loan principal repayment: Rs 80,000
NSC investment: Rs 30,000
Solution - Salary (a) 320,000
Income from house property (b)* 120,000
Gross total income (c) (c = a - b) 200,000
Home loan principal repayment 80,000
NSC investment 30,000
Section 80C investments 1,10,000
Limit for Section 80C deduction (d) 1,00,000
Taxable income (c - d) 100,000
Tax on taxable income Nil
Corporate Income tax
1. For companies, income is taxed at a flat rate of 30% for Indian companies, with a 10%
surcharge applied on the tax paid by companies with gross turnover over Rs. 1 crore (10
million).
2. Foreign companies pay 40%.An education cess of 3% (on both the tax and the surcharge)
are payable, yielding effective tax rates of 33.99% for domestic companies and 41.2% for
foreign companies.
Minimum Alternate Tax u/s 115JB
This section is applicable from assessment year 2001-02. If tax liability of a company under
normal provisions is lower than 10 per cent (7.5% for the assessment years 2001-02 to 2006-07)
of "book profit", book profit shall be deemed as total income and 10 per cent (7.5% for the
assessment years 2001-02 to 2006-07) of book profit should be deemed as tax liability.
Book profit is a profit which is demonstrated on paper, but not yet actually real. The best way to
think about book profit is in terms of stock value; if someone purchases a stock and the value goes
up, he or she has made a book profit. By selling the stock, the investor can turn the book profit into
an actual profit.
Exception: There is an exception for companies in SEZ.

 MAT Calculation
If tax payable @30% (at present) by business units as per provisions of IT Act and if it is
less than 10% of the book profits, tax payable will be 10% of the book profits plus surcharge plus
cess... as per provisions of Section 115JB of income tax act.
Professional Tax
 Professional Tax is a state subject.
 This differs from state to state.
 Professional Tax is calculated on the gross monthly income.
 Professional tax is levied by state governments or local municipal bodies and is in addition
to the income tax that the central government collects
Professional Tax in A.P
Professional tax rates applicable in Andhra Pradesh on Salary & Wages is:
Wages per month
up to Rs. 5,000 --- Tax Nil
Rs. 5001 to 6000 --- Tax Rs. 60
Rs. 6001 to 10000 --- Tax Rs. 80
Rs. 10001 to 15000 -- Tax 100
Rs. 15001 to 20000 --- Tax 150
Rs. 20000 and above --- Tax 200

Concept of Cost-to-Company (CTC)
What is Cost to Company or CTC salary? How is it calculated? If your CTC package is so
high, why do you get so little in hand? This article explains it all.
Your company offered you a salary of Rs. 6 Lakhs per year. That means you should be
getting Rs. 50,000 in hand every month. Even if you consider income tax, you should be
getting about Rs. 40,000 in hand.
But you get only Rs. 32,000 in-hand every month! Why? Where did the promised money
vanish? Is your company cheating you?
No! It is because the company promised you the salary as Cost to Company, or CTC.
So, what exactly is CTC?
The concept of Cost to Company (CTC)
Simply speaking, CTC is the amount that you cost your company. That is, it is the amount
that the company spends – directly or indirectly – because of employing you.
Thus, it is the money given to you (your in-hand component), plus the money spent because
of you.
Components of Cost to Company (CTC) Salary
In “Understanding components of your salary”, we saw the various components of your

in-hand salary.
These are:
 Basic
 Dearness Allowance (DA)
 Incentives or bonuses
 Conveyance allowance
 House Rent Allowance (HRA)
 Medical allowance
 Leave Travel Allowance or Concession (LTA / LTC)
 Vehicle Allowance
 Telephone / Mobile Phone Allowance
 Special Allowance
All the above are a part of your in-hand salary, and therefore, are a part of your CTC pay as
well.

Example: Let‟s understand this using a simple example. Say your basic is Rs. 15,000 per
month, DA is Rs. 10,000 per month, you get conveyance allowance of Rs. 800 per month,
and you get HRA of Rs.4,500 per month. So, your package so far is Rs. 3,63,600 per year.
Now let‟s look at some of the other components of your CTC pay – the parts that inflate your
CTC package but may not be actually given to you!
Company’s contribution to Provident Fund (PF)
It is mandatory for you to contribute 12% of your basic towards provident fund (PF). Your
employer makes an equal contribution (12% of your basic) to your PF account.
(Please read “Provident Fund (PF) and Voluntary Provident Fund (VPF)” to know more
about provident fund)
So, although this amount is not given out to you every month, for your company, it is an
expense that it incurs on you every month! Therefore, this forms a part of your CTC pay.
Example: 12% of your basic is Rs. 1,800 per month. That is, Rs. 21,600 per annum. Your
CTC package becomes Rs. 3,85,200.
Reimbursements
Various reimbursements that you get from your company can also form a part of your CTC
package.
This includes reimbursement of:
 Medical bills
 Phone bills
 Magazine subscriptions
 Book purchases, etc.
Example: Say you get reimbursement of medical bills of upto Rs.15,000. So, your CTC
package becomes Rs. 4, 00,200.
Life Insurance and Health insurance
Most respectable employers provide free health insurance cover to their employees and their
dependents. Some companies also provide life insurance for their employees free of cost.
The premium amounts paid for such insurance on your behalf can be included in your CTC
salary.
Example: Say you get a health insurance cover of Rs. 1 Lakh for yourself and your family.
The premium for this is Rs. 2,000. Thus, your CTC package becomes Rs. 4,02,200.

Medical Facilities
Many companies have in-house health centers, hospitals or other health care facilities where
medical care is provided free of cost to employees.
Companies work out a per-employee cost for such facilities, and can include that in your
CTC pay package.
Transport Facilities
Many companies provide free transport facility to their employees from their place of work to
the job location.
The cost of such transportation can be added to your CTC package.
Subsidized Meals
Many companies run canteens or cafeterias for their employees, which provide subsidized
meals to the employees. Such subsidy can be included in your cost to company package.
Example: Let‟s say your company provides you lunch for Rs. 10, and the actual cost of that
lunch is Rs. 25. Thus, there is a subsidy of Rs.15 per meal.
For 21 working days in a month, this is Rs. 315. Or, Rs. 3,780 per year. Thus, your CTC
package becomes Rs. 4,05,980.
Taking it too far
The components of your CTC salary sound reasonable so far, right? After all, this is the
money that you get in one form or the other.
But some companies take the concept of cost-to-company too far! Look at the following:
Office phone bill
The bill for the office phone that you use can be included in your CTC salary too.
Office space rent
Shocked? Its true! There are many companies – especially large investment banks – that
include your office space rent in your CTC package!! Yes, it defies logic, but it is true!
Example: Let‟s say your office is in Churchgate in Mumbai. Your have a small cubicle, say 6
feet by 8 feet (48 square feet). Let‟s say the going rate for rent for office space in that area
is Rs. 200 per sq. ft. per month.
What is the cost of your cubicle in that case? Its Rs. 200 * 48 = Rs.9,600 per month,
or Rs. 1,15,200 per year.
When this is included in your CTC, your overall CTC package becomes Rs. 5,21,180!

A side note: Remember this when you read about the whopping, exorbitant salaries paid out
to fresh management graduates (Like the IIM Ahmedabad MBAs)! Their large salaries might
include the office space rent as well!!
A note on government salaries
We often hear people say that the salary of government employees is quite low.
Although there is truth in this, government salaries wouldn't seem too less if we look at it
from a “CTC” point of view.
When we talk about government salaries, we only talk about the “in-hand” component. But
we forget that on a cost-to-company basis, it can be quite substantial.
What extras do government servants get? Here's a sample list:
 The 12% of basic that the government deposits in their PF accounts, just like private companies
 Membership of government clubs or gymkhanas
 Free stay at various circuit houses and government guest houses
 Free telephone connection at home
 Free car with driver
 Reimbursement of newspaper bills
 Free use of many libraries
 In case of defense personnel (Army / Navy / Air Force), a huge subsidy on items bought from
their “canteens” (like groceries, appliances, etc.)
When these things are taken into account and salaries of government employees is
considered on a cost to company (CTC) basis, it won't seem too less compared to the
private sector!
OTHER TAX SECTIONS
Section Income Income

Tax Rate
111A Short-term capital gains 15.00%
112 Long-term capital gains 20.00%
Dividend received by a foreign company or a non-resident non-

115A (1)(a)(i) corporate assessee [*it is not applicable in the case of dividends 20.00%
referred to in section 115-O]
Interest received by a foreign company or a non-resident non-

115A
corporate assessee from Government or an Indian concern on 20.00%
(1)(a)(ii)
moneys borrowed or debt incurred by Government or the Indian

concern in foreign currency
Royalty or fees for technical services received by a foreign

company or non-resident (b)non-corporate assessee from an
Indian concern or Government in pursuance of an agreement
approved by the Central Government and made after -
115A(1)
a. March 31, 1976 but before June 1, 1997 30.00%
b. May 31, 1997 but before June 1, 2005 20.00%
c. May 31, 2005 10%
Income from Global Depository Receipts held by a resident

individual who is an employee of an Indian company engaged in
information technology software/services
115ACA Dividend [other than dividend referred to in section 115-O] on

global Depository Receipts issued under employees stock option 10.00%
scheme and purchased in foreign currency
Long-term capital gain on transfer of such receipts 10.00%
Income in respect of listed securities received by a Foreign

Institutional Investor as specified2 by the Government
Short-term capital gain covered by section 111A 15.00%
115AD Any other short-term capital gain 30.00%
Long-term capital gain 10.00%
Other income [*not applicable in the case of dividends referred to in

20.00%
section 115-O]
Winnings from lotteries, crossword puzzles, or race including horse

race (not being income from the activity of owning and maintaining
115BB 30.00%
race horse) or card game and other game of any sort or from
gambling or betting of any form or nature
Income of a non-resident foreign citizen sportsman for participation

in any game in India or received by way ofadvertisement or for
115BBA contribution of articles relating to any game or sport in India or 10.00%
income of a non-resident sport association by way of guarantee
money
115BBC Anonymous donation 30.00%
Income from foreign exchange assets and capital gains of non-

resident Indian
115E a. income from foreign exchange asset [*not applicable in the case
20.00%
of dividends referred to in section 115-O]
b. long-term capital gain 10.00%

Tax on book profits of certain companies (Assessment year 2010-
115JB 15.00%
11)
161(1A) Profits and gains of a business in the case of a trust 30.00%
Income of private discretionary trust where shares of beneficiaries

164 30.00%
are Indeterminate
164A Income of an oral trust 30.00%
167A Income of a firm 30.00%
Income of an association of persons or body of individuals if shares

167B 30.00%
of members are unknown
Income of an association of persons or body of individuals if total

income of any member (excluding share from the association or
body) exceeds the maximum amount not chargeable to tax [*if total
income of any member of the association or body is chargeable to
tax at a rate higher than 33.99 per cent for the assessment year
167B(2) 2009-10 or 30.9 per cent for the assessment year 2010-11, then 30.00%
tax shall be charged on that portion of the total income of the
association/body which is relatable to the share of such member at
such higher rate and the balance of the total income is taxable at a
rate of 33.99 per cent and 30.9 per cent for assessment years
2009-10 and 2010-11, respectively.]
Service Tax in India

Backdrop
Dr. Manmohan Singh, the then Union Finance Minister, in his Budget speech for the year
1994-95 introduced the new concept of Service Tax and stated that '' There is no sound
reason for exempting services from taxation, therefore, I propose to make a modest effort in
this direction by imposing a tax on services of telephones, non-life insurance
and stock brokers.''
Applicability
1. The Service Tax assessee is the person/firm who provides the service. Hence,
the Service Tax must be paid by the person/firm providing the service.
2. Chapter V of the Finance Act, 1994 (32 of 1994) (Sections 64 to 96) deals with
imposition of Service Tax interalia on-

Service rendered by the telegraph authorities to the subscribers in relation to telephone
connections.
 Service provided by the insurer to the policy-holder in relation to general insurance

business.
 Service provided by a stockbroker.
 The Finance Acts of 1996, 1997, 1998, 2001, 2002 and 2003 added more services to tax
net by way of amendments to Finance Act, 1994.
 At present total number of services on which Service Tax is levied has gone up to 58
despite withdrawal of certain Services from the tax net or grant of exemptions (Goods
Transport Operators, Outdoor Caterers, Pandal and Shamiana Contractors, and
Mechanized Slaughter Houses).
Chronology of event
The services, brought under the tax net in the year 1994-95, are as below:
 Telephone
 Stockbroker
 General Insurance
The Finance Act (2) 1996 enlarged the scope of levy of Service Tax covering three more
services, viz.,
 Advertising agencies,
 Courier agencies
 Radio pager services.
But tax on these services was made applicable from 1st November, 1996.
The Finance Acts of 1997 and 1998 further extended the scope of service tax to cover a
larger number of services rendered by the following service providers, from the dates
indicated against each of them.
7. Consulting engineers - 7th July, 1997

8. Custom house agents - 15th June, 1997
9. Steamer agents - 15th June, 1997
10. Clearing & forwarding agents - 16th July, 1997
11. Air travel agents - 1st July, 1997
12. Tour operators - exempted up to 31.3.2000 Notification No.52/98, 8th July, 1998,
reintroduced w.e.f. 1.4.2000

13. Rent-a-Cab Operators - exempted up to 31.3.2000 Vide Notification No.3/99 Dt.28.2.99,
reintroduced w.e.f. 1.4.2000
14. Manpower recruitment Agency - 1st July, 1997
15. Mandap Keepers - 1st July, 1997
 Additions
Government of India has notified imposition of service Tax on twelve new services in 1998-
99 union Budget. These services listed below were notified on 7th October, 1998 and were
subjected to levy of Service Tax w.e.f. 16th October, 1998.
16. Architects
17. Interior Decorators
18. Management Consultants
19. Practicing Chartered Accountants
20. Practicing Company Secretaries
21. Practicing Cost Accountants
22. Real Estates Agents/Consultants
23. Credit Rating Agencies
24. Private Security Agencies
25. Market Research Agencies
26. Underwriters Agencies
In the Finance Act 2001, the levy of service tax has been extended to 14 more services,
which are listed below. This levy is effective from 16.07.2001.
27. Scientific and technical consultancy services

28. Photography
29. Convention
30. Telegraph
31. Telex
32. Facsimile (fax)
33. Online information and database access or retrieval
34. Video-tape production
35. Sound recording
36. Broadcasting
37. Insurance auxiliary activity
38. Banking and other financial services
39. Port
40. Authorised Service Stations
41. Leased circuits Services

In the Budget 2002-2003, 10 more services have been added to the tax net which are listed
below. This levy is effective from 16.08.2002.
42. Auxiliary services to life insurance

43. Cargo handling
44. Storage and warehousing services
45. Event Management
46. Cable operators
47. Beauty parlours
48. Health and fitness centres
49. Fashion designer
50. Rail travel agents.
51. Dry cleaning services.
In the Budget 2003-2004, more services have been added to the tax net, which are listed
below. This levy is with respect to the below stated services was effective from July 1, 2003.
52. Commercial vocational institutes, coaching centres and private tutorials

53. Maintenance and repair services.
54. Commissioning and installation services
55. Business auxiliary service
56. Technical testing and analysis; technical inspection and certification
57. Internet cafe services
58. Franchise services
In the budget 2004-2005 13 more services are proposed to be added, to the list of taxable
services. The services are:
59. Airport services

60. Transport of goods by air
61. Survey and exploration of minerals
62. Business exhibition services
63. Transport of goods by road
64. opinion poll services
65. Intellectual property services
66. Broker of forward contracts
67. Pandal and shamiana contractors
68. Outdoor caterers
69. Independent TV/radio programme producers
70. Construction services in respect of commercial and industrial constructions
71. Travel agents

Service Tax Rates
 Service Tax to be charged at 10% under Tax Code.

