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Union Budget 2016-17 - a Glimpse

Union budget 2016

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Page 1: Union budget   2016

Union Budget

2016-17

- a Glimpse

Page 2: Union budget   2016

Introduction

Indirect Taxes Service tax

CENVAT

Central Excise

Customs

Direct Taxes

INDEX

Page 3: Union budget   2016

INTRODUCTION

“The Hon’ble Finance Minister presented the Union Budget for the FY 2016-

17 with positive note on the growth achieved so far. The budget was presented with an

optimistic outlook for the years to come.

The budget revolves around various reforms planned including in the area of

taxation with an intent to rationalize taxes by restricting exemptions in some sectors

and providing incentives to promote start-ups and boost manufacturing under the

Make In India, Start Up India and Digital India Schemes.

Various proposals include schemes to resolve tax disputes demonstrating the

positive intent of the Government towards tax payers.”

Union Budget 2016-17 - a Glimpse3

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Indirect Taxes

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SERVICE TAX

Krishi Kalyan Cess

(Effective from June 01, 2016)

Krishi Kalyan Cess (“KKC”) to levied with effect from June 01, 2016 on all taxable

services at the rate of 0.5% on the value of Service. Further the CENVAT Credit of

KKC to be utilized towards payment of KKC only.

Exclusion from Negative List

(Effective from enactment of Finance Bill 2016)

Specified Education Services – Primary and Secondary Education, Education as part

of degree recognized by law & Approved Vocational Course (Simultaneously the

definition of Approved Vocational Course in Section 65B stands omitted). But the

same has been included in the exemption list.

Transportation of Passengers by Stage Carriage (Effective from June 01, 2016).

However, exemption has been provided to Transportation of Passengers by non air-

conditioned Stage Carriage. Accordingly Service tax has been made applicable on

Transportation of Passengers services by air-conditioned Stage Carriage.

Union Budget 2016-17 - a Glimpse5

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SERVICE TAX

Exclusion from Negative List

(Effective from enactment of Finance Bill 2016)

Transportation of goods by aircraft or vessel from a place outside India up to

customs station (Effective from June 01, 2016). However, exemption has been

provided to Transportation of goods by aircraft from a place outside India up to

customs station. Accordingly, tax is applicable on Transportation of goods by vessel

from a place outside India up to customs station.

Addition to Declared List

(Effective from enactment of Finance Bill 2016)

Right to use the radio-frequency spectrum and subsequent transfers thereof

assigned by the Government has been included in the list of declared services.

Accordingly, the same would be taxable. Further the CENVAT Credit availed on such

service is to be apportioned over the years of right to use.

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SERVICE TAX

New Services under Exemption List

(Effective from April 01, 2016)

Legal Services by a Senior Advocate to a person other than a person ordinarily

carrying out any activity relating to industry, commerce or any other business or

profession. Accordingly, service tax would be applicable on services provide by a

Senior Advocate for services provided in relation to business or profession.

Prescribed Educational Services provided by Indian Institute of Management

(Effective from March 01, 2016).

Assessment services by bodies appointed under Skill Development Initiative (SDI)

Scheme.

Services provided by trainers under Deen Dayal Upadhyaya Grameena Kaushalya

Yojana providing Skill or Vocational Training.

Construction and related services provided for rehabilitation of existing slum

dwellers under scheme notified (Effective from March 01, 2016).

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SERVICE TAX

New Services under Exemption List

(Effective from April 01, 2016)

Notified services provided to Government or Local Authority relating to

construction & related services for contracts entered prior to March 01, 2015 only.

Accordingly, construction and related services provided to Government or Local

Authority for contracts entered into after March 1, 2015 would be liable to service

tax. (Effective from March 01, 2016).

Construction / enhancement of house under notified schemes (Effective from March

01, 2016).

Construction of low cost houses up to a carpet area of 60 Sq. Mtrs under Notified

Schemes.

Construction & related services provided in relation to Airports or Ports for

contracts entered prior to March 01, 2015 (Effective from March 01, 2016).

Services provided by the artist in relation to folk or classical art where the amount

charged is not more than “one lakh and fifty thousand rupees”.

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SERVICE TAX

New Services under Exemption List

(Effective from April 01, 2016)

Transportation of passengers by a non air conditioned stage carriage (Effective from

June 01, 2016).

General Insurance services under “Niramaya Health Insurance Scheme”.

Services of Life Insurance Business by the way of annuity under National Pension

Scheme.

Services by EPFO to the persons governed under Employees Provident Funds and

Miscellaneous Provisions Act, 1952 .

Services by IRDA to the insurers under Insurance Regulatory and Development

Authority of India Act, 1999.

Services provided by SEBI by way of protecting the interest of investors in securities

and to promote the development and regulation of securities market.

