CENTRAL EXCISE, CUSTOMS, & SERVICE TAX PROPOSALS

BUDGET THEME  Move towards GST - ST rate increase, removing exemptions to sync with State VAT levy.  Improve Ease of doing business  Remove ambiguity by changes in law & clarifications  Boost to domestic manufacturing by reducing tax burden 2

CENTRAL EXCISE & CUSTOMS CHANGES  Central Excise duty rate increased from 12.36% to 12.5% with abolition of education cesses.  Issue of balance credit of Education Cess as on 1 st March under consideration of Govt.  Reduction of Customs duty on raw-materials, intermediate and components (22 items) to promote domestic manufacturing and minimise duty inversion on items used by polymers, Telecom, IT and Power Sector. 3

CENTRAL EXCISE & CUSTOMS CHANGES  Reduction in SAD to minimise CENVAT Credit accumulation and liquidity issues. IT Sector items, Polymers, metals and LED light goods benefited.  Tablet Computers and their parts manufacturing given boost by reduction of import duties  Excise duty increased on Cigarettes by %. Excise duty structure on Pan Masala and Gutka also modified.  Clean Energy Cess increased from Rs 100 to 200 per MT to fund Swatcha Bharat Mission 4

EASE OF DOING BUSINESS.  On-line Central Excise & Service Tax registration within 2 working days.  Tax payers allowed to use digitally signed invoices.  Time limit for taking CENVAT Credit increased from 6 months to 1 year from date of invoice.  Facility of direct dispatch of goods to the customer of a dealer or job worker of manufacturer allowed.  Time limit for return of capital goods from job worker increased from 6 months to 2 years. 5

EASE OF DOING BUSINESS.  Clarification also issued for garnishing provision and providing instalments for recovery of arrears.  Withdrawal of prosecution cases permitted if the adjudication proceedings are dropped on merit.  Exporters allowed credit of services used between factory and port – clarification  Advance ruling facility extended to Indian firms also.  Valuation provisions amended to add reimbursement 6

MODIFIED PENAL PROVISIONS - Encouraging Voluntary Compliance (All 3 taxes)  Non-suppression cases  can be closed on payment of Tax and interest, if paid within 30 days of issue of SCN  25% of penalty if paid within 30 days of OIO  Max Penalty 10% of Tax amt  SUPPRESSION Cases  Only 15% penalty, if tax and interest is paid within 30 days of SCN.  Only 25% penalty if tax n interest is paid within 30 days of issue of order.  For existing cases also benefit available after enactment of Finance Bill 7

 Service Tax rate increased from 12.36% to 14%. Levy of Swatch Bharat Cess at the rate of 2%.  New Levy on Tickets of amusement park, Theme Park, Waterparks etc.  New levy on entry ticket to concerts, award functions, non-recognised sport events if the ticket charge is more than Rs.500/-. However, Cinema, Circus, dance, drama tickets remain exempted. 8 SERVICE TAX CHANGES

 Service Tax on contract manufacturing/job work for alcoholic liquor liable to Service Tax.  Services provided by Govt. or local authority to business entities charged Service Tax  Construction/repair services provided to Govt. would be taxable except like canals, dam, irrigation, water supply. (wef 1/4/15)  Construction of Airport and port also made taxable. 9 SERVICE TAX CHANGES

 Services provided by Mutual fund or Lottery agents or chit fund selling agent made taxable on reverse charge basis.  Services provided by the Banks on behalf of RBI or similar services also taxable.  In case of foreign aggregator model (like UBER taxi) the aggregator is liable to pay tax in India.  For transport of goods by Road and vessel uniform abatement of 30% allowed. 10 SERVICE TAX CHANGES

 In the case of executive air travel abatement reduced from 60% to 40%.  Partial reverse charge on manpower supply and security services made to full reverse charges.  CENVAT Credit allowed under partial reverse charge without linking it to the payment to service provider.  Section 73 being amended to provide that if the short payment has been declared, for recovery purpose no need to issue any SCN. 11 SERVICE TAX CHANGES

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