Highlights of Karnataka State Budget 2010-11 - CHARTERED ...

R. SINGHVI & ASSOCIATES 

Chartered Accountants 

Highlights of 

Karnataka State 

Budget 2010-11 

Audit | Taxation | Accounting | Legal Advisory | Business Consulting 

Partners: 

R. K. Singhvi B.Com, FCA 

Subhash Chand Singhvi, B.Com, FCA 

Vijay Jain, B. Sc., LLB, ACS, FCA 

Support Team: 

Rishabh Singhvi B.Com, ACS, ACA 

Hemadri Kolla B.Com, CWA Grad, ACA 

Ankita Agarwal B.Com. ACS 

Address: 

F-113, Ground Floor, 

Central Chambers, 2nd Main, 

Gandhi Nagar, 

Bangalore-560 009 

Phone: +91 80 22281573 

Fax : +91 80 22264859 

Email: admin@rsinghvi.com 

Note: This booklet is prepared by R.SINGHVI & ASSOCIATES, Chartered Accountants for the exclusive use of clients and staff. While due care has been taken 

to ensure accuracy in preparing this booklet the readers are advised not to take any decision on the basis of contents of this booklet.

Highlights of Karnataka State Budget 2010-11 



PART A : Major Changes in Karnataka Value Added Tax Act, 2003 effective 

from 01-04-10 

• VAT is exempted on paddy, rice, wheat, pulses and products of rice and wheat 

for another one more year up to 31.03.2011. 

• optional scheme for dealers in medicines is introduced to pay tax based on the 

MRP even on sale of non medicinal items 

generally sold by such dealers. 

• Advance Ruling Mechanism for dealers to seek 

clarifications and advance rulings to be 

introduced. 

• VAT is levied on tobacco products on MRP 

basis. 

Limit for Registration, Tax payment under 

composition scheme, Audit under VAT 

Increased 

• The minimum annual turnover limit for registration increased from Rs. 2 lakhs 

to Rs. 5 lakhs. 

• The maximum annual turnover limit for opting for Composition Tax Payment 

Scheme increased from Rs.15 lakhs to Rs.25 lakhs. 

• Annual turnover limit for compulsory audit of accounts of dealers increased 

from Rs. 40 lakhs to Rs.60 lakhs. 

Changes in Rates of VAT 

• VAT rate 4 per cent increased to 5 per cent on all goods except declared goods. 

• VAT rate of 12.5 per cent increased to 13.5 percent. 

• VAT rate of 12.5 per cent on tobacco products increased to 15 per cent. 

• VAT at rate of 13 per cent on sale of motor car exceeding 5 Lakhs. 

• Medical dealers will have to pay VAT @ 4% up-to 30th day of Jun 2010. on any 

sale of “Medical and pharmaceutical preparations” out of Tax suffered stock 

lying as on March 31, 2010 (Notification no. FD 94 CSL 10 dated 31.03.2010). 

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Other Items on which VAT is reduced are 

Sr No Types of Products Tax Rates 

Part B: Major Changes in Luxury Tax: 



• Luxury tax on hotels with daily room rents from Rs. 1,000 to Rs.2000 increased 

from 6 per cent to 8 per cent. 

• Luxury tax on hotels with daily room rents exceeding Rs. 2,000 increased from 

10 per cent to 12 per cent. 

Part C: Major Changes in Entry Tax: 

• Provision for collection of Entry Tax on sugar at 

the point of sale by sugar factories. 

• Entry tax on entry of tobacco products of all 

description including ghutka, cigarettes, cigars, 

churuts, zarda, quimam and others but excluding 

snuff to 2%. 

