3 rd Floor, Oricon House

Transcription

1 UNION BUDGET rd Floor, Oricon House 12 K. Dubhash Marg, Kalaghoda, Mumbai -23

2 Overview Direct Tax No change in Income Tax exemption slabs Direct Taxes Code to be introduced before the end of this Budget session Royalty or technical fees paid to NRI s will attract higher rate of tax i.e. 25% (previously it was 10%) Indirect Tax No change in rate of basic Custom Duty, Excise Duty and Service Tax One time Amnesty scheme for service tax assessees Draft GST Constitutional amendment bill and GST bill in pipeline 1

3 Direct Tax

4 Direct Tax Effective from April 1, 2013 No change in tax rates for Individuals, Companies, Partnership Firms, Cooperative societies and Local Authorities The amount of Income tax shall be increased by a surcharge at the rate of 10% in case of Individuals, Co-operative societies, Firms and Local authorities on income exceeding` 1 Crore In case of Companies the proposed rate of surcharge is : Existing Proposed Assessee Total Income Total Income Exceeding `1 Crore `1 Crore `10 Crore Exceeding `10 Crore Domestic Company 5% 5% 10% Other than Domestic Company 2% 2% 5% 2

5 Direct Tax Effective from April 1, 2013 Commodities Transaction 0.01%, payable by the seller, proposed to be levied on taxable commodities transactions entered into in a recognized association Incentive on investment made by a company engaged in the business of manufacture, for a sum of more than `100 Crore in new assets (plant or machinery) during the period beginning from April 1, 2013 and ending on March 31, 2015, shall be allowed a deduction of 15% on the aggregate amount of assets acquired and installed during the above period, subject to fulfillment of specified conditions Income received by non-resident in respect of royalty or fees for technical services chargeable to 25% in place of 10% 3

6 Direct Tax Effective from April 1, 2013 Rebate in Income tax of`2000 for individuals having total income up to`5 Lakhs Additional deduction in respect of interest on loan sanctioned during F.Y for acquiring residential house property. This deduction, applicable only to first-home buyers, shall not exceed `1 Lakh in an A.Y., subject to following conditions: The loan is sanctioned during F.Y The amount of loan sanctioned does not exceed `25 Lakhs The value of residential house property does not exceed`40 Lakhs The limit of percentage of eligible premium for life insurance policies of persons with disability or disease raised from 10% to 15% of capital sum assured 4

7 Direct Tax Effective from April 1, 2013 Deduction in respect of medical insurance premium extended for contribution to health schemes similar to CGHS Scope of deduction expanded to include investments in listed units of an equity oriented fund (RGESS) for three consecutive assessment years as against a onetime deduction, while also increasing the eligibility in respect of GTI from`10 Lakhs to`12 Lakhs 100% deduction for donation to National Children s Fund Proposal to adopt the stamp duty value, where consideration of the assets other than capital assets is less than stamp duty value 5

8 Direct Tax Effective from April 1, 2013 If the difference between stamp duty value and consideration exceeds `50,000, in case of receipt by an Individual or HUF of immovable property, due to inadequate consideration, the stamp duty value of such property shall be adopted as the consideration Keyman insurance policy once assigned during its term, shall continue to be treated as a Keyman insurance policy, with or without consideration and shall not be subject to exemption No deduction shall be allowed in respect of any sum contributed by way of cash by an Indian Company to any political party or an electoral trust 6

9 Direct Tax Effective from April 1, 2013 Tax residency certificate is now necessary but not sufficient condition for claiming treaty benefits under certain agreements Non filing of Annual information return after issuance of notice to attract penalty of `500 per day Extension of sunset clause for the power sector by further period of one year i.e. up to March 31,

10 Direct Tax Effective from June 1, 2013 Dividend distributed by the holding Company shall not be subject to DDT if the holding Company has received dividend from a foreign subsidiary, to the extent of such dividend received 1% TDS by transferee proposed on transfer of immoveable properties (other than agricultural land) to a resident transferor where value of such immoveable property exceeds`50 Lakhs The expression Tax Due now includes penalty, interest or any other sum payable under the Act 8

