The Union Budget, 2014 presented by the Finance Minister today is promising on building consumer’s confidence, investor’s confidence ...
The Union Budget, 2014 presented by the Finance Minister today is promising on building consumer’s confidence, investor’s confidence & overall confidence and taken several steps to improve fiscal situation and boost growth of Indian economy to 7-8% in coming years. The Roadmap made for fiscal consolidation in the next 3 years is inspiring on reduced fiscal deficit at 4.1% of GDP in 2014-15, 3.6% in 2015-16 and 3% in 2016-17.
Further, the focus on rural infrastructure, agriculture infrastructure, urban infrastructure, manufacturing revival, tourism, education, banking and finance and foreign direct investments would go a long way to rejuvenate the economic growth, going forward. Focus on GST implementation and discussions with State Governments are also encouraging.
HIGHLIGHTS OF CHANGES IN INDIRECT TAXES:
We are presenting you detailed analyses of changes made in Indirect Taxes viz. Service Tax, Excise and Customs vide the Union Budget, 2014.
UNION BUDGET 2014: CHANGES IN SERVICE TAX:
After the introduction of the Negative List based Service tax regime in July, 2012, the emphasis has been to ensure stability and continuity. The main focus in service tax at the present juncture is to widen the tax base and enhance compliance.
The changes being made by amendments in Notifications and Rules can be categorized into two broad categories based on when they would come into effect: (i) changes which will have immediate effect; and (ii) changes which are proposed to be given effect to only from 1st October, so as to coincide with the Service Tax Return cycle.
As far as statutory amendments are concerned, they would come into effect only from the date on which the Bill receives the assent of the President.
A. Changes In Chapter V of the Finance Act, 1994 (Will Come
Into Force When the Finance Bill (No.2), 2014 is enacted):-
I.
Changes in relation to the Negative list:-
·
To broaden the tax base in Service tax, Sale of space or time
for advertisements in broadcast media, namely radio or television, extended to
cover such sales on other segments like online and mobile advertising, etc.
Sale of space for advertisements in print media however would remain excluded
from Service tax.
·
Service provided by radio-taxis brought under the Service
tax. The abatement presently available to rent-a-cab service would also be made
available to radio taxi service, to bring them on par.
II. Other
Important Changes in the Finance Act, 1994:-
1.
Variable Rates of Interest for Delayed Payment of Service
Tax Prescribed By Notification No. 12/2014-ST Dated 11-7-2014:-
·
To encourage prompt payment of Service tax, new interest
rates on delayed payments under Section 75 of the Finance Act, 1994, which
would vary as per the extent of delay has been prescribed as under:
Extent of delay
|
Simple interest rate per
annum
|
Up to six months
|
18%
|
More than six months and up to one year
|
18% for first six months and
24% for the period of delay beyond six months.
|
More than one year
|
18% for first six months, 24% for second six months and 30% for the
period of delay beyond one year
|
This new interest rate
regime will become operational from October 1, 2014 up to which the rate of
interest of 18%, as presently applicable, will continue to apply.
E.g. Assume a case, where
service tax became due, say, on the 6th of July, 2012 and the assessee pays the
dues on 6th of December, 2014. In such a case, the interest to be charged would
be as below:
(i) 18% simple interest upto September,
30th, 2014.
(ii) For the period from 1st October, 2014 to
6th December, 2014, the rate of interest will be 30% since the period of delay
is beyond one year.
As
specified in the
proviso to section
75, three per
cent concession on the
applicable rate of interest will continue to be available to the small service
providers, whose value of taxable services provided in a financial year does
not exceed Sixty lakh rupees during any of the financial years covered by the
notice or during the last preceding financial year, as the case may be.
2.
Changes in
Advance Ruling Under Section 96A(b)(iii) of The Finance Act, 1994 Vide
Notification No. 15/2014-ST Dated 11-7-2014 (Effective From July 11, 2014):-
·
The
Resident Private Limited Company has also been included as a class of persons
eligible to make an application for Advance Ruling in Service tax.
