First of all never spank your child that will never be effective. You can let him know by being firm that the rude behavior of his is unacceptable. Talk to him and tell him where he went wrong and what should be done.

Never abuse him instead talk to him nicely and he goes not misbehaving just walk out. Set some boundaries and if those are crossed ask him to be ready to face some punishment. A punishment may include not letting him watch TV or play video games etc.

These days a lot of kids seem to develop this kind of behavior. One of my neighbor was complaining about a similar behavior of her daughter.

But after a lot of talking with her daughter she came to realize that her daughter was feeling neglected and she needed more time of hers thats why she was very irritated which made her become rude.

Its always good to talk to your child and try to get to a solution.

New generation kids seem to be too fast at everything. I cannot remember me even saying NO to my parents for what they said till I was out of school. See my son who is not even 3 yet very easily says NO to whatever I say.
He just does not listen to me... Its real difficult to handle kids of this new generation.

yuktimaan, you need to sit and have a talk with your child. Don't go to him and ask why he is doing so. That will not help. Instead over a period of time maybe a fortnight or month chat with him and in the process try to find out whats going wrong with him. Is it school, friends or parents? Something has to be there.
You will never find the reason by just asking him why he is doing so and soanking is not at all a solution.