 Education Cess @3% on the base rate i.e. on 10% to be collected.
 So effective service tax inclusive of cess to be collected at 10.30% on the services
rendered.
Value Added Tax in India

CST –A perspective
o TheCentralSales Tax(CST) Act that comes under the direction of Central Government takes into
consideration all the interstate sales of commodities.
o Sales taxcan be levied either by the central or state government, CentralSales tax department. A
4 per cent tax was generally levied on all inter-State sales. State sales taxes, that apply on sales
made within State, had rates that range from 4 to 15 per cent.
The states are empowered to impose sale tax on the goods that are subject to purchase or sale by
enacting laws. The Parliament has enacted the CST Act and the states are in the process of
enacting laws. The sale of goods or purchase includes:
1. The sale of goods, defined under the sale of goods act.
2. Transfer of goods used as otherwise in pursuance of the contract.
3. Transfer of goods used otherwise in works contracts.
4. Delivery of goods in pursuance to hire purchase agreement or on installment.
5. Transfer of right to use to goods on lease or otherwise.
6. Supply of food by the club or body to its members.
7. Supply of food articles or drinks for consumption
VAT Replaces Sales Tax

Most of the states in India, from April 01,2005, have supplemented the sales tax with the new
Value Added Tax (VAT). VAT in India is classified under the following tax slabs:
1. 0% for the essential commodities
2. 1% on gold ingots as well as expensive stones
3. 4% on capital merchandise, industrial inputs, and commodities of mass
4. 12.5% on all other items
5. Variable rates (depending on state) are applicable for tobacco, liquor, petroleum products, etc.
Note –A Central Sales Tax which is at the rate of 4% is also levied on inter-State sales
but would be eliminated gradually.

Miscellaneous Taxes
1. Municipal/Local Taxes
2. Stamp duty on the transfer of assets
3. Property/building tax that is levied by local bodies
4. Agriculture income tax levied by the State Governments on the income from plantations
5. Luxury tax that is levied by certain State Government on specified goods
Meaning -VAT
 A general consumption tax that is assessed on the value added to goods &services.
 It is the indirect tax on the consumption of the goods, paid by its original producers upon the
change in goods or upon the transfer of the goods to its ultimate consumers.
 It is based on the value of the goods,added by the transferor.
 It means every seller of goods and service providers charges the tax after availing the input tax
credit. It is the form of collecting sales tax under which tax is collected in each stage on the
value added of the goods.
 VAT is a multi-stage tax, levied only on value that is added at each stage in the cycle of
production of goods and services with the provision of a set-off forthe taxpaid at earlier stages
in thecycle/chain.
CST Vs. VAT

 CST -Under the CST Act, the taxis collected at one stage of purchase or sale of goods.
Therefore, the burden of the full tax bond is borne by only one dealer, either the first or the last
dealer.
 VAT -Under the VAT system, the tax burden would be shared by all the dealersfrom first to
last. Then, such tax would be passed upon thefinal consumers.
 Under the CST Act, the taxis levied at a single point. Under the VAT system, the retailers are
not
 subject to tax except for the retail tax.
Importance of VAT in India
 A well-administered system comes in, it will not only close options for traders and
businessmen to evade paying their taxes,but also make sure that they'll be compelled to keep
proper records of sales and purchases.
 Under the VAT system, no exemptions are given and a tax will be levied at every stage of
manufacture of a product. At every stage of value-addition, the tax that is levied on inputs can
be claimed from tax authorities.

Advantages of VAT
 Coverage –If the taxis considered on a retail level, it offers all the economic advantages of
a tax of the entire retail price within its scope. The direct payment of tax spreads out over a
large number of firms instead of being concentrated only on particular groups, such as
wholesalers & retailers.
 Revenue Security -under VAT, if the payment of tax is avoided at one stage no thing will be
lost if it is picked up at later stage. Even if it is not picked up later, the government will at
least have collected the VAT paid at previous stages. Where as if evasion takes place at
the final/last stage the state will lose only tax on the value added at that particular point
 Selectivity -VAT is selectively applied to specific goods & business entities. In addition, VAT
does not burden capital goods because of the consumption- type. VAT gives full credit for
tax included on purchases of capital goods.
 Co-ordination of VAT with direct taxation -Most taxpayers cheat on sales not to evade VAT
but to evade their personal and corporate income taxes. Operation of VAT resembles that
of the income tax and an effective VAT greatly helps in income tax administration and
revenue collection
Disadvantages of VAT
1. VAT is regressive (Decreasing proportionately as the amount taxed increases )
2. VAT is difficult to operate from position of both administration and business
3. VAT is inflationary
4. VAT favors capital intensive firms Items covered under VAT
 All business transactions that are carried on within a State by individuals /
partnerships/companies etc. will be covered under VAT.
 More than 550 items are covered under the new Indian VAT regime out of which 46 natural
& unprocessed local products will be exempt from VAT
 Nearly 270 items including drugs and medicines, all industrial and agricultural inputs,
capital goods as well as declared goods would attract 4 % VAT in India.
 The remaining items would attract 12.5 % VAT. Precious metals such as gold and bullion
will be taxed at 1%.
 Petrol and diesel are kept out of the VAT regime in India. (Continue to follow CST).
Levies of TAX under the VAT

1. Sale Tax or Output Tax including Deemed Sale within the state. It covers all kinds of transfer of
goods, under the Sale of Goods Act including deemed sale that is transfer of goods by way of
Works Contract delivery of goods on the basis of a hire purchase agreement or installment, etc.
 Purchase Tax, including deemed Purchase within the state. The tax paid on purchase of
goods in certain circumstances.
 Composition tax, that is in lieu of tax by way of lump sum tax. This means the amount paid by
the dealers like retailers whose turnover is below the specified limit of the taxable turnover that
is allowed to pay the amount at his option.

What is the difference between VAT and CENVAT?
VAT- Value Added Tax
 VAT is a sales tax collected by the government (of the state in which the final consumer is
located) – which is the government of destination state on consumer expenditure.
 Over 120 countries worldwide have introduced VAT over the past three decades and India
is amongst the last few to introduce it.
 India already has a system of sales tax collection wherein the tax is collected at one point
(first/last) from the transactions involving the sale of goods. VAT would, however, be
collected in stages (installments) from one stage to another.
 The mechanism of VAT is such that, for goods that are imported and consumed in a
particular state, the first seller pays the first point tax, and the next seller pays tax only on
the value-addition done – leading to a total tax burden exactly equal to the last point tax.
CENVAT - Central Value Added Tax
 CENVAT is the new name for MODVAT. Basically they are the same. These are related to
central excise.
 CENVAT means, Tax on Value Addition on the goods manufactured according to Central
Excise & Customs Act Definition. Here the value addition means the Additional
Services/Activities etc. which converts the Input in to Output, and the output is newly
recognized as per the this act as Excisable goods.
VAT - in India
VAT will replace the present sales tax in India. Under the current single-point system of tax levy,
the manufacturer or importer of goods into a State is liable to sales tax. There is no sales tax on
the further distribution channel. VAT, in simple terms, is a multi-point levy on each of the entities in
the supply chain with the facility of set-off of input tax - that is, the tax paid at the stage of
purchase of goods by a trader and on purchase of raw materials by a manufacturer. Only the
value addition in the hands of each of the entities is subject to tax. For instance, if a dealer
purchases goods for Rs 100 from another dealer and a tax of Rs 10 has been charged in the bill,
and he sells the goods for Rs 120 on which the dealer will charge a tax of Rs 12 at 10 per cent,
the tax payable by the dealer will be only Rs 2, being the difference between the tax collected of
Rs 12 and tax already paid on purchases of Rs 10. Thus, the dealer has paid tax at 10 per cent on
Rs 20 being the value addition in his hands.
Purchase price - Rs 100

Tax paid on purchase - Rs 10 (input tax)
Sale price - Rs 120
Tax payable on sale price - Rs 12 (output tax)
Input tax credit - Rs 10
VAT payable - Rs 2

VAT levy will be administered by the Value Added Tax Act and the rules made there-under.
VAT can be computed by using either of the three methods detailed below
 The Subtraction method:- The tax rate is applied to the difference between the value of
output and the cost of input.
 The Addition method: The value added is computed by adding all the payments that is
payable to the factors of production (viz., wages, salaries, interest payments etc).
 Tax credit method: This entails set-off of the tax paid on inputs from tax collected on sales.
India opted for tax credit method, which is similar to CENVAT.
Note : Also look for MODVAT
States such as Andhrapradesh, Kerala, Maharashtra, Madhyapradesh, Delhi and Haryana have
experimented with VAT albeit in a limited manner, covering only limited goods. The experiments
never had the full-fledged features of VAT and were only concoctions. These states have even
called off their experiments owing to different reasons. If one analyses why VAT or its variant
failed in Maharashtra, which was the only state to come closer to a true VAT regime, the following
reasons emerge:
1. Dual methodologies of computation of VAT credit Error! Hyperlink reference not valid. , one for
the Manufacturing stage and the other for the trading stage, thus breaking the audit trail. It may be
noted that one of the advantages of VAT system, as we would be dealing later on, is the audit trail
that is created in the VAT chain.
2. Presence of a large number of tax deferral and holiday schemes, which resulted in a narrow
base. It may again be noted that under VAT, which is multi-point, the tax rates have to be
reasonably low, and lower tax rates presupposes that the tax base is wide. These two features
were not present in the Maharashtra tax regime.
3. Low level of awareness among traders, and even administrators, giving rise to fears and
apprehensions. Owing to this, there was considerable consternation among the trade, which gave
rise to open revolt against the system.
4. Partial implementation of the ideal VAT with the existing system coexisting even under this
regime.
5. Increased burden on retailers of Bookkeeping and compliance.
6. Multiplicity of rates of tax under the VAT regime.
7. Drop in revenue for the State Government, though there are no studies attributing such
reduction to the system of taxation.
Thus States had indeed tried some variations of VAT, but eventually gave up due to a variety of
reasons.

What is Cenvat?
1. Avoid cascading effect
Basic purpose of Vat is to eliminate cascading effect of taxes by tax credit system. This is done
through mechanism of input tax credit.
2. Destination Principle
Cenvat is based on destination principle i.e. excise duty/service tax is paid only when goods
are consumed. Till then, burden of duty gets passed on to the next buyer/customer [In case of
sales tax, as per this principle, sales tax is payable in the State in which goods are consumed
and not in the State in which goods are produced]
3. Credit of inputs, input services and capital goods

Cenvat scheme allows credit of excise duty paid on inputs goods, capital goods and service tax
paid on input services [Rule 3(1) of Cenvat Credit Rules]
4. Utilisation of Cenvat Credit

This credit can be utilised for payment of excise duty on dutiable final products and service tax
on taxable output services [Rule 3(4) of Cenvat Credit Rules]
5. Credit only if manufacture or provision of service

Cenvat credit is available only if there is „manufacture‟ or „provision of taxable output service‟.
6. One to one relation not required

Cenvat Credit Rules do not require one to one relationship [Rule 3(1) read with 3(4) of Cenvat
Credit Rules] Entire Cenvat credit is common pool which can be utilised for payment of any
eligible duty, service tax or amount.
7. Input (goods) eligible for Cenvat credit
Inputs used in or in relation to manufacture

Inputs which are used in or in relation to manufacture of taxable final product and inputs
directly used for provision of taxable output service are eligible for Cenvat credit [Rule 2(k) of
Cenvat Credit Rules]
Input may be used directly or indirectly in manufacture. Any input integrally connected with
manufacturing process is eligible. Process loss is eligible.
8. Consumables eligible
Consumables are eligible for Cenvat credit.
9. Accessories, packing material, paint

Accessories, packing material and paints are eligible as inputs.
10. LDO, HSD and petrol not eligible

LDO, HSD and petrol are not eligible for Cenvat credit
11. Cement, angles, channels etc. not eligible

Input does not include cement, angles, channels, CTD or TMT used for construction of factory
shed, building or foundation or structures to support capital goods [Explanation 2 to Rule 2(k)
of Cenvat Credit Rules]

12. Inputs directly used for providing service
Definition of „input‟ is restricted for service providers. Only inputs used directly in providing
taxable service are eligible.
If service provider charges separately for material supplied while providing service, its cost is
not includible. Correspondingly, duty paid on such material is not Cenvat able.
13. Instant credit

Cenvat credit on input (goods) is instant, i.e. as soon as inputs are received in the factory.
14. Input Service

Input service eligible for Cenvat credit
15. Cenvat credit is available of service tax paid on input services.

Definition of „input service‟ is very wide [Rule 2(l) of Cenvat Credit Rules]. Inclusive part of the
definition expands the scope much beyond manufacture or provision of taxable service.
16. Any service in relation to business is input service

Decisions in Coca Cola (Bombay High Court) and ABB (LB of CESTAT) have cleared most of
doubts about interpretation of „input service‟ and it is clear that any relation with manufacture or
provision of taxable service is not required. any service in relation to business of manufacturer
or service provider is „input service‟
17. Credit only after payment of bill

Credit of service tax on input services is available only after payment is made of bill including
service tax to service provider for service [Rule 4(7) of Cenvat Credit Rules]
When is Sales Tax payable?
Central Sales tax is generally payable on the sale of all goods by a dealer in the course of inter-
state Trade or commerce or, outside a State or, in the course of import into or, export from India.
What is interstate sale?
According to S3, a sale or purchase shall be deemed to take place in the course of interstate trade
or commerce in the following cases:
 when the sale or purchase occasions the movement of goods from one State to another;
 when the sale is effected by a transfer of documents of title to the goods during their
movement from one State to another.
Definition of Income Tax
QUICK LOOK
 Taxes in India are of two types, Direct Tax and Indirect Tax.
 Direct Tax, like income tax, wealth tax, etc. are those whose burden falls directly on the
taxpayer.
 The burden of indirect taxes, like service tax, VAT, etc. can be passed on to a third party.

Income Tax is all income other than agricultural income levied and collected by the central
government and shared with the states.
According to Income Tax Act 1961, every person, who is an assessee and whose total income
exceeds the maximum exemption limit, shall be chargeable to the income tax at the rate or rates
prescribed in the finance act. Such income tax shall be paid on the total income of the previous
year in the relevant assessment year.
The total income of an individual is determined on the basis of his residential status in India.
Residence Rules
An individual is treated as resident in a year if present in India
I. for 182 days during the year or
II. for 60 days during the year and 365 days during the preceding four years. Individuals
fulfilling neither of these conditions are nonresidents. (The rules are slightly more liberal for
Indian citizens residing abroad or leaving India for employment abroad.)
A resident who was not present in India for 730 days during the preceding seven years or who
was nonresident in nine out of ten preceding yeas I treated as not ordinarily resident. In effect, a
newcomer to India remains not ordinarily resident.
For tax purposes, an individual may be resident, nonresident or not ordinarily resident.
Non-Residents and Non-Resident Indians
Residents are on worldwide income. Nonresidents are taxed only on income that is received in
India or arises or is deemed to arise in India. A person not ordinarily resident is taxed like a
nonresident but is also liable to tax on income accruing abroad if it is from a business controlled in
or a profession set up in India.
Capital gains on transfer of assets acquired in foreign exchange is not taxable in certain cases.
Non-resident Indians are not required to file a tax return if their income consists of only interest
and dividends, provided taxes due on such income are deducted at source.
It is possible for non-resident Indians to avail of these special provisions even after becoming
residents by following certain procedures laid down by the Income Tax act.
Taxability of individuals is summarised in the table below
Status Indian Income Foreign Income
Resident and ordinarily resident Taxable Taxable
Resident but not ordinary resident Taxable Not Taxable
Non-Resident Taxable Not Taxable

Budget 2010-11: Major Amendment in Central Excise Duty
Note: Changes come into effect immediately unless otherwise specified.