3.
Other Changes :
·
Changes in Section 67A of
the Finance Act, 1994:
Section 67A is amended enabling Government to prescribe rules for
determination of rate of exchange for calculation of taxable value in respect
of certain services. Rules will be prescribed in due course, after the Bill
receives the assent.
·
Changes in Section 73 of
the Finance Act, 1994:
Section 73 is amended providing time limits for completion of
adjudication already existing in Central Excise which are to be followed, as
far as possible.
·
Changes in Section 80 of
the Finance Act, 1994:-
Section 80 is amended excluding reference of first proviso to Section 78
wherein power was granted to waive the 50% penalty imposable in cases where
Service tax has not been levied, not paid or short levied or short paid on
account of suppression of facts or wilful misstatement but details of
transactions are available in the specified record. The said power has now been
removed.
·
Changes in Section 82 of
the Finance Act, 1994:-
Section 82(1) is amended along with Section 12F(1) of the Central Excise
Act 1944, whereby the Joint Commissioner or Additional Commissioner or any
other officer notified by the Board can authorize any Central Excise Officer to
search and seize.
·
Changes in Section 86(6A)
of the Finance Act, 1994:-
Section 86(6A) is amended
to provide that every application made
before the Appellate Tribunal in an appeal for rectification of mistake or for
any other purpose or for restoration of an appeal or an application only shall
be accompanied by a fee of five hundred rupees. However, earlier the appeal for
grant of stay was also to be accompanied by a fee of five hundred rupees.
·
Changes in Section 87 of
the Finance Act, 1994:-
Section 87 is amended by
incorporating power to recover dues of a predecessor from the assets of a
successor purchased from the predecessor on the same line as it is provided
under Section 11 of the Central Excise Act, 1944.
·
Changes in Section 94 of
the Finance Act, 1994:-
Section 94 is amended to
obtain the power to make Rules on the following:-
(a)
Imposition on assessees the duty of furnishing information,
keeping records and making returns and specify the manner in which they shall
be verified.
(b)
For withdrawal of facilities or imposition of restrictions
including restrictions on utilization of Cenvat credit on service provider or
exporter, to check evasion of duty or misuse of Cenvat credit.
(c) To issue instructions
in supplemental or incidental matters.
·
Changes in Section 95 of
the Finance Act, 1994:-
After sub-section (1J),
the sub-section (1K) has been inserted in Section 95 providing that if any
difficulty arises in giving effect to Section 106 of the Finance Act, 2014
related to amendments made by the said Act, the Central Government may, by an
order, not later than one year from the date on which the Finance Bill, 2014
passes remove the difficulty.
·
Insertion of New Section
100 of the Finance Act, 1994:-
Section 100 has been
inserted stating that no Service tax shall be levied or collected in respect of
taxable services provided by the Employees’ State Insurance Corporation set up
under the Employees’ State Insurance Act, 1948 during the period prior to the
July 1, 2012.
4.
The Central Excise provisions made applicable to Service
tax vide Section 83 of the Finance Act, 1994 is being amended to prescribe that
the provisions of following Sections of
the Central Excise Act shall apply, mutatis mutandis, to Service tax:-
·
Section 5A(2): This Section prescribes
that any explanation inserted in a Notification or special order at any time
within one year of issue of notification or order, for clarifying the scope or
applicability thereof, shall have effect from the date of issue of such
notification or order.
·
Section 15 A: This new Section is being
inserted in the Central Excise Act to stipulate that third party sources shall
furnish periodic information, as specified, in the manner as may be prescribed.
·
Section 15B: This new Section is being inserted in the
Central Excise Act to prescribe that failure to provide information under
section 15A of the Act would attract penalty as specified.
