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K.VAITHEESWARAN ADVOCATE & TAX CONSULTANT
Flat No.3, First Floor,
No.9, Thanikachalam Road,
T. Nagar,
Chennai - 600 017, India
Tel.: 044 + 2433 1029 / 4048
402, Front Wing,
House of Lords,
15/16, St. Marks Road,
Bangalore – 560 001, India
Tel : 080 22244854/ 41120804
Mobile: 98400-96876
E-mail : [email protected] [email protected]
www.vaithilegal.com
AIIMS
Institute of Pharma
IITs
Upgrade Indian School of
Mines into IIT
IIMs
Horticulture Research &
Education
Centre for Film
Production, Animation
and Gaming.
Upgrade National
Institute of Speech and
Hearing to a University of
Disability Studies
Apprenticeship Training
Institute for Women
Institute of Science &
Education Research
Development of heritage
sites
ARUN JAITLEY EXPRESS…. States and Union Territory Covered in the Budget
Karnataka
J & K
Punjab
Tamil Nadu
Himachal Pradesh
Assam
Amritsar
Maharashtra
Rajasthan
Chhattisgarh
Nagaland
Odisha
Andhra
Haryana Uttrakhand
Dhanbad
Goa
Bhihar
Gujarat
Telangana
Uttar Pradesh
2014-2015 (Revised Estimates)
(Rs. in Crores)
2015-2016 (Budget Estimates
(Rs. in Crores)
Corporation Tax 426079 470628
Taxes on income 278599 327367
Customs 188713 208336
Excise 185480 229808
Service Tax 168132 209774
Without an increase in corporate tax rates, the Government is estimating an increase of Rs.44000 crores which is more than 10% of the RE of 2014-2015.
With a marginal increase in excise duty rate from 12% to 12.5%, the Government is estimating an increase of nearly Rs.44000 crores.
Factoring the increase in the rate of service tax Government is estimating an additional increase of about Rs.13000 crores.
Education cess and Secondary Education cess on excise duty exempted from 01.03.2015.
Education cess and Secondary Education cess continues on customs duty.
Education cess and Secondary Education cess continues on service tax.
Clean energy cess on coal, lignite, peat increased from Rs.100 per ton to Rs.300 per ton from 01.03.2015. (effective rate at Rs.200 per ton vide Notification No.1/2015)
Excise duty increased from 12% to 12.5% from 01.03.2015.
Imposition of duty on condensed milk, peanut butter.
Excise duty of 2% without cenvat credit and 12.5% with cenvat credit on tablet computer.
Parts, components, accessories used for manufacture of tablet computer exempted.
Scope of MRP based taxation widened.
Mineral waters and aerated waters containing added sugar from 12% to 18%.
Cigarettes by 25% and 15%.
Inverted duty structure. Rate of customs duty on a number of imported raw materials
/ inputs reduced to encourage manufacture in India. Reduction in duty on metal parts for use in manufacture of
electrical insulators. Certain parts used for manufacture of insulated wires and
cables; microwave ovens, compressor. Certain items used for hydrogen peroxide, fertilizers, parts
and components of digital still image video camera with minimum resolution of 800 x 600 pixels at minimum 23 frames per second.
Specified inputs used for manufacture of specified CNC lathe machines reduced.
Certain items used for manufacture of LCD, LED TV panels reduced to ‘nil’.
Organic LED panels reduced to ‘nil’ rate. Certain items used for manufacture of solar water heater
system exempted. Parts, components, accessories falling under any Chapter
for use in the manufacture of Tablet Computers and the sub-parts used for manufacture parts, components and accessories fully exempted from BCD, CVD and SAD.
Duty on specified inputs such as ethylene dichloride (EDC), vinyl chloride monomer (VCM) and styrene monomer (SM) from 2.5% to 2%.
BCD on liquefied butane, isoprene reduced from 5% to 2.5%. BCD and CVD on parts, components and accessories for use
in the manufacture of table computer exempted. Effective BCD of 10% on vehicles falling under 8702 or 8704
when imported in CKD condition. Effective BCD in any other form at the rate of 20%. Nil BCD and CVD for goods imported for setting up mega
specified project.
Accumulation of cenvat credit in the hands of manufacturers on account of SAD.
All goods except populated PCB falling under any chapter for used in the manufacture of ITA bound goods reduced from 4% to nil.
Inputs used for manufacture of LED driver and MCPCB for LED lights, fixtures and LED lamps reduced from 4% to nil.
EDC, VCM and SM used for manufacture of excisable goods reduced from 4% to 2%.
Metal scrap of iron and steel, copper, brass and alluminium reduced from 4% to 2%.
Duty of excise arising on account of reasons other than fraud, etc. penalty non-exceeding 10% of the duty or Rs.5,000 whichever is higher.
No such penalty if the duty or interest is paid before issue of Show Cause Notice or within 30 days of Show Cause Notice.