Major proposals about Central Excise duty are the following:
A. General CENVAT Rate for non-petroleum goods:

The standard rate of excise duty of 8% on non-petroleum products is being increased to 10% with
a few exceptions where exemptions/concessions have been given.
B. CEMENT
Consequent to enhancement of the standard rate of duty from 8% to 10%, the specific rates of
duty on cement and cement clinker is also being revised upwards as follows:
Mini cement plant:
Cement Present rate Proposed rate
1. Cleared in packaged form,-
(i). of retail sale price not exceeding Rs. 190 per 50 kg

Rs.145 per
bag or of per tonne equivalent retail sale price not Rs.185 per tonne
tonne
exceeding Rs. 3800;
(ii). of retail sale price exceeding Rs. 190 per

Rs. 250 per
50 kg bag or of per tonne equivalent retail sale price Rs.315 per tonne
tonne
exceeding Rs. 3800;
Rs. 170 per

2. Cleared other than in packaged form Rs.215 per tonne
tonne
Other than mini cement plant:

Cement Present rate Proposed rate
1. Cleared in packaged form,-
i) of retail sale price not exceeding Rs. 190 per 50 kg

Rs. 230 per
bag or of per tonne equivalent retail sale price not Rs.290 per tonne
tonne
exceeding Rs. 3800;
(ii). of retail sale price exceeding Rs. 190 per

8% of retail 10% of retail
50 kg bag of per tonne equivalent retail sale price
saleprice sale price
exceeding Rs. 3800
8% or Rs. 230
10% or Rs.290 per
per tonne,
2. Cleared other than in packaged form tonne, whichever is
whichever is
higher
higher

C. AUTOMOBILE SECTOR
Ad-valorem (An ad-valorem tax (Latin for according to value) is a tax based on the value of real
estate or personal property. It is more common than a specific duty, a tax based on the quantity
of an item, such as cents per kilogram, regardless of price. An ad valorem tax is typically imposed
at the time of a transaction (a sales tax or value-added tax [VAT]), but it may be imposed on an
annual basis (real or personal property tax) or in connection with another significant event
(inheritance tax, surrendering citizenship,[1] or tariffs) component of excise duty on large cars, Multi
Utility Vehicles and Sports Utility Vehicles etc. and chassis thereof is being increased from 20% to
22%. There is no change in the specific component, which will continue to be levied as applicable.
D. PETROLEUM PRODUCTS
The rates of excise duty on Motor Spirit (petrol) and HSD (diesel) are being increased by Re.1 per
litre. The revised rates of duty on these items are as under:
Description Without Brand Name With Brand Name
Motor Spirit *Rs .14.35 per litre *Rs.15.50 per litre
HSD **Rs.4.60 per litre **Rs.5.75 per litre

Note: * Includes Rs.2 Additional Excise Duty and Rs.6 Special Additional Excise Duty. ** Includes Rs.2 Additional Excise Duty.
E. TOBACCO PRODUCTS
1) The existing slab of filter cigarettes of length not exceeding 70 mm is being broken up into two
slabs: filter cigarettes of length not exceeding 60 mm; and filter cigarettes of length exceeding 60
mm but not exceeding 70 mm. Suitable rates are being prescribed for these slabs. The basic
excise duty (BED) on other cigarettes is being revised. The revised rates of excise duty including
basic excise, additional excise and NCCD on cigarettes are as under:
Present
S.No. Description Proposed rate
rate
Rs. per 1000
Non-filter length in mm
1 Not exceeding 60 819 669 (509 BED+70 AED+90 NCCD)
1473 (1218 BED+1 10 AED +145

2 Exceeding 60 but not exceeding 70 1323
NCCD)
Filter length in mm
3 Not exceeding 60 819 669 (509 BED+70 AED +90 NCCD)
4 Exceeding 60 but not exceeding 70 819 969 (809 BED+70 AED +90 NCCD)
5 Exceeding 70 but not exceeding 75 1323 1473 (1218 BED+1 10 HC+145 NCCD)
1959 (1624 BED+145 AED +190

6 Exceeding 75 but not exceeding 85 1759
NCCD)
7 Others 2163 2363 (1948 BED+180 HC+235 NCCD)
8 Cigarettes of tobacco substitutes 1208 1408 (1258 BED +150 NCCD)

Note: BED, AED and NCCD stands for Basic Excise Duty, Additional Excise Duty and National Calamity Contingent Duty respectively.
2) At present, cigars, cheroots and cigarillos of tobacco attract ad valorem rate of basic excise
duty (BED) of 8% plus Additional Excise Duty (Health Cess) of 1.6%. These rates are now being
replaced with a composite rate of “10% or Rs.1227 per thousand, whichever is higher” (BED) and
“1.6% or Rs.246 per thousand whichever is higher” (AED). Cigars, cheroots and cigarillos of
tobacco substitutes will now attract BED of “10% or Rs.1473/1 000” whichever is higher.
3) Basic excise duty on branded unmanufactured tobacco and tobacco refuse is being increased
from 42% to 50%.
4) Basic excise duty on branded „hookah‟ or „gudaku‟ tobacco is being increased from 8% to 10%
while that on chewing tobacco, preparations containing chewing tobacco, jarda scented tobacco,
snuff and its preparations, tobacco extracts and essences etc. has been increased from 50% to
60%.
5) Basic excise duty on branded homogenised or reconstituted tobacco is also being increased
from 50% to 60%.
6) Basic excise duty on items of other smoking tobacco (branded) is being increased from 34% to
40% while the duty on such unbranded tobacco is being increased from 8% to 10%.
7) Basic excise duty on smoking mixtures of pipes and cigarettes is being increased from 300% to
360%.
8) Basic excise duty on cut tobacco is being increased from Rs.50 per kg. to Rs.60 per kg.
9) Excise Duty on Chewing Tobacco and branded unmanufactured Tobacco packed

in pouches with the aid of packing machines will now be levied based on capacity of production
under Section 3A of the Central Excise Act, 1944 (compounded levy). The levy will come into
effect on 8th March, 2010.
F. CLEAN ENERGY CESS

Clean Energy Cess is being imposed on coal, lignite and peat produced in India. This cess would
be levied and collected as a duty of excise with effect from a date to be notified after the
enactment of the Finance Bill, 2010.
G. SECTOR SPECIFIC RELIEF MEASURES:
I. FOOD/AGRO PROCESSING AND AGRICULTURE SECTOR

1. Full exemption from excise duty presently available to 20 specified equipments for
preservation, storage or transport of agricultural produce is being extended to apiary,
horticultural, dairy, poultry, aquatic & marine produce and meat as well as processing thereof.
2. Full exemption from excise duty is being extended to self-loading/self-unloading trailers & semi
trailers for Agricultural Purposes (tariff item 8716 20 00).

II. ENVIRONMENT FRIENDLY AND ENERGY SAVING GOODS
1. A uniform concessional rate of duty of 4% is being prescribed for parts, namely batteries
includingbattery chargers, electric motors and AC or DC motor controllers required for
manufacture of all categories of electrical vehicles including cars, two wheelers and three
wheelers (like „Soleckshaw‟) subject to actual user condition. This concession will be
available till 31 .03.2013. Such vehicles will also be charged to excise duty @ 4%.
2. Excise duty is being reduced from 8% to 4% on LED lights/lighting fixtures.
3. Full exemption from excise duty is being provided to additional specified raw materials for the
manufacture of rotor blades for wind operated electricity generators.
III. CAPITAL GOODS

Full exemption from central excise duty presently available to goods supplied against International
Competitive Bidding is now being extended to goods supplied to mega power projects from which
power supply has been tied up through tariff-based competitive bidding. The exemption would also
be available where the mega power project has been awarded through tariff-based competitive
bidding.
IV. MSME/ SMALL SCALE SECTOR

1) Changes are being made in the relevant provisions to provide certain facilities to Small Scale
Industrial (SSI) units eligible for availing benefit under Notification No. 8/2003-CE as under:
a) full Cenvat credit on capital goods in one installment in the year of receipt of such
goods.
b) Facility of payment of excise duty on quarterly basis.
The above changes come into effect from 1st April, 2010 and will be applicable even if an eligible
unit opts not to avail of the SSI exemption.
2) While retaining the system of filing quarterly returns, the due date for filing of Central Excise
returns by SSI units is being advanced to the 10th of the month following the quarter.
3) The relaxation from brand name restriction under the general SSI exemption scheme is being
extended to plastic bottles and plastic containers used as packing material.
V. GOLD AND SILVER

1. Refined serially numbered gold bars made from the ore/concentrate stage will now attract
excise duty of Rs.280 per 10 grams (instead of 8% ad valorem) with Cenvat credit facility on
inputs and capital goods.
2. Excise duty on DTA clearances of plain gold and silver jewellery manufactured by a 100%
EOU is being increased from:
(i) Rs.500 per 10 gram to Rs.750 per 10 gram for gold jewellery; and
(ii) Rs.1000 per kg to Rs.1500 per kg. for silver jewellery.
H. OTHER RELIEF MEASURES

1) Following items are being fully exempted from excise duty:
a. Articles of bedding wholly made of quilted textile materials;

b. Toy balloons made of natural rubber;
c. Betel nut product known as “Supari”;
d. Dementholised oil, Deterpenated Mentha oil, Spearmint/ Mentha Piperita oils and all
intermediates and by-products of Menthol.

2) Excise duty is being reduced from 8% to 4% on:
a) Replaceable kits for all household type water filters (except those operating on RO
technology)
b) Corrugated boxes/ cartons manufactured by stand- alone manufacturers
c) Latex rubber thread.
3) Excise duty on goods covered under the Medicinal and Toilet Preparations Act is being reduced
from 16% to 10% to bring it at par with standard Cenvat rate.
I. RATIONALIZATION MEASURES
1. At present, maize starch and tapioca starch are exempt from excise duty while potato
starch attracts 8% duty. Excise duty on all these starches is now being unified at 4%.
2. In the last budget, concessional rate of 4% excise duty applicable to the ceramic tiles
manufactured in kilns not using electricity was enhanced to 8% without Cenvat credit
facility. Since, ceramic tiles in general also attracted 8% excise duty (standard rate) with
Cenvat credit, this entry had become redundant. The rate of duty on all ceramic tiles,
regardless of the fuel used for firing the kiln, is now being unified at 10% with Cenvat credit
facility.
3. Umbrellas currently attract 4% excise duty while umbrella parts attract 8% excise duty and
umbrella cloth panels are fully exempt. The rate of excise duty on umbrellas and all
umbrella parts is being unified at 4%.
4. Currently, two different rates of excise duty (NIL and 4%) for rough ophthalmic blanks have
been prescribed under two different notifications. Redundant entry prescribing 4% is being
omitted.
J. WITHDRAWAL OF EXEMPTIONS/CONCESSIONS
1) Full exemption from excise duty on following items is being withdrawn. They will now attract
excise duty of 4%.
a) Mosquito nets impregnated with insecticides;

b) Av gas;
c) Microprocessor for computers (other than motherboard), Floppy disk drive, Hard disk drive,
flash drive, CD/DVD and Combo Drive meant for external use.
2) Full exemption from excise duty on baby & clinical diapers and sanitary napkins is being
withdrawn. These items will now attract duty at 10%.
3) Concessional rate of excise duty on open tin sanitary (OTS) cans is being withdrawn. OTS
cans will now attract duty at 10%.
4) Concessional rate of excise duty on goggles is being withdrawn except those used for
correcting vision. These items will now attract duty at 10%.
K. AMENDMENTS IN CENTRAL EXCISE ACT, 1944

1. In section 11A (2B), an Explanation is being inserted to clarify that no penalty shall be
imposed where duty along with interest has been paid before the issuance of a demand
notice by the Department.
2. Section 32 dealing with Settlement Commission is being amended so as to restore certain
provisions as they obtained prior to the enactment of the Finance Bill, 2007. Accordingly, the
prohibition on filing of applications for the settlement of cases where an assessee admits
short-levy for goods in respect of which he has not maintained proper records (i.e. cases of
misdeclaration, clandestine removal etc.) is being removed. Similarly, the restriction that an

assessee may seek only onetime settlement is also being relaxed. The Commission is being
empowered to extend the time limit of nine months for disposal of applications by another
three months, for reasons to be recorded in writing.
3. In Section 37, a new clause is being inserted to provide rule-making powers to the Central
Government for withdrawal of facilities or imposition of restrictions including restrictions on
utilization of Cenvat credit on a manufacturer or exporter or suspension of registration of a
dealer for dealing with evasion of duty or misuse of Cenvat credit.
The above changes will come into effect on enactment of the Finance Bill.
L. AMENDMENTS IN THE FIRST SCHEDULE TO CENTRAL EXCISE TARIFF ACT, 1985

1. In heading 2402, a new tariff item covering filter cigarettes of length not exceeding 60 mm
has been inserted. Consequential changes have been made to other tariff items in the said
heading.
2. In Chapter 27, sub-heading 2712 20 and the tariff items 2712 20 10 and 2712 20 90 are
being substituted by 2712 2000 covering „Paraffin Wax containing by weight less than 0.75%
of oil‟. Further, tariff item 2712 90 40 covering „Paraffin wax containing by weight 0.75% and
more of oil‟ is being inserted.
3. In chapter 68, Note 3 is being inserted to provide that in relation to goods of headings 6802
and 6810 the process of cutting or sawing or sizing or polishing or any other process for
converting stone blocks into slabs or tiles shall amount to “manufacture”.
4. In Chapter 76, Note 2 is being inserted to declare the process of drawing or redrawing of
aluminum tubes and pipes as amounting to “manufacture‟”
M. AMENDMENTS IN CENTRAL EXCISE RULES AND CENVAT CREDIT RULES
1. Rule 11 (5) of the Central Excise Rules, 2002 is being deleted so as to dispense with the
requirement of pre-authentication of the invoice.
2. The Central Excise Rules, 1944, the Cenvat Credit Rules, 2000, the Cenvat Credit Rules
2001, the Cenvat Credit Rules 2002 and the Cenvat Credit Rules, 2004 are being amended
retrospectively w.e.f. 01.09.1996 to 31.03.2008 (for periods as applicable to respective rules)
to provide that where a manufacturer avails Modvat/Cenvat credit in respect of any inputs,
other than fuel, to manufacture both dutiable and exempted goods, he can opt to reverse
credit or pay an amount equivalent to credit attributable to inputs used for manufacture of
exempted goods. It is being further provided that such manufacturer shall pay interest @
24% p.a. from the date of clearance till date of reversal of the said credit or payment of
equivalent amount. Such option will, however, be available only in such cases where disputes
in this regard are pending on the date of enactment. This change will come into effect on the
enactment of Finance Bill, 2010.
3. Rule 3(5) of the Cenvat Credit Rules, 2004 is being amended to provide accelerated
depreciation in the case of computers and computer peripherals cleared after use at the
same rates as applicable for similar capital goods of EOU/EHTP/STP units under Notification
No. 52/2003-Customs.
4. Rule 4(5) (b) of the Cenvat Credit Rules, 2004 is being amended to permit sending of jigs,
fixtures, moulds and dies to a vendor for production of goods according to the specifications
of the principal manufacturer without reversal of credit.