·
Mandatory fixed
Pre-deposit - Section 35F: Section 35F of the
Central Excise Act has already been made applicable to Service Tax. This section
is being substituted with a new Section to prescribe a mandatory fixed
pre-deposit of:
a)
7.5% of the duty demanded or penalty imposed or both for
filing of appeal before the Commissioner(Appeals) or the Tribunal at the first stage; and
b)
10% of the duty demanded or penalty imposed or both for
filing second stage appeal before the Tribunal. The amount of pre-deposit
payable would be subject to a ceiling of Rs 10 Crore. All pending appeals/stay application
would be governed
by the statutory provisions prevailing at the time
of filing such stay applications/appeals. This new provisions would, mutatis
mutandis, apply to Service Tax.
B.
Changes in the Mega Exemption List of Services Vide
Notification No. 6/2014-ST Dated. 11-7-2014 amending Notification No.
25/2012-ST Dated. 20-6-2012 (Effective From 11-7-2014):-
·
Entry 2B: For safe disposal
of medical and clinical wastes, services provided by common bio-
medical waste treatment facilities exempted.
·
Entry 7: Exemption withdrawn to
services by way of technical testing or analysis of newly developed drugs,
including vaccines and herbal remedies on human participants by a clinical
research organization approved to conduct clinical trials by the Drug Controller
General of India.
·
Entry 9: Concept of ‘auxiliary
educational services’ has been omitted and the following services received by
eligible educational institutions are exempted from service tax: (i)
transportation of students, faculty and staff of the eligible educational
institution; (ii) catering service including any mid-day meals scheme sponsored
by the Government; (iii) security or cleaning or house-keeping services in such
educational institution; (iv) services relating to admission to such
institution or conduct of examination.
Further, for the purposes of this exemption, “educational institution” is
being defined in the exemption notification 25/2012-ST as institutions
providing educational services specified in the negative list.
Furthermore, the exemption hitherto
available to services provided by way of renting of immovable property to
educational institutions stands withdrawn.
·
Entry 18: Service by way of renting
of a hotel, inn, guest house, club or campsite or other commercial places meant for residential or lodging purposes, having
a declared tariff of a unit of accommodation below rupees one thousand per day
or equivalent is exempt from Service tax i.e. Exemption not available if
declared tariff > Rs. 1,000/- Per day irrespective of fact whether for
commercial purpose or not. Hence, this exemption, upto the specified threshold
level, is available to any entity providing service by way of accommodation,
including dharmashalas or ashram or such other entities. Tax base has been
widened by removal of term ‘other commercial places’.
·
Exemption provided on Transport of organic manure by vessel,
rail or road (by GTA) by amending entries at Entry. No. 20 and 21.
Therefore, organic manure will be on par with fertilizer which is
already exempted.
·
Exemption provided on Services by way of loading, unloading,
packing, storage or warehousing, transport by vessel, rail or road (GTA), of
cotton, ginned or baled, [amendment of entry at Entry. No. 20 & 21 and 40].
·
Entry 23: Presently service of
passenger transportation by a contract carriage other than for the purposes of
tourism, conducted tour, charter or hire, is exempt from Service tax. The scope
of exemption is being reduced by withdrawing the exemption in respect of
air-conditioned contract carriages. As a result, any service provided for transport
of passenger by air-conditioned contract carriage including which are used for
point to point travel, will attract service tax, with immediate effect. Service
tax will be charged at an abated value of 40% of the amount charged from
service receiver; therefore, effective tax will be 4.944%.
·
Entry 25: The exemption in respect
of services provided to Government or local authority or Governmental authority
has been made more specific. Services by way of water supply, public health,
sanitation conservancy, solid waste management or slum improvement and
up-gradation will continue to remain exempted but the exemption would not be
extendable to other services such as consultancy, designing, etc., not directly
connected with these specified services.
·
Entry 26A: Exemption available for
specified micro insurance schemes approved by IRDA expanded to cover all life
micro-insurance schemes where the sum assured does not exceed Rs. 50, 000/- per
life insured.
·
Entry 41: Specialized financial
services received by RBI from outside India, in the course of management of
foreign exchange reserves, e.g. external asset management, custodial services,
securities lending services, are being exempted.
·
Entry 42: Exemption available on
services provided by the Indian tour operators to foreign tourists in relation
to tours wholly conducted outside India.