If duty and interest is paid within 30 days from the date of receipt of order, penalty shall be 25% of the total penalty.
New concept of penalty even for duty demands which do not involve any fraud or suppression.
Duty on account of fraud or suppression, etc. with intent – Penalty equivalent to duty.
In such cases, if the duty and interest is paid within 30 days of receipt of Show Cause Notice, penalty shall be 15% of the duty provided the penalty is also paid within 30 days.
In such cases, where the duty and interest is paid within 30 days of receipt of order, penalty shall be 25% of the duty provided the penalty is also paid within 30 days.
Advance Rulings applicable to resident firms (LLP, Partnership Firm, Sole Proprietor, one person company).
Time limit for availment of credit increased from 6 months to 1 year.
Rule 6 amended to provide that exempted goods shall include non-excisable goods cleared for a consideration from a factory
Capital goods can be taken out for job work and received back within 2 years.
Credit on inputs / capital goods can be taken as soon as the inputs / capital goods are received in the job worker premises in case the goods are sent directly to the job worker location.
Credit taken wrongly but not utilized – recovery under Section 11A or Section 73 as the case may be.
Credit taken but utilized wrongly or has been erroneously refunded, same shall be recovered with interest.
Records can be preserved in electronic form and every page of the record so preserved shall be authenticated by means of a digital signature.
If invoice meant for a transporter is digitally signed, hard copy of the duplicate copy of the invoice meant for transporter and self-attested by the manufacturer shall be used for transport.
Concept of aggregator. Aggregator defined as a person who owns and manages a web
based software application and by means of the application and a communication device enables a potential customer to connect with the persons providing service of a particular kind under the brand name or trade name of the aggregator.
Aggregator is liable to pay service tax. If aggregator does not have a physical presence in the
taxable territory any person representing the aggregator for any purpose shall be liable to pay service tax.
If aggregator does not have a physical presence or a representative, he shall appoint a person for the purpose of paying service tax.
Services provided by MF agent or distributor to MF or AMC – Service receiver liable.
Services provided by selling or marketing agent of lottery tickets to a lottery distributor or selling agent – service receiver liable.
100% tax to be paid by service receiver in respect of manpower supply services and security services.
Concept of support services provided by Government omitted in Act and Rules.
In respect of services provided or agreed to be provided by Government or local authority excluding renting, postal, port, airport, transport service tax is payable by the business entity located in the taxable territory.
Auction fees for spectrum, mines ? Any activity for consideration provided by the Government
which is not in the nature of a tax or a sovereign levy.
Transport of goods by rail taxable value of 30% - no cenvat credit on inputs, capital goods and input services.
Transport of passengers by rail taxable value of 30% - no cenvat credit on inputs, capital goods and input services.
Transportation of passengers by air in a class other than economy class – taxable value 60%.
Goods transportation agency taxable value increased from 25% to 30%.
Rule 4(1A) of the Service Tax Rules which enabled the Board to specify documents to be submitted for registration deleted.
Invoice can be authenticated by digital signature.
Board to specify conditions, safeguards and procedures.
Records can be kept in electronic form and every page so preserved shall be authenticated by digital signature.
Board to specify conditions, safeguards and procedures.
Service tax rate increased from 12% to 14% after FA 2015 is enacted and an effective date is notified.
Till the new rate is notified education cess and secondary education cess to continue.
Alteration in compounded rates for travel agents, insurer carrying on life insurance business, money changing.
Swachh Bharath Cess on all or any of the taxable services at the rate of 2% on the value of such services for the purposes of financing and promoting Swachh Bharath initiatives – Section 117 of Finance Bill, 2015.
Enabling provision and effective after a date is notified.
Section 67 is being amended in order to provide that consideration include any reimbursable expenses or cost incurred by the service provider and charge in the course of providing or agreeing to provide a taxable service except in such condition and subject to such condition as may be prescribed.
Decision of the Delhi High Court in the case of Inter-Continental Consultants and Technocrats nullified.
Amendment in definition of ‘service’. Services of a foreman of chit fund for conducting or
organizing a chit in any manner taxable – Delhi Chit Funds Association case nullified.
Services of a lottery distributor or selling agent in relation to promoting, marketing, organizing, selling of lottery or facilitating in organizing lottery of any kind taxable – Tashi De Lek Gaming Solutions Pvt. Ltd.
Government defined. Government will not include any entity created by
statute or otherwise, the accounts of which are not required to be kept in accordance with Article 150 of the Constitution.
In a case where the amount of service tax payable has been self-assessed in the return furnished under sub-section (1) of section 70, but not paid either in full or in part, the same shall be recovered along with interest in any of the modes specified in section 87, without issue of notice under Section 73(1).
Section 78 penalty – 15% of the service tax payable as penalty if the tax and interest is paid within a period of 30 days from the date of receipt of notice.