5. Rule 6 (6) (vii) of the Central Credit Rules, 2004 is being amended so as to allow Cenvat
credit on inputs used in the manufacture of goods supplied to such mega power projects from
which power has been tied up through tariff-based competitive bidding or the projects
awarded through tariff-based competitive bidding. Similar facility available to goods supplied
against International Competitive Bidding available at present is also being continued.
6. Rule 15 of the Cenvat Credit Rules, 2004 is being amended to harmonize the penal
provisions for incorrect availment of Cenvat credit of duty paid on inputs or capital goods or
input services.
N. AMENDMENTS IN MEDICINAL AND TOILET PREPARATIONS (EXCISE DUTIES) ACT,

1955
Section 3 of the M&TP Act is being amended to exclude goods manufactured or produced by units
in SEZ from excise duty leviable under that Act. This change will come into effect on enactment of
the Finance Bill.
O. AMENDMENTS IN CENTRAL SALES TAX ACT, 1956

The provisions of CST Act are being amended so as to provide for:
i. reassessment by the assessing authority on the basis of new facts discovered or revision by a
higher authority.
ii. Filing of appeals to the highest authority of every State against the orders made by assessing
authorities on issues involving stock transfer or interstate sale including incidental issues
relating to rate of tax, computation of assessable turnover, penalty and procedure.
iii. filing of appeal against any order passed by the highest appellate authority of a State on
disputes of interstate nature relating to stock transfer or consignments of goods to the CST
Appellate Authority.

Legal Framework
 Legal-permitted by law
 Law-a system of rules recognized by a country
 Statute- a written Law passed by a Legislative Assembly
 Legislative- having the power to make Law
 Legislation- laws
 Legislator- a person who makes Law
 Frame work- A supporting structure.
 There is no Human Activity where no legal aspects are applicable right from the womb to the
tomb.
 Legal aspects are enforceable as a measure of Control under one of the Management
Functions.
Laws Applicable to Construction Business
Business establishment laws
1. Indian partnership act
2. Companies act
3. Indian contract act
Banking laws
1. Banking Regulations act
2. Reserve Bank of India act
3. Interest act
Employee laws
1. Building & Other Construction Workers (Regulation & Employment Conditions Of

Service) Act.
2. Contract Labour (Regulation and Abolition) Act.
3. Minimum Wages act.
4. Payment of Wages act.
5. Employees provident fund act.
6. Workmen Compensation Act.
7. Payment Bonus Act.
8. Payment gratuity act.

Land laws
1. Transfer of property act
2. Indian stamp act
3. The Indian Registration act
4. Land Acquisition Act
5. Urban Land (Ceiling & Regulation) Act
6. Binami Transactions Act
Tax laws
1. Sale tax act
2. Excise duty act
3. Service tax
4. Value added tax
5. Import and export duty act
6. Foreign exchange M & R acts
7. Income tax act
 Consumer laws
1. Sale of goods act
2. Consumer protection act
 Environment laws
1. Environmental protection act(Air, water, land)
2. Forest act
3. Wild life protection act
 Dispute laws
1. Industrial Dispute act
2. Arbitration and Conciliation act
3. Civil and Criminal procedure code

Constitution of India
 The Constitution of India came into force on 26th January 1950.
 The Constitution provides for a Parliamentary form of government which is federal in
structure .
 It is a Sovereign Socialist Democratic Republic.
 Constitution-A body of principles according to which a state /organization is governed.
 Govern- conduct the policy of affairs of a state/organization/people
 Government- the group of people who govern the state.
 Federal- relating to system of government in which several states unite under a central
authority but remain independent
 Sovereign-Possessing supreme power
 Socialist-Country‘s wealth should be owned and controlled by the community as a whole.
 Republic- A state in which power is held by the people and their elected representatives which
has president.
 Secular- not bound by religious rules
 Fraternity - a group of people sharing a common interest
Central Government
 The constitutional head of the Executive of the Union is the President.
 The council of the Parliament of the Union consists of the President and two Houses to be
known as
- the Council of States (Rajya Sabha) and - the House of the People (Lok Sabha).
 The Constitution provides that there shall be a Council of Ministers with a Prime Minister as its
head to aid and advise the President, who shall exercise his functions in accordance to the
advice.
 The real executive power is thus vested in the Council of Ministers with the Prime Minister as
its head.
 The Council of Ministers is collectively responsible to the House of the People (Lok Sabha).
Individual State Government
 Every State has a Legislative Assembly.
 Certain States have an upper House called State Legislative Council.
 Governor is the Head of a State.
 There shall be a Governor for each State and the executive power of the State shall be vested
in him.

 The council of Ministers with the Chief Minister as its head advises the Governor in the
discharge of the executive functions.
 The Council of the Ministers of a state is collectively responsible to the Legislative Assembly of
the State.
Legislative Powers
 The Constitution distributes legislative powers between Parliament and State legislatures as
per the lists of entries in the Seventh Schedule to the Constitution.
 The centrally administered territories are called Union Territories.
 WE, THE PEOPLE OF INDIA, having solemnly resolved to constitute India into a
1. SOVEREIGN 4. DEMOCRATIC
2. SOCIALIST 5. REPUBLIC and to secure
3. SECULAR
6. to all its citizens:
DIRECTIVE PRINCIPLES OF STATE POLICY

The directive principles are classified into three charters
1. Social and Economic Charter
 One of the ideals and goals to be achieved in the preamble of our constitution is social justice‘
 The main function of the Republic is to secure to all its citizens social, economic and political
justice.
 The expression ‗justice‘ briefly speaking is ― harmonious reconcilement of individual conduct with
general welfare of society.
 An act or conduct of a person is said to be ‗just‘ if it promote the general well being of the
community.
 The expression ‗ social justice‘ means ‗ abolition/removal of all sorts of inequalities, which may
result from the inequalities of wealth, opportunity, status, race, religion, caste and the like.‖
 The concept of ―social justice‖ consists of Directive Principles essential for the orderly growth
and development of personality of every citizen.
 Social Justice is not a simple or single idea of a society but is an essential part of complex
social charge to relieve suffering citizens.

2. Social security Charter
1. Participation of workers in Management of Industries
2. Right to work, Education
3. 3.Just and human conditions of work
4. Living wage for workers
5. Free and compulsory Education for children
6. Improvement in standard of living and health
3. Community Welfare Charter
1. Uniform civil code
2. Organisation of agriculture and other related areas.
3. Protection and improvement of Forests and wild life
4. Protection of Monuments and places and objects of importance
5. Separation of Judiciary from Executive
6. Promotion of International Peace and security
7. Organisation of village Panchayats
Relation/ Correlation/ Conflict/ Distinction between Fundamental Rights and Directive

Principles
 Fundamental rights are individual rights, while the directive principles are social rights.
 As long as there is no conflict between the two, no problem arises.
 When conflict between the fundamental rights and directive principle takes place, the question
is – which will prevail over the other?
 To answer this question, there are three views as detailed below:
1. First View : Fundamental rights prevail over the Directive principles

2. Second view : Directive
principles prevail over the Fundamental rights; and
3. Third view : Balance ( Harmony) between the Fundamental rights and Directive
Principles

Civil & Criminal Procedure Code
 In every civilized society, there are two sets of laws,
 [1] substantive laws,
 [2] procedural laws (also known as adjective laws).
 Substantive laws determine the rights and obligations of citizens.
 Procedural laws prescribe the procedure for the enforcement of such rights and
obligations.
Procedure is a means to justice.
The procedure must meet the following requirements:
1. Requirement of effectiveness, i.e., an adequate organization of the Courts for the efficient
distribution and dispatch of business
2. Requirement of simplicity and speed, i.e. freedom from mere technicalities at all stages;
3. Requirement of fairness, i.e. clear definition of issues; and wherever possible, the elimination
of any element of surprise at the trial;
4. Effectiveness of the trial, i.e., control and supervision by the Court of the progress of the
proceedings and effective methods of execution; and
5. Requirement of substantial justice, i.e., a speedy and authoritative system of appeal (
COURTS AND THEIR JURISDICTION

 Supreme Court It is the highest Court in India.
 It has both original and appellate jurisdiction.
 (a) between the Government of India and one or more States; or
 (b) between the Government of India and any State on one side and another State or States
on the other; or
(c) between two or more States

 Appeal. An appeal lies to the Supreme Court from any judgment, decree or final order of a
High Court, whether in a civil, criminal or other proceeding if the High court certifies that the
case involves a substantial question of law as to the interpretation of the Constitution .
 High Courts High Courts come next below the Supreme Court.
 there shall be a High Court for each state and each High Court shall be Court of record and
shall have all the powers of such a Court including power to punish for contempt of itself.

Jurisdiction of existing High Courts
 (a) to make rules of Court, and
 (b) to regulate the sittings of the Court and of members thereof sitting alone or in Division
Courts.
 District Courts. The District Court comes next below the High Court.
 It is the principal Court of original jurisdiction in a district.
 In certain cases, it is also a Court of Appeal from the decrees and orders of subordinate and
lower Courts in the district.
Subordination of Courts
 For the purposes of the Civil Procedure Code, the District Court is subordinate to the High
court. The following Courts are subordinate both to the High Court and the District Court:
 (a) Every Civil Court of a grade inferior to that of a District Court, and
 (b) Every Court of Small Causes
CONSTITUTION OF CRIMINAL COURTS

 Classes of Criminal Courts
1. Courts of Session;
2. Judicial Magistrates of the first class and, in any metropolitan area, Metropolitan
Magistrates;
3. Judicial Magistrates of the second class; and
4. Executive Magistrates.
5. The Supreme Court has also jurisdiction vested with certain criminal powers.

THE CODE OF CRIMINAL PROCEDURE, 1973
Object of the Code
 The object of the Code of Criminal Procedure, is to provide machinery for the punishment of
offences against the substantive criminal law and to ensure to the accused a fair trial for the
ascertainment of his guilt or innocence.
DEFINITIONS
1. Offence
 an evil intention or a knowledge of the wrongfulness of act, which means an act does not
constitute guilt unless it is done with a guilty intent, is the fundamental principal of penal
liability.
2. Bailable and non-bailable offences
Bailable offences
 In bailable offences bail is granted as a mater of course.
 The bail may be granted either by the police officer in charge of the accused person or by the
Court.
Non-bailable offences
 In case of non-bailable offences bail is not granted as a matter of course, but it does not mean
that an accused person cannot be granted bail under any circumstances.
 the Court or a police officer unfettered discretion to grant bail in case of non-bailable offences,
except where there appear reasonable grounds for believing that the accused person is guilty
of an offence punishable with death or imprisonment for life.
 But a person under the age of 16 years or any women or any sick or infirm person may be
released on bail even if the offence be punishable with imprisonment for life or with death.
Anticipatory bail
 It is a bail which is granted to a person who apprehends arrest but has not yet been arrested.
 When any person has reason to believe that he may be arrested on an accusation of having
committed a non-bailable offence, he may apply to the High Court or the Court of Session.
 The Court may, if it thinks fit, direct that in the event of such arrest, he shall be released on
bail subject to the following conditions, namely, that the person shall –
make himself available for interrogation by a police office as and when required;
not, directly or indirectly, make any inducement, threat or promise to any person
acquainted with the facts of the case so as to dissuade him from disclosing such facts to
the Court or to any police officer;
not leave India without the previous permission of the Court.

3. Cognizable and non-cognizable offence
 Cognizable offence It means an offence for which a police officer may, in accordance with the
First Schedule arrest without warrant.
 The examples of cognizable offences are murder, culpable homicide, dacoity, abetting mutiny,
counterfeiting coins.
 Non-cognizable offence means as offence for which a police officer has no authority to arrest
without warrant.
 The examples of non-cognizable offences are: causing a simple hurt, undue influence at an
election, false claim in a Court of Law.
4. Complaint
 The essentials of a complaint are as follows:
1) The complaint means an allegation made to a Magistrate (and not a police officer).
2) The allegation may be made orally or in writing to the Magistrate.
3) The allegation must be made with a view to the Magistrate's taking action under the Code.
4) The allegation must be that some person has committed an offence.
5) The person who has committed the offence may or may not be known to the complainant.
6) The complaint need not be necessarily made by the aggrieved person. It may be made by
any person who is aware of the offence.
7) Police report' means a report forwarded by a police officer to a Magistrate.
5. Inquiry means every inquiry, other than a trial, conducted under the Code by a Magistrate or
Court.
6. Investigation includes all the proceedings under this Code for the collection of evidence
conducted by a police officer or by any person (other than a Magistrate) who is authorised by a
Magistrate in this behalf.
7.Judicial proceedings includes any proceeding in the course of which evidence is or may be
legally taken on oath. It includes inquiry and trial but not investigation.

Right to Constitutional Remedies
Locus Standi
 Locus standi means ‗ right to move the court‘
 Generally a person whose legal right is infringed alone has a right to move the court.
 However, there are certain circumstances, in which any member of the public can have a right
to move the court
Public Interest Litigation
 It is also known as Social Interest litigation
 It means any public spirited citizen can move/approach the court for the public cause in the
interest of public welfare.
 Today it has great significance and drew attention of all concerned
Constitutional Remedies
 Constitution confers a fundamental right to an individual to move the court for enforcement of
fundamental right.
 Also confers power on supreme court to issue various writs for enforcement of the fundamental
rights.
 The Supreme Court can provide relief to Bonded Labour, under trial prisoners, victims of police
torture etc.
WRITS
 Writ means an instrument or order of the court by which the court directs an individual
or official of an authority to do an act or abstinence.
 Writs classified under the following heads.
1. - Habeas Corpus
2. - Mandamus
3. - Certiorari
4. - Prohibition
5. - Quo Warranto

1.Habeas Corpus
 If a person is detained unlawfully, he can move the court by filing an application in the high
court or Supreme Court.
 The court on being satisfied with the contents therein, issues the writ of Habeas Corpus.
 The writ is in the form of an order directing a person who has detained, to produce that person
before the court.
 He is also asked to let the court know, by what authority he has detained that person.
 If the cause shown has no legal justification, the court orders immediate release of the person
detained.
 The court may also awards exemplary damages.
We can apply for the Writ of Habeas Corpus
 The General rules is, the person who is detained can apply for the writ.
 But. In certain cases, the application can be made on his behalf by his friends or relatives.
 However, a total stranger cannot make the petition for the writ of Habeas Corpus.
Scope of the Writ of Habeas Corpus
It is the most effective and speedy remedy in the case unlawful detention.
The purpose of the writ is not to punish the wrongdoer, but to protect the personal liberty of the
person detained.
2. Mandamus
 It means ― we command‖
 It is a Judicial Order issued in the form of a command to any Constitutional, Statutory or Non-
statutory authority asking to carry out of a public duty imposed by law or to refrain from doing
a particular act, which the authority is not entitled to do under law.
 It is an important writ to check arbitrariness of an administrative action.
WHO CAN FILE A CASE FOR THE WRIT

The petitioner has to prove that he has a right to enforce public duty in his favour. Conditions :
1.There must be a public duty on the part of the respondent
2.Such duty must be absolute
3. There must be specific demand and refusal

3.CERTIORARI
 Certiorari is an order or command by the Supreme court or High court to the inferior (lower)
court or quasi judicial or administrative body.
 The inferior authority is directed to transmit the records, to check whether the decision by such
authority is illegal or against the principles of the natural justice.
 If is found illegal, the decision is quashed.
GROUNDS FOR ISSUING THE WRIT

 1. Judicial error or Lack of jurisdiction
 2. Improper constitution of such authority
 3. If the authority is incompetent
 4. Its jurisdiction is unconstitutional
 5.Violation of the principles of natural justice.
4. WRIT OF PROHIBITION
 The writ of prohibition is issued to prevent the decision or administrative action in the process
so that it can not proceed further.
5. WRIT OF QUO WARRANTO

 Quo warranto means ―By What authority‖.
 It is a judicial order asking a person, who occupies public office, to show by what authority he
hold the office.
 If it is found that the holder of the office has no valid title, then the writ of quo Warranto is
issued to him to oust (vacate) from the office.
WHO CAN FILE THE PETITION FOR THE WRIT
Any person though he is not an aggrieved person
Conditions :
 The office must be a public office
 The office must be substantive in nature (permanent in character and)
 The person must be in actual possession of the office
 The person must be have held the office contrary to law

FUNDAMENTAL RIGHTS & DUTIES
 Fundamental Rights are known as Basic Rights or Justifiable Rights.
 Fundamental Rights are essential for a human being existence/survival in a dignified manner
in a civilized society.
 These fundamental rights represent the basic values cherished by the people of this country
since the Vedic times and they are calculated to protect the dignity of the individual and create
condition in which every human being can develop‘ his personality to the fullest extent.
The State is shouldered with the responsibility
(i) to protect the rights of individuals
(ii) to maintain peace
(iii) To ensure social security.
The State protects an individual, whose legal right is infringed by another.
 Sometimes, the State itself, by passing a legislation/G.O./Ordinance may infringe (encroach
upon) the fundamental right of an individual.
 Such person can approach the court for enforcement of his/her fundamental right by filing a
petition in the High Court
 The Fundamental Rights embodied in the Indian constitution acts as a guarantee that all Indian
citizens can and will lead their lives in peace as long as they live in Indian democracy.
 The Fundamental Rights for Indians are aimed at overturning the inequities of past social
practices.
 They have also been used for successfully abolishing the "untouchability"; prohibit
discrimination on the grounds of religion, race, caste, sex, or place of birth.
7 Rights
1. Right to Equality: This provides for equality before law and equal protection of laws
Equality before law means that among equals the law should be equal and should equally
administrate
In simple words all are equal before law and no one is above law
2. Right to Freedom: This provide for six freedoms

Freedom of speech and expression: It means right to express one‘s own convictions and
opinions freely by words of mouth, writing, printing, pictures or any other mode.
It includes the expression of one‘s own ideas by any communicable media or visible
representation.