·
New definition provided for certain terms - ‘Educational
institution’, ‘life micro insurance product’, ‘radio–taxi’, ‘recognised sports
body’ and deletion of term – ‘auxiliary education service’
C.
Changes in the Service Tax Rules, 1994 Vide Notification
No. 9/2014-ST Dated. 11-7-2014 (Effective From 11-7-2014 Unless Otherwise
Stated):-
·
Service provided or agreed to be provided by a Director of a
Company or body corporate to the said company or the body corporate has been
brought under the Reverse Charge Mechanism. Service receiver, who is a body corporate,
will be the person liable to pay Service tax.
·
Services provided by Recovery Agents to Banks, Financial
Institutions and NBFCs has also been brought under the Reverse Charge
Mechanism.
·
E-payment of Service tax has been made mandatory with effect
from October 1, 2014. Relaxation from e-payment may be allowed by the Deputy
Commissioner/ Asst. Commissioner on case to case basis.
D.
Changes in Reverse Charge Mechanism Vide Notification No.
30/2012-ST Dated 20-6-2012, duly amended by Notification No. 10/2014-ST Dated
11-7-2014 (Effective From 11-7-2014 Unless Otherwise Stated):-
·
Corresponding changes pertaining to the services brought
under Reverse Charge Mechanism (discussed in Point C, supra) have been made.
·
In case of Renting of motor vehicle where the service
provider does not take abatement, the portion of Service tax payable by the
service provider and service receiver has been modified as 50% each effective
from October 1, 2014.
E.
Changes in the Service Tax (Determination of Value)
Rules, 2006 Vide Notification No. 11/2014-ST Dated 11-7-2014 to amend Service
Portion in Works Contract (Effective From 1-10-2014):-
·
In Rule 2A of the Service Tax (Determination of Value) Rules,
2006, category ‘B’ and ‘C’ of Works Contract (reproduced below) has been merged
into one single category, with percentage of service portion as 70%, for the
chargeability of Service tax.
“(B) in case of works
contract entered into for maintenance or repair or reconditioning or
restoration or servicing of any goods, service tax shall be payable on seventy
percent of the total amount charged for the works contract;
(C) in case of other works
contracts, not covered under sub-clauses (A) and (B), including maintenance,
repair, completion and finishing services such as glazing, plastering, floor
and wall tiling, installation of electrical fittings of an immovable property,
service tax shall be payable on sixty per cent of the total amount charged for
the works contract;”
F.
Changes in the Point of Taxation Rules, 2011 (“The POT
Rules”) Vide Notification No. 13/2014-ST Dated 11-7-2014, by amending Point of
Taxation in respect of Reverse Charge (Effective From 1-10-2014):-
·
The Point of Taxation in respect of Reverse Charge under the
first Proviso to Rule 7 of the POT Rules has been amended to be the payment
date or the first day that occurs immediately after a period of three months
from the date of invoice, whichever is earlier.
·
The said amendment will apply only to invoices issued after
October 1, 2014. A transition rule for the same has also been prescribed under
new Rule 10 of the POT Rules, which provides as under:
“10. Notwithstanding
anything contained in the first proviso to rule 7, if the invoice in respect of
a service, for which point of taxation is determinable under rule 7 has been
issued before the 1st day of October, 2014 but payment has not been made as on
the said day, the point of taxation shall,–
(a) if payment is made within a period of six months of the date
of invoice, be the date on which payment is made;
(b) if payment is not made
within a period of six months of the date of invoice, be determined as if rule
7 and this rule do not exist.”
G.
Changes In Notification No. 12/2013-ST Dated 1-7-2013 relating To
Exemption From Service Tax To SEZ Units or the Developer Vide Notification No.
7/2014-ST Dated 11-7-2014 (Effective From 11-7-2014):-
·
It is provided that the Central Excise Officer would issue authorization in Form A-2, within fifteen working days from the date of receipt of Form A-1.
