INDIRECT TAXES
CENTRAL EXCISE
Amendments made effective
immediately
·
The
Clean Energy cess is to be renamed as Clean Environment cess. The effective
rate of Clean Energy cess proposed to be increased from Rs.200 per tonne to
Rs.400 per tonne .
·
Infrastructure
cess is to be levied on
motor vehicles under heading 8703 subject to certain exceptions. Further, this cess is not CENVATable and CENVAT
credit cannot be utilized for its payment.
Amendments to be effective from the date on
which Finance Bill receives the assent of the President
Amendments
in the Central Excise Act, 1944
·
Requirement
of publishing and offering for sale any notification issued, by the Directorate
of Publicity and Public Relations of CBEC under section 5A proposed to be done
away with.
·
The
time-limit for issuance of show cause notice under section 11A for recovery of
service tax not levied/paid/short levied/short paid/erroneously refunded, for
non-fraud cases is proposed to be enhanced by 1 year, i.e. from 1 year to 2
years.
·
It
is proposed to empower the Board under section 37B to issue orders,
instructions and directions for the implementation of any other provision of
the Central Excise Act, 1944.
Amendments effective from 01.04.2016
Amendments in the CENVAT Credit
Rules, 2004
The CENVAT Credit Rules, 2004 have been
simplified and rationalized with an endeavor to improve CENVAT credit flow,
reduce the compliance burden and associated litigations, predominantly those
relating to apportionment of credit between exempted and non-
exempted final products/services. Primary amendments include:
- Banks and other financial institutions are to be allowed to reverse credit in respect of exempted services, on actual basis also, in addition to the option of 50% reversal.
- Inputs and input services used in an activity which is not a ‘service’ under the Finance Act, 1994also to attract reversal provisions under rule 6.
- CENVAT credit of service tax paid on amount charged for assignment by Government or any other person of a natural resource available, over such period of time as the period for which the rights have been assigned.
Amendments in the Central Excise
Rules, 2002
The Central Excise Rules, 2002 are proposed to be
amended as follows:
(a) Reduction of the number of
returns to be filed by a central excise assessee above a specified threshold to
13, that is, 1 annual return and 12 monthly returns.
The said annual
return is also required to be filed by the service tax assessees above a specified
threshold. Thus, now three service tax returns
need to be filed instead of two.
(b) Like under service tax, the
facility of revision of return to be available under central excise also.
(c) Manual attestation of copy of
invoice, meant for transporter, is not required in cases where invoices are
digitally signed.
(d) In case of finalization of
provisional assessment, the interest will be chargeable from the original date
of payment of duty.
SERVICE
TAX
Amendments effective from
01.03.2016
Exemption
withdrawn
·
Exemption
with respect to construction, erection, commissioning or installation of
original works pertaining to monorail or metro in respect of contracts entered
into on/after 01.03.2016, has been withdrawn.
New
Exemptions
Following
services have been exempted:
·
Services by way of construction, erection, commissioning,
etc. in respect of-
a) housing projects under Housing For All (HFA) (Urban)
Mission/Pradhan Mantri Awas Yojana (PMAY)
b) low cost houses up to a carpet area of 60 m2 in a
housing project under “Affordable housing in Partnership” component of PMAY
c) low cost houses up to a carpet area of 60 m2 in a
housing project under any housing scheme of the State Government.
·
Services provided by the Indian Institutes of
Management (IIM) to their students, by way of the specified educational
programmes.
Other
Amendments
·
CENVAT credit is being allowed to service
providers providing services by way of transportation of goods by a vessel from
India to abroad
·
Rule 5 of the Point of Taxation Rules, 2011 has
been amended so as to clarify that this rule shall apply mutatis mutandis in
case of new levy on services and new levy or tax shall be payable on all the
cases other than specified in said rule.
·
Information Technology Software (IT Software) on
media bearing RSP is exempted from service tax provided central excise duty is
paid on RSP in accordance with section 4A of the Central Excise Act.
Further,
IT Software recorded on media which is “NOT FOR RETAIL SALE” is exempted from
so much of the Central Excise duty/CVD as is equivalent to the duty payable on
the portion of the value of such IT Software recorded on the said media, which
is leviable to service tax. In such
cases, manufacturer/importer would therefore be required to pay Central Excise
duty/CVD only on that portion of value representing the value of the medium on
which it is recorded along with freight and insurance.
Thus, levy
of excise duty and service tax is mutually exclusive.
Amendments effective from 01.04.2016
Exemptions withdrawn
With a
view to broaden the tax base, following exemptions are to be withdrawn:
·
services provided by-
(i) a senior advocate to an advocate or partnership firm of advocates
providing legal service; and
(ii) a person represented on an arbitral tribunal to an arbitral
tribunal.
Service tax would be payable
under forward charge on such services.
·
transport of passengers, with or without
accompanied belongings, by ropeway, cable car or aerial tramway
New Exemptions
Exemption
has been provided with respect to the following services:
·
Services of life insurance business provided
by way of annuity under the National Pension System.
