BUDGET
HIGHLIGHTS-TAXATION 2014-15
Hello friends finally the most awaited budget by Modi’s
government is out. The chant of “acche din aa gye” sounds clearer now. I must
appreciate the efforts of NDA government. This is the best budget in last 4
years. Lets begin with Key highlights of Budget from the point of view of
taxation. Around 71 amendments in Income Tax & various in Indirect taxes
also. Due to this incentives government will lose Rs.22000 Crores from Direct
taxes. I have thoroughly covered direct taxes below & key points of
indirect taxes. This is my first budget analysis so readers are requested to
correct me in case I interpret law wrongly. All the comments are most welcome
on article.
DIRECT TAXES PROPOSALS
DIRECT TAXES PROPOSALS
1). Change in Slab: Personal
Income-tax exemption limit raised by Rs. 50,000/- that is, from Rs. 2 lakh to
Rs.2.5 lakh in the case of individual taxpayers, below the age of 60 years.
Exemption limit raised from Rs. 2.5 lakh to Rs. 3 lakh in the case of senior
citizens.
(Finally after getting relief of Rs.20000 from last 3 budgets, this year FM relaxes slab by Rs.50000)
(Finally after getting relief of Rs.20000 from last 3 budgets, this year FM relaxes slab by Rs.50000)
2) Amendment of Section
80C: Investment limit under section 80C of the Income-tax Act raised
from Rs. 1 lakh to Rs. 1.5lakh.
(It is already predicted at my end, it will increase investments.)
(It is already predicted at my end, it will increase investments.)
3) Amendment of Section-2:
(i) Section 2(13A) “Business Trust”. It is not used commonly so i have ignored to describe here.
(ii) Section 2(14) “Capital Assets” amended to includes “any securities held by a Foreign Institutional Investor which has invested in such securities in accordance with the regulations made under the Securities and Exchange Board of India Act, 1992” other than a Stock in Trade.
(iii) Numerous definition added Section 2(15A) “Chief Commissioner”, 2(16) “Commissioner”, & so on. Not relevant to discuss here.
(iv) Proviso to Section 2(42A) “ Short Term Capital Assets” a major amendment comes in it that. Previously for the condition of 12 months holding period it includes
Old: “a share held in a company or any other security listed in a recognized stock exchange in India or a unit of a Mutual Fund specified under clause(23D) of section 10 ”
New: “a security (other than a unit) listed in a recognised stock exchange in India or a unit of an equity oriented fund”
Effect: That means from now onward only equity oriented mutual funds will count for 12 months holding period to get classify in short term capital assets. In case of remaining mutual funds it will be treated as short term capital assets if it is holding for less than 36 months. Most of the peoples who were taking indexation benefits by selling debt funds after 12 months will not do this practice any more. All private limited company shares are now long term only when held for more then 36 months. Further taxation on such mutual funds also increased under Section 112 (Now Long-term capital gains on units of debt-oriented mutual funds not eligible for concessional rate of tax@10% (without indexation benefit)
4) Amendment of section-10 (Exempt Income)
Section 10(23FC) introduced to exempt income of a business trust by way of interest received or receivable from a special purpose vehicle
Section 10(23FD) introduced to exempt any distributed income, referred to in section 115UA, received by a unit holder from the business trust
Section 10(38) Long term gain from sale of units of Business trust is exempt.
Section 10(23C)
(i) Section 2(13A) “Business Trust”. It is not used commonly so i have ignored to describe here.
(ii) Section 2(14) “Capital Assets” amended to includes “any securities held by a Foreign Institutional Investor which has invested in such securities in accordance with the regulations made under the Securities and Exchange Board of India Act, 1992” other than a Stock in Trade.
(iii) Numerous definition added Section 2(15A) “Chief Commissioner”, 2(16) “Commissioner”, & so on. Not relevant to discuss here.
