1. BUDGET - 2016 - an overview BUDGET - 2016 - an overview swamy associates 1

2. C E N T R A L E X C I S E

3. T A X O N J E W E L L E R Y 1 % ED on all articles of jewellery without Cenvat Credit. Simplified and centralised registration. SSI exemption of Rs.6 crores (for 3/2016 - Rs.50 lakhs), subject to previous year turnover < Rs.12Cr. 3

4. T A X O N G A R M E N T S 12.5 % ED with Cenvat Credit or 2 % ED without Cenvat Credit. On 60% of RSP. On branded readymade garments having a RSP of Rs.1000 or above. SSI Exemption for March 2016 upto Rs. 12.50 lakhs. 4

5. I N F R A C E S S 4 % on BIG cars. 1 % on small petrol cars ( <1200 cc & 4000mm). 2.5 % on small diesel cars ( < 1500 cc & 4000mm). Ambulance and Taxi exempted. To be paid in cash. Applicable only for cars manufactured on or after 1.3.16. 5

6. MISCELLANEA Interest for provisional assessment – clarified. ER4, ER5, ER 6 & ER 7 to be unified. Facility to file revised return introduced. Refund under Rule 5 of CCR, 2004. - Relevant date for service exporters – Date of realisation of export proceeds. Single Registration for inter linked manufacturing units within the same Range jurisdiction. 6

7. MISCELLANEA RMC given a reprieve. ( L&T decision undone). “Accessories” of automobile also under 4 A levy. 2% duty on parts and components of mobile phones. Demand under normal period raised to 2 years from 1 year. Indirect Tax Dispute Resolution Scheme 2016 - Pending appeals before Commissioner. (Appeals) can be closed by paying full duty / tax, interest and 25 % of the penalties. Interest rates reduced to 15 % from 18% 7

8. C E N V A T C R E D I T

9. IMPORTANT CHANGES Office equipments and appliances eligible for credit. All capital goods having value of below Rs.10,000 would be inputs. Credit for services in instalments on long time assignment of rights. Rule 6 goes for a revamp - 6 % / 7 % subject to maximum of “available credit”. - Option of proportionate reversal for banking companies. - Rigour to apply only on common credit. 9

10. IMPORTANT CHANGES Non - service is exempted service – effect on works contracts. Input Service Distribution - Revamped to include outsourced units also. Wrong credit taken but not utilised – method of computation made easy. 10

11. S E R V I C E T A X

12. CONSTRUCTION Exemptions withdrawn on 01.03.2015, w.e.f. 01.04.2015 restored retrospectively from 01.04.2015 to 29.02.2016 (vide Finance Bill) and from 01.03.2016 to 31. 03.2010 (Vide S.NO. 12 A to Notification 25/2012) for contracts entered prior to 01.03.2015. - taxable services provided to the Government, a local authority or a Governmental authority, by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation or alteration of–– (a) a civil structure or any other original works meant predominantly for use other than for commerce, industry or any other business or profession; (b) a structure meant predominantly for use as–– (i) an educational establishment; (ii) a clinical establishment; or (iii) an art or cultural establishment; (c) a residential complex predominantly meant for self-use or for the use of their employees or other persons specified in Explanation 1 to clause (44) of section 65B of the said Act under a contract entered into before the 1st day of March, 2015 and on which appropriate stamp duty, where applicable, had been paid before that date. 12

13. CONSTRUCTION services provided by way of construction, erection, commissioning or installation of original works pertaining to an airport or port, under a contract which had been entered into before the 1st day of March, 2015 and on which appropriate stamp duty, where applicable, had been paid before that date, subject to the condition that Ministry of Civil Aviation or, as the case may be, the Ministry of Shipping in the Government of India certifies that the contract had been entered into before the 1st day of March, 2015. (Finance Bill for the period 01.07.2012 to 29.02.2016 and S.No.14 A of Notification 25/2012 from 01.03.2016) 13

14. CONSTRUCTION Exemption to the services by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation or alteration of canal, dam or other irrigation works, provided to “Government authority” has been retrospectively provided from 01.07.2012 to 29.01.2014 (The date on which the definition of Government authority was amended in Notification 25/2012) 14

15. CONSTRUCTION New Exemption. low cost houses up to a carpet area of 60 square metres per house in a housing project approved by the competent authority under: (i) the “Affordable Housing in Partnership” component of the Housing for All (Urban) Mission/Pradhan Mantri Awas Yojana; (ii) (ii) any housing scheme of a State Government.”. 15

16. IMPORTANT CHANGES Demand under normal period raised to 30 months - Effectively 36 months. Interest rates reduced to 15 %. (For ST collected and not paid 24 %). Inward ocean freight taxed - Outward ocean freight is not an exempted service but not taxable! Assignment of spectrum by Government to be a service. Arrest only in cases of ST collected and not paid involving more than Rs.2 crores. Krishi Kalyan Cess @ 0.5 % on all services from 01.06.2016 – Cenvatable. 16

17. MISCELLANEA Senior Advocates to pay ST themselves (No reverse charge). Construction related exemption to monorail and metro rail projects, withdrawn prospectively. Performing artists’ threshold exemption per performance raised from 1 to 1.5 lakhs. Transport of passengers by ropeway, cable car, aerial tramway – Exemption withdrawn. New levies and New services – ST payable for all the amounts received after the introduction of the new service / new levy - Rule 5 of POT Rules amended. NO ST on software if ED/CVD paid on MRP basis - Segregation of value between sale and service – recognised. An Annual Return to be filed by Service providers. OPCs, given the benefit of quarterly payment and non-observance of POT rules. 17

18. THANKSTHANKS 18 mail@swamyassociates.com www.swamyassociates.com