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SERVICE TAX

New Services under Exemption List

(Effective from April 01, 2016)

Services by National Centre for Cold Chain Development under Ministry of

Agriculture, Cooperation and Farmer’s Welfare by way of cold chain knowledge

dissemination.

Transportation of goods by an aircraft from a place outside India up to the customs

station of in India (Effective from June 01, 2016).

Services by way of Information Technology Software recorded on Media under

Chapter 85 of Central Excise Tariff Act and also requires declaration of MRP under

Legal Metrology regulations subject to conditions prescribed.

10Union Budget 2016-17 - a Glimpse

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SERVICE TAX

Services removed from Exemption List

(Effective from April 01, 2016)

Construction or related services relating to Monorail or Metro (Effective from March

01, 2016). However the exemption from Service Tax is still applicable for contracts

entered prior to March 01, 2016.

Transportation of passengers by Ropeway, Cable Car or Aerial Tramway.

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SERVICE TAX

Abatements

(Effective from April 01, 2016)

Below are the changes in the abatement rates applicable for the notified services:

Sl. No. Description of Service

Value of Service

chargeable after

abatement

1 Transport of goods in containers by rail by any

person other than Indian Railways40%

2 Household goods transported by GTA 40%

3 Goods transported by GTA other than household

goods.30%

4 Service provided in relation to chit fund foremen 70%

5 Transportation of passengers by Air-Conditioned

Stage Carriage (Effective from June 01, 2016)40%

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SERVICE TAX

Abatements

(Effective from April 01, 2016)

Below are the changes in the abatement rates applicable for the notified services:

The condition of non-availment of CENVAT Credit on Input Services stands

removed for “Transportation of passengers by Rail” and “Transportation of Goods

by Vessel” if abatement is availed.

Sl. No. Description of Service

Value of Service

chargeable after

abatement

1Services of Tour Operator with respect to

“arranging and booking of accommodation10%

2

Services of Tour Operator with respect to Services

other than “arranging and booking of

Accommodation”

30%

3 Construction of Civil Structures 70%

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SERVICE TAX

Point of Taxation Rules

(Effective from March 01, 2016)

Rule 5 – Point of Taxation with respect to levy of Service Tax on new services shall

also apply in cases of new Service Tax rate or introduction of Cess, if any.

Reverse Charge Mechanism (“RCM”)

(Effective from April 01, 2016)

Following Services are removed from the list of Services taxable under RCM:

Services provided by a Mutual Fund agent or Distributor to a Mutual Fund or Asset

Management Company.

Legal Services by Senior Advocates.

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SERVICE TAX

Reverse Charge Mechanism (“RCM”)

(Effective from April 01, 2016)

Following Services are amended in the list of Services taxable under RCM:

Any Services provided by a Government or Local Authority to any business entity

liable to tax. Earlier only Support Services was taxable.

Services of Lottery Agent under the provisions of the Lottery (Regulations) Act,

1998.

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SERVICE TAX

Service Tax Rules

(Effective from April 01, 2016)

Quarterly payment of Service Tax is now extended to One Person Company whose

aggregate value of Taxable Turnover from all premises does not exceed Rs. 50

Lakhs.

Payment of Service Tax on “Receipt Basis” is now extended to One Person Company

with other condition remaining intact.

A new composition rate for life insurance business at 1.4% of the single premium

charged from policy holder in case of single premium annuity policies.

Submission of “Annual Returns” apart from the periodical returns for notified

persons in notified form within 30th November of the succeeding Financial Year.

Further revision of “Annual Returns” within a period of one month of submission

shall be allowed. Penalty for failure to file “Annual Returns” shall be Rs. 100 for

every day of delay subject to Maximum of Rs. 20,000.

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SERVICE TAX

Offences, Penalty and Prosecution

Penalty provisions against the Director’s or Officers of the Company rationalized

with the penalty provisions with respect to non-payment of Service Tax.

The Threshold limit for imprisonment increased to “Two Crore rupees” from “Fifty

Lakh Rupees” for all the offences mentioned in Section 89.

Power to arrest is proposed to be restricted only to situation where the tax payer

has collected the tax but not deposited (Section 90 and 91).

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SERVICE TAX

Other Changes

Time Limit to issue Show Cause Notice under normal period of limitation increased

to “Thirty Months” from “Eighteen Months”.

New provisions introduced to provide for refund of Service Tax with respect to the

following:

Relating to construction of canal, dam or irrigation works provided between July 01, 2012

to January 29, 2014 (both days inclusive)

Relating to construction of Government Buildings provided between April 01, 2015 to

February 29, 2016 (both days inclusive)

Relating to construction of Airport or Port provided between April 01, 2015 to February

29, 2016 (both days inclusive).