(iv) Proviso to Section 2(42A) “ Short Term Capital Assets” a major amendment comes in it that. Previously for the condition of 12 months holding period it includes
Old: “a share held in a company or any other security listed in a recognized stock exchange in India or a unit of a Mutual Fund specified under clause(23D) of section 10 ”
New: “a security (other than a unit) listed in a recognised stock exchange in India or a unit of an equity oriented fund”
Effect: That means from now onward only equity oriented mutual funds will count for 12 months holding period to get classify in short term capital assets. In case of remaining mutual funds it will be treated as short term capital assets if it is holding for less than 36 months. Most of the peoples who were taking indexation benefits by selling debt funds after 12 months will not do this practice any more. All private limited company shares are now long term only when held for more then 36 months. Further taxation on such mutual funds also increased under Section 112 (Now Long-term capital gains on units of debt-oriented mutual funds not eligible for concessional rate of tax@10% (without indexation benefit)
4) Amendment of section-10 (Exempt Income)
Section 10(23FC) introduced to exempt income of a business trust by way of interest received or receivable from a special purpose vehicle
Section 10(23FD) introduced to exempt any distributed income, referred to in section 115UA, received by a unit holder from the business trust
Section 10(38) Long term gain from sale of units of Business trust is exempt.
Section 10(23C)
Income for the purposes of application under section 11 and section 10(23C), shall be determined without providing deduction or allowance for depreciation in respect of an asset, acquisition of which has been claimed as an application of income under these sections in the same or any other
previous year. In effect, if the cost of asset has been claimed as application of income, then depreciation on such asset cannot be claimed in the same or any other previous year.
(One of tax loophole removed by this insertion, currently all trusts are claiming cost of assets & depreciation both as APPLICATION of income to deploy trust income i.e. double deduction but now FM's amended & inserted a clause by which one can take only one amount as application)
5) Amendment of Section 24(b): Deduction limit on account of interest on loan in respect of self occupied house property raised from Rs..1.5 lakh to Rs.2 lakh.
(Very good efforts made to increase this slab, however one loophole still there by using which one may claim unlimited interest as a deduction in case of other than self occupied property.)
previous year. In effect, if the cost of asset has been claimed as application of income, then depreciation on such asset cannot be claimed in the same or any other previous year.
(One of tax loophole removed by this insertion, currently all trusts are claiming cost of assets & depreciation both as APPLICATION of income to deploy trust income i.e. double deduction but now FM's amended & inserted a clause by which one can take only one amount as application)
5) Amendment of Section 24(b): Deduction limit on account of interest on loan in respect of self occupied house property raised from Rs..1.5 lakh to Rs.2 lakh.
(Very good efforts made to increase this slab, however one loophole still there by using which one may claim unlimited interest as a deduction in case of other than self occupied property.)
6) Conducive tax regime to Infrastructure Investment Trusts and
Real Estate Investment Trusts to be set up in accordance with regulations of
the Securities and Exchange Board of India.
7) Amendment of
Section 32AC: By Clause (1A) Investment allowance to be given at the
rate of 15 % to a manufacturing company that invests more than Rs. 25 crore in
any year in new plant and machinery.
The benefit to be available for three years i.e. for investments upto
31.03.2017. But this benefit is not available on existing assets on which allowance
is already claiming under clause(1).
( Thank god FM reduces limits to 25 crores from 100 crores & increase period too from 2 years to 3 years. It is a corrective action made to provide benefit to SME’s. Last year Chidambaram brought section 32AC but with 100 crores limit it was totally unreachable for a medium class entrepreneurs. Hopefully now corporates will take advantage of it)
( Thank god FM reduces limits to 25 crores from 100 crores & increase period too from 2 years to 3 years. It is a corrective action made to provide benefit to SME’s. Last year Chidambaram brought section 32AC but with 100 crores limit it was totally unreachable for a medium class entrepreneurs. Hopefully now corporates will take advantage of it)
8) Amendment of Section 35AD: Following amendments
made in the draconian 35AD
(i) Investment linked deduction extended to two new sectors, namely, slurry pipelines for the transportation of iron ore, and semi-conductor wafer fabrication manufacturing
(i) Investment linked deduction extended to two new sectors, namely, slurry pipelines for the transportation of iron ore, and semi-conductor wafer fabrication manufacturing
units.
9) Amendment of Section 37: A very cruel amendment brought in this section by DISALLOWING the expenses incurred by assessee on the activities relating to corporate social responsibility referred to in section 135 of the Companies Act, 2013.