·
Services provided by SEBI by way of
protecting the interests of investors in securities and to promote the
development of, and to regulate, the securities market.
·
Services
provided by Employee Provident Fund Organisation (EPFO) to employees.
·
Services
provided by Biotechnology incubators approved by Biotechnology Industry Research
Assistance Council (BIRAC) approved biotechnology incubators to the incubatees.
·
Services
provided by National Centre for Cold Chain Development by way of knowledge dissemination.
·
Services
provided by Insurance Regulatory and Development Authority (IRDA) of India.
·
Services
of general insurance business provided under Niramaya Health Insurance scheme launched
by National Trust for the Welfare of Persons with Autism, Cerebral Palsy,
Mental Retardation and Multiple Disability in collaboration with private/public
insurance companies.
·
Services
provided by way of skill/vocational training by Deen Dayal Upadhyay Grameen Kaushalya
Yojana training partners.
·
Services
of assessing bodies empanelled centrally by Directorate General of Training,
Ministry of Skill Development & Entrepreneurship.
Amendments in existing
exemptions
·
Hitherto,
service tax payable on a performance in folk or classical art forms of music/
dance/ theatre is exempt provided the consideration therefor exceeds
Rs. 1,00,000. This limit has been increased to Rs. 1,50,000.
Rs. 1,00,000. This limit has been increased to Rs. 1,50,000.
Rationalisation of
abatements alongwith the conditions for availing such abatements
·
Abatement
at the existing rate of 70% will continue to be available on transport of
passengers and goods by rail and on transport of goods by vessel, with the
CENVAT credit of input services now to be allowed [presently, the credit of
input services is not allowed with the abatement being claimed].
·
A
lower rate of abatement of 60% for transport of goods in containers by rail by
any person other than Indian railway, with the CENVAT credit of input services
being allowed.
·
Uniform
rate of abatement of 70% on services by way of construction of residential
complex, building, civil structure, or a part thereof, irrespective of the
carpet area of the units and amount charged for such units.
·
Abatement
on services by a tour operator in respect of a tour only for the purpose of
arranging or booking accommodation for any person, retained at the existing
rate of 90%. However, abatement in
respect of any other tour is rationalised from 75% and 60% to 70%.
·
A
lower rate of abatement of 60% on shifting of used household goods by a Goods
Transport Agency (GTA) without CENVAT credit on inputs, input services and
capital goods.
·
Abatement
of 70% on services of a foreman to a chit fund restored, without CENVAT credit
on inputs, input services and capital goods.
Amendments in Service
Tax Rules, 1994
·
Rule
6 of the Service Tax Rules, 1994 to be amended to extend the benefit of
quarterly payment of service tax to One Person Company (OPC) whose aggregate
value of services provided is up to Rs. 50 lakh in the previous financial year
and an HUF. Further, payment of service
tax on receipt basis is also extended to such OPC.
·
With
respect to services provided by mutual fund agents/distributor to a mutual fund
or asset management company, service tax to be payable under forward charge
provisions, i.e. service provider to be liable to pay service tax.
·
Rule
6(7A) of the Service Tax Rules, 1994 to be amended to provide that an insurer carrying
on life insurance business to have an option to pay tax at 1.4% of the total
premium charged on single premium annuity (insurance) policies, in cases where
the amount allocated for investment/savings on behalf of policy holder is not
intimated to such policy holder at the time of providing of service.
·
With
effect from 01.04.2016, any service (and not only support services) provided by
Government or local authorities to business entities are leviable to service
tax. Consequently, service tax would be
payable on any (and not only support services) service by the service recipient
on reverse charge basis from said date.
Amendments to be effective
from the date on which Finance Bill, 2015 receives the assent of the President
·
Finance
Act, 2015 had inserted Explanation 2 to the definition of “service” under
section 65B(44) of the Finance Act, 1994 to specifically state that service tax
is leviable on activities undertaken by lottery distributors and selling
agents, in relation to lotteries.
The
said explanation is proposed to be amended to clarify that it is the activity
in relation to promotion, marketing, organizing, selling of lottery or
facilitating in organizing lottery of any kind, in any other manner, of the
State Government as per the provisions of the Lotteries (Regulation) Act, 1998,
carried out by a lottery distributor/selling agent, which is leviable to service
tax.
·
The
Negative List entry under section 66D(l) covering ‘educational services is proposed
to be omitted. The said benefit would continue by way of exemption under mega
exemption Notification No. 25/2012 ST
dated 20.06.2012.
·
Assignment
by the Government of the right to use the radio-frequency spectrum and
subsequent transfers thereof is proposed to be declared as a service.
·
Section
67A is proposed to be amended to obtain specific rule making powers in respect
of Point of Taxation Rules, 2011.