11 Direct Tax Effective from June 1, 2013 Additional 20% to be charged on difference between price at which buy back is effected and issue price, in case a Company buys back its unlisted shares from shareholders New facility introduced for electronic filing of annexure-less Return of Net Wealth for certain class of assessees Return of Income filed without payment of self-assessment tax to be treated as defective return 9

12 Indirect Tax

13 Central Excise Imprisonment of up to 7 years and fine in case of offence involving CED exceeding `50 Lakhs (earlier CED was`30 Lakhs) All offence except those specified offence and involving CED in excess of `50 Lakhs will be non-cognizable Specified offence involving CED in excess of `50 Lakhs would be cognizable and non-bailable Recoveries of CED can now be made from amounts lying with another Central Excise officer or Custom officer as defined in Section 142 of Customs Act, 1962 after giving proper notice Attachment of property now applicable to all provisions of Section 11A of CEA 10

14 Central Excise Recovery of dues has now been extended to any other person holding any money for or on behalf of defaulter after giving proper notice and such person is bound to comply with the notice and in case of non compliance such person would be treated as assessee in default Service of statement shall be deemed to be treated as service of SCN for subsequent period if SCN has already been issued for earlier period Definition of the term activity has been enlarged for the purpose of seeking advance ruling Advance ruling to now cover issues of admissibility of credit of service tax paid or deemed to have been paid on input services 11

15 Central Excise Advance ruling order void if obtained by fraud or misrepresentation of facts On application by party, Tribunal on specified grounds can extend the effect of stay order by additional 185 days. If the appeal is not decided within 365 days of the original stay order, the stay order will be vacated Monetary limit of single bench of Tribunal has been increased from `10 Lakhs to`50 Lakhs 12

16 Central Excise Effective from March 1, 2013 Branded and generic ayurvedic, unani, siddha, homeopathic or bio-chemic medicaments have been brought under Third schedule and hence applicable to MRP based valuation Pressure cooker included in MRP based valuation in Third schedule CED on cigarettes and cigars have been enhanced Tariff CED on specified motor vehicles has been increased to 30% from 27% 13

17 Central Excise Effective from March 1, 2013 Pressure cooker included in MRP based valuation with abatement of 25% Branded and generic ayurvedic, unani, siddha, homeopathic or bio-chemic medicaments have been brought under MRP based valuation with abatement of 35% If assessee is entitled to refund pursuant to final assessment order, then interest is payable if the refund application is not decided within three months from the date of filing of such refund application Cenvat credit would be recovered along with interest if it has been wrongly taken on inputs and capital goods and removed as such or after use or written off or partially written off 14

18 Central Excise Effective from March 1, 2013 The term Applicant now includes resident public company and this been divided into two parts i.e. Resident and Public Limited Company which shall have the meanings assigned to it in Section 2(42) of Income Tax Act, 1961 and Section 3(1) and Section 43A of the Companies Act, 1956 respectively CED on stainless steel pattis or pattas has been increased from `30,000/- per cold rolling machine per month to `40,000/- per cold rolling machine per month Effective rate of 1% on mobile handsets including cellular phones has been removed 15

19 Central Excise Effective from March 1, 2013 Exemption from CED provided to intermediate goods captively consumed in manufacture of final goods by units availing Area based exemption in the State of Himachal Pradesh & Uttarkhand Effective rate of CED on branded cotton goods not containing other textile material has been reduced from 12% to 6% with Cenvat benefits Full exemption from CED without Cenvat benefits has been provided to following goods Specified handmade carpets Ships for transport of persons or goods Tugs and pusher craft Vessels other than warships 16

20 Central Excise Effective from March 1, 2013 Full exemption from CED to branded readymade garments have been provided with no Cenvat benefit Concessional CED of 6% for specified parts of electrical vehicles has been extended up to March 31, 2015 CED has been increased from`30 per sq. meter to`60 per sq. meter in case of marble slabs and tiles Full exemption from CED subject to fulfillment of certain condition: Tapioca Starch Peanut Butter Tapioca Sago Henna Powder or Paste 17

