Here's the Kelkar Committee Report-II, in a nutshell.

INDIRECT TAXES

• Capital goods: Full and immediate credit for integrated goods and services tax (GST) on capital goods in the year in which they are acquired has been proposed. Any transfer of the fixed asset at a later stage should also attract a GST liability.
• Petroleum products: Ad-valorem rates of excise applicable to petroleum products should be converted into specific rates, for which various alternatives can be used. The basic excise duty and other levies like additional and special additional excise duties, wherever applicable, should continue.
• SSI: The threshold exemption for small-scale industries should be reduced from Rs 1 crore (Rs 10 million) to Rs 40 lakh (Rs 4 million). For clearances between Rs 40 lakh and Rs 1 crore, there should be an option to pay at the rate of 4 per cent, without credit for integrated GST paid on inputs, or at the standard GST rate (of 12%) and claim credit for the taxes paid on inputs. The threshold exemption should be based on the value of total clearances, excluding exports. To reduce compliance cost, SSI units can pay on a quarterly basis.
• Location-based exemptions: The area-based exemption should be grandfathered (should be restricted only to present units and not extended to new units) to units that have already been established in areas like the north-eastern states, Kutch, Jammu and Kashmir, Uttaranchal and Himachal Pradesh, which enjoy exemptions. Deemed input credit for purchases from exempt areas should also be withdrawn.
• Immovable property: For integrating the real estate sector into the central GST, the existing stamp duty should be removed to facilitate input credit and eliminate cascading effects. The central GST should be applicable to all newly constructed property. Rent received from leasing for commercial use should be charged to central GST, but rental charges or imputed rental values should be exempted. Buyers for secondary market transactions would be required to pay the GST on the difference between the sale and the purchase price.
• Financial services: Entities regulated by the Reserve Bank of India, Insurance Regulatory and Development Authority, Provident Fund Regulatory and Development Authority, Sebi and Forward Markets Commission are to register separately with central excise, which will determine the value added by each entity by subtracting allowable purchases (on which GST has been paid) from net revenues. Financial providers with revenue below Rs 24 lakh will be exempted from integrated GST.
• Imports: A two-part levy is to replace the countervailing duty (CVD) proposed with the first part reflecting the central GST and the second reflecting state-level GST. All imports should be charged to the central and state GST at the same rate applicable to domestic goods. For imported goods and services, used as inputs, credit for the central GST and state VAT should be allowed against the central and the state GST on the final product. An exporter can either claim credit for the central GST on imports against its liability on domestic output, or claim a refund of the central GST on imports if it is greater than the central GST on output.

• Life insurance premium : It will not be eligible for tax rebate, but the amount received on maturity will be exempted. Investment in new policies will be exempted at the investment and the accrual stage but taxed on maturity (EET method).
• Payment for deferred annuity: The contributions to an existing annuity plan will not be eligible for tax rebate, but the contributions to the new schemes will be governed by the EET method of taxation of savings.
• Contribution to EPF, PPF, recognised PF, GPF, and approved superannuation funds: Contributions to existing accounts will not enjoy tax rebates but interest earned in the existing accounts and withdrawals will be out of the tax net. Employees would be required to open new accounts and contributions; accumulations and withdrawals would be subjected to the EET method of treatment.
• Subscription to notify security or deposit scheme of the Centre or NSC: New investments will not get Section 88 benefits but where income and withdrawal from these investments are exempt from the income tax (other than under Section 80L), the existing investments will continue to enjoy such exemptions. New investments will be governed by the EET method.
• Contribution to ULIP: No tax rebate under Section 88, but withdrawals exempt under Section 10(D). New investments will be governed by the EET method.
• Contributions to pension fund set up by mutual funds: Savings in these plans subject to the EET method of taxation.
• Tax-free income from specified investments: All existing instruments to enjoy existing benefits. New investments will be governed by the EET method.
• Redefining speculative transactions: The present distinction between speculative and non-speculative transactions should be totally dispensed with insofar as they relate to shares and securities.
• Financing infrastructure development: All gains from zero coupon bonds, listed in the markets, may be treated as capital gains and subjected to tax depending upon the period of holding. All zero coupon bond issues should be dematerialised. The amount paid on maturity may be exempt from tax.

• Accelerated depreciation: The general rate of depreciation for plant and machinery should be reduced from 25% to 20%. Rates for other blocks of assets should also be reviewed.
• Tax incentives under Sections 80 IA and 80 IB (backward areas and infrastructure sectors): It should be phased over a two-year period. Alternatively, the government may consider grandfathering these incentives.
• Treatment of corporate tax losses: A distinction between unabsorbed depreciation and unabsorbed business losses should be removed and the two should be merged.
  
  Also Read:
• The Kelkar Tax Proposals
• Kelkar reforms? GDP can grow to 13%
• What if Kelkar proposals are accepted
• Kelkar II: Corporates accept logic