Certain amendments were made to principle Notification 49/2012-ST by

Notification 01/2016-ST which provided for refund of Service Tax paid on notified

services in case of export of goods. The amendments are now made effective

retrospectively with effect from June 01, 2012.

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SERVICE TAX

Circumstances Simple Interest

Rate

- Delay in payment of Service Tax collected but not paid within

due date prescribed24% p.a

- Any case other than above 15% p.a

- Delay in payment of Service Tax collected in excess or not

required to be collected15% p.a

Other Changes

Certain amendments affected to exemption Notification in relation to services

provided by TBI or STEP.

Indirect Tax Dispute Resolution Scheme, 2016 notified to settle the litigations

pending before the First Appellate Authority upon filing of declaration and

payment of prescribed amount.

Interest Rates for delay in payment of Service Tax (Effective from enactment Finance

Bill, 2016)

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CENVAT

The Amendments to the CENVAT Credit Rules, 2004 are envisaged below which are

effective from April 01, 2016.

Wagons falling under Chapter 8606 92 is included in the definition of “Capital

Goods”.

Capital Goods used outside the premises of manufacturer for “pumping of water” is

included within the definition of “Capital Goods”.

The Services of “Transportation of goods by a vessel from customs station to a place

outside India” is specifically excluded from the definition of “Exempt Service” along

with Export of Services (Effective from March 01, 2016)

Goods used for “pumping of water” and “Capital Goods less than value of Rs. 10,000

per unit” is included within the definition of “Inputs”.

CENVAT Credit availed cannot be utilized for payment of Infrastructure Cess (Effective

from March 01, 2016)

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CENVAT

The Amendments to the CENVAT Credit Rules, 2004 are envisaged below which are

effective from April 01, 2016.

Availment of full CENVAT Credit in respect to Capital Goods in the same financial

year was allowed for a Small Scale Industry. The same is now extended to

manufacturer of jewel falling under Chapter 7113 (Effective from March 01, 2016).

The orders of jurisdictional Central Excise officers allowing to remove the final

products directly from premises of job worker will have a validity of three years.

New mechanism for reversal of CENVAT Credit in respect of manufacture of exempt

goods and provision of exempt services.

New mechanism for distribution of CENVAT Credit by Input Service Distributor.

New Provisions inserted relating to distribution of CENVAT Credit of Inputs for

manufacturers having multiple factories and a common warehouse distributing the

Inputs.

Submission of Annual Return by a manufacturer or output service provider within

30th November of the succeeding year in the form to be notified.

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CENVAT

The Amendments to the CENVAT Credit Rules, 2004 are envisaged below which are

effective from April 01, 2016.

The provisions of sub-rule 2 of Rule 14 has been omitted. Accordingly, the whether a

particular credit has been utilised or not shall be ascertained by examining whether

during the period under consideration, the minimum balance of credit in the account

of the assessee was equal to or more than the disputed amount of credit.

Credit of duties under Rule 3 other than NCCD shall not be available to be utilised

for payment of NCCD levied under Section 136 of Finance Act, 2001.

Time limit of 1 Year for claiming refund under Notification 27/2012 –CE(NT) has been

specifically provided in case of export of service which shall be as follows:

Date of receipt of Convertible Foreign Exchange where service has been

provided prior to the date of receipt of such payment; or

The date of issue of invoice, where payment has been received in advance.

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CENTRAL EXCISE

Legislative Changes

MRP based valuation for all soaps, smart watches, accessories of motor vehicles and

aluminum foil not exceeding 0. 2 mm thickness.

Infrastructure Cess introduced on specified motor vehicles.

Changes in the tariff value and Excise duty rates for Readymade garments.

Excise Duty of 1% (without CENVAT Credit) or 12.5% (with CENVAT Credit) on articles

of jewellery excluding silver jewellery, other than studded with diamonds or other

precious stones.

Jewellery manufacturer eligible for exemption under the SSI Notification for

clearances upto Rs.6 Crore provided the value of clearance in the immediately

preceding year is less than Rs.12 Crore.

Increase in rate of Clean Energy Cess in respect of Coal, Lignite, & Peat, is increased

from Rs.300 per tonne to Rs.400 per tonne.

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Legislative Changes

Exemption from the whole of Excise Duty in respect of Ready Mix Concrete

manufactured at the site of construction for use in construction work at such site.

Increase in rate of abatement from RSP in respect all categories of footwear is being

increased from 25% to 30%.

Fork-lift trucks; other works trucks fitted with lifting or handling equipment's, Self

propelled bulldozers, angledozers, graders, levellers, scrapers, mechanical shovels,

excavators, shovel loaders, tamping machines and road rollers, pile drivers and pile

extractors made liable for RSP based assessment of excise duty.