Freedom of silence – Right not to speak : freedom of speech and expression also includes
freedom to observe silence.
3. Freedom of assembly: All citizens have right to assemble peacefully without arms.
It includes the right to hold meetings and to take out processions.
However, this right is subject to certain restrictions.
4. Freedom to form association:
 All citizens have right to form associations and unions.
 FREEDOM OF MOVEMENT
 All citizens have right to move freely through out the territory of India.
 This right extents the freedom to go abroad.
 Freedom to reside and to settle
5. Freedom of profession, occupation, trade or business.
 All citizens have right to practice any profession or to carry on any occupation, trade or
business
 The right carry on a business includes not to start any business or right to close it down at any
time.
 Trade means buying and selling of goods.
 It also includes other activities which may be regarded as integral part of the transaction of
buying and selling such as the transport ,exchange of goods etc.
 Commerce technically also means buying and selling of goods. It includes transportation of
goods and also men and animals.
 Intercourse means commercial intercourse and it includes not merely trade and commerce
but also activities such as movement of persons for the purpose of friendly association with
one another
PROTECTION OF LIFE AND PERSONAL LIBERTY

This guarantees the followings:
1. Right to privacy
2. Right to livelihood
3. Right to Education
4. Right to get pollution free water and Air
5. Right to Die?

4. Right against arbitrary arrest
A. This right provides the following safeguards to the persons arrested/detained under
ordinary laws.
B. A) Right to be informed, as soon as may be, of the ground for arrest or detention
C. B) Right to consult and to be defended by a legal practitioner of his choice
D. C) Right to be produced before the nearest Magistrate within 24 hours of arrest.
E. D) Right not to be detained in custody beyond 24 hours without the authority of the Magistrate
5. Right against exploitation
 This provides prohibition of traffic in human being and forced labour.
 This aims to eradicate child labour by prohibiting engaging of children for employment
 Prohibition of discrimination
 The state shall not discriminate against any citizen on grounds of religion, race, caste,
sex, place of birth or any of them.
6. CULTURAL AND EDUCATIONAL RIGHTS
 This guarantees the protection of interest of minorities to practice their culture, customs,
tradition and to establish and administer the educational institutions of their own.
FREEDOM OF RELIGION
 India is a secular state. The word ‗secular‘ was inserted in the Preamble of the Indian
Constitution by the Constitution (42nd amendment) Act, 1976.
 The word ‗Secularism‘ under the law means that ‗the state does not owe loyalty to any
particular religion, and the state has no religion of its own‘.
 Every one has a right to relate himself to god according to his own conscience.
This right provides:

1. Freedom of conscience and the right to freely profess, practice and propagate religion.
2. Right of religious denomination to manage religious affairs
3. Freedom from payment of taxes for promotion of any particular religion
FUNDAMENTAL DUTIES
 Rights and duties are correlative
 Rights and duties exist side by side
 No rights can exist without a correlative duty
 The right of one may be the duty of other

It shall be the duty of every citizens of India
 To abide by the Constitution and respect its ideals and institutions, the National Flag and the
National Anthem;
 To cherish and follow the noble ideals which inspired our national struggle for freedom;
 To uphold and protect the sovereignty, unity and integrity of India;
 To defend the country and render national service when called upon to do so;
 To promote harmony and the spirit of common brotherhood amongst all the people of India
transcending religious, linguistic and regional or sectional diversities; to renounce practices
derogatory to the dignity of women;
 To value and preserve the rich heritage of our composite culture;
 To protect and improve the natural environment including forests, lakes, rivers and wild life, and
to have compassion for living creatures;
 To develop the scientific temper, humanism and the spirit of inquiry and reform;
 To safeguard public property and to abjure violence;
 To strive towards excellence in all spheres of individual and collective activity so that the nation
constantly rises to higher levels of endeavour and achievement.
OBJECTIVE
 The main objective of the fundamental duties is to remind/enlighten every citizen that, while
enforcing fundamental rights, he must also be conscious of his fundamental duties.
 One can not enforce his fundamental rights without adhering to the fundamental duties.
Enforcement of Fundamental Duties
o The fundamental duties are statutory duties and are enforceable by a law passed by the
parliament.
 They are imposed on the citizens and not upon the State, and hence, a legislation is necessary
to implement them.
 For successful implementation of the fundamental duties, every effort should be made to make
the public know/realize the importance of the fundamental duties.
 Since most of the people in our country are illiterates, wide publicity should be given by a
systematic and intensive education to the people.

CENTRE STATE RELATIONS
The legislative, executive and financial authority is divided between the Centre and the states.
Therefore, the centre – State relations may be explained with reference to the following heads.
1) Legislative relations
2) Administrative relations
3) Financial relations
LEGISLATIVE RELATIONS
The distribution of powers between the Union and the states is contained in three list
1) the union list,
2) the state list
3) the concurrent list
 The union list consists of 97 subjects the state list consists of 66 subjects and the concurrent
list consists of 47 subjects.
 The union parliament is empowered to make laws in respect of the subjects of national
important viz, defence, foreign affairs etc, contained in the union list
 The state list contains the subjects of local importance viz. public order and police, agriculture,
forest etc. and the legislature of the state concerned is empowered to make laws.
 The concurrent list consists of 47 subjects in respect of which both the centre and state can
make laws.
 In the event of conflict between the two, central laws prevails over the state law.
ADMINISTRATIVE RELATIONS
The constitution lay down the provisions relating to ‗ Administrative relations‘ between the union and
states, as stated hereunder.
1. Direction by the union to states
2. Delegation of authority
3. All-India services
4. Grants-in-aid
5. Disputes relating to Water

Direction by the union to states
 The centre can exercise its power subject to laws passed by parliament.
 The union can extended its power to states by giving direction.
Delegation of Authority
 The union parliament, with the consent of the state Governments entrust to the state
Government or its officers, the matters relating to the executive powers of the union.
 Similarly, the state government also can delegate its power to the union and its officers.
All-India services
 The creation of All India Services‘ common to the union and the states to ensure greater inter-
state co-ordination.
Grants-in-aid
The central Government makes grants-in-aid to the states for two purposes;
1. to exercise control over the states
2. to generate centre-state co-ordination , co-operate,and assist the states in implementing the
Welfare schemes
Disputes Relating to Water
The parliament by law adjudicate any dispute relating to distribution or control of the waters of the
inter-state rivers and river-valleys.
FINANCIAL RELATIONS
 The constitution deal with financial relations of the union and the states.
 For smooth and successful conduct of the legislative and executive relations, there must exist
financial authority.
 In India, the scheme of distribution of sources of revenue between the central and the state is
based on the scheme laid down in the Government of India Act, 1935

TRANSFER OF PROPERTY ACT, 1882
OBJECTIVES
1.to lay down uniform rules for transfer of property
2.to complete the code of contract law so far as it relates to immovable property
WHAT IS TRANFER
 Transfer of property means an act by which a living person conveys property in present or in
future, to one or more other living persons.
 Transfer of property includes sale, mortgage, lease, gift and exchange, but also any other
transaction which has the effect of ‗conveying‘ any property from one person to another.
CONVEYANCE
Conveyance means the legal process of transferring property from owner to another
ESSENTIALS OF A VALID TRANSFER
In order to constitute a valid transfer of property, whether movable or immovable the following
conditions must be satisfied:
1. The property must be transferable
2. The transferor must be competent to transfer
3. Transferee must be competent to take the transfer
4. The consideration and the object of the transfer must be lawful
5. The transfer must not be opposed to the nature of interest affected thereby
6. The transfer must be made in the manner and form prescribed by the act, if any.
SALE OF IMMOVABLE PROPERTY

‗Sale‘ is a transfer of ownership in exchange for a price paid or promised or part-paid and part-
promised.
LIABILITIES AND RIGHTS OF SELLERS AND BUYERS

I. Seller’s liability and right before the completion of the sale
1.Disclosure of material defects
2. Production of title deeds
3. Duty to answer questions
4. Execution of conveyance
5. Reasonable care of property
6. payment of charges

Right : The seller has only one right before the completion of sale. He is entitled to the rents and
profits of the property till the ownership thereof passes to the buyer
Buyers liabilities and rights before the completion of sale
1. Duty to disclose facts
2. Duty to tender price
Sellers liabilities and rights after the completion of the sale
1. Delivery of possession
2. Implied covenant of title
3. Delivery of title deeds
Sellers Right : Where the ownership of the property has passed to the buyer before payment of the
whole of the purchase money, the seller is entitled to the lien or charge upon the property in the
hands of the buyer. This right of the seller is known as sellers lien.
Buyers liabilities and rights after completion of the sale
Buyers liability
1.Duty to bear loss
2. Duty to pay public charges and rent
Buyers rights: Where the ownership of the property has passed to the buyer, he is entitled to the
benefit of any improvement in , or increase in value of the property. He is also entitled to the rents
and profits derived from such improvement in the property.

MORTGAGE OF IMMOVABLE PROPERTY AND CHARGES MORTGAGE
When some immovable property is offered as security for a loan, the transaction is called mortgage.
.
Characteristic of a mortgage:
1. Writing and registration
2. Transfer of interest in specific immovable property
Types Of Mortgage
1. Simple mortgage
2. Mortgage by conditional sale
3. Usufructuary mortgage (mortgage with possession)
4. English mortgage
5. Mortgage by deposit of title deeds
6. anomalous mortgage
1. Simple Mortgage
The mortgagor, without delivering possession of the mortgaged property, gives a personal
understanding to the mortgagee to repay the amount due under the mortgage.
The personal understanding to pay may be either express or implied.
2. Mortgage by conditional sale

The mortgagor ostensibly sells the mortgaged property on one of the following conditions:
1. That on default of payment of the mortgage-money on a certain date, the mortgagor agrees
that the sale shall become absolute.
2. That if the mortgagor pays the mortgage-money on the agreed date, the mortgagee agrees
that the sale shall become avoid.
3. That on the payment being made by the mortgagor on the fixed date, the mortgagee agrees to
transfer the property mortgaged to the mortgagor.
Thus the essential characteristic of the mortgage by conditional sale are as follows:
4. The mortgagor has a right of redemption
5. When he repays the amount due, the sale becomes void
6. If he makes a default in paying the amount due on the stipulated date, the sale becomes
absolute and binding.
7. There is no personal covenant on the part of the mortgagor to pay.
8. Delivery of possession of the property is not given to the mortgagee
3. Usufructuary mortgage or mortgage with possession

 The word ‗usufruct‘ means the right of enjoying the use and advantages of another person‘s
property.
 In case of usufructuary mortgage, the mortgagor delivers possession of the mortgaged property
to the mortgagee, or expressly or by implication binds himself to deliver possession of the
mortgaged property.
 He further authorized the mortgagee to receive
 the rents and profits accruing from the property and to appropriate the same in lieu of interest
and the principal sum.

 The mortgage cannot sue for the recovery of the mortgage-money or for the sale of the
mortgaged property, he can only retain possession of the property till his mortgage-money is
fully recovered.
 He has no personal remedy against the mortgagor.
 In case of usufructuary mortgage, rents and profits wholly or in part may be appropriated either-
A. towards payment of interest,
B. towards payment of principal,
C. partly towards payment of interest and partly towards payment of principal.
The liability of the mortgagor is gradually reduced.
4. English Mortgage
In case of an English mortgage, the mortgagor binds himself to repay the mortgage-money on a
certain date.
He transfers the mortgaged property absolutely to the mortgagee on the condition that the
mortgagee will transfer the property to the mortgagor upon payment of the mortgage-money.
5.Mortgage by deposit of title deeds or Equitable mortgage

Where the debtor delivers to a creditor or his agent documents of title to property, with intent to create
a security thereon, the transaction is called mortgage by deposit of title deeds or an equitable
mortgage.
6. Anomalous Mortgage
A mortgage which does not belong to any on the above categories is called an anomalous mortgage.
RIGHT AND LIABILITIES OF MORTGAGOR AND MORTGAGEE

Right of Mortgagor:
Right of Redemption : The mortgagor may redeem every transaction in the nature of a mortgage at
any time after the mortgage money becomes due.
1. This right of the mortgagor to call back the property ( or interest therein which he had parted
with at the time of mortgage) by paying of the mortgage-money is called the Right of
Redemption.
2. Right of assigning the mortgage instead of a retransfer
3. Right of inspection and production of documents
4. Right to redeem separately or simultaneously
5. Right of usufructuary to recover possession
6. Right to accession to mortgaged property
7. Right to improvement to mortgaged property
Liabilities of mortgagor
1) Covenant for title
2) Covenant for defense to title
3) Covenant for payment of public charges
4) Covenant where the mortgaged property is a lease
5) Covenant for payment of prior incumbrances.
Right of Mortgagee

The mortgagee has, at any time after the mortgage-money has become due, a right to obtain from
the court a decree that the mortgagor shall be absolutely debarred of his right to redeem the property
or a decree that the property be sold.
1. This right can however be exercised before a decree has been made for the redemption of the
mortgaged property, or the mortgage money has been paid or deposited
2. Right to sue for mortgage-money
3. Right of sale without intervention of the court
4. 4.Right to appoint Receiver
5. 5.Right of accession to mortgaged property
6. Right in case of renewal of mortgaged lease
7. Right to spend money
8. Right to proceeds of revenue, sale or compensation on acquisition
Liabilities of Mortgagee
1. Only one suit for several mortgages
2.Liabilities of mortgagee in possession
a) Management
b) Collection of rents and profits
c) Payment of revenue
d) Repairs
e) Destructive acts
f) Insurance
g) Accounts
Charge
Means the immovable property which serves as a security for a monitory or other benefit.
The essentials of a charge are
1. It must be a immovable property
2. It must be a security for payment of money or other favour/benefit
3. The charge may be created by act of parties or it may come into existence by operation of law.
Two types of Charges

1.Charge created by acts of parties
 When both the parties (debtor and creditor) to a transaction, for value, agree that some specific
immovable property shall be made available as security for the payment of a debt, a charge is
created by the act of the parties.
 No particular form of words are necessary to create the charge. The Act also does not prescribe
any particular mode of creating a charge.
2.Charge created by operation of law

 A charge created by provisions of an Act (i.e. by statutory provisions) comes into being by
operation of law.
 It is not created by the volition or voluntary action of the parties.
 It arises as a legal consequence of certain conditions or as a result of some legal obligation.

