INDIRECT TAX PROPSALS & FEMA /

PMLA PROVISIONS

VIKRAM NANKANI

SENIOR ADVOCATE

BUDGET & FINANCE BILL

2015-16

BIG TICKET POINTS

RATE OF TAX INCREASED: ST-14% FROM 12.36%, BED 12.5% FROM 12%.

NO EDUCATION & S.H.E CESS

SWACH BHARAT CESS:2% on ST

LIBERAL PENALTY PROVISIONS

ST ON REIMBURSEMENTS OF EXPENSES & COSTS

CUSTOMS & EXCISE: REVISED PENALTY

RATES

Period of Demand: 1 year OR 5 years

Maximum penalty 10% and 100%

Nil OR 15% penalty if tax+ interest paid before SCN or within 30 days therefrom provided reduced penalty also paid

25% if tax+ interest +reduced penalty paid within 30 days of the order

Section 73(4A) is being omitted. (It provides for reduced penalty, if true and complete, details of transactions were available on specified record.)

Section 80 being omitted.

PENALTY UNDER SECTION 76 AND 78

Section 76

No penalty if service tax and interest paid within 30 days of issuance of SCN

Reduced penalty equal to 25% of the penalty imposed under OIO if Service Tax, Interest and reduced penalty is paid within 30 days

Reduced penalty equal to 25% to be imposed when Service Tax gets reduced in any appellate proceedings subject to the condition of payment of ST, interest and reduced penalty within 30 days

Penalty

Section 78

It provides penalty of 100% of service tax.

Penalty reduced to 15% if service tax interest along withreduced penalty paid within 30 days of issuance of SCN

Reduced penalty equal to 25% of the penalty imposedunder OIO if Service Tax, Interest and reduced penalty ispaid within 30 days

Reduced penalty equal to 25% to be imposed whenService Tax gets reduced in any appellate proceedingssubject to the condition of payment of ST, interest andreduced penalty within 30 days

TRANSITION PROVISION

Section 78B is being inserted (Transition provision)

Proposed amended provisions of Section 76 and 78 shall apply where no SCN is served or SCN is served but no OIO has been passed till the date of enactment of the Finance Bill, 2015;

Cases covered under Section 73(4A) where SCN is not issued or if issued but OIO has not been passed before the date of enactment of the Finance Bill, 2015, Penalty shall not exceed 50% of Service Tax.

SERVICE TAX

Section 67-Taxable Value-Definition of the term“consideration” has been expanded to includereimbursement of all expenses and costs incurred by theservice provider and charged, in the course of providingor agreeing to provide a taxable service:

(Overrules the judgment passed by Delhi HighCourt in the case of IntercontinentalConsultants)

Amount retained by the lottery distributor/ selling agentsfrom gross sale amount of lottery ticket in addition to thefees or commission including discount received.

SERVICE TAX contd…

Any service rendered by Government or local tobusiness entity taxable

Potential to levy ST on specified amusement facilitiesand entertainment events-carved out of betting,gambling or lottery

ST on processes amounting to manufacture alcohol forhuman consumption

Definition of “Services” amended to include lotterydistributor and selling agent as well as foreman of ChitFund from money transactions. Overrule the decisionof Delhi Chit Fund Association Vs UOI 2013 (30) STR347 (Del).

Advance Ruling for all Resident Firms including soleproprietors, LLP and One Person Company

NEW Exemptions/Concessions (Amended Notification No. 25/2012)

Exhibition of movie by exhibitor (theatre owner) todistributor or AOP consisting of such exhibitor as one ofits members;

Services by way of right to admission to exhibitions ofcinematographic film circus dance or theatricalperformance including drama or ballet, recognized sportsevents;

Services by way of right to admission to concerts,pageants award functions, musical performances,sporting events other than recognized sporting eventswhere consideration for admission is less than Rs.500/-per person

Exemption/Concession (contd)

Services of effluent treatment by an operator of commoneffluent treatment plant;

Services by way of transportation of a patient inambulance;

Pre-conditioning, pre-cooling, ripening, waxing, retailpacking, labeling services of fruits and vegetable;

Transport of export goods by road from the place ofremoval to a land customs station;

Services of life insurance business provided underVaristha Pension Bima Yojana;

Services by way admission to a museum, national park,wildlife sanctuary, tiger reserve zoo.

EXEMPTIONS/CONSESSIONS AMENDED TO BE WIHDRAWN

Service of construction. Erection, commissioning,maintenance etc to the Government, a local authority ora government authority except historical and nationalimportance; irrigation works; water and sewagetreatment; (Sr. No. 12 amended);

Construction, erection, commissioning or installation oforiginal works related to an airport or port (Sr. No. 14amended);

Performing artist in fork or classical art forms whereconsideration charged is more than Rs.1 lac; If suchservice provided as brand ambassadors, no exemption isavailable; (Sr. No. 16 amended);

EXEMPTIONS/CONSESSIONS AMENDED TO BE WIHDRAWN

Transportation by rail or vessel from one place in India to another in respect of tea, coffee, jaggery, sugar, milk products and edible oil; (Sr. No. 20 (i) amended);

GTA services for transportation of tea, coffee, jaggery, sugar, milk products and edible oil etc; (Sr. No. 21(d) amended);

Services of mutual fund agent or distributor to a mutual fund/asset management company; (Sr. No. 29 amended);

EXEMPTIONS/CONSESSIONS AMENDED TO BE WIHDRAWN

Services in relation to making of telephone callsfrom departmentally run publice telephone, publictelephone operating only for local calls, freetelephones at airport and hospitals (Entry No. 32);

ABATEMENT OF SERVICE TAX

Amended Notification No.26/2012 ST dated 30.6.2012

Transportation of goods by rail, road or vessel, service tax is to be paid on 30% subject to the condition that CENVAT credit on input, capital goods and input service not availed;

Air transport of passenger for classes other than economy, service tax is to be paid on 60% subject to the condition that CENVAT credit on input, capital goods and input service not availed.

Service provided in relation to “Chit” being withdrawn.

SERVICE TAX

Section 73(1B) is being inserted to provide recovery ofthe Service Tax amount self assessed and declared in thereturn but not paid shall be made under Section 87,without service of notice under Section 73(1).

Definition of “Government”

Provision of “Revision by Central Government” undersection 35EE of the Central Excise Act will be applicableto the order passed by Commissioner (Appeals) in materinvolving rebate of service tax on input services or dutypaid on inputs, in case of services which are exported.

CENVAT CREDIT & EXCISE RULES

Period to avail credit extended to 1 year

Credit of partial tax paid under Reverse Charge Mechanism allowedDefinition of Export-physical only

Concept of deemed utilization of CENVAT credit has been introduced vide Rule 14 of CCR.

SERVICE TAX RULES

Tax on “aggregator” – who owns and manages web based software application under a brand name

Tax on recipient in case of services by mutual fund agents or lottery agents

Digital signature invoices to be accepted

REVERSE CHARGE MECHNISM

Service Receiver (Body corporate) will have to payfull service tax instead of partial payment in respectof manpower supply and security service provided byan Individual HUF, partnership firms or AOP;

FEMA / PMLA

Competent Authority to get powers to seize property in India equivalent in value to the foreign exchange, foreign security or immovable property outside India held in contravention of section 4 of FEMA

Making false declaration or filing false documents is a scheduled offence under PMLA

Special court can consider claims of legitimate interest in the confiscated property, provided claimant is innocent.

NEGATIVES

CENVAT credit scheme not made comprehensive

SSIs ignored

SAD retained

Place of Provision of Service Rules relating intermediaries unaffected

No change in CST

Thank you