Excise Duty at the rate of 4% without CENVAT Credit/12.5% with CENVAT Credit is

being prescribed for Routers, Broadband Modems, Set top Boxes for gaining access

to internet, Reception apparatus for TV but not designed to incorporate a video

display, Digital Video Recorder or network video Recorder.

Union Budget 2016-17 - a Glimpse

CENTRAL EXCISE

24

Page 25: Union budget   2016

CENTRAL EXCISE

Legislative Changes

Exemption in respect of parts, components and accessories for use in the

manufacture of Routers, Broadband Modems, Set top Boxes for gaining access to

internet, Reception apparatus for TV but not designed to incorporate a video display,

Digital Video Recorder or network video Recorder.

Exemption in respect of inputs & parts for use in manufacture of charger/adapter,

battery and wired headsets/speakers of mobile handsets including cellular phone.

ED Exempted on parts, components and accessories for use in manufacture of above

items.

Exemption is being provided in respect of capital goods & Spare thereof , raw

materials, parts, Material Handling Equipment & Consumables for repairs of Ocean-

going vessels by a ship repair unit, subject to fulfilment of actual user condition.

Exemption is being provided in respect of tools and tool kits for maintenance, repair,

and overhauling of aircraft. Further, the procedures for availing the benefits is also

being simplified.

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CENTRAL EXCISE

Legislative Changes

Exemption from duty of excise in respect of Disposable sterilized dialyzer and micro

barrier of artificial kidney.

Excise duty exemption on remnant kerosene, presently available for manufacture of

Linear alkyl Benzene [LAB] and heavy alkylate [HA] is being extended to N-paraffin

arising in the course of manufacture of LAB and HA also.

Unconditional Exemption in respect of Improved Cook Stoves including Smokeless

Chulhas for burning wood, agrowaste, cowdung, briquettes, and coal.

Area based exemptions in respect of production of gold & Silver from Gold dore,

silver dore, or any other raw materials is being withdrawn prospectively.

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Procedural Changes

Reduction of number of returns to be filed by Central Excise Assessee to 13 from

existing 27 returns.

The facility for revision of returns has also been extended to Central Excise Assessees.

In cases where the invoices are digitally signed by the Central Excise Assessee,

manual attestation of invoices meant for transporter not required any more.

In case of finalization of provisional assessment, the interest will be applicable from

the original date of payment of duty.

Instructions issued to the Chief Commissioners of Central Excise to withdraw cases

involving duty of less than Rs.5 lakh and pending for more than fifteen years before

courts.

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CENTRAL EXCISE

27

Page 28: Union budget   2016

Procedural Changes

The existing Central Excise (Removal of Goods at Concessional Rate of Duty for

Manufacture of Excisable Goods) Rules, 2001 are being substituted with the Central

Excise (Removal of Goods at Concessional Rate of Duty for Manufacture of Excisable

and Other Goods)Rules, 2016, so as to simplify the rules, including allowing duty

exemptions to importer/manufacturer based on self-declaration instead of obtaining

permissions from the Central Excise Authorities.

Rationalization of Interest Rates to 15% for delayed payment of duty

Union Budget 2016-17 - a Glimpse

CENTRAL EXCISE

28

Page 29: Union budget   2016

Clarifications Issued

Switchboards, switchgears, electrical motors, automation products are covered within

the ambit of Exemption Notification granting exemption in respect of supplies made

to institutions registered with Department of Scientific and Industrial Research

(DSIR).

Availability of exemption to sub-contractors making supplies to projects financed by

the UN or an International Organisation subject to other conditions mentioned in the

Notification.

Benefit under Notification 12/2012 exempting duty on specified goods intended to

be used for installation of a cold storage, cold storage room or refrigerated vehicles,

for the preservation, storage, transport or processing of agricultural, apiary,

horticultural, diary, poultry, etc. should not be denied solely on the ground that the

person receiving the specified goods is not a manufacturer of excisable goods.

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CENTRAL EXCISE

29

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CENTRAL EXCISE

Changes in Excise Duty Rates

(Effective from March 01, 2016)

Description of Goods New Rate Old Rate

Basic Excise Duty on Pan Masala 19% 16%

Waters, including mineral waters and aerated waters, containing added

sugar or other sweetening matter or flavoured21% 18%

Cigar and cheroots

12.5% or Rs.3,755/-

per 1000, Whichever

is Higher

12.5% or Rs.3375

per 1000, Whichever

is Higher

Cigarillos

12.5% or Rs.3755 per

1000, Whichever is

Higher

12.5% or Rs.3375

per 1000, Whichever

is Higher

Cigarettes of tobacco substitutes Rs.3,755/- per 1000 Rs.3,375/- per 1000

Cigarillos of tobacco substitutes

12.5% or Rs.3755 per

1000, Whichever is

Higher

12.5% or Rs.3375

per 1000, Whichever

is Higher

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CENTRAL EXCISE

Changes in Excise Duty Rates

(Effective from March 01, 2016)