Distinction between mortgage and charge
Mortgage
1. 1.It is transfer of an interest in specific immovable property made by a mortgagor as a security
for the loan
2. It is created by act of the parties
3. It can be enforced against any transferee whether he takes it with or without notice of the
mortgage
4. In a mortgage by conditional sale or in an anomalous mortgage, the mortgagee can foreclose
the mortgaged property.
5. In a mortgage, there can be security as well as personal liability
Charge
1. It does not involve transfer of any interest in the property although it serves as a security for
the payment of the loan
2. It may be created by act of the parties of by operation of law
3. It cannot be enforced against bonafide transferee for consideration having no notice of charge
4. A charge-holder cannot foreclose the property on which he has a charge. He can however get
the property sold as in a simple mortgage
5. In a charge created by act of the parties when a particular property is specified, the remedy of
the charge-holder is against the property only.
Distinction between charge and lien

Charge
 It may be created by act of the parties or by operation of law
 It is confined only to immovable property
Lien
 It can arise only by operation of law
 It may be confined both to movable and immovable property.
Distinction between Lease and license

Lease
There is a transfer of an interest in the immovable property.
A lessee gets the exclusive possession of the property.
 It creates an heritable estate
 It can be assigned or transferred
A lessee can sue trespassers
 It cannot be revoked
 It can be terminated in any of the ways provided by law.

License
There is no transfer of interest.
A license gets the right to use the property without exclusive possession
 It does not create an heritable estate
 It cannot be assigned as it is a personal right. A licensee therefore, has on transferable
interest in the license.
A licensee cannot do so.
 It is ordinarily revocable.
 It is terminated by death of either party, or by the alienation of property in question.
Exchanges
 When two persons mutually transfer the ownership of one thing for the ownership of another, the
transaction is called an exchange.
 Exchange is thus a transfer of one thing for another. The things exchanged may be movable or
immovable, tangible or intangible. On the execution of the exchange, each party acquires a
good little to the thing or property exchanged.
The following should be noted in connection with exchange:

1. In exchange, neither thing to be transferred by either party should be money.
2. In exchange, payment of money is not altogether ruled out. Where one property is exchanged
for another which is more in value and the difference is paid in cash to equalize the values of the
two properties, the transaction is an exchange.
3. To effect exchange, the parties must have property in hand or in possession and the transfer of
property by both the parties must be complete.
Gift :A gift can be made only of a property which is in existence at the time and date of the gift.
 Transfer of property must be made voluntarily
 The gift must be accepted by the done otherwise it is not valid
Gift how effected
 Movable property – Transfer is effected by delivery
 Immovable property – Transfer must be effected by a registered instrument

PURCHASE OF LAND PROPERTY
Division of Land
Land is divided into usable and non-usable.
In usable land it is subdivided into salable and Non-salable.
Land Documents Verification

The following is the list of documents to be verified before purchase of any land for any
purpose.
1.Title Deed - Owner (Pattadar) Passbook.
2.Farmer Passbook.
3.Present Owner Sale Deed.
4.Sale deed Link Documents.
5.Encumbrance Certificate for 30 years.
6.Land Pahani for 30 years.
7.Property Certificate from Tahasildar stating that the owner enjoying the property from last 30 years.
8.Land Tax Receipts.
9.NOC from PAC (Primary Agriculture Cooperative society.)
10.Whether Govt Assigned land?
 Press Notification
 Apart from the verification of The 9 Set of Documents, finally there a need of a Press
Notification Calling for Objection if any for so and so purchasing such and such land of so and
so person
 The PN shall have complete detains like:
 Survey no
 Land extent
 Location
 Direction
 And other details of 3 document of ” The Set of 9 Documents”.
Conversion of Agriculture Land into Non Agriculture Land

 Land Valuation & Land Compensation.
 Land valuation is estimating the worth of a land location wise, utility wise, market wise,
buyer‘s purpose wise and ultimately the appropriate govt evaluation wise. Land valuation is
essential to decide the land compensation.

 Whenever there is a transaction for purchase or acquisition then the land valuation arises for
payment of land consideration or land compensation.
Land compensation is the appropriate payment basing on land valuation towards the land acquired
by the govt for public utility services..
The compensation has to be paid wholly or partly by installments out of public revenue managed by
local revenue authority. Payment of interest, when the amount of compensation is not paid or
deposited is fixed at 9% p.a.
1. Based on prevailing market price as on day of declaration of acquisition, and registered with
registrar of surrounding area.
2. Based on 20 times the rental/ annum being obtained.
3. Based on assessment existing assets, property, plantation potential with/with out irrigation etc
and revenue returns in 20 years.
4. Acquisition cost + exgratia + solarium 100%+33%+33% to avoid party entering into litigation.
5. Negotiations‘.
The Registration Act 1908

The objectives are
 To give notice to the world that such document has been executed to prevent fraud and
forgery and to secure a reliable and complete account of all transactions affecting the title to
the property.
 To prevent people being duped into purchasing property from a person who does not own it.
Government Officials in Registration dept

 Inspector-General of Registration:
 Registrars and Sub-Registrars
 Offices of the Registrar and
Sub- Registrar
 Inspector of Registration Offices
 Confirmation of registration
Signature and Seal of Registering officers on each and every page.

 Storage of documents
 Registers/ books and fire-proof boxes
 Keeping of books in computer floppies, diskettes, etc
REGISTRABLE DOCUMENTS
 Instruments of gifts of immovable property

 Instruments transfering of rights /titles or interest.
 Leases of immovable property from year to year or for any term exceeding one year or
reserving a yearly rent.
 Instruments transferring any decree of a court or for any award.
Annexures to the Main Documents of a property

 Description of property and maps or plans
 Description of houses and land by reference to Government maps or survey nos
 Finger prints of parties to the registration.
 Compulsory affixing of photographs of parties, etc :
Place for registration of land documents

 Land document shall be presented for registration in the office of sub-registrar with in
whose sub-district the whole or some portion of the property is situated.
Persons to present documents for registration

 Every document to be registered under this Act shall be presented and represented by an
authorized person/persons at the proper registration office.
 The persons selling and buying or by the representatives or assign of such persons duly
authorized by power of attorney
Power-of-attorney
 A power of attorney (POA) or letter of attorney in civil law systems is an authorization to act
on someone else's behalf in a legal or business matter.
 The person authorizing the other to act is the Principal (granter or donor of the power), and
the one authorized to act is the Agent,
 Power of attorney means an instrument empowering a specific person to act for and in the
name of a person executing it.
Types of powers of attorney

 A power of attorney may be special or limited to one specified act or type of act, or it may be
general,
 A person holding a general power of attorney is often referred to as an attorney general.
Times for presenting documents

 Within four months from the date of its execution
Times for presenting WILL documents

 A will may at any time be presented for registration.
Re-registration of certain documents

 If the documents originally registered are found defective legally such documents needs re-
registration.
Document executed out of India

 When a document has been executed out of India is not presented for registration till after
expiry of the time prescribe, the registrar can accept such document for registration within four
month after its arrival in India.
Indian Stamp Act, 1899

The objective of Stamp Act is to collect revenue for the state.
In many of the articles under the Stamp Act it is provided that duty is chargeable on the value
set forth in the instrument.
Instruments chargeable with duty
Payment of duty
Use of adhesive stamps
Certificate by Collector
Levy of stamp duty

 It is mentioned in the concurrent list .
 Therefore both Central/state govts have authority to decide the rates of stamp duty for various
instruments.
 It is based on the value of the property in general
 Instrument is a document which gives formal expression to a legal act or agreement for the
purpose of creating, securing, modifying, or terminating a right.
 An instrument includes conveyances, leases, mortgages ,promissory notes, bills ,power of
attorney etc.
Payment of stamp duty
The stamp duty can be made by
a) Adhesive stamps
b) Impressed stamps

MRTP ACT,1969(The Monopolies and Restrictive Trade Practice Act)
INTRODUCTION
 The Monopolies and Restrictive Trade Practice Act has its genesis in the Directive Principles
of State Policy embodies in the Construction of India
 The provision of MRTP act are aimed to achieve two main objects.
 The first and foremost is consumer protection which can be achieved by way of ensuring
quality and availability at reasonable prices of all articles and commodities to a common man
by way of curtailing some undesirable trade practices.
 These undesirable trade practices are restrictive, monopolistic and unfair trade practices.
 The second objective is to ensure avoidance of concentration of economic power in few hands
to the common detriment.
OBJECTIVES
1. a) To prevent concentration of economic power with single individual/trade etc.
2. b) To prohibit monopolistic trade practices
3. c) To prohibit restrictive trade practices
4. d) To prohibit unfair trade practices
 MONOPOLISTIC TRADE PRACTICES

A monopolistic trade practice has a reference to the general effect on prices, employment,
competition, capital development, and quality control in respect of the goods of any description
- The emphasis is on the effect of the practice rather than on the practice itself.
- A monopolistic trade practice is necessarily restrictive in character.
- In effect, only dominant undertaking would be charged with indulging in monopolistic trade
practice.
Means a trade practice that has, the effect of
1. Maintaining the prices of goods or charges for the services at an unreasonable level by
limiting, reducing or controlling the production, supply or distribution of goods or the supply of
any services.
2. Unreasonably preventing or lessening competition in the production, distribution of any goods
or in any services
3. Limiting technical development or allowing the quality of any goods, or any service rendered,
to deteriorate.
4. Increasing unreasonably,
A. The cost of production of any goods,

B. Changes for maintenance, of any services
5.Increasing unreasonably
A. The prices at which goods are, sold or the services are, provided.
B. The profits which are, derived by the production, distribution or any services.
RESTRICTIVE TRADE PRACTICES

 means, trade practice, which has the effect of preventing, distorting or restricting competition
in any manner and in particular-
1) which tends to obstruct the flow of capital resources into the stream of production
2) which tends to bring about manipulation of prices or conditions of delivery relating to goods or
services in such manner as to impose on the consumers unjustified costs or restrictions
UNFAIR TRADE PRACTICES

 mean a trade practice which for the purpose of promoting the sale, use or supply of any goods
or any services, adopt such specific practices thereby causes loss or injury to the consumers
of such goods or services, whether by eliminating or restricting competition or otherwise
MRTP COMMISSION
 The commission consists of a Chairman and not less than two or not more that eight other
members.
TERMS OF OFFICE
The term of office of a member is fixed at 5 years subject to renewal
POWER OF THE COMMISSION

a. Commission shall have the some powers as are enjoyed by the civil court.
b. to call books, accounts or other documents relating to an undertaking under inquiry
c. to enter, search and seizure in relation to such undertaking or books or papers
d. to grant temporary injunction restraining a person to carry on any monopolistic, restrictive or
unfair trade practice
e. to award compensation for the loss or damage caused by reason of monopolistic, restrictive
or unfair trade practice .
f. to cause investigation to find out whether or not orders made by it have been complied with
g. to regulate the procedure and conduct of its business regarding
h. to make regulations for the efficient performance of its functions.

CONSUMER PROTECTION ACT 1986
 While the M.R.T.P. Act is directed at prohibition and control of certain trade practices, the
Consumer protection Act is directed protecting the interest of individual consumers by
prescribing specific remedies to make good the loss or damage caused to consumers as a
result of Unfair Trade Practices.
OBJECTS
i. to protect against marketing of goods and services, which are hazardous to life and property.
ii. to inform about the quality, quantity, potency, purity, standard and price of goods, or services
so as to protect the consumer against U.T.P.
iii. to assure, wherever possible towards access to the variety of goods and services at
competitive prices.
iv. to hear and to assure that consumers interest will receive due consideration at appropriate
forums
v. to seek redressel against Unfair Trade Practices (U.T.P) or Restrictive Trade Practices (R.T.P)
and unscrupulous exploitation of consumers
vi. to educate consumers
 These objectives are based on the basic right of consumers' as defined by the international
organization of consumers namely the right to safety, to information, of choice, to be heard, to
redressal, to consumer education, to healthy environment and to basic needs.
Definition of Important Terms
1. COMPLAINANT
 Complainant means a consumer or any voluntary consumer association registered
 Having purchased the goods/ hire the s services should have a common cause of action.
2. COMPLIANT
 Any allegation in writing made by a complainant that an U.T.P. or a R.T.P. has been adopted
by any trader;
 the goods bought by him or agreed to be bought by him suffers from one or more defects.
 3. CONSUMER
Any person who
 (i) buys any goods for a consideration
 (ii) Hires or avails of any services for a consideration which has been paid or promised or
partly paid and partly promised

DEFECT
 means any goods fault, imperfect. or short coming in the quality, quantity, potency, purity or
standard i.e., required to be maintained by or under any law for the time being in force or under
any contract, expressed or implied.
Deficiency
means any service fault, imperfection or short coming in the quality, quantity, potency, purity or
standard, which is to be required to he maintained by or under any law for the time being in force or
has been undertaken to be performed by a person in pursuance of a contract or otherwise in relation
to any service.
Consumers Dispute
means dispute, where the person against whom a compliant has been made, denies or disputes the
allegations contained in the complaint.
Restrictive Trade Practice means any trade practice which requires a consumer to buy, hire, of any
goods or, as the case may be, or avail services as a condition precedent for buying, hiring or availing
of other goods or services.
CONTRACT OF SERVICE AND CONTRACT FOR SERVICE

 There is a difference in contract for service and contract of service.
 In the contract of service the master can order what is to be done and how it is to be done.
 This is a contract of personal service and hence is out of purview of CP Act.
 In contract for service" the person cannot order what is to be done or how is to be done.
 Ex:
(1) Lawyer and client relationship will fall under this category.
(2) Services rendered in professional category would fall in this category.
(3) Thus the service of doctor is covered under the definition of service, as it is "contract for
service "and not as" contract of service.
CONSUMER PROTECTION COUNCILS
 1. The Central Consumer Protection Council

 2. State Consumer Protection Council:

REDRESSAL MACHINERY
 (a) District Forum: Entertain compliant where the value of the goods, services in dispute is
up to Rs.20 Lakhs;
The state govt. may establish more than one district forum in a district.
Dist Forum President: District Judge either in service or after retirement and two other members
with adequate knowledge and experienced to deal with problems relating to economics, law,
commerce, accountancy, industry, public affairs
 (b) State commission: Entertain complaints where the value of the goods and services in
dispute exceeding Rs.20 Lakhs but not exceeding Rs. 1 Core.
STATE COMMISSION President:
 Judge of the high court present or retired. Two other members possessing qualifications,
characteristics and experience as stated in the matter of dist forum one of
 (c) National commission: Entertain complaints where the value of the goods and services in
dispute exceeding Rs. 1 Core.
National Commission President

A judge of the Supreme Court to be appointed by the Central Government in consultation with Chief
Justice of India. Four other members possessing the required qualifications and experience as is
detailed in the case of District Forum
Nature and scope of remedies

Where the goods complained suffer from any of the defects specified in the compliant or any of the
allegations contained in the compliant about the services are proved, the District Forum/State
Commission/National Commission may pass one or more of the following orders:
a) To remove the defects point out by the appropriated laboratory from the goods in question
b) To replace the goods with the new goods of similar description which shall be free from any
defects
c) To return to the complainant the price or as the case may be.
d) To pay such amount as may awarded by it as compensation to the consumer for any loss or
injury suffered by the consumer due to the negligence of the opposite party.
e) To remove the defects, deficiencies in this services in question.
f) To discontinue the UTP, and the RTP and not to repeat them.
g) Not to allow the offer of the hazardous goods for sale
h) To withdraw the hazardous goods from being offered for sale.