(This clause applies to company only as companies act referred. But on a serious end it is still questionable that what government wants. By introducing companies act 2013 they mandates the condition to do specified percentage of expenses on CSR activities & on other end disallowing all those expenditure. It was never expected from Modi’s Govt.)
10) Amendment of Section 40(a)(i): This amendment was expected from many years but finally FM does it. FM replaces reference of Section 200 with section 139 & provided huge relief.
Old: If TDS is not deducted or deducted but not deposited on NRI interest income & other income before 30th April of assessment year (as per Section 200) than this expense gets disallowed to assessee.
New: Now this 30th april is aligned with all other sub clauses by replacing reference with Sec-139. Now If assessee deposit TDS before due date of filing of return u/s 139 than also this expense will allow to assessee.
(Aligned with 40(a)(ia))
10) Amendment of Section 40(a)(ia): Another one of the relaxing amendment for assesses who were lazy in deducting TDS.
Old: Whole expense disallowed if you have not deducted TDS on interest, commission or brokerage, rent, royalty, fees for technical service.
New: From now onwards only 30% of expense will be disallowed. But one more thing to be noted here, now all expenses are covered to disallow on which TDS is deductible under chapter XVII-B . Interest, commission, etc words are deleted from section now.
11) Amendment of Section 44AE: Finally tax is increased on assesses carrying business of plying, hiring or leasing goods carriages. Presumptive Income limits are increased now from Rs.5000 to Rs.7500 in case of heavy vehicles.
12) Amendment of Section 45(5):
Old: Enhanced Compensation on compulsory acquisition by order of court/tribunal was taxable in the year which such amount is received by assessee.
New: Now it is provided that if any compensation received due to interim order of court/tribunal than it would be taxable in the year in which final order would pass.
13) Amendment of Section 47: Following items will not be treated as TRANSFER for the purpose of capital gains hence no capital gain tax will be levied on that:
(i) any transfer of a capital asset, being a Government Security carrying a periodic payment of interest, made outside India through an intermediary dealing in settlement of securities, by a non-resident to another non-resident
(ii) any transfer of a capital asset, being share of a special purpose vehicle to a business trust in exchange of units allotted by that trust to the transferor.
14) Amendment of Section 51 (Advance money received):
Old: Advance money received & forfeited was reduced from cost of assets for calculation of capital gains.
New: Now It would not reduced from cost if in the year it is received shown taxable income under section 56.
(It will provide a little benefit of indexation to assessee as there cost of indexation will rise while calculating LTCG/STCG on sale of Property)
15) Amendment of Section 54 & 54F (Profit on sale of property used for residence):
Old: constructed, a residential house
New: constructed, one residential house in India
(That means now scope of 54 is narrowed by inserting India word to section)
16) Insertion of Proviso to Section 54EC (Capital gain not to be charged on investment to certain bonds) : Exemption under section 54EC for investment in long-term specified asset, out of capital gains arising from transfer of one or more original assets, to be restricted to Rs.50 lacs, whether such investment is made in the same financial year or in the next financial year or partly in the same financial year and partly in the next financial year .
9) Amendment of Section 37: A very cruel amendment brought in this section by DISALLOWING the expenses incurred by assessee on the activities relating to corporate social responsibility referred to in section 135 of the Companies Act, 2013.
(This clause applies to company only as companies act referred. But on a serious end it is still questionable that what government wants. By introducing companies act 2013 they mandates the condition to do specified percentage of expenses on CSR activities & on other end disallowing all those expenditure. It was never expected from Modi’s Govt.)
10) Amendment of Section 40(a)(i): This amendment was expected from many years but finally FM does it. FM replaces reference of Section 200 with section 139 & provided huge relief.
Old: If TDS is not deducted or deducted but not deposited on NRI interest income & other income before 30th April of assessment year (as per Section 200) than this expense gets disallowed to assessee.
New: Now this 30th april is aligned with all other sub clauses by replacing reference with Sec-139. Now If assessee deposit TDS before due date of filing of return u/s 139 than also this expense will allow to assessee.
(Aligned with 40(a)(ia))
10) Amendment of Section 40(a)(ia): Another one of the relaxing amendment for assesses who were lazy in deducting TDS.
Old: Whole expense disallowed if you have not deducted TDS on interest, commission or brokerage, rent, royalty, fees for technical service.