Description of Goods New Rate Old Rate

Others of tobacco substitutes

12.5% or Rs.3755 per

1000, Whichever is

Higher

12.5% or Rs.3375 per

1000, Whichever is

Higher

Paper rolled Biris (Whether Hand made or Machine made) and other

birisRs. 80 per 1000 Rs. 30 per 1000

Gutkha 81% 70%

Unmanufactured Tobacco 64% 55%

Chewing Tobacco (including filter khaini) 81% 70%

Zarda Scented Tobacco 81% 70%

Aviation Turbine Fuel (ATF Supplied to Schedule Commuters Airlines

from Regional Connectivity Scheme airports shall attract 8% Excise by

virtue of Notification14% 8%

Micro Nutrients covered under the Fertilizer Control Order 6% 12.5%

Sacks & Bags of polymers of any plastics 15% 18%

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CENTRAL EXCISE

Changes in Excise Duty Rates

(Effective from March 01, 2016)

Description of Goods New Rate Old Rate

Rubber Sheets & Resin Rubber Sheets for Soles & Heels 6% 12.5%

PSF/PFY manufactured from plastic scrap or Plastic waste including

waste PET Bottles

2% without CENVAT

Credit or 12.5% with

CENVAT Credit

2% without CENVAT

Credit or 6% with

CENVAT Credit

Articles of Jewellery [excluding articles of silver jewellery, other than

those studded with diamonds, ruby, emerald or sapphire]

1% (without Cenvat

Credit) and 12.5%

(with Cenvat Credit)

12.5%

Gold Bars manufactured from Gold ore or concentrate, gold dore bar

and silver dore bar9.5% 9%

Gold Bars & Gold Coins of Purity not below 99.5% produced during

process of Copper smelting9.5% 9%

Silver manufactured from silver ore or concentrate: silver dore bar

gold dore bar 8.5% 8%

Silver in any form except silver coins of purity below 99.9%, produced

during the process of copper smelting8.5% 8%

Rubber Sheets & Resin Rubber Sheets for Soles & Heels 6% 12.5%

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CENTRAL EXCISE

Changes in Excise Duty Rates

(Effective from March 01, 2016)

Description of Goods New Rate Old Rate

Silver produced during process of Zinc or Lead smelting 8.5% 8%

Disposable Aluminium Foil Containers

2% without CENVAT

Credit, and 12.5%

with CENVAT Credit

2% without CENVAT

Credit, and 6% with

CENVAT Credit

Shafts, Sleeve, Chamber, Impeller, Washer, Electric Motor 6% 12.5%

Charger/adaptor, battery and wired Headsets/Speakers used in

manufacture of cellular phones

2% without CENVAT

credit / 12.5% with

CENVAT credit

Exempt

Parts of railway or tramway locomotives or rolling stock & Railway or

Tramway track fixtures and fitting6% 12.5%

Refrigerated containers 6% 12.5%

Silver produced during process of Zinc or Lead smelting 8.5% 8%

Disposable Aluminium Foil Containers

2% without CENVAT

Credit, and 12.5%

with CENVAT Credit

2% without CENVAT

Credit, and 6% with

CENVAT Credit

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CENTRAL EXCISE

Changes in Excise Duty Rates

(Effective from March 01, 2016)

Description of Goods New Rate Old Rate

Solar Lamps or Lanterns Exempt 12.5%

Rotor blades and intermediates, parts and sub-parts of rotor blades

for wind operated electricity generators6% * Exempt

Epoxy Resin, Vinyl ester adhesives, Hardener for adhesives

ResinHardeners, Polyester based Infusion Resin, Carbon Pultrusion6% 12.5%

* Subject to actual user condition

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CENTRAL EXCISE

Changes in Additional Duties of Excise

(Effective from March 01, 2016)

Description of GoodsNew Rate (Rs. Per

1000 Sticks)

Old Rate (Rs. Per 1000

Sticks)

Non filter cigarettes not exceeding 65mm 215 70

Non-filter cigarettes exceeding 65mm but not exceeding 70mm 370 110

Filter cigarettes not exceeding 65mm 215 70

Filter cigarettes exceeding 65mm but not exceeding 70mm 260 70

Filter cigarettes exceeding 70mm but not exceeding 75mm 370 110

Other than above 560 180

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CUSTOMS

Legislative Changes

Exemption in respect of media with recorded Information Technology Software

classifiable under Chapter 85 of the First Schedule to the customs Tariff Act, 1975 ,

provided that the importer files a declaration in the prescribed format and that such

Information Technology software is leviable to Service tax under 66B read with

Section 66E of the Finance Act.

