Post on 18-Nov-2015
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1
Budget 2015
Contents
Direct tax proposals
Indirect tax proposals
HEADS UP
2
Direct Tax
Proposals
3
Important tax rates AY 2016-17
Particulars
Taxable
Income Less
Than INR 1
Crore
Taxable
Income Less
Than INR 10
Crore
Taxable
Income More
Than INR 10
Crore
Effective MMR 30.90% 34.61%
Effective Corporate Tax Rate (Domestic
Company) 30.90% 33.06% 34.61%
Effective Corporate Tax Rate (Foreign
Company) 41.2% 42.02% 43.26%
Effective MAT 19.06% 20.39% 21.34%
Effective DDT 20.36%
Effective Buy-back tax 23.07%
Basic rates for all assessees have remained the same. Only surcharge has increased by
2% for all assessees (where applicable), except Foreign companies.
4
Direct tax regime Rationalisation
Presently individual, HUF, companies are liable to pay wealth tax
@1% if the net wealth exceeds INR 30 Lakh
To decrease the compliance burden for assesse and administrative
burden for revenue, it is proposed to abolish Wealth tax
However, information relating to the assets covered under the
erstwhile Wealth-tax Act, will have to be mentioned in the Income
tax return to ensure that there is no escapement of income from tax
The FM has proposed in his speech a gradual reduction in
corporate tax rate from 30% to 25% over next four years. This shall
be counterbalanced by a reduction in exemptions
5
Indirect transfer Subjectivity curbed
Following amendments have been proposed w.r.t. taxability of
gains on transfer of shares / interest in a Foreign Entity:
Such gains to be taxable under domestic tax law, if FMV of
underlying Indian assets exceeds:
INR 10 cr., and
50% of all assets of the Foreign Entity
No tax on minority shareholders holding no control / management,
and upto 5% voting power, capital or interest
6
Indirect transfer Subjectivity curbed
When taxable in India, such gains should be computed by way of
reasonable attribution to Indian assets
Indian concern through / in which the Foreign Entity holds any
Indian assets (being the underlying assets from which value of
Foreign entitys shares is derived) made liable to furnish prescribed
information
These requirements can be onerous for some Indian corporates,
where the relationship with the foreign shareholder(s) is not
strategic
Penalty for failure: 2% of transaction value (minimum INR 5 Lacs)
Determination of FMV of assets and attribution of gains, is yet to be
notified
7
REIT and InviT Capital Gains
Presently, capital gains on sale of listed units of REIT/ InviT
acquired by a Sponsor through exchange of shares of unlisted
SPV, are not eligible for LTCG exemption / lower tax rate on STCG
(as available to other unit holders)
It is proposed to bring the Sponsor at par with other unitholders,
whereby units allotted in lieu of transfer of SPV to REIT / InviT shall
be eligible for LTCG exemption / lower tax rate on STCG
However, MAT will continue to apply
Also, if the Sponsor transfers the Real Estate asset to the REIT, the
aforementioned preferential regime will not be available
8
REIT and InviT Capital Gains
Presently, rental Income arising to REIT is taxable in its hands, and
is not eligible for pass-through status
It is proposed that rental income shall not be taxable in the hands of
REIT and no TDS shall apply to the same
Income distributed to unitholders (from the rental income) shall be
taxable in their hands
TDS on above, in case of resident unitholders shall be 10%, and for
non-resident unitholders it shall be 30% (40% in case of a
company)
9
AIF Tax pass through
New tax pass-through regime for SEBI registered Category 1 and 2
AIF
The new regime now covers AIFs organized as LLPs, partnerships,
etc. (earlier regime only covered trusts and companies)
All income (other than business income) shall be exempt in the
hands of the fund, and taxable in the hands of unit holder under
same heads of income
Tax shall be charged in the hands of unit-holders irrespective of
actual distribution of income from fund
10
AIF Tax pass through
Any loss incurred by the fund would be available for set-off against
its income (or to be carried forward to subsequent years). The
same shall no more be available to unit holders, against their
income
Funds would be required to withhold tax @10% on income
distributed / credited to unit holders. Non-resident unit holders
should be able to claim treaty benefits, if available
11
Company Deciding Residential Status