New: From now onwards only 30% of expense will be disallowed. But one more thing to be noted here, now all expenses are covered to disallow on which TDS is deductible under chapter XVII-B . Interest, commission, etc words are deleted from section now.
11) Amendment of Section 44AE: Finally tax is increased on assesses carrying business of plying, hiring or leasing goods carriages. Presumptive Income limits are increased now from Rs.5000 to Rs.7500 in case of heavy vehicles.
12) Amendment of Section 45(5):
Old: Enhanced Compensation on compulsory acquisition by order of court/tribunal was taxable in the year which such amount is received by assessee.
New: Now it is provided that if any compensation received due to interim order of court/tribunal than it would be taxable in the year in which final order would pass.
13) Amendment of Section 47: Following items will not be treated as TRANSFER for the purpose of capital gains hence no capital gain tax will be levied on that:
(i) any transfer of a capital asset, being a Government Security carrying a periodic payment of interest, made outside India through an intermediary dealing in settlement of securities, by a non-resident to another non-resident
(ii) any transfer of a capital asset, being share of a special purpose vehicle to a business trust in exchange of units allotted by that trust to the transferor.
14) Amendment of Section 51 (Advance money received):
Old: Advance money received & forfeited was reduced from cost of assets for calculation of capital gains.
New: Now It would not reduced from cost if in the year it is received shown taxable income under section 56.
(It will provide a little benefit of indexation to assessee as there cost of indexation will rise while calculating LTCG/STCG on sale of Property)
15) Amendment of Section 54 & 54F (Profit on sale of property used for residence):
Old: constructed, a residential house
New: constructed, one residential house in India
(That means now scope of 54 is narrowed by inserting India word to section)
16) Insertion of Proviso to Section 54EC (Capital gain not to be charged on investment to certain bonds) : Exemption under section 54EC for investment in long-term specified asset, out of capital gains arising from transfer of one or more original assets, to be restricted to Rs.50 lacs, whether such investment is made in the same financial year or in the next financial year or partly in the same financial year and partly in the next financial year .
17) Amendment
of Section 56: Now another income brings into premises to tax under section 56
i.e.
any sum of money received as an advance or otherwise in the course of negotiations for transfer of a capital asset, if
any sum of money received as an advance or otherwise in the course of negotiations for transfer of a capital asset, if
(a) such sum is forfeited; and
(b) the negotiations do not result in transfer
of such capital asset.
18) Amendment of Section 80(IA): 10 year tax holiday extended to the undertakings which begin generation, distribution and transmission of power by 31.03.2017.
19) Numerous amendments made in Section 92B, 92CC, 111A not relevant to discuss here.
(i) Introduction of a “Roll Back” provision in the Advanced Pricing Agreement (APA) scheme so that an APA entered into for future transactions is also applicable to international transactions undertaken in previous four years in specified circumstances.
(ii)Introduction of range concept for determination of arm’s length price in transfer pricing regulations. (iii) To allow use of multiple year data for comparability analysis under transfer pricing regulations.
20) Income
arising to foreign portfolio investors from transaction in securities to be
treated
as capital
gains. Further provisions of AMT to be attracted to assessees claiming investment linked tax deduction under section 35AD.
21) Section 115BBD:
Concessional rate of 15 percent on foreign dividends without any sunset date to
be continued.
22) Numerous amendments in Section 115JC, 115JEE, 115O, 115R, 115TA made not relevant to discuss here. Income and dividend distribution tax to be levied on gross amount instead of amount paid net of taxes.
(It is but obvious that Gross amount is always more than Nett amount hence it would increases tax revenues to government & burden to companies)
23) Insertion of New Chapter XII-FA “SPECIAL PROVISIONS RELATING TO BUSINESS TRUSTS”.
24) Amendment in Section 133A: Power of survey by IT authorities are broaden this year. Now they can do survey for the purpose of verifying that tax has been deducted or collected at source in accordance with the provisions under sub-heading B of Chapter XVII or under sub-heading BB of Chapter XVII. Another secondary amendment made is that now they can impound books for 15 days instead of 10 days without approval.