·
Authorization shall be valid from the date on which Form A-1
is verified by the Specified Officer of SEZ. However, if Form A-1 is furnished
after a period of 15 days from the date of its verification by the Specified
Officer, the authorization shall have validity from the date on which it is
furnished.
·
SEZ Units or the Developer will, pending issuance of Form
A-2, be entitled to avail upfront exemption on the basis of Form A-1. However,
in such a case, the SEZ Unit/ Developer would be required to furnish a copy of
authorization issued by the Central Excise Officer within 3 months from the
date of receipt of specified services. If a copy of authorization is not provided
within the said period of 3 months, the service provider shall pay Service tax
on the service so provided availing the exemption.
·
As regards services covered under full Reverse Charge, it is
mentioned specifically in Form that there would be no requirement of furnishing
service tax registration number of service provider.
·
It is provided
that a
service shall be
treated as exclusively
used for SEZ operations if the recipient of service is
SEZ unit or developer, invoice is in the name of such unit/ developer and the
service is used exclusively for furtherance of authorized operations in SEZ.
·
Certain doubts have been raised by field formations as
regards the jurisdiction for the purposes of granting refunds under
notification No. 12/2013-ST to the SEZ Units and SEZ Developers. It is
clarified that the jurisdictional Deputy Commissioner/ Assistant Commissioner
of Central Excise for all purposes under the said notification would be the
authority with whom SEZ Units or the Developers are registered for taking
upfront exemption or for the purposes of Chapter V of the Finance Act, 1994. In
this context, attention is also invited to Circular No. 105/08/2008-ST, dated
16.9.2008. If SEZ units have obtained a centralized registration under the
Service Tax Rules, it will have option to file a common service tax refund in
respect of all units covered under the Centralized Registration or file a
unit-wise refund at its option, to the authority having jurisdiction over
centralized registration.
H.
Changes
In Abatement Notification No. 26/2012-ST Dated 20-6-2012 Vide Notification No.
8/2014-ST Dated 11-7-2014 (Effective From 11-7-2014 Unless Otherwise Stated):-
·
It
is clarified that abatement on the GTA services is applicable only if Cenvat
credit on inputs, capital goods and input services is not availed by the
service provider. Service recipient will not be required to establish
satisfaction of this condition by the service provider.
·
Taxable
portion in respect of transport of goods by vessel has been reduced from 50% to
40% with effect from October 1, 2014.
·
Service
related to transportation of passenger by air-conditioned contract carriages or
radio taxi has now become taxable. Therefore, a new entry is inserted at Sr.
No. 9A providing taxable portion of such services to be 40% with the condition
that Cenvat credit of inputs or capital goods or input services has not been
availed.
·
The
condition in entry No. 9 is amended with effect from October 1, 2014 allowing
credit of input service of renting of a motor cab if such services are received
from a person engaged in the similar business i.e. a sub-contractor providing
services of renting of motor cab to the main contractor. The whole of the
Cenvat credit has been allowed with respect to input service of renting of any
motor cab, received from a person who is paying Service tax on 40% of the value
of services. The Cenvat credit eligibility will be restricted to 40% of the
credit of the input service of renting of any motor cab if Service tax is paid
or payable on full value of the services i.e. no abatement is availed.
·
Effective
from October 1, 2014, the service of tour operator is also being allowed to
avail Cenvat credit on the input service of another tour operator, which are
used for providing the taxable service.
I.
Changes
in Place of Provision of Services Rules, 2012 (“The POP Rules”) Vide Notification No.
14/2014-ST Dated 11-7-2014 (Effective From 1-10-2014):-
·
Definition
of ‘Intermediary’ has been amended to include intermediary of goods in its
scope. Accordingly, an intermediary of goods, such as a commission agent or
consignment agent shall be covered under Rule 9(c) of the POP Rules instead of
Rule 3 of the POP Rules.