The period of limitation in case of matters not involving fraud, suppression of facts ,

willful mis-statement has been increased to two years from the existing period of

one year.

Proposal for deferred payment of Customs Duty for certain class of importers and

exporters.

Proposal for amendment of warehousing provisions i.e. section 57 and 58 with

regard to licensing, surveillance and cancellation of warehousing licenses. The

authority is being proposed to be given to the Principal Commissioner as against

Assistant Commissioner / Deputy Commissioner earlier.

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CUSTOMS

Legislative Changes

Introduction of Baggage Rules, 2016 providing multiple slabs of duty free allowance

for various categories of passengers.

Rationalisation of Interest Rates to 15% for delayed payment of duty.

The Duty Free Allowance for bonafide gifts is being increased from Rs.10,000/- to

Rs.20,000/-.

Import of phosphoric acid and anhydrous ammonia at concessional rates subject to

fulfilment of actual user condition.

Exemption from Basic Customs Duty (“BCD”) to the extent of 1% of the FOB value of

exports done in the previous FY on import of specified fabrics for manufacturing

goods meant for export.

Withdrawal of exemption from Countervailing Duty (“CVD”) in respect of specified

machinery required for construction of road.

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CUSTOMS

Legislative Changes

Exemption from BCD on import of specified raw materials and capital goods for use

in manufacture of Micro fuses, Sub-miniature fuses, Resettable fuses, and Thermal

fuses.

Exemption from the levy of BCD and Special Additional Duty (“SAD”) on import of

machinery, electrical equipment's, other instruments and their parts [except

populated Printed Circuit Boards] for fabrication of semiconductor wafer and Liquid

Crystal Display (LCD), subject to actual user condition.

Exemption from levy of BCD and SAD on import of machinery, electrical equipment's,

other instruments and their parts [except populated PCBs] falling under chapter 84,

85, 90 for assembly, testing, marking and packaging of semiconductor chips (ATMP),

subject to actual user condition.

Exemption from BCD, CVD & SAD withdrawn with respect to charger/Adopter,

Battery and Wired Headsets/Speakers procured for the purpose of manufacture of

mobile handsets including cellular phones.

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CUSTOMS

Legislative Changes

However, exemption is provided in respect of inputs imported for the purpose of

manufacturing of charger/adopter, battery and wired headsets/speakers of mobiles

handsets including cellular phones.

Exemption provided in respect of BCD, CVD and SAD on parts, components and

accessories for use in manufacture of routers, broadband modems, set top boxes for

gaining access to internet, set of boxes for TV, Digital Video Recorder (DVR)/

Network video Recorder (NVR), CCTV Camera.

Withdrawal of exemption on notified telecommunication equipment.

Exemption from BCD on Liquid Crystal Display, Light Emitting Diode or Organic

Emitting Diode for manufacture of TVs, subject to fulfilment of actual user condition.

Exemption from BCD in respect of magnetron of capacity up to 1.5KW for use in

manufacture of domestic micro ovens.

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CUSTOMS

Legislative Changes

Extension of Notification granting exemption in respect of specified goods for the

use in the manufacture of electrically operated vehicles and hybrid vehicles is being

extended for indefinite period.

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CUSTOMS

Changes in Duty Rate-Basics Customs Duty

(Effective from March 01, 2016)

Description of Goods New Rate Old Rate

Cashew nuts in shell 5% Nil

Denatured Ethyl Alcohol (ethanol) 2.5% 5%

Silica Sand 2.5% 5%

Coal; briquettes, ovoids and similar soli fuels manufactured from coal.

Lignite, whether or not agglomerated, excluding jet.

Peat (including peat litter), whether or not agglomerated are rationalized to

2.5% 10%

Coke and semi coke of coal , of lignite or peat, whether or not agglomerated; retort

carbon.

Coal gas, water gas, producer gas and similar gases other than petroleum gases and

other gaseous hydrocarbons .

Tar distilled from coal, from lignite or from peat and other mineral tars, whether or

not dehydrated or partially distilled, including reconstituted tars .