25) Insertion of Section 133C: Although they have powers under 142 & 133B still they have now inserted 133C to take power to issue notice to person for the purposes of verification of information in its possession relating to any person, issue a notice to such person requiring him, on or before a
date to be
specified therein, to furnish information or documents for the purpose of acts.
26) Misc. amendments in 139(4C) & 140 not relevant.
26) Misc. amendments in 139(4C) & 140 not relevant.
The eligible date of borrowing in foreign currency extended
from 30.06.2015 to
30.06.2017
for a concessional tax rate of 5 percent on interest payments. Tax incentive
extended to
all types of bonds instead of only infrastructure bonds.
27) Substitution of new section for section
142A
For section 142A of the Income-tax Act, the following section shall be substituted with effect
For section 142A of the Income-tax Act, the following section shall be substituted with effect
from the 1st day of October, 2014, namely:––
‘142A. (1) The Assessing Officer may, for
the purposes of assessment or reassessment, make a
reference to a Valuation Officer to estimate
the value, including fair market value, of any asset,
property or investment and submit a copy of
report to him.
(2) The Assessing Officer may make a
reference to the Valuation Officer under sub-section (1)
whether or not he is satisfied about the
correctness or completeness of the accounts of the assessee.
(3) The Valuation Officer, on a reference
made under sub-section (1), shall, for the purpose of
estimating the value of the asset, property
or investment, have all the powers that he has under
section 38A of the Wealth-tax Act, 1957.
(4) The Valuation Officer shall, estimate
the value of the asset, property or investment after
taking into account such evidence as the
assessee may produce and any other evidence in his
possession gathered, after giving an
opportunity of being heard to the assessee.
(5) The Valuation Officer may estimate the
value of the asset, property or investment to the best
of his judgment, if the assessee does not
co-operate or comply with his directions.
(6) The Valuation Officer shall send a copy
of the report of the estimate made under sub-section
(4) or sub-section (5), as the case may be,
to the Assessing Officer and the assessee, within a
period of six months from the end of the
month in which a reference is made under sub-section (1).
(7) The Assessing Officer may, on receipt of
the report from the Valuation Officer, and after giving
the assessee an opportunity of being heard,
take into account such report in making the assessment
or reassessment.
28) Amendment in section 112:
To remove tax arbitrage, rate of tax on long term capital gains increased from
10 percent to 20 percent on transfer of units of Mutual Funds, other than
equity oriented funds. For MF Units LTCG , provision of paying tax @10% without indexation now withdrawn. ALL MF LTCG now taxable @20% after indexation.
29) Insertion of Section 194DA: TDS on Payment in respect
of life insurance policy other than sum exempt under Section 10(10D) @ 2%
exceeding Rs.100000.
30) Insertion of Section 194LBA: Certain income from units of a business trust @ 10%.
31) Some amendments also made in Section 285BA annual information return not relevant to discuss here.
30) Insertion of Section 194LBA: Certain income from units of a business trust @ 10%.
31) Some amendments also made in Section 285BA annual information return not relevant to discuss here.
INDIRECT TAXES PROPOSALS
Service Tax
Service Tax
1). To broaden the tax base in Service Tax, sale of space or
time for advertisements in broadcast media, extended to cover such sales on other segments like online and mobile
advertising. Sale of space for advertisements in print media however would remain
excluded from service tax. Now, print media is also being defined to exclude business directories, yellow pages and trade catalogues which are primarily meant for commercial purposes. Service provided by radio-taxis brought under
service tax however abatement of 60% is provided.
(Govt. brings new services in regime of tax to increase revenue it will increase inflation indirectly.)
(Govt. brings new services in regime of tax to increase revenue it will increase inflation indirectly.)
2). Services by
air-conditioned contract carriages (60% abatement) and technical testing of newly developed drugs
on human participants brought under service tax.
(Both services are withdrawn from exemption notification now. First they hikes railway fare by 14% & now levied Service tax @ 4.944% on AC Buses which would hikes fares by buses also.)
(Both services are withdrawn from exemption notification now. First they hikes railway fare by 14% & now levied Service tax @ 4.944% on AC Buses which would hikes fares by buses also.)
3) Provision of services rules to be amended and tax incidence
to be reduced on transport of goods through coastal vessels to promote Indian
Shipping industry.