·
Rule
4(a) of the POP Rules is not applicable on repair of goods imported temporarily
into India and then exported after repairs without being put to any use in the
taxable territory. It may be noted that this exclusion does not apply to goods
that arrive in the taxable territory in the usual course of business and are
subject to repair while such goods remain in the taxable territory, e.g., any
repair provided in the taxable territory to containers arriving in India in the
course of international trade in goods will be governed by Rule 4 of the POP
Rules.
·
From
the scope of Rule 9(d) of the POP Rules, the services related to hiring of
Vessels (excluding yachts) and Aircraft has been excluded and will be covered
by the general Rule i.e. location of the Service Receiver.
J.
Changes In Cenvat Credit Rules, 2004 Vide Notification
No. 21/2014-Central Excise (N.T.) Dated. 11-7-2014 (Effective From 11-7-2014):-
·
Definition provided of
‘Place of Removal’: A new sub-rule (qa) is being inserted in Rule 2 to introduce
the definition of “place of removal.
“(qa) “place of removal” means-
(i) a factory or any other place or premises of production or
manufacture of the excisable goods;
(ii) a warehouse or any other place or premises wherein the
excisable goods have been permitted to be deposited without payment of duty;
(iii) a depot, premises of a consignment agent or any other
place or premises from where the excisable goods are to be sold after their
clearance from the factory,
from where such goods are removed;”
·
Time limit for availment
of Cenvat Credit: Rule 4(1) (for input credit) and Rule 4(7) (for input service
credit) are being amended in order to fix a time limit of six months for
availment of the CENVAT Credit. In case of service tax paid under full reverse
charge, the condition of payment of invoice value to the service provider for
availing credit of input services is being withdrawn. However, the said change
is not applicable in respect of partial reverse charge.
·
Re-credit of Cenvat Credit
on non receipt of export proceeds: Re-credit of CENVAT credit reversed on account of
non-receipt of export proceeds within the specified period or extended period,
to be allowed, if export proceeds are received within one year from the period
so specified or extended period. This can be done on the basis of documents
evidencing receipt of export proceeds [Refer the newly inserted proviso to Rule
6(8)].
·
Input Service Distributor: Rule 7 of the CENVAT
Credit Rules, 2004, provides for the manner of distribution of common input
service credit by the Input Service Distributor. This was amended vide
notification No. 05/2014-CE (N.T.) amending, inter-alia, Rule 7(d), to provide for distribution of common input
service credit among all units in their turnover ratio of the relevant period.
Some interpretational
issues were raised regarding the amendment such as:
(i)
due to the use of
the term “such unit”
in Rule 7(d), the
distribution of the credit would be restricted to only those units where
the services are used, and
(ii)
the credit available for distribution would also get reduced
by the proportion of the turnover of those units where the services are not
used.
Please refer clarification
provided vide Circular No. 178/04/2014-ST, dated 10.7.2014 illustrating the
effect of the amendment carried out vide Notification No. 05/2014-CE (N.T.). It
clarifies that the amended Rule 7 allows distribution of input service credit
to all units (which are operational in the current year) in the ratio of their
turnover of the previous year/previous quarter as the case may be.
·
Rule 12A is being amended so as to disallow transfer of
credit by a large taxpayer from one unit to another.
UNION BUDGET 2014:
CHANGES IN EXCISE AND CUSTOMS:
Changes in Customs and Central Excise law and rates of duty have been
proposed through the Finance (No.2) Bill, 2014 (Clauses 72 to 87 for Customs and Clauses 88 to 105,
107 and 110 for Central Excise). In order to prescribe effective rates of duty and to carry out changes in the Rules made under the respective Acts, the following Notifications are being
issued:
CUSTOMS
|
Notification Nos.
|
Date
|
Tariff
|
No.11/2014-Customs
to No.25/2014-Customs
|
July 11, 2014
|
Non-Tariff
|
No.50/2014-Customs(NT) and No.51/2014-Customs
(NT)
|
July 11, 2014
|
CENTRAL EXCISE
|
||
Tariff
|
No.8/2014-CE to No.20/2014-CE
|
July 11, 2014
|
Non-Tariff
|
No.17/2014-CE (NT) to No.22/2014-CE (NT)
|
July 11, 2014
|
Unless otherwise stated, all changes
in rates of duty take effect from the midnight of 10th/11th July, 2014. A declaration has been made under the
Provisional Collection of Taxes Act, 1931 in respect of clauses 86, 87 [(1) and
(9)(ii)], 104, 105(1), 107, and 110 of the Finance (No.2) Bill, 2014 so that
changes proposed therein also take effect from the midnight of 10th/11th July,
2014.