5% 10%

Oils and other products of the distillation of high temperature coal tar similar

products in which the weight of the aromatic constituents exceeds that of the non-

aromatic constituents

2.5% 10%

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CUSTOMS

Changes in Duty Rate-Basics Customs Duty

(Effective from March 01, 2016)

Description of Goods New Rate Old Rate

Pitch and pitch coke, obtained from coal tar or from other mineral tars 5% 10%

Aluminum oxide for use in the manufacture of Wash Coat, for catalytic converters 5%* 7.5%

Medical Use Fission Molybdenum (On Import by Board of Radiation & Isotope

TechnologyNil 7.5%

Acyclic hydrocarbons and all cyclic hydrocarbons ( except para-xylene and Styrene ) 2.5% 10%

Polypropylene granules/resins for the manufacture of capacitor grade plastic films. Nil* 7.5%

Super Absorbent Polymer for the manufacture of goods of Sanitary towels,

tampons, napkins, diapers etc. 5%* 7.5%

Natural latex rubber made balloons 20% 10%

Wood in chips or particles for manufacture of paper, paperboard and news print Nil* 5%

Pulp of wood for manufacture of sanitary towels, tampons, napkins, diapers etc.. 2.5%* 5%

*Subject to actual user condition

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CUSTOMS

Changes in Duty Rate-Basics Customs Duty

(Effective from March 01, 2016)

Description of Goods New Rate Old Rate

Braille paper Nil 10%

Plans, drawings and designs 10% Exempt

Specified fibres, filaments/yarns 2.5% 5%

Solar tempered glass or solar tempered (anti-reflective coated) glass for use in

manufacture of solar cells/panels/modules.5% * Exempt

Preform of silica for use in manufacture of telecommunication grade optical

fibre/cables.10% Exempt

Imitation jewellery 15% 10%

Brass scrap 2.5% 5%

Primary aluminium products 7.5% 5%

Other aluminium products 10% 7.5%

Zinc alloys 7.5% 5%

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CUSTOMS

Changes in Duty Rate-Basics Customs Duty

(Effective from March 01, 2016)

Description of Goods New Rate Old Rate

E-Readers 7.5% Exempt

Parts and raw material for manufacture of E-readers 5% 7.5%

Foreign Satellite data on storage media imported by National Remote Sensing

Centre (NRSC), Hyderabad.Nil 10%

Electrolysers, membranes and their parts required by caustic soda / potash unit

based on membrane cell technology.Nil 2.5%

Refrigerated containers 5% 10%

Golf Cars 60% 10%

Natural latex rubber made balloons 20% 10%

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CUSTOMS

Changes in Duty Rate- Countervailing Duty (“CVD”)

(Effective from March 01, 2016)

Description of Goods New Rate Old Rate

Gold dore bar 8.75% 8%

Silver dore bar 7.75% 7%

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CUSTOMS

Changes in Duty Rate- Special Additional Duty (“SAD”)

(Effective from March 01, 2016)

Description of Goods New Rate Old Rate

Orthoxylene for use in manufacture of phthalic anhydride 2% 4%

Populated printed circuit boards [PCBs] for manufacture of personal computers

(laptop or desktop) including tablet computer.4% Exempt

Ppopulated PCBs for use in manufacture of mobile phone or tablet computer 2% Nil

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CUSTOMS

Changes in Duty Rate- Export Duty

(Effective from March 01, 2016)

Description of Goods New Rate Old Rate

Iron ore lumps (below 58% Fe content) Nil 30%

Export Duty on Iron ore fines (below 58% Fe content) Nil 10%

Export Duty on chromium ores and concentrates , all sorts Nil 30%

Export Duty on bauxite (natural), not calcined

bauxite (natural) calcined15% 20%

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Direct Taxes

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Individual Income Tax

No change in income tax slabs.

Dividend received in excess of Rs 10 Lakhs proposed to be taxed at 10%.

Rate of Surcharge for those having income more than Rs. 1 Crore is increased to

12%.

Rebate under Sec 87A for assesses having income less than Rs. 5Lakhs enhanced to

Rs.5,000/-.

Deduction under Sec 80GG for house rent paid has been increased from Rs 24,000/-

to Rs 60,000/-.

Limit for tax audit for professionals has been increased to Rs 50 lakhs.

Presumptive taxation scheme has been extended to professionals with gross

receipts up to Rs 50 lakh with a presumption of profit being 50% of the gross

receipts.

DIRECT TAXES

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Individual Income Tax

Limit has been increased to Rs 2 Crore for presumptive taxation of businesses

under Sec 44AD.

The limit under Sec 17(2)(vii) in relation to employer’s contribution towards

superannuation fund is increased to Rs 150,000/-.

Withdrawal of Corpus from National Pension Scheme up to 40% at the time of

retirement is exempted from tax.

Additional deduction of interest for “First Home Buyers” upto Rs 50,000/- p.a. for

loans up to Rs 35 lakhs sanctioned during the FY 2016-17 has been proposed,

provided the value of the house does not exceed Rs 50 lakhs.

Time limit for construction / acquisition of house under Sec 24(b) has been

extended from 3 years to 5 years for claiming deduction of interest on housing loan.

DIRECT TAXES

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DIRECT TAXES

Corporate Taxes Rates

Proposal for reduction in rate of income tax for the companies having turnover less

of than Rs 5 Crore from 30% to 29%.