21 Central Excise Effective from March 1, 2013 Explanation has been inserted to include Bentonite sulphur as fertilizer 4% imposed on silver produced or manufactured during the process of zinc or lead smelting starting from the state of zinc or lead ore or concentrate Copper now means copper and copper alloys including brass for the purpose of Serial No 217 in Notification No. 12/2012 dated March 17, 2012 Mobile handset with RSP less than`2000/- chargeable to 1% and 6% in case of other mobile 18

22 Central Excise Effective from March 1, 2013 Refund to the extent of 28% of CED paid at the time of clearance available to SUV used as taxi Effective CED on SUV s increased from 27% to 30% CED on chassis of other than petrol driven motor vehicle for transport of goods has been reduced from 14% to 13% 19

23 Customs Scope of copyrights enhanced to include designs and geographical indications for empowering government to prohibit import/export of such goods Rights given for provisional attachment of property belonging to the person on whom SCN has been served under Section 28(4) of CA The definition of activity under Advance ruling has been expanded to include any new business of import or export proposed to be undertaken by the existing importer or exporter, as the case may be The CBEC has been empowered to allow the landing of vessels or aircrafts at any place other than customs port or at custom airport 20

24 Customs Electronic filling of IGM /EGM now permissible. The Commissioner of Customs has been given power to allow the delivery of such manifest in cases where electronic filing is not feasible Interest free days for paying custom duty reduced to 2 from 5 if importer fails to pay duty on clearance of goods for home consumption Restriction of time period of 30 days has been specified for clearance of imported goods stored in public warehouse. The Commissioner of Customs empowered to extend the period of this storage for additional period not exceeding 30 days Section 104 of CA amended for specifying certain offences to be bailable and non bailable respectively 21

25 Customs On application by party, Tribunal on specified grounds can extend the effect of stay order by additional 185 days. If the appeal is not decided within 365 days of the original stay order, the stay order will be vacated Recoveries of Custom duty can now be made from amounts lying with the proper officers or any other person after giving proper notice and such person is bound to comply with the notice Facility for duty free import under advance license scheme has been withdrawn The BCD has been increased to 125% from 100% on motor cars and other motor vehicles principally designed for transport of person including station wagons and racing cars 22

26 Customs Effective from March 1, 2013 The threshold limit has been increased to` 1500 from`600 to bring items gifts like chocolates, cheese, cosmetics and other petty gift items at the time of returning of the aircraft from foreign journey for their personal or family use by crew member of an aircraft Threshold limit for bringing jewelry without payment of CD has been enhanced to `50,000 in case of male passenger and `1,00,000 in case of female passenger Exemption from levy of education cess withdrawn on import of parts of aircraft (for e.g. aeroplane and helicopter) spacecraft, maize corn, soya bean, olive other oils, mustard oil and other vegetable oils 23

27 Customs Effective from March 1, 2013 The exemption of BCD on import of ships and vessel under chapter heading 89.01, 89.04, and are being rescinded BCD on steam coal has been increased to 2% from NIL duty and CVD has been increased to 2% from 1% The BCD on set top box has been increased to 10% from 5% The BCD has been increased to 100% from 75% on import of motor vehicle whose FOB Value is more than $40,000 or with engine capacity more than 3000 CC for petrol segment and 2500 CC diesel segment or both The BCD on motorcycle with engine capacity of 899 CC or more has been increased to 75% from 60% 24

28 Customs Effective from March 1, 2013 The exemption of BCD on foreign going vessels (Ships and vessels ) has been removed BCD on the following machines has been reduced to 5% from 7.5% Machine for extruding drawings, texturing or cutting man made textile materials Machines for preparing textiles fibers, spinning, doubling or twisting machines and other machinery for producing textiles yarns; textile reeling or winding Weaving machines (looms) Knitting machines, stitch-bonding machines and machines for making gimped yarn, tulle, lace, embroidery, trimming, braid Auxiliary machinery for use with machine of heading 8444,8445,8446 and 8447 Machinery for the manufacture of finishing of felt or non woven in the piece or in shapes, including machinery for making felt hats; blocks for making hats 25