The remaining legislative changes
would come into effect only upon the enactment of the Finance (No.2) Bill,
2014. Retrospective amendments in the provisions of law or Notification issued
under the respective Acts shall have the force of law only upon the enactment
of the Finance (No.2) Bill, 2014 but with effect from the date indicated in the
relevant clause or Schedule. These dates may be carefully noted.
Changes
under the Central Excise Act, 1944 (“The Excise Act”) and the Excise Tariff
Act, 1985 (“The Excise Tariff”)
I.
Change in Rate of Excise duty or
Exemption provided:-
·
To incentivize expansion of
processing capacity, reduction in Excise duty on specified food processing and
packaging machinery from 10% to 6%.
·
Reduction in the Excise duty
from 12% to 6% on footwear of retail price exceeding Rs. 500 per pair but not
exceeding Rs. 1,000 per pair.
·
Withdraw concessional Excise
duty (2% without Cenvat benefit and 6% with Cenvat benefit) on smart cards and
a uniform Excise duty at 12%.
·
To develop renewable energy,
various items exempted from Excise duty.
·
Exemption to Polyester Staple
Fiber (PSF) and Polyester Filament Yarn (PFY) manufactured from plastic waste
and scrap including PET bottles from Excise duty retrospectively with effect
from 29th June, 2010 to 7th May, 2012.
·
Prospective levy of a nominal
duty of 2% without Cenvat benefit and 6% with Cenvat benefit on such PSF and
PFY w.e.f. July 11, 2014.
·
Concessional Excise duty of 2%
without Cenvat benefit and 6% with Cenvat benefit on sports gloves.
·
Excise duty on cigarettes is
being increased by 72% for cigarettes of length not exceeding 65 mm and by 11%
to 21% for cigarettes of other lengths. Similar increases are proposed on
cigars, cheroots and cigarillos.
·
Excise duty increased from 12%
to 16% on pan masala, from 50% to 55% on unmanufactured tobacco and from 60% to
70% on Gutkha and chewing tobacco.
·
Levy of an additional duty of
Excise at 5% on aerated waters containing added sugar.
·
To finance Clean Environment
initiatives, Clean Energy Cess increased from Rs. 50 per tonne to Rs. 100 per
tonne.
II. Amendments in the Central Excise
Rules, 2002:-
·
E-payment is being made mandatory for all assessees subject
to certain exceptions.
·
Sub-rule (3A) of Rule 8 is being substituted to provide that
in case of default in payment of duty, the assessee shall on his own pay a
penalty of 1% per month on the amount of duty not paid for each month or part
thereof.
(Please Refer Notification No.4/2002-Central Excise
(NT) dated 1st
March, 2002 as
amended vide Notification
No.19/2014-Central Excise dated 11th July, 2014)
III.
Amendments in the Central Excise Valuation Rules, 2004:-
The Central Excise
Valuation (Determination of Price of Excisable Goods) Rules, 2000 is being
amended so as to provide that in cases where excisable goods are sold at a
price below the manufacturing cost and profit and there is no additional
consideration flowing from the buyer to the assessee directly or from a third
person on behalf of the buyer, value for the assessment of duty shall be deemed
to be the transaction value.
(Please refer Notification No.45/2000-Central Excise
(NT) dated 30th June, 2000 as amended
vide Notification No.20/2014-Central Excise dated 11th July, 2014)
IV. Authority
for Advance Rulings:-
The Scheme of Advance
Ruling is also being extended to Resident Private Limited Companies. (Please refer Notification
No.18/2014-Central Excise (N.T.))