Surcharge on domestic companies having income exceeding Rs 1 Crore and not

exceeding Rs 10 Crore has been proposed to be increased to 7% and for Companies

having income exceeding Rs 10 Crore surcharge has been proposed to be increased

to 12%.

Other Tax Rates

Rate of Securities transaction tax in case of options has been increased to 0.05%.

Equalisation Cess

Introduction of Equalisation levy on specified services (i.e., online advertising under

Sec 161) to be with held before making payment to non-residents.

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DIRECT TAXES

Restriction of Exemptions / Incentives

Exemption for SEZ Developer and SEZ Unit under Section 10AA proposed to be

restricted to only units commencing their operation before April 1, 2021.

Proposal to withdrawal of deduction of profits and gains of industrial undertakings

engaged in infrastructure development.

Withdrawal of deduction of profits and gains of industrial undertakings or

enterprises engaged in development of SEZ.

Reduction in weighted deduction in case of research and development expenditure

under Sec 35.

Place of Effective Management (POEM)

The applicability of POEM based residence test has been deferred by one year.

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DIRECT TAXES

Base Erosion and Profit Shifting (BEPS)

The OECD report on Action 13 of BEPS Action plan provides for revised standards for

transfer pricing documentation and a template for country-by-country reporting of

income, earnings, taxes paid and certain measure of economic activity.

India has been one of the active members of BEPS initiative and part of international

consensus. It is recommended in the BEPS report that the countries should adopt a

standardised approach to transfer pricing documentation. A three-tiered structure

has been mandated consisting of:-

a master file containing standardised information relevant for all multinational

enterprises (MNE) group members;

a local file referring specifically to material transactions of the local taxpayer;

and

a country-by-country report containing certain information relating to the

global allocation of the MNE's income and taxes paid together with certain

indicators of the location of economic activity within the MNE group.

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DIRECT TAXES

Income Declaration Scheme

An opportunity is proposed to be provided to persons who have not paid full taxes

in the past to come forward and declare the undisclosed income and pay tax,

surcharge and penalty totalling in all to forty-five per cent of such undisclosed

income declared.

The scheme is proposed to be brought into effect from 1st June 2016 and will

remain open up to the date to be notified by the Central Government in the official

gazette.

The scheme is proposed to be made applicable in respect of undisclosed income of

any financial year upto 2015-16

Tax is proposed to be charged at the rate of thirty per cent on the declared income

as increased by surcharge at the rate of twenty five per cent of tax payable (to be

called the Krishi Kalyan cess).

A penalty at the rate of 25% of tax payable is also proposed to be levied on

undisclosed income declared under the scheme.

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DIRECT TAXES

New Incentives

New manufacturing companies incorporated after March 1, 2016 provided an option

to be taxed at 25%.

Proposal to allow deductions of 100% profits for a period of 3 to 5 years for the

start-ups setup during April 2016 to March 2019.

Insertion of Section 80 IBA providing for deductions of profits and gains from

developing and building housing projects as approved.

Gains arising on transfer of house property qualifies for deduction if invested in

eligible start-ups under Sec 54GB.

Deduction under Sec 32(1)(ii)(a) proposed to be extended to business of distribution

or transmission of power.

Deduction for employment of manpower with emoluments less than Rs. 25,000/-

extended to all assessee covered under Section 44AB earlier available only for

manufacturing units.

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DIRECT TAXES

Other Proposals

Indexation Benefit extended to Sovereign Gold Bond’s issued under Sovereign Gold

Bond Scheme, 2015.

Income earned in lieu of shares by Individuals / HUF as a consequence of Demerger

/ Amalgamation of a Company exempt under “Other Sources”.

Following shall not be regarded as transfers for the purposes of “Capital Gains”:

Redemption of bonds under Sovereign Gold Bond Scheme, 2015 by Individual.

Value of Total Assets (not exceeding 5 Crore) in books of Company in any 3

Previous Years preceding the Previous Year in which conversion into LLP takes

place.

Units transferred by Mutual Fund on account of consolidating plan of Mutual

Fund scheme.

Benefit of Set off and carried forward of loss denied for specified business under

Section 35AD.

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DIRECT TAXES

Other Proposals

Benefit of set off of any loss denied in respect of unexplained and undisclosed

incomes under Section 115BBE.

Non-Applicability of Tax on distributed income in respect of any income distributed

by the securitization trust to its investors on or after the June 1, 2016.

Power of Assessing Officer extended under Section 133C to utilize the outcome

obtained from processing of information and documents under said Section.

Authentication of Notices and other documents through electronic form.

E-Sahyog to be expanded to minimize cost of compliance, mainly for small tax

payers.

Expansion of scope of e-assessments to all assessee in 7 mega metro cities in the

near future.

Dispute Resolution Scheme has been proposed for disposal of pending litigations.

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