29 Service Tax Negative list Scope expanded by including education services provided by industrial training institute or industrial training centre affiliated to State Council for vocational training, earlier only institutes affiliated to National Council for vocational training were covered Vocational education course provided by an institute affiliated to the National Skill Development Corporation excluded from negative list Process amounting to manufacture or production of goods to include manufacturing process defined under Medicinal and Toilet Preparations (Excise Duties) Act, 1955 All testing of agriculture & agricultural produced now covered under negative list 26

30 Service Tax If a SCN is issued by invoking extended period of limitation (i.e. period beyond 18 months) and held as not sustainable by any Appellate authority or Tribunal or Court then the Central Excise Officer shall determine service tax only for the limited period of 18 months Penalty under Section 77 for failure to pay service tax or non-registration shall be maximum`10,000. Earlier it was higher of`10,000 or`200 per day from due date till actual compliance date Tribunal can now admit an appeal by an assessee after expiry of the filing period i.e. 3 months subject to sufficient cause for such delay being demonstrated 27

31 Service Tax Penalty of up to`1 lakh to be levied on any director/ manager/ secretary or any other officer of the Company who at the time of following contravention was in charge and responsible for conduct of the business and knowingly concerned with such contravention: Service tax evasion Issue of bill, invoice, challan without provision of taxable service Availment & utilisation of credit/ duty without receipt of taxable services/ excisable goods either partially or fully Failure to pay any service tax collected to the Government treasury within 6 months of its due date Section 89 completely revamped thus providing specific punishments for specific contravention 28

32 Service Tax Section 90 introduced to specify and differentiate cognizable offences from non-cognizable and bailable offences Commissioner of Central Excise granted power to arrest person committing certain specified offences Retrospective exemption given to Indian railways in respect of services provided prior to July 1, 2012 Introduction of Amnesty Scheme for specified assessees for service tax remaining unpaid as on March 1, 2013 for the period October 1, 2007 to December 31, This scheme provides for waiver of penalty, interest & other proceedings 29

33 Service Tax Effective from March 1, 2013 Reduction in abatement rate from 75% to 70% for construction of buildings, civil structures etc., other than residential unit having carpet area up to 2000 square feet or amount charged is less than`1 Crore Benefit of Advance Rulings now available to Resident Public Ltd. Company 30

34 Service Tax Effective from April 1, 2013 Exemption on services provided by educational institution (to persons other than educational institution) in respect of education by way of auxiliary educational services and renting of immovable property withdrawn Exemption in relation to copyrights for cinematograph films will be available only to films exhibited in a cinema hall or theatre All Air conditioned restaurants, eating joints or a mess which serves food or beverages covered under service tax net. Earlier such establishments were taxed if they possessed a license to serve alcohol Transport of petroleum products, postal mail or mail bags and household effects by rail/vessel within India is now taxable 31

35 Service Tax Effective from April 1, 2013 Scope of exemption provided to Goods transport agency expanded to include transport of newspapers, chemical fertilizers, defence equipments etc. Vehicle parking service provided to general public is now taxable Exemption on services provided to government/local authority for repair and maintenance of aircraft withdrawn 32

36 Glossary Abbreviations Abbreviations CGHS Central Government Health Scheme CVD Countervailing Duty GTI Gross total Income CED Central Excise Duty DDT Dividend Distribution Tax CEA Central Excise Act RGESS Rajiv Gandhi Equity Savings Scheme CA Customs Act TDS Tax Deducted at Source BCD Basic Custom Duty CBEC Central Board of Excise & Customs EGM Export General manifest MRP Maximum Retail Price IGM Import General manifest RSP Retail Sales Price SCN Show Cause Notice SUV Sports Utility Vehicle CD Custom Duty 33

37 Disclaimer Thispublicationisintendedtoprovideclientswiththedetailsofthebudgetproposals,it has been prepared for general guidance of interest only, and does not constitute professional advice Nopersonshallactupontheinformationcontainedinthispublicationwithoutobtaining specific professional advice S M & Associates, its members, employees accept no liability and disclaim all responsibilities for the consequence of any person acting or refraining to act, if reliance is placed on the information contained in this publication or for any decision based on it Thispublicationisforprivatecirculationonly

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