·
The
time-limit for issuance of show cause notice under section 73, for recovery of
service tax not levied/paid/short- levied/short paid/erroneously refunded, for non-fraud
cases is proposed to be enhanced by 1 year, i.e. from 18 months to 30 months.
·
Interest
rates on delayed payment of duty/tax across all indirect taxes are proposed to
be made uniform at 15% p.a. However,
under service tax, in case where any amount is collected as service tax but
amount so collected is not paid to the credit of the Central Government on/before
the date on which such payment becomes due, proposed interest rate is 24% p.a.
·
Power
to arrest under section 91 proposed to be restricted only in case where the tax
payer has collected the tax of more than Rs 2 crore, but not deposited it to Government.
The monetary limit for launching
prosecution under section 89 proposed to be increased to Rs. 2 crore of the
amount of service tax collected but not deposited to the credit of the Central
Government beyond a period of 6 months from the date on which such payment
becomes due.
·
Section
93A of the Finance Act, 1994 proposed to be amended so as to allow rebate by
way of notification as well as rules.
Amendments to be effective
from 01.06.2016
Krishi Kalyan Cess
·
It
is proposed to levy a Krishi Kalyan Cess on ANY OR ALL the taxable services at the rate of 0.5% of the value of taxable services. It is important to note here that unlike
Swachh Bharat Cess, service provider shall be allowed to utilize the CENVAT credit
of Krishi Kalyan Cess paid on input services for payment of such cess on the
output service provided by it.
·
Service
tax proposed to be levied on transportation of passengers, with or without
accompanied belongings, by a stage carriage by amending Negative List of
services. However, transportation of
passengers by non-air conditioned stage carriage are being exempted vide mega
exemption notification.
|
·
Service
tax proposed to be levied on transportation of goods by an aircraft or a
vessel from a place outside India up to the customs station of clearance by
omitting the negative list entry to said effect. However, said services are being exempted
vide mega exemption notification.
|
CUSTOMS
·
Section
2(43) has been amended so as to include Special Warehouse licensed under
Section 58A for enabling storage of specific goods under physical control of
the department, as control over the other types of warehouses would be only
record based.
·
Section
25 is being amended so as to omit the requirement of publishing and offering
for sale any notification issued, by the Directorate of Publicity and Public
Relations of CBEC. To align with it has been proposed to provide the every
notification issued shall unless otherwise provided come into force on the date
of its issue by the Central Government for publication in the official Gazette.
·
The
period of limitation has been increased from one year to two years in case of
bonafide error assessment.
·
In
order to simplify and rationalize the tax schemes, the amendment has been
proposed in section 28, 47, 51 and 156 of the Customs Act to provide for
deferred payment of customs duties for importers and exporters with proven
track record. It will reduce the cargo release time and transaction cost of
EXIM trade. The details changes in this regard would be prescribed by Rules.
·
The
Principal Commissioner or Commissioner are proposed to be empowered to license
a public and private warehouses in place of Deputy/Assistant Commissioner,
subject to such conditions as may be prescribed. Further, they also have been
proposed to be empowered for licensing of special warehouse as wherein dutiable
goods may be deposited and be locked by the proper officer and no person shall
enter the warehouse or remove any goods therefrom without his permission.
·
The
bond amount for the warehousing bonds submitted by importers availing duty
deferred warehousing has been increased to thrice the duty amount as against
earlier requirement of twice the duty amount. In addition to bond furnishing of
security may also be required. In case of ownership of such goods being
transferred to another person, the transferee would need to execute bond and
security
·
The
provisions of Section 61 relating period of warehousing has been extended to all
goods used by Export Oriented Undertakings, Units under Electronic Hardware Technology
Parks, Software Technology Parks, Ship Building Yards and other units
manufacturing under bond. Additionally Principal Commissioners and
Commissioners have been empowered to extend the warehousing period upto one
year at a time.
·
Provisions
relating to control over warehousing goods and payment of rent and warehousing
charges done away with. Further, free
Samples from the warehouse can no longer be taken away.
·
The
payment of fees to Customs for supervision of manufacturing facilities under
Bond is no longer required. Principal Commissioner or Commissioner of Customs
empowered to license such activities.
·
As
a step towards Make in India, the rates of customs and excise duty have been
changed on certain inputs to reduce costs and improve competitiveness of
domestic industry in sectors like Information technology hardware, capital
goods, defence production, textiles, mineral fuels & mineral oils,
chemicals & petrochemicals, paper, paperboard & newsprint, Maintenance
repair and overhauling [MRO] of aircrafts and ship repair.
·
Customs
Single Window Project to be implemented at major ports and airports starting
from beginning of next financial year.
·
Increase
in free baggage allowance for international passengers. New Simplified Baggage
Rules, 2016 has been notified which would be effective from 1st
April, 2016. Further Customs Baggage declaration regulation 2013 is also being
amended so as to provide for custom declaration only for those passengers who
carry dutiable and/or prohibited goods.
·
The
rate of interest on delayed payment of duty has been revised to 15% from
earlier rate of 18%.
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