1. Indian Tax Overview Date: 25-06-2009

2. 2 Agenda  Excise Duty  Types of Excise Duty  Excise Invoice Requirements  CENVAT credit  Personal Ledger Account  Excise Registers  Excise Monthly Return  Excise Annual Return  Additional Info on Excise  Sales Tax  Service Tax  Withholding Tax

3. 3 Excise Duty Excise duty is a tax on the manufacture of goods that is levied when goods leave the place of manufacture Material is Excisable if  Manufactured in India  Tangible  Listed in Central Excise Tariff act Liability arises when material leaves manufacturing plant Manufacturers can set off the duty paid on input materials against their output duty, a procedure known as central value-added tax (CENVAT)

4. 4 Types of excise duty Types of dutyTax Rate Basic Excise Duty (BED) 8% on Total assessable amount based on chapter id of material First Schedule of Excise tariff act, 1985 Special Excise Duty (SED) Not applicable for SLL products Second Schedule of Excise Tariff act 1985 (Selected Goods) National Calamity Contingency Duty (NCCD) Not applicable for SLL products Seventh schedule of Excise Tariff act 1985 (Selected Goods) Education Cess 2% on total of BED, SED and NCCD Finance Bill 2004 Secondary Education Cess1% on total of BED, SED and NCCD

5. 5 Excise Invoice Requirements  Excise goods cannot be moved from the factory without invoice  Invoice should be serially numbered  Invoice should be prepared in triplicate  Original for buyer  Duplicate for transporter  Triplicate for assessee  Original of the cancelled invoice must be sent to excise department

6. 6 CENVAT credit  CENVAT minimizes cascading effect  Credit for input excise paid can be taken on the receipt of materials in the plant (Rule 4 of CENVAT credit rule, 2004)  CounterVailing Duty on Customs for import items are included for CENVAT credit  For capital goods purchase, 50% of duty paid can be taken as credit in that financial year  Balance credit can be taken in subsequent financial years.  When scraping capital goods, excise on transaction value of such waste should be paid  When inputs and capital goods are removed as such, then CENVAT credit availed has to be paid back

7. 7 Personal Ledger Account - PLA  Excise has to be paid from PLA by the 6 th day of the following month for e-payment. (Rule 8)  5 th day of the following month in any other case  Education CESS and Secondary CESS are paid along with Excise from PLA  Deposits to PLA are made through TR6 challan.  PLA account balance should be sufficient to cover excise due on the goods intended to be shipped at any time.  4 copies of TR6 challan should be submitted to bank

8. 8 Excise Registers  Rule 10 of central Excise Rule 2002 requires us to maintain daily stock account in registers indicating:  Description of goods manufactured  Opening balance  Quantity manufactured  Inventory  Quantity removed  Assessable Value  Duty payable  Duty payment details

9. 9 Excise Registers contd. RegisterPurpose RG23A Part IQuantity details of excisable materials RG23A Part IIValue details of excisable materials RG23C Part IQuantity details of Capital goods RG23C Part IIValue details of Capital goods RG23DDetail of Depot Sales RG1Goods movement details of finished goods from Factory to Stores

10. 10 Excise – Monthly return  Monthly return should be made within 10 days from the end of the month in ER 1 form. (Rule12)  The return should have:  Month of return  Quantity removed with or without duty  Value  Rate of duty  Payment through PLA  CENVAT credit details

11. 11 Excise - Annual Return  Annual financial Information Statement shall be filed every year by the 30 th day of November  Form ER 4  The return provides the following details:  Details of expenditure  Value and quantity of each major raw material consumed in manufacture  Details of goods manufactured through job workers  Details of income  Details of job work undertaken by the assessee  CENVAT credit details

12. 12 Additional info on Excise  The law of central excise involves:  Central Excise Act, 1944 – Defines the scopes and ambit of levy of excise duty  Central Excise Rule 2002 –Procedures for various transactions such as removal, registration, payment of duty, records etc  The central excise tariff Act, 1985 – List of commodities, which are subject to excise duty  CENVAT credit rules, 2004 – Provisions relating to duty credit.  Notification/Circulars/Trade notice issued by Central Board of Excise and Customs

13. 13 Sales Tax  This is a tax levied on the sale of a product  It is applied on the gross price of goods, inclusive of excise duty  There are two types of sales tax  Interstate sales tax (CST)  is levied on all interstate sale (goods move from one state to another)  2 % with C form  Local rate without C form  Local sales tax (VAT)  VAT liability is calculated by deducting input tax credit from tax collected on sales during the payment period  Form I has to be filed before 12 th or 20 th of succeeding month.  12.5 % or 4% based on commodity code

14. 14 Service Tax  Service tax is levied on specified taxable services like telecommunication, technical assistance, etc  For services are provided by a foreign company, service tax is liability of recipient  Service tax shall be paid to the credit of central government:-  by the 6th day of the month, if the duty is deposited electronically through internet banking  by the 5th day of the month, in any other case  Service tax shall be deposit by using TR-6 form  Half yearly return in triplicate form ST-3 and along with TR6 challan

15. 15 Withholding Tax  The liability for tax arises at the time of payment or invoice verification, whichever is earlier  Tax shall be deducted at the rate provided in sec -192 to 196D  Surcharge @10% shall be deducted in the following cases:-  If the payee is being a firm or a company and the income paid exceeds Rs.1 Crore  If payee being individual, HUF, AOP or BOI and the income paid exceeds Rs. 10 lakhs  Education cess and Secondary Education cess shall be deducted @ 2% and 1% respectively on tax amount  TDS certificate for salary shall be issued in form – 16  TDS certificate for incomes other than salary shall be issued in form -16A  Filing of quarterly statement

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