V. Unit
Quantity Codes:-
The Schedules to the
Customs and Central Excise Tariffs are being amended in respect of selected
goods to match the Unit Quantity Codes prescribed therein with the ones that
are actually used in trade and commerce. This would facilitate trade and
improve data quality and compliance.
Changes
under the Customs Act, 1962 (“The Customs Act”) and the Customs Tariff Act,
1975 (“The Customs Tariff”)
I.
Change in Rate of Customs duty or
Exemption provided:-
·
Description of the product “sun
dried dark seedless raisins” under Sl. No. 29 of the Notification No.
12/2012-Customs (T) dated March 17, 2012 is being changed to “dark seedless
raisins”.
·
To boost domestic manufacture
and to address the issue of inverted duties, Basic customs duty (“BCD”) reduced on certain specified
items.
·
To encourage new investment and
capacity addition in the chemicals and petrochemicals sector, BCD reduced on
certain specified items.
·
Steps taken to boost domestic
production of electronic items and reduce our dependence on imports. These
include imposition of BCD on certain items falling outside the purview of IT
Agreement, exemption from Special Additional Duty (“SAD”) on inputs/ components for PC manufacturing, imposition of
education cess on imported electronic products for parity etc.
·
Colour television picture tubes
for use in manufacture of cathode ray televisions exempted from BCD to make
cathode ray TVs cheaper and more affordable to weaker sections.
·
To encourage production of LCD
and LED TVs below 19 inches in India, BCD on LCD and LED TV panels of
televisions below 19 inches reduced from 10% to Nil.
·
To give an impetus to the
stainless steel industry, increase in BCD on imported flat-rolled products of
stainless steel from 5% to 7.5%.
·
Concessional BCD of 5% extended
to machinery and equipment required for setting up of a project for solar
energy production.
·
Specified inputs for use in the
manufacture of EVA sheets and back sheets and flat copper wire for the
manufacture of PV ribbons exempted from BCD.
·
Reduction in BCD from 10% to 5%
on forged steel rings used in the manufacture of bearings of wind operated
electricity generators. Exemption from SAD of 4% on parts and raw materials
required for the manufacture of wind operated generators.
·
Concessional BCD of 5% on
machinery and equipment required for setting up of compressed biogas plants
(Bio-CNG).
·
Anthracite coal, bituminous
coal, coking coal, steam coal and other coal to attract 2.5% BCD and 2% CVD to
eliminate all assessment disputes and transaction costs associated with testing
of various parameters of coal.
·
BCD on metallurgical coke
increased from Nil to 2.5% in line with the duty on coking coal.
·
Duty on ship breaking scrap and
melting scrap of iron or steel rationalized by reducing the BCD on ships
imported for breaking up from 5% to 2.5%.
·
To prevent mis-use and avoid
assessment disputes, BCD on semi- processed half cut or broken diamonds, cut
and polished diamonds and coloured gemstones rationalized at 2.5%.
·
To encourage exports, pre-forms
of precious and semi-precious stones exempted from BCD.
·
The duty free entitlement for
import of trimmings & embellishments and other goods used by the readymade
textile garment sector for manufacture of garments for export is being
increased from 3% to 5%.
·
Export duty on bauxite increased
from 10% to 20%.
·
For passenger facilitation, free
baggage allowance increased from Rs. 35,000 to Rs. 45,000.
II. Authority
for Advance Rulings:-
·
The Scheme of Advance Ruling is also being extended to
Resident Private Limited Companies. (Please
refer Notification No.51/2014-Customs (N.T.) dated July 11, 2014)
Bimal
Jain FCA, FCS, LLB, B.Com (Hons)
Flat No. 34B, Ground Floor, Pocket-1, Mayur Vihar, Phase–I,Delhi – 110091
Desktel: +91-11-22757595/42427056 Mobile: +91 9810604563
Thanks Sir,
ReplyDeleteVery Useful for working personel bcz of a lot of work pressure over them can't go for deep study of Budget 2014.