Earlier, situation of control and management of
affairs of a Company wholly in Indian was the
criteria for determining its residential status
The same has been amended to propose that
any company which at any time in the year has
its Place of effective management (POEM) in
India shall become an Indian resident
DTAAs and OECD have the concept of POEM for determining
residency of a company. However, usage of term any time in the
year significantly widens the scope in Indian context
Likely to cause jitters to foreign companies which undertake any
significant function in India. The memorandum however assures
laying down guiding principles in this regard to ensure clarity
12
Fund Managers of Offshore Funds
FM delivers his word from Budget
speech last year. Introduces concrete
proposal to encourage fund managers
to shift to India without constituting an
Indian 'Business Connection' of their
off-shore fund
This exception to general principle of
'Business Connection', is subject to
various conditions, some of which may
require a relook, such as:
5% cap on total participation by Indian residents
No 10 or fewer members should hold 50% or more participation
Fund manager should not be an employee / connected person, or
be entitled to more than 20% profits of the fund
13
Deferment of GAAR
GAAR provisions are currently proposed to
come into effect from FY 2015-2016
Budget 2015 proposes deferment of GAAR
provisions by further two years and the same
shall apply to investments made on or after 01
April 2017(application to prospective investment
is mentioned in speech but missing in Finance
Bill)
The deferment has been attributed to the awaited report on BEPS
project currently being undertaken by OECD with Indias active
participation. The same may require structural changes to be made
in current GAAR proposals
14
Domestic TP Limit Enhanced
To determine reasonableness of expenditure between related
parties or group companies, Transfer Pricing provisions on
domestic transactions were introduced in Finance Act 2012
Currently, Transfer Pricing provisions are applicable to taxpayer, if
aggregate value of specified transactions exceeds INR 5 Crores, in
which case they constitute specified domestic transactions
To reduce the compliance burden on mid-sized assessee, the limit
for applicability of Transfer Pricing provisions is proposed to be
raised to INR 20 Crores
15
Investment Incentives
Allowance of additional depreciation
Additional depreciation @ 20% is allowed to the manufacturing and
power sector, on purchase and installation of new plant and
machinery in first year. However, if such assets are acquired and
put to use for less than 180 days then the depreciation is restricted
to 10% and the balance 10% cannot be availed
Non availability of balance 10% depreciation may motivate assesse
to defer the investment in plant and machinery to next year
To remove this lacunae, it has been proposed that the balance
depreciation of 10% shall be allowed in the immediately succeeding
year
16
Investment Incentives
Tax incentives for Andhra / Telangana
Additional investment allowance @ 15% (over and above
existing investment allowance @ 15%) of cost of new assets
acquired and installed is proposed to be allowed if:
The taxpayer sets up a manufacturing undertaking in the
notified backward areas of these states on or after 01 April
2015
New asset are acquired or installed between 01 April 2015 to
31 March 2020
Additional depreciation @ 35% is proposed to be allowed
(instead of 20% in other cases) on new plant and machinery
purchased and installed in notified backward areas of these states
between 01 April 2015 and 31 March 2020
17
Employment Generation Incentivized
Currently, an Indian company engaged in manufacture of goods in
a factory is allowed (for 3 financial years) a deduction of 30% of
additional wages paid to new regular workmen employed by it
Wages currently imply wages to workmen exceeding 100 employed
in a year, subject to some conditions
To encourage new employment opportunities, it is proposed to
amend the section, as under:
- The benefit is being extended to non company assessee's
having manufacturing units fulfilling the prescribed conditions
- For benefit of smaller units the limit of new workmen is being
reduced from 100 to 50 in a year for allowance of the deduction
18
Reduced tax rate Royalty / FTS
Royalty / FTS income of Non
Residents is currently taxable @ 25%.