Tax Rates 

Old New 

1 Masala Powder Mixtures 13.50% 5% 

2 Macaroni, Sports Trophies, Shields and Medals 13.50% 5% 

3 All kind of scraps 13.50% 5% 

4 Electrical Generators of less than 15 KVA 13.50% 5% 

5 Railway Concrete Sleepers 13.50% 5% 

6 Schoolbags costing up to Rs. 200 13.50% 5% 


Part D: STAMP DUTY AND REGISTRATION 

Changes in Stamp duty rate for certain types of Documents: 

Sr No Types of Documents 

• In case of lease and license agreement for 

residential buildings, stamp duty is levied at the 

rate of 0.5% up to 1 year period, subject to a 

maximum of Rs. 500. In respect of a period of 1 

year to 10 years, 10 years to 20 years, 20 years to 

30 years, Stamp Duty of 1%, 2% and 3% is 

imposed respectively, based on average of 1 year 

rentals and advance. 

• Stamp duty and registration fees is exempted in 



case of loan documents of rain water harvesting units, student studies, non- 

conventional sources of energy like solar and Bio-gas energy units, houses built 

under ‘Indira Avas’ scheme and in respect of loan papers pertaining to the 

agricultural loans of the farmers. 

• Stamp duty and registration fee is exempted in respect of documents transferring 

properties for public purposes, free of cost to local bodies and urban development 

authorities. 

Tax Rates 

Old New 

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Maximum 

Limit (Rs) 

1 Agreement to Sale 0.25% 0.10% 20,000 

2 

3 

4 

Joint development agreement and general power of 

attorney 

Agreement deeds related to shares/debentures and 

other marketable securities 

Broker notes/memos for transfer of shares/ 

debentures and other marketable securities 

NIL 1.00% 150,000 

Rs 200 Rs 50 NIL 

NIL 0.01% 50 

5 DTD (Deposit of Title Deed) 0.25% 0.10% 50,000 

6 Amalgamation & De-merger of companies 5.00% 3.00% - 

7 Transfer of Development Rights (TDR) NIL 1.00% -

Part E: MOTOR VEHICLES TAXES 



• Quarterly taxes payable by the Central Government employees on purchase of two 

wheelers is increased from Rs. 25 to Rs. 125 and on cars, jeeps and other Vehicles 

from Rs.187.50 to Rs. 500. 

• Quarterly taxes for omni buses with all-India permit is increased from Rs.2,500 per 

seat to Rs.2,750 per seat. 

• Life time tax on motor cars and jeeps is modified as follows: 

1. Vehicles with selling price less than Rs .5,00,000 : from 12% to 13% 

2. Vehicles with selling price from Rs.10,00,000 to Rs.20,00,000 : from 16% to 17% 

3. Vehicles with selling price more than Rs 

.20,00,000 : from 16% to 18%. 

• Quarterly tax on stage carriages covered by 

special permit is increased from Rs. 700 to 

Rs. 1,000 per seat. 

• Life time tax on motor cycles and other two 

wheelers is modified as follows 

1. For vehicles with selling price below 

Rs.50,000 : from 8% to 10%. 

2. For vehicles with selling price from 

Rs.50,000 to Rs.1,00,000 : from 10% to 

12%. 

• Life time tax of Rs. 20,000 is imposed in respect of light goods vehicles of 3,000 to 

5,500 Kg.GVW instead of quarterly tax of Rs. 1,200. Further, For those light goods 

vehicles which are already under operation, the life time tax at an average of Rs. 

12,000 will be levied on the basis of the year of manufacture 

• Quarterly tax on stage carriage is increased from Rs.500 to Rs.600 per seat. 

• Life time tax is of 10% is imposed on all construction equipment vehicles such as 

cranes, mobile cranes, forklift etc. 


Part F: OTHERS 



• Toll is imposed of Rs.500 on every trip made by a vehicle of more than 16 ton weight 

in transporting materials other than machinery and equipment. 

• Karsamadhana Scheme is announced to provide relief in respect of interest, if sales 

tax arrears (local as well as CST) till the financial year 2004-2005 are paid before 30 

June 2010. 

• Karsamadhana Scheme is announced to provide relief in respect of interest, if state 

excise arrears in respect of arrack / toddy rentals or, other excise dues are paid 

before 30 June 2010. 

• submission of tax records and payment of tax electronically is introduced.

Highlights of Karnataka State Budget 2010-11 - CHARTERED ...

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