4) Services provided by
Indian tour operators to foreign tourists in relation to a tour wholly
conducted outside India to be taken out of the tax net and Cenvat credit for services
of rent-a-cab and tour operators to be allowed to promote tourism.
5) Service tax exempted on loading, unloading, storage,
warehousing and Transportation of cotton, whether ginned or baled. (by rail/vessel/GTA)
6) Services provided by the Employees’ State Insurance
Corporation for the period prior to 1st July 2012 exempted, from service tax.
7) Exemption available for specified micro insurance schemes
expanded to cover all life micro-insurance schemes where the sum assured does
not exceed Rs. 50, 000 per life insured.
8) Exemption to services by way of loading, unloading, packing, storage or warehousing of rice, cotton, ginned or baled.
9) Exemption to services provided by a tour operator to a foreign tourist in relation to a tour conducted wholly outside India.
10) Exemption to services provided to an educational institution by way of auxiliary education services and renting of immovable property services has been rationalized. Earlier "auxiliary services" was not defined, but now it is defined & cover only
-transportation of students, faculty and staff
-catering service including any mid-day meals scheme sponsored by the Government
-security or cleaning or house-keeping services in such educational institutions;
-services relating to admission to such institution or conduct of examination.
(By inserting this definition government indirectly brings Renting of Immovable property to educational institute in to service tax regime, earlier it was not taxable)
11)Exemption available to accommodation services provided by hotels, dharamshalas or ashrams when they provide rooms for less than Rs.1,000 per day, re-worded to bring out the intent clearly
19) As per the first proviso to Rule 7 of POT Rules, 2011, for reverse charge services, if payment is not made within a period of 6 months of the date of invoice, POT will be governed by Default Rule 3 of POT Rules, 2011. However, first Proviso to rule 7 of the Point of Taxation Rules (POTR) is being
amended to provide that point of taxation in respect of reverse charge will 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. This amendment will apply only to invoices issued after 1st October, 2014.
Customs
8) Exemption to services by way of loading, unloading, packing, storage or warehousing of rice, cotton, ginned or baled.
9) Exemption to services provided by a tour operator to a foreign tourist in relation to a tour conducted wholly outside India.
10) Exemption to services provided to an educational institution by way of auxiliary education services and renting of immovable property services has been rationalized. Earlier "auxiliary services" was not defined, but now it is defined & cover only
-transportation of students, faculty and staff
-catering service including any mid-day meals scheme sponsored by the Government
-security or cleaning or house-keeping services in such educational institutions;
-services relating to admission to such institution or conduct of examination.
(By inserting this definition government indirectly brings Renting of Immovable property to educational institute in to service tax regime, earlier it was not taxable)
11)Exemption available to accommodation services provided by hotels, dharamshalas or ashrams when they provide rooms for less than Rs.1,000 per day, re-worded to bring out the intent clearly
12) For greater clarity, the exemption in respect of services provided to Government or local authority or governmental authority made more specific. Services by way of water supply, public health, sanitation conservancy, solid waste management or slum improvement and up-gradation continue to remain exempted but exemption not be extendable to other services such as consultancy, designing, etc., not directly connected with these specified services.
13) With effect from 01.10.2014, CENVAT credit of input service of renting of a motor cab is allowed if such services are received from a person engaged in the similar line of 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 allowedwith 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.
14) With effect from 01.10.2014, abatement in respect of transport of goods by vessel is increased from 40% to 50%.
15) “Resident private limited company” has been notified as class of persons under section 96A(b)(iii) of the Finance Act, 1994 who can make application for advance ruling
16) With effect from 01.10.2014, in 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 will be 50% each.
17) With effect from 01.10.2014, in rule 2A of the Service Tax (Determination of Value) Rules, 2006, category ‘B’ and ‘C’ of works contracts to be merged into one single category, with service portion as 70%. Existing valuation of 60% on Repair & maint. contracts of immovable property now ceased & will be valued at 70% from 1st October.
18) New Interest rates on service tax
Extent of Delay Proposed Rate Existing Rate
- upto 6 months 18% 18%
13) With effect from 01.10.2014, CENVAT credit of input service of renting of a motor cab is allowed if such services are received from a person engaged in the similar line of 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 allowedwith 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.
14) With effect from 01.10.2014, abatement in respect of transport of goods by vessel is increased from 40% to 50%.