SALE OF GOODS ACT
Sale of Goods Act
 Sale of Goods Act is one of very old mercantile law.
 Sale of Goods is one of the special types of Contract.
 Initially, this was part of Indian Contract Act itself in chapter VII (sections 76 to 123). Later these
sections in Contract Act were deleted, and separate Sale of Goods Act was passed in 1930.
 The Sale of Goods Act is complimentary to Contract Act
 Basic provisions of Contract Act apply to contract of Sale of Goods also.
Basic requirements of contract

a) offer and acceptance,
b) legally enforceable agreement,
c) mutual consent,
d) parties competent to contract,
e) free consent,
f) lawful object,
g) consideration etc.
h) apply to contract of Sale of Goods also.
Contract of Sale - A contract of sale of goods is a contract whereby the seller transfers or agrees to
transfer the property in goods to the buyer for a price.
The contract of sale is between one part- seller and another part-buyer.
―Buyer‖ means a person who buys or agrees to buy goods. ―Seller‖ means a person who sells or
agrees to sell goods.
A contract of sale may be absolute or conditional.
In brief
It is of ‗goods‘ * Transfer of property is required * Contract is between buyer and seller * Sale should
be for ‗price‘
How Contract of sale is made
 A contract of sale is made by an offer to buy or sell goods for a price and the acceptance of such
offer.
 The contract may provide for the immediate delivery of the goods or immediate payment of the
price or both, or for the delivery or payment by instalments, or that the delivery or payment or
both shall be postponed.

 Subject to the provisions of any law for the time being in force, a contract of sale may be made in
writing or by word of mouth, or partly in writing and partly by word of mouth or may be implied
from the conduct of the parties. Thus, credit sale is also a ‗sale‘.
 A verbal contract or contract by conduct of parties is valid. e.g. putting goods in basket in super
market or taking food in a hotel.
 Contract of Sale includes agreement to sale - Where under a contract of sale the property in
the goods is transferred from the seller to the buyer, the contract is called a sale.
 But where the transfer of the property in the goods is to take place at a future time or subject to
some condition thereafter to be fulfilled, the contract is called an agreement to sell.
 Transfer of property - ―Property‖ means the general property in goods, and not merely a
special property.
 In layman‘s terms ‗property‘ means ‗ownership‘. ‗General Property‘ means ‗full ownership‘. Thus,
transfer of ‗general property‘ is required to constitute a sale.
 If goods are given for hire, lease, hire purchase or pledge, ‗general property‘ is not transferred
and hence it is not a ‗sale‘.
POSSESSION AND PROPERTY - Note that ‗property‘ and ‗possession‘ are not synonymous.
Transfer of possession does not mean transfer of property.
 e.g. - if goods are handed over to transporter or godown keeper, possession is transferred but
‗property‘ remains with owner.
 Similarly, if goods remain in possession of seller after sale transaction is over, the ‗possession‘ is
with seller, but ‗property‘ is with buyer.
 Goods - ―Goods‖ means every kind of movable property other than actionable claims and
money; and includes stock and shares, growing crops, grass, and things attached to or forming
part of the land.
 Price - ―Price‖ means the money consideration for a sale of goods.
 Consideration is required for any contract. However, in case of contract of sale of goods, the
consideration should be ‗price‘ i.e. money consideration.
Ascertainment of price
 The price in a contract of sale may be fixed by the contract or may be left to be fixed in manner
thereby agreed or may be determined by the course of dealing between the parties.
 Where the price is not determined in accordance with the foregoing provisions, the buyer shall
pay the seller a reasonable price.

 What is a reasonable price is a question of fact dependent on the circumstances of each
particular case.
Conditions and Warranties
 A condition is a stipulation essential to the main purpose of the contract, the breach of which
gives rise to a right to treat the contract as repudiated
 A warranty is a stipulation collateral to the main purpose of the contract, the breach of which
gives rise to a claim for damages but not to a right to reject the goods and treat the contract as
repudiated.
 A stipulation may be a condition, though called a warranty in the contract.
 Where a stipulation in a contract of sale is a condition or a warranty depends in each case on
the construction of the contract.
 Where a particular stipulation in contract is a condition or warranty depends on the
interpretation of terms of contract.
 Mere stating ‗Conditions of Contract‘ in agreement does not mean all stipulations mentioned are
‗conditions‘ .
Time of payment is not essence of contract but time of delivery of goods is, unless specified
otherwise
 Stipulations as to time of payment is not deemed to be of the essence of a contract of sale.
 As a general rule, time of payment is not essence of contract, unless there is specific different
provision in Contract.
 In other words, time of payment specified is ‗warranty‘.
 If payment is not made in time, the seller can claim damages but cannot repudiate the
contract.
Caveat Emptor - The principle termed as ‗caveat emptor‘ means ‗buyer be aware‘.
Generally, buyer is expected to be careful while purchasing the goods and seller is not liable for any
defects in goods sold by him.
―Quality of goods‖ includes their state or condition.
Transfer of property as between seller and buyer Transfer of general property is required in a
sale. ‗Property‘ means legal ownership.
 It is necessary to decide whether property in goods has transferred to buyer to determine
rights and liabilities of buyer and seller.
 Generally, risk accompanies property in goods i.e. when property in goods passes, risk also
passes.

 If property in goods has already passed on to buyer, seller cannot stop delivery of goods even
if in the meanwhile buyer has become insolvent.
 Where there is a contract for the sale of unascertained goods, no property in the goods is
transferred to the buyer unless and until the goods are ascertained
Auction Sale
 Auction sale is special mode of sale.
 The sale is made in open after making public announcement.
 Buyers assemble and make offers on the spot.
 Person offering to pay highest price gets the goods.
 Higher and higher bids are offered and sale is complete when auctioneer accepts a bid.
In the case of a sale by auction—
1. Where goods are put up for sale in lots, each lot is prima facie deemed to be the subject of a
separate contract of sale;
2. The sale is complete when the auctioneer announces its completion by the fall of the hammer
or in other customary manner; and, until such announcement is made, any bidder may retract
his bid;
3. A right to bid may be reserved expressly by or on behalf of the seller and, where such right is
expressly so reserved, but not otherwise, the seller or any one person on his behalf may,
subject to the provisions hereinafter contained, bid at the auction;
4. Where the sale is not notified to be subject to a right to bid on behalf of the seller, it shall not
be lawful for the seller to bid himself or to employ any person to bid at such sale
5. The sale may be notified to be subject to a reserved or upset price;
6. If the seller makes use of pretended bidding to raise the price, the sale is voidable at the option
of the buyer.
Delivery of goods to buyer

It is the duty of the seller to deliver the goods and of the buyer to accept and pay for them, in
accordance with the terms of the contract of sale.
 Unless otherwise agreed, delivery of the goods and payment of the price are concurrent
conditions, that is to say, the seller shall be ready and willing to give possession of the goods
to the buyer in exchange for the price, and the buyer shall be ready and willing to pay the price
in exchange for possession of the goods.
 Note that this is ‗unless otherwise agreed‘, i.e. buyer and seller can agree to different
provisions in respect of payment and delivery.

Acceptance of goods by buyer
 Contract of Sale is completed not by mere delivery of goods but by acceptance of goods by
buyer.
 ‗Acceptance‘ does not mean mere receipt of goods.
 It means checking the goods to ascertain whether they are as per contract.
o Where goods are delivered to the buyer which he has not previously examined, he is
not deemed to have accepted them unless and until he has had a reasonable
opportunity of examining them for the purpose of ascertaining whether they are in
conformity with the contract.
 Unless otherwise agreed, when the seller tenders delivery of goods to the buyer, he is bound,
on request, to afford the buyer a reasonable opportunity of examining the goods for the
purpose of ascertaining whether they are in conformity with the contract.
Rights of unpaid seller against the goods

 After goods are sold and property is transferred to buyer, the only remedy with seller is to
approach Court, if the buyer does not pay.
 Seller has no right to take forceful possession of goods from buyer, once property in goods is
transferred to him.
 However, the Act gives some rights to seller if his dues are not paid.
Measure for compensation and damages – The Sale of Goods Act does not specify how to
measure damages.
 However, since the Act is complimentary to Contract Act, measure of compensation and
damages will be as provided in Contract Act.

FOREIGN EXCHANGE REGULATION ACT, 1973 (FERC)
Objective
 To regulate certain payments, dealings in foreign exchange and securities, transactions
indirectly affecting foreign exchange and the import and export of currency, for the
conservation of the foreign exchange resources of the country and the proper utilization
thereof in the interests of the economic development of the country.
Applicability
 It extends to the whole of India.
 It applies to all citizens of India outside India and to branches and agencies outside India of
companies or bodies corporate, registered or incorporated in India.
Definitions
1. "foreign exchange" means foreign currency and includes -
2. all deposits, credits and balances payable in any foreign currency, and any drafts, traveller's
cheques, letters of credit and bills of exchange, expressed or drawn in Indian currency but
payable in any foreign currency;
3. any instrument payable, at the option of the drawee or holder thereof or any other party
thereto, either in Indian currency or in foreign currency or partly in one and partly in the other;
Authorised dealers in foreign exchange

1. The Reserve Bank may, on an application made to it in this behalf, authorise any person to
deal in foreign exchange.
2. An authorisation shall be in writing and -
3. An authorised dealer shall, before undertaking any transaction in foreign exchange on behalf
of any person, require that person to make such declarations and to give such information as
will reasonably satisfy him that the transaction will not involve, and is not designed for the
purpose of, any contravention or evasion of the provisions of this Act or of any rule,
notification, direction or order made thereunder, and where the said person refuses to comply
with any such requirement or makes only unsatisfactory compliance therewith, the authorised
dealer shall refuse to undertake the transaction and shall, if he has reason to believe that any

such contravention or evasion as aforesaid is contemplated by the person, report the matter
to the Reserve Bank.
Acquisition by Central Government of foreign exchange
 The Central Government may, by notification in the Official Gazette, order every person in, or
resident in, India who owns or holds such foreign exchange as may be specified in the
notification, to transfer that right to the Reserve Bank on behalf of the Central Government on
payment of such consideration therefof as the Central Government may fix having regard to
the rate for the time being authorised by the Reserve Bank .
Lease, hire or other arrangement

No person shall, except with the general or special permission of the Reserve Bank, take or send out
by land, sea or air any goods from India to any place on lease or hire or under any arrangement other
than sale or disposal in any other manner of such goods.
Restriction on holding of immovable property outside India

No person resident in India shall, except with the general or special permission of the Reserve
Bank, acquire or hold or transfer or dispose of by sale, mortgage, lease, gift, settlement or otherwise,
any immovable property situate outside India:
1) Prior permission of Reserve Bank required for practising profession, etc. in India by
nationals of foreign States
2) Restriction on acquisition, holding, etc., of immovable property in India
3) Power to search suspected persons and to seize documents
4) Power to arrest
5) Power to stop and search conveyances
6) Power to search premises
7) Power to seize documents, etc.
8) Power to examine persons
9) Power to summon persons to give evidence and produce documents
10) Custody of documents, etc.
11) Encashment of cheque, draft, etc.
12) Inspection

False statements
 No person shall, when complying with any direction or order with any requirement , give any
information or make any statement which he knows or has reasonable cause to believe to be
false, or not true, in any material particular.
Penalty
If any person contravenes any of the provisions of this Act he shall be liable to such penalty not
exceeding five times the amount or value involved in any such contravention or five thousand rupees,
whichever is more, as may be adjudged by the Director of Enforcement or any other officer of
Enforcement ..
 Penalty for contravention of direction of Reserve Bank or for failure to file returns
 Any authorised dealer contravenes any direction given by the Reserve Bank under this Act or
fails to file any return as directed by the Reserve Bank, the Reserve Bank may, after giving a
reasonable opportunity of being heard impose on the authorised dealer a penalty which may
extend to ten thousand rupees.
 Factors to be taken into account by the Central Government and the Reserve Bank while giving
or granting permissions or licences under the Act
 The Central Government or the Reserve Bank, as the case may be, shall, while giving or
granting any permission or licence under this Act, have regard to all or any of the following
factors, namely:-
1) conservation of the foreign exchange resources of the country;
2) all foreign exchange accruing to the country is properly accounted for;
3) the foreign exchange resources of the country are utilised as best to subserve the
common good; and
4) such other relevant factors as the circumstances of the case may require.
Certain officers to assist officers of Enforcement

i. officers of the Customs Department;
ii. officers of the Central Excise Department;
iii. officers of Police;
iv. officers of the Central or State Government employed at any port or airport;
v. such other officers of the Central or State Government or a local authority as are
specified by the Central Government in this behalf by notification in the Official Gazette.

FEMA (FOREIGN EXCHANGE & MANAGEMENT ACT), 1999
Objective : To facilitate external trade and payments for promoting the development and
maintenance of Foreign exchange market in India
Applicability : it extends to the whole of India. It also applies to all branches, offices and agencies
outside India owned or controlled by a person resident in India.
Definition
A ‗person‘ includes (i) an individual (ii) a Hindu undivided family (iii) A company (iV) a firm or
(v) an association of persons or a body of individuals, whether incorporated or not. (vi) Every
artificial judicial person.
Non Resident India

 NRI means a person resident outside India who is a citizen of India or is person of an Indian
origin
POSSESSION AND RETENTION OF FOREIGN CURRENCY

a) Authorised persons have been permitted to posses foreign currency and coins in accordance
with limits, if any advised to them by RBI
b) There is no restriction on possession of foreign coins by any person
c) Any person resident in India is permitted to retain an aggregate foreign currency not exceeding
US$2,000 or its equivalent in the form of currency notes/bank note or Traveller cheques
acquired by them from specified sources
AUTHORISED PERSON
 An authorised person means an authorised dealer, moneychanger, offshore banking unit or
any other person being authorised under the act to deal in foreign exchange or foreign
securities
PRECAUTIIONS TO BE TAKEN BY THE AUTHORISED PERSONS BEFORE UNDERTAKING A

FOREIGN EXCHANGE TRANSACTION
1. The authorised person is required to obtained a declaration and such other information from
the applicant that will reasonable satisfy him the transaction will not involve and is not

designed for the purpose of any contravention or evasion of any law or any rule regulation
notification, direction.
2. The authorised person should preserve the information / documentation obtained by them from
the applicant for verification by RBI
3. The authorised person can refused in writing to undertake the transaction if the person does
not comply with the requirement prescribed by him
TRANSACTIONS WHICH REQUIRE RBI’s PRIOR APPROVAL FOR DRAWAL OF FOREIGN

