INDIRECT TAXES:
EXCISE, SERVICE TAX & OTHERS
KRISHI KALYAN CESS (KKC) New cess proposed @0.50% wef 01.06.2016. This shall be levied & collected as service tax on all or any taxable services on the value of such services. Proceeds to be used for financing & promoting initiatives to improve agriculture or for any other purpose relating thereto.
INFRASTRUCTURE CESS: New excise duty introduced to be levied on goods specified in the Eleventh Schedule, being goods manufactured or produced.
Proposed Rates are:
• 1.0% on Petrol, LPG & CNG
• 2.5% on Diesel Cars
• 4.0% on higher capacity vehicles(SUV’S)
CLEAN ENVIRONMENT CESS: Name of “Clean Energy Cess” changed to “Clean Environment Cess”.
• Rates of Clean Environment Cess increased to Rs. 400/- per tonne on Coal, lignite & peat.
• Excise Duty on various tobacco products (except Beedi) raised from 10% to 15%.
• Excise Duty on Aerated Beverages (such as Waters, including mineral waters and aerated waters, containing added sugar or other sweetening matter or flavoured) raised from 18% to 21%.
• Dialysis Equipment’s to be exempt from Excise Duty/CVD.
• 2% Excise Duty on Readymade Garments exceeding Rs .1,000/-
• Excise Duty of 1% (without CENVAT Credit) or 12.50% (with CENVAT Credit) on artificial jewelry subject to threshold limits.
• Exemption from Excise Duty from Ready Mix Concrete manufactured at the site of construction work at such site.
• Excise Duty on Electric motor, shafts, sleeve, chamber, impeller, washer required for the manufacture of centrifugal pump reduced from 12.50% to 6.00%.
• New Option to pay Excise Duty at 4% (Without CENVAT Credit) on Routers, broadband Modems, Set-top boxes for gaining access to internet, set top boxes for TV, digital video recorder (DVR) / network video recorder (NVR), CCTV, camera / IP camera, lithium ion battery [other than those for mobile handsets] or else pay 12.50% (with CENVAT Credit).
Reduce the number of Excise Returns from 27 to 13 i.e 1 annual & 12 monthly Returns (e-file). Annual Return also to be filed by Service Tax Assessee.
• In case of finalization of provisional assessment, the interest will be chargeable from the original date of payment of duty.
• Basic custom and excise duty on refrigerated containers reduced from 6% to 5%.
• Instructions are being issued to Chief Commissioners of Central Excise to file application to Courts to withdraw prosecution in cases involving duty of less than Rs. five lakh and pending for more than fifteen years.
SERVICE TAX
• Wef 01.04.2016 Withdrawal of Exemption on 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.
• Wef 01.04.2016 Withdrawal of Exemption on service of transport of passengers, with or without accompanied belongings, by ropeway, cable car or aerial tramway.
• Removal of list entry that covers ‘service of transportation of passengers, with or without accompanied belongings, by a stage carriage’ is being omitted with effect from 1st June, 2016.
• New Exemption by way of construction etc in certain low cost housing project wef 01.03.2016.
• Exemption for service of life insurance business by way of annuity under NPS regulated by PFRDA.
• Exemption to Services provided by EPFO to employees, IRDA, SEBI, BIRAC, General Insurance business to ‘NIRAMAYA’ Health Insurance Scheme etc.
• The threshold exemption to services provided by a performing artist in folk or classical art forms of music, dance or theatre is being enhanced from Rs 1 lakh to Rs 1.5 lakh charged per event with effect from 1st April, 2016.
• The benefit of quarterly payment of Service Tax is being extended to ‘One Person Company’ (OPC) and HUF with effect from 1st April, 2016.
• The facility of payment of Service Tax on receipt basis is being extended to ‘One Person Company’ (OPC) with effect from 1st April, 2016.
• Sub-Brokers of Mutual Funds can avail small scale exemption of threshold turnover of Rs. 10 Lakh p.a.
• Interest Rates for delay in payments made rationalized & made uniform at 15%. So, in case of assesse whose value of service is less than 60lakh, rate of interest will be 12%.
• Indirect Tax Dispute Resolution Scheme, 2016 wherein a scheme in respect of cases pending before Commissioner (Appeals), the assessee, after paying the duty, interest and penalty equivalent to 25% of duty, can file a declaration, is being introduced. In such cases the proceedings against the assessee will be closed and he will also get immunity from prosecution.
• Notification No. 27/2012 – C.E. (N.T.) dated 18.06.2012 is being amended with effect from 1st March, 2016 so as to provide that time limit for filing application for refund of CENVAT Credit under Rule 5 of the CENVAT Credit Rules, 2004, in case of export of services, is 1 year from the date of :
(a) receipt of payment in convertible foreign exchange, where provision of service has been completed prior to receipt of such payment; or
(b) issue of invoice, where payment, for the service has been received in advance prior to the date of issue of the invoice.
• Clause 11 of Section 65B omitted. Definition of “Approved Vocational Courses.”
• Clause 44 of Section 65B: definition of Lottery Distributor added.
• Pre-School education omitted from negative list. Clause (l) of section 66D. However, the exemption shall continue by way of exemption notification No. 25/2012 – ST.
• Section 73 of the Finance Act, 1994 is being amended so as to increase the limitation period from 18 months to 30 months for short levy/non levy/short payment/non-payment/erroneous refund of Service Tax.
• Exemption of service tax on services provided to DDUGKY and services provided by ministry of skill development and entreneurship.
• Threshold limit for Imprisonment provisions for non payment of service tax raised from 50 lacs to 200 lacs. Section 89
• New sections 101, 102 & 103 introduced.
DIRECT TAXES
• Amnesty Scheme for Tax Defaulters: Limited period compliance window for domestic taxpayers to declare past transgressions at total 45% tax (30% tax + 7.50% Surcharge + 7.50% penalty). Surcharge on this would be known as Krishi Kalyan Cess. This scheme will be called INCOME DECLARATION SCHEME’2016.
• EQUILISATION LEVY: With Holding Tax leviable @ 6% on consideration received or receivable by a non resident without permanent establishment in India for any specified services which includes online Advertisement, provision for digital advertising etc subject to other conditions.
• No change in Slab Rate but Surcharge on income tax for those with incomes exceeding Rs 1 crore per annum raised from 12% to 15%.
• Rebate U/s 87A increased from Rs. 2,000/- to 5,000/- where income is less than Rs . 5lacs.
Section 80GG: Rent deduction limit raised from Rs 24,000/- to 60,000/-.
• PoEM (Place of Effective Management) to be deferred by 1 year.
• No deferral of GAAR, to kick in from April 2017.
• Entire scheme of penalty revisited. Different penalty rate for different classes of mis-demeanors. Minimum penalty rate brought down to 50%.
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