15) “Resident private limited company” has been notified as class of persons under section 96A(b)(iii) of the Finance Act, 1994 who can make application for advance ruling
16) With effect from 01.10.2014, in 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 will be 50% each.
17) With effect from 01.10.2014, in rule 2A of the Service Tax (Determination of Value) Rules, 2006, category ‘B’ and ‘C’ of works contracts to be merged into one single category, with service portion as 70%. Existing valuation of 60% on Repair & maint. contracts of immovable property now ceased & will be valued at 70% from 1st October.
18) New Interest rates on service tax
Extent of Delay Proposed Rate Existing Rate
- upto 6 months 18% 18%
- 6months-1year 18% for first 6months
24% for next 18%
24% for next 18%
- more than 1 year same above but after 1 year 30% 18%
19) As per the first proviso to Rule 7 of POT Rules, 2011, for reverse charge services, if payment is not made within a period of 6 months of the date of invoice, POT will be governed by Default Rule 3 of POT Rules, 2011. However, first Proviso to rule 7 of the Point of Taxation Rules (POTR) is being
amended to provide that point of taxation in respect of reverse charge will 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. This amendment will apply only to invoices issued after 1st October, 2014.
Customs
1) 24X7 customs clearance facility extended to 13 more airports
in respect of all export goods and to 14 more sea ports in respect of specified
import and export goods to facilitate cargo clearance.
2) ‘Indian Customs Single Window Project’ to facilitate trade,
to be implemented.
3) The scheme of Advance Ruling in indirect taxes to be expanded to cover resident private limited companies. The scope of Settlement Commission to be enlarged to facilitate quick dispute resolution.
4) Customs and Central Excise Acts to be amended to expedite
the process of disposal of appeals
5) For Safe disposal of medical & clinical wastes, services
provided by common biomedical waste treatment facilities exempted.
6) Raise the Free Baggage allowance from Rs.35000 to Rs.45000. Reduce the duty free allowance of cigarettes from 200 to 100, of cigars from 50 to 25 and of tobacco from 250 gm to 125 gm.
6) Raise the Free Baggage allowance from Rs.35000 to Rs.45000. Reduce the duty free allowance of cigarettes from 200 to 100, of cigars from 50 to 25 and of tobacco from 250 gm to 125 gm.
Excise
1) To boost domestic manufacture and to address the issue of
inverted duties, basic customs duty (BCD) reduced on certain items.
2) To encourage new investment and capacity addition in the
chemicals and petrochemicals sector, basic customs duty reduced on certain
items.
3) Steps taken to boost domestic production of electronic items
and reduce our dependence on imports. These include imposition of basic customs
duty on certain items falling outside the purview of IT Agreement, exemption
from SAD on inputs/components for PC manufacturing, imposition of education
cess on imported electronic products for parity etc.
4) Colour picture tubes exempted from basic customs duty to
make cathode ray TVs cheaper and more affordable to weaker
sections.
5) To develop renewable energy, various items exempted
from excise duty.
6) Exemption to PSF and PFY manufactured from plastic waste and
scrap including PET bottles from excise duty with effect from 29th June, 2010
to 7th May, 2012.
7) Prospective levy of a nominal duty of 2 percent without
Cenvat benefit and 6 percent with Cenvat benefit on such PSF and PFY.
8) Concessional excise duty of 2 percent without Cenvat benefit
and 6 percent with Cenvat benefit on sports gloves.
9) Specific rates of excise duty increased on cigrettes in the
range of 11 per
cent to 72 per cent.
10) Excise duty increased from 12 percent to 16 percent on pan
masala, from 50 percent to 55 percent on unmanufactured tobacco and from 60
percent to 70 percent on gutkha and chewing tobacco.
11) Levy of an additional duty of excise at 5 percent on aerated waters
containing added sugar.
12) To finance Clean Environment initiatives, Clean Energy Cess
increased from Rs..50 per tonne to Rs..100 per tonne.
Thanks
Thanks
Animesh
Singi
(CA Final Student)
Indore
90985-89691
(CA Final Student)
Indore
90985-89691
animeshsingi@gmail.com
a good analytical and helping presentation......
ReplyDeleteThanks Brother :)
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