EXCHANGE
1. Release of foreign exchange exceeding USD 5,000 or its equivalent in one calendar year, for
one or more private visits to any country (except Nepal and Bhutan)
2. Gift remittance exceeding USD 5,000 per beneficiary per annum,
3. Donations exceeding USD 5,000 per annum per beneficiary
4. Exchange facilities exceeding USD 5,000 for person going abroad for employment
5. Exchange facilities for emigration exceeding USD 5,000 and amount prescribed by country of
emigration
6. Remittance for maintenance of close relatives abroad exceeding USD 5,000 per year per
recipient
7. g) Release of foreign exchange, exceeding USD 25,000 to a person, irrespective of period of
stay, for business travel, or attending a conference or specialized training or for maintenance
expenses of a patient going abroad, or for accompanying as attendant to a patient going
abroad for medical treatment/ check-up
8. Release of exchange for studies abroad exceeding the estimates from the institution abroad or
USD 30,000 whichever is higher
OTHER IMPORTANT HIGHLIGHTS OF FEMA

The foreign exchange management Act and rules give full freedom to a person resident in India to
hold, own, transfer or invest in foreign currency, foreign security or any immovable property situated
outside India, if such currency, security or property was a acquired, held or owned by such person
when he was resident outside India or inherited from a person who was resident outside India
An Indian citizen resident outside India is permitted to
a) Acquire any immovable property in India other than agricultural/plantation property or a farm
house,
b) Transfer of any property in India to a person resident in India

c) Transfer any property other than agricultural or plantation property or farmhouse to an Indian
citizen or an person of India origin, resident outside India.
PENALTIES
 A person contravening any provision of the Act, rule, regulation, notification, direction or order
issued by Government/RBI is liable to a penalty up to thrice the amount involved in such
contravention where such amount is quantifiable, or up to 2 lakhs.
FERA
Regulating certain payments, dealings in foreign exchange and securities, transactions affecting
foreign exchange and the import and export of currency for the conservation of the foreign exchange
resources of the country
FEMA
facilitating external trade and payments and for promoting the orderly development and
maintenance of foreign exchange market in India
FERA
prohibit almost all foreign exchanges transactions unless there is general or specific permission to
do so may be subject to certain conditions.
FEMA
all current transactions are permissible by the law and it is a positive law
 FERA
criminal nature,
There is presumption of existence of guilty mind
 FEMA
civil nature,
The prosecution will have to prove that the person has committed an offence
 FERA
Empowers the enforcement officer to arrest a person
 FEMA
In case penalty is not paid then only the person will be arrested

FOREIGN TRADE (DEVELOPMENT AND REGULATION) ACT,1992
Objective : To develop and regulate foreign trade by facilitating import and increasing exports
Applicability : To all persons and all businesses involved in imports and exports.
IMPORTER AND EXPORTER CODE NUMBER

Every importer and exporter must obtained an import and export code number from Director
General of Foreign Trade or Officer Authorised by him.
Cancellation : The code number can be cancelled by DGFT if the person has contravened
provisions of customs act, excise act, FERA, FEMA, FIRD or any economic offences under any other
law only after providing a reasonable opportunity to the person to defend his case
SEARCH AND SEIZURE

a) Person authorized by central Govt. can enter any premises search and Seize goods,
documents, things and conveyances.
b) Settlement : A person can opt for settlement by admitting contravention by paying penalty.
c) Penalty : Penalty upto 5 times the value the goods imposed.
PROHIBITED ITEMS
a) Wild animals and their parts
b) Restricted items : This needs licence for items like chemical fertilizers, industrial leather,
minerals etc.
c) Import of Gold and Silver : only government and other authorized agencies are permitted

Act & Subject` Particulars
Industrial Disputes Act,

1947:
1) Object: To provide machinery for the investigation of

Industrial disputes and for settlement there
of.
IMPORTANT - "EMPLOYER 2) Application: To every industry with a motive to make any gain
or profit
EMPLOYEE LEGISLATION" - SALIENT 3) Dispute settlement Grievance authority, conciliation officers, board
FEATURES machinery: of conciliation, courts of enquiry, labour

courts.
4) Notice of change: 42 days notice for any change of' service
Prof.B.G.Varma condition
5) Strikes and Lock-outs: Notice to all concern as per settlement. 14 days
notice in case of PUS
6) Lay-off and Retrenchment: 60 days notice and Permission from appropriate

Termination, Dismissal, Government if there are 100 and more
Discharge workmen.
7) Closure Same as above
8) Unfair labour practices Exploitation of labour and not following PONJ

Industrial Employment
(Standing Orders Act), The Trade Unions
1946 Act. 1926
1) Object: To define the conditions of the 1)Object: To provide for registration of
employment Trade Unions to enable
2) Application: To every Industrial aspect wherein collective bargaining
100 or more workmen are employed. 2) Application: To any group of people in
commercial
3) Model standing orders To be followed till draft SO. are activities entrusted for an
certified association.
4) Certification of standing 7 copies to be sent for COSO. No 3) Registration : Minimum 7 members can
orders modification at least for 6 months
apply for registration with by-
laws
Act & Subject Particulars Act & Subject Particulars

Factories Act. 1948 Factories Act. 1948
1) Object To ensure adequate measures in the area of Land, Spittoons / Waste A Sufficient number at convenient places to be provided and
Buildings, Machinery, Health, Safety, Welfare etc. in the Bins shall be maintained in clean and hygienic condition.
interest of people in the premises of factory.
8) Space 500 C.Ft. for each employee in the factory working place.
2) Application To every manufacturing activity in which 10 or more persons
are engaged. 9) Safety Fencing of moving parts of machinery, adherence to safe
lifting load of hoists and lifts; lifting load of hoists and lifts;
3) Approval of Before making use of any land, Building and Machinery for Hand rails for steps / gangways; Fire fighting equipment and
Land, Building and Manufacturing activity apply for approval by Inspector of means of escape in case of fire; supply and use
Machinery Factories in Form No. 1
of gloves; goggles; shoes; mesh; ear muffs; dry rubber
4) Appointment of One of the Directors to be nominated as Occupier. mats at electrical panel boards etc., whenever necessary,
Occupier prohibition of young persons and women. Notice of accident
5) Appointment of One of the Executives of the Factory to be nominated as Form No. 18A, Register in Form No.26, Telegraphic
Manager Factory Manager. Any change to be Communicated communication to local IF in case of dangerous occurrence
immediately in Form No.2A. or fatal accident.
6) Factory License To be applied before commencement of manufacturing Safety Officer Safety Officer to be employed if there are 1000 or more or by
activity in Form No. 2 and renewed once in a year in specific advise of appropriate Government.
October.
7) Cleanliness Painting / Rewamishing of necessary all inside walls. Ceiling
once in 5 years. White washing once in a year. Register to 10) Drinking Water Adequate drinking water at convenient place. Cool water
be maintained in Form No. 7 during summer.
1
Act & Subject Particulars
Act & Subject Particulars Factories Act. 1948
Factories Act. 1948 14) Working hours Normally 48 hours in a week and 9 hours a day. Form No. 11
11) Latrines & One flush-out for every 25 workers. One urinals for every 50 containing No. of shifts, relays and Timings to be displayed.
Urinals workers. If a worker is engaged more than 9 hours in a day, entitled to
OT wages @ double the ordinary rate of wages. OT not to
exceed 8 hours in a day and 50 hours in a quarter.
12) First Aid One box for every 100 workers. Ambulance room in case of 15) Compensatory number of compensatory holidays within two months.
appliance 500 or more. Qualified doctor & staff to be employed. holiday and work
on weekly holidays
13) Shelters, Rent Rest room with back rest benches and drinking water facility 16) Annual leave An employee worked for 240 days in a calender year is
Rooms and Creche if there are 100 or more workers. Creche if 5 or more women with wages eligible for 12 days leave with wages @ one day for every 20
workers engaged. days of work to be availed in the following calendar year.
Registers to be maintained in Form 25 (Attendance Register)
Canteen If there are 250 or more workers and Form 16 (Leave Register)
17) Returns Half-yearly returns in July and Annual Returns in January in
Form N0.22&21.
Welfare Officer If there are 500 or more workers employed
18) Seasonal Opening / Closing Notices to be displayed and sent to

Factory Inspector of Factories one week in advance.

Payment of Wages
Minimum Wages Act.
Act. 1936
1948
1) Object To regulate payments and wage deductions.
1) Object To ensure payment of Minimum
2) Application To every Industry
wages / any higher wages as per
3) Time of Payment Before expiry of 7th
day from the last day of Government notifications / award
wage period. Where the employment of any / settlement.
person is terminated, payment to be made
before the expiry of the second working day. 2) Annual Return In Form No.III by 15th January
4) Limit for total Not exceeding 50% in general. Not exceeding
deduction in a wage 75% including deductions of Cooperative
period Societies.
Registers to be maintained with particulars of
Employees; Attendance; Wage earned;
Deductions, Net payment etc. in Form No. IV.
5) Returns Annual return by 15th January of each year
Form No .VIII.

Payment of Bonus
Act. 1965 Payment of Gratuity Act.
1) Object To ensure a considerable profit sharing from the
1972
Employer's gains. 1) Object To ensure considerable payment of
2) Application From the accounting year in which employer derives those employees rendered long
profit or from the 6th accounting year following the service to the Industrial
accounting year in which the goods produced are sold Establishment.
/ rendered services which ever is earlier.
2) Application To any Industrial establishment where
3) Eligibility To every employee who works for a minimum of 30 10 or more employees are engaged.
days in an accounting year.
3) Opening Notice To Local ACL
4) Minimum & 8.33% to 20%
Maximum limits 4) Eligibility Minimum Five years continuous
5) Disqualification In case of riotous / violent behaviours, fraud, theft or
service.
mis-appropriation of any property of the 5) Payment 15 days wages for each completed
establishment. year of service on the basis of last
6) Time limit for Within 8 months from the close of the accounting year. wage drawn. Employee to apply in
payment ABC register to be maintained confirming bonus Form I and Employer to settle in Form
payments to employees with full details. L.
7) Annual Return Submission of Annual returns in Form D in the month
of December.
2
Act & Subject Particulars Act & Subject Particulars
Contract Labour (Regulation & Contract Labour (Regulation &
Abolition Act. 1970 Abolition Act. 1970
1) Object To minimise exploitation of labour engaged 5) Principal employer Ultimately it is principal employer's
through contractors. responsibility responsibility to make sure that each contractor
2) Application To every contractor and principal employer who employed by him takes care of the payment of
engage 5 or more persons as contract labour. minimum wages, ESI and PF coverage and other
welfare amenities similar to that prescribed
3) License to Contractor Every contractor needs license to take up
under factories Act.
Contract works in any establishment and he has
to apply in Form No.4. The Principal employer to 6) Contractor's half yearly* In the month of July & January Form No.24
issue certificate in Form No. 5 to enable the return
contractor to obtain licence from Asst. Labour
Commissioner. Renewed once in a year. 7) Principal Employer To the local Asst. Labour Commissioner by 15th
4) Registration to employer The employer to apply for Registration in Form Annual return February of every year Form No. 2 5.
to engage labour through No. 1 to Asst. Labour Commissioner
the contractor 8) Register of Contractors Principal Employer to maintain a register in
Form XII furnishing details of contractors.

Workmen compensation Act 1923 Act & Subject Particulars
Objective To provide financial protection to the workmen Workmen compensation Act 1923
and his helpless dependents in case of an c) Permanent total An amount equal to 50% of the monthly wage
employment injury. disablement multiplied by the relevant factor as per the act
Application To every industry, commercial establishment
where workmen are employed. This act is not d) Death result from the An amount equal to 50% of the monthly wage
applicable where ESI Act is applicable and vice injury multiplied by the relevant factor as per act or a
versa lump sum amount
Employer's Liability If the employment injury warrants absence from Medical Examination Medical examination to be conducted to the
amount of compensation work exceeding 3 days compensation is injured workmen
payable.
Amount of compensation Penalties In case of violation of any provision in this act
a) Temporary disablement Half monthly wage payment as per the the employers shall be punishable with fine
provisions which may extend to Rs.5000/-
b) Permanent partial As per the loss of earning capacity caused by
disablement the injury as per the scheduled in the act.

Building and Other Construction Workers act 1996
Object To provide for regular employment
and conditions of service including
health, safety and welfare.
Application To every establishment where 10 or
more building workers are in
Cleanliness , health , safety and

employment.
Same that are applicable to factory
Thank You
welfare except additional facility of providing
temporary accommodation to the
workers.
Constitution of welfare boards by
state governments
Empowering the central government

to give direction to the state
government on to remove
difficulties arising in giving effect
to the provisions of the act

7th Term - Legal Frameworks of Construction

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Legal Framework of Construction

Income Tax and Professional Tax

S.R.P** 7TH TERM- LEGAL FRAMEWORKS OF CONSTRUCTION. Page 1

Non-Residents and Non-Resident Indians

S.R.P** 7TH TERM- LEGAL FRAMEWORKS OF CONSTRUCTION. Page 2

Income from House Property

Income from Capital Gains

S.R.P** 7TH TERM- LEGAL FRAMEWORKS OF CONSTRUCTION. Page 3

Income from other sources

S.R.P** 7TH TERM- LEGAL FRAMEWORKS OF CONSTRUCTION. Page 5

S.R.P** 7TH TERM- LEGAL FRAMEWORKS OF CONSTRUCTION. Page 6

So, what exactly is CTC?

The concept of Cost to Company (CTC)

Components of Cost to Company (CTC) Salary

In “Understanding components of your salary”, we saw the various components of your

S.R.P** 7TH TERM- LEGAL FRAMEWORKS OF CONSTRUCTION. Page 7

Company’s contribution to Provident Fund (PF)

This includes reimbursement of:

S.R.P** 7TH TERM- LEGAL FRAMEWORKS OF CONSTRUCTION. Page 8

The cost of such transportation can be added to your CTC package.

Taking it too far

Office phone bill

Office space rent

S.R.P** 7TH TERM- LEGAL FRAMEWORKS OF CONSTRUCTION. Page 9

A note on government salaries

What extras do government servants get? Here's a sample list:

OTHER TAX SECTIONS

Section Income Income

111A Short-term capital gains 15.00%

112 Long-term capital gains 20.00%

Dividend received by a foreign company or a non-resident non-

Interest received by a foreign company or a non-resident non-

S.R.P** 7TH TERM- LEGAL FRAMEWORKS OF CONSTRUCTION. Page 10

Royalty or fees for technical services received by a foreign

b. May 31, 1997 but before June 1, 2005 20.00%

c. May 31, 2005 10%

Income from Global Depository Receipts held by a resident

115ACA Dividend [other than dividend referred to in section 115-O] on

Long-term capital gain on transfer of such receipts 10.00%

Income in respect of listed securities received by a Foreign

Short-term capital gain covered by section 111A 15.00%

115AD Any other short-term capital gain 30.00%

Long-term capital gain 10.00%

Other income [*not applicable in the case of dividends referred to in

Winnings from lotteries, crossword puzzles, or race including horse

Income of a non-resident foreign citizen sportsman for participation

115BBC Anonymous donation 30.00%

Income from foreign exchange assets and capital gains of non-

b. long-term capital gain 10.00%

S.R.P** 7TH TERM- LEGAL FRAMEWORKS OF CONSTRUCTION. Page 11

161(1A) Profits and gains of a business in the case of a trust 30.00%

Income of private discretionary trust where shares of beneficiaries

164A Income of an oral trust 30.00%

167A Income of a firm 30.00%

Income of an association of persons or body of individuals if shares

Income of an association of persons or body of individuals if total

Service Tax in India

S.R.P** 7TH TERM- LEGAL FRAMEWORKS OF CONSTRUCTION. Page 12

 Service provided by the insurer to the policy-holder in relation to general insurance

7. Consulting engineers - 7th July, 1997

S.R.P** 7TH TERM- LEGAL FRAMEWORKS OF CONSTRUCTION. Page 13

27. Scientific and technical consultancy services

Motor Spirit Rs .14.35 per litre Rs.15.50 per litre

HSD Rs.4.60 per litre Rs.5.75 per litre