Section 76 penalty at the rate of 10% of the tax where the levy for reasons other than fraud.
If the tax and interest is paid within a period of 30 days from the date of receipt of Notice – No penalty.
If the tax and interest is paid within a period of 30 days from the date of receipt of Order, penalty shall be 25% of the penalty imposed in the order, provided the reduced penalty is paid within a period of 30 days from the date of receipt of order.
Construction, installation etc. provided to Government taxable. (01.04.2015)
Construction, installation etc. of airport and port taxable (01.04.2015)
Drama, music, theatre artist exempt only if consideration charged for such performance is not more than Rs.1 lakh. (01.04.2015)
Transportation by rail or vessel or GTA by road of food stuff taxable. Exemption confined to milk, salt, food grain including flour, pulses and rice. (01.04.2015)
Section 80 omitted.
Negative list is being amended in order to delete admission to entertainment events or access to amusement facilities.
Services by way of right of admission to
exhibition of cinematograph film, circus, dance or theatrical performance including drama or ballet,
recognized sport event,
award function / concert / pageant / musical performance or other sport events where the consideration for admission is not more than Rs.500/-
exempted after enactment of FA 2015 and from an effective date.
Services by way of exhibition of movie by an exhibitor to the distributor or an association of persons consisting of the exhibitor as one of its members is exempt from 01.04.2015.
Litigation ?
Deletion of definition of entertainment event. Service tax on admission to certain entertainment events. Entertainment is a State subject. Definition of process amounting to manufacture or production of goods
to exclude manufacture of alcoholic liquor for human consumption. Negative list amended in order to enable levy of tax on any process
amounting to manufacture or production of alcoholic liquor for human consumption.
Service Tax leviable on contract manufacturing/job work for production of potable liquor for a consideration.
Intoxicating liquors, that is to say, the productions, manufacture, possession, transport, purchase and sale of intoxicating liquors’ falls under Entry 8 of the State List.
Finance Bill, 2015 has also introduced amendments to Reserve Bank of India Act, 1934
Forward Contracts (Regulation) Act, 1952
Securities Contract (Regulation) Act, 1956
FEMA, 1999
Prevention of Money Laundering Act, 2002
FRBM Act, 2003
Government Securities Act, 2006
122nd Constitutional Amendment was introduced in the Lok Sabha.
Requires 2/3rd majority in the Parliament for clearance and subsequent adoption by 50% of the legislatures.
We are now embarked on two more game changing reforms. GST and what the Economic Survey has called the JAM Trinity – Jan Dhan, Aadhar and Mobile – to implement direct transfer of benefits. GST will put in place a state-of-the-art indirect tax system by 1st April, 2016. The JAM Trinity will allow us to transfer benefits in a leakage-proof, well-targetted and cashless manner. (Para 11 of the Finance Minister’s Speech on 28.02.2015)
We need to revive growth and investment to ensure that more jobs are created for our youth and benefits of development reach millions of our poor. We need an enabling tax policy for this. I have already introduced the Bill to amend the Constitution of India for Goods and Services Tax (GST) in the last Session of this august House. GST is expected to play a transformative role in the way our economy functions. It will add buoyancy to our economy by developing a common Indian market and reducing the cascading effect on the cost of goods and services. We are moving in various fronts to implement GST from the next year. (Para 96)
As part of the movement towards GST, I propose to subsume the Education Cess and the Secondary and Higher Education Cess in Central Excise duty. (Para 118)
Introduction of GST is eagerly awaited by Trade and Industry. To facilitate a smooth transition to levy of tax on services by both the Centre and the States, it is proposed to increase the present rate of service tax plus education cesses from 12.36% to a consolidated rate of 14%. (Para 121)
Compensation to States for revenue losses due to phasing out of CST
Actual 2013-14 Budget 2014-15 Revised 2014-15 Budget 2015-16
(Rs. in Crores)
70 0.01 10758 14929
Seriousness on the part of the Government in introducing GST from 01.04.2016 is evident in the speech.
Significant provision for CST compensation to States will ensure that the States come on board.
Devolution of more revenues to States by the Finance Commission would improve the State Finances and act as a GST enabler.
Increase in the service tax rate would make people ready for a GST rate.
Law, policy, guidelines, IT infrastructure will have to move at a faster pace at the Government level in order to meet the deadline.
K.VAITHEESWARAN ADVOCATE & TAX CONSULTANT
Flat No.3, First Floor,
No.9, Thanikachalam Road,
T. Nagar,
Chennai - 600 017, India
Tel.: 044 + 2433 1029 / 4048
402, Front Wing,
House of Lords,
15/16, St. Marks Road,
Bangalore – 560 001, India
Tel : 080 22244854/ 41120804
Mobile: 98400-96876
E-mail : [email protected] [email protected]
www.vaithilegal.com