Although tax treaties prescribe a lower
rate, obtaining TRC from revenue
authorities of payees country (for
taking treaty benefit) is a challenge
faced by various entities
In order to reduce this hardship and
encourage technology transfers, it has
been proposed to reduce the rate to
10%
19
Rationalization of MAT provisions
To promote investment climate in India, it is proposed that MAT
provisions shall not apply to Net Income of FIIs, other than Short
Term Capital Gain on which STT has not been paid
The amendment however fall short of industry expectation of
clarification that no MAT is payable by a foreign company. This
would have come as a relief to Private Equity investors as well
Further, it is proposed that share of a company (being member of
an AOP) in the income of AOP and relatable expenditure thereon
shall not be considered while computing MAT liability of the
company
20
Indian Branch of Foreign Banks
There has been considerable litigation in past, as regards taxability
in India, of interest paid by Indian branches of Foreign Banks, to
their Head Office or other branches
Henceforth, such branches
shall be treated as tax entities
separate and independent of
their HO
Further, interest paid by them
to their HO / other branches
outside India, will be taxable in
India
21
Demerged asset Capital Gains
There were certain gray areas in computation of capital gain on
subsequent sale by a Resulting Company, of assets acquired
previously by it upon demerger
The same have been now been rationalized by providing that such
gains shall be computed with reference to the cost of acquisition
(and improvement) of the said assets to the Demerged company
To determine the nature of the capital gain (Long-term vs. Short-
term), the period for which the Demerged company held the asset,
shall also be taken into account
22
MF Schemes Tax Neutral Merger
Various Mutual Funds currently run parallel schemes having
essentially similar features. Non existence of tax neutrality
provisions is a hindrance to merger of these schemes
The Finance Bill 2015 proposes to introduce provisions to make
such mergers tax neutral wherein:
- The period of holding of consolidating scheme will be added for
calculating holding period of consolidated scheme
- The cost of acquisition of consolidating scheme will be
considered acquisition cost of consolidated scheme
These provisions shall only apply to merger of similar schemes
(Equity-Equity & Non Equity - Non Equity)
23
GDRs
Pursuant to the notification of Depository
Receipt Scheme, 2014 the Depository
Receipts (DRs) have replaced the erstwhile
GDRs
While the GDRs could only be issued based
on underlying shares / FCCBs of a listed
company, the DRs in the current scheme
represent a much broader spectrum,
including shares / debts instruments issued
by unlisted companies, and unsponsored
DRs
24
GDRs
Capital markets were expecting a tax-friendly liberalised depository
regime, in line with Sahoo committee recommendations, such as:
Conversion of DRs into permissible securities and vice versa,
and NR-to-NR transfer of DRs to be tax neutral
Beneficial tax treatment to apply to DRs based on all permissible
securities
Alignment of tax treatment of sponsored GDRs with that of sale
of shares in listed company
However, the proposed amendment falls short of this expectation,
as the definition of DRs is restricted to the ones based on shares
issued and FCCBs
25
CSR vs. Income-tax deduction
CSR activities were made mandatory for specified Companies by
Companies Act, 2013. Under IT Act, although expenditure on CSR
is disallowed, a benefit is separately allowed by way of specific
deductions (e.g. CSR expenditure on payments to Prime
Ministers National Relief Fund)
To encourage the schemes of Swachchh Bharat, it has been
proposed to provide 100% deduction from income. However, this
deduction would not be allowed if expenditure is done in pursuance
of CSR regulations
Co-relation of allowability of deduction under IT Act vis--vis
recognition as CSR activity in Company Law reflects a negative
approach. Further, it also raises uncertainty on future approach of
government on some cases, where deduction from income on CSR
spent is presently allowed
26
Withholding tax on transporters
In case of payments made to transporters,
there exists a beneficial provision which
allows non deduction of tax, provided the
transporter furnishes PAN
It is proposed to apply this beneficial
provision only to small transporters (those
who do not own more than 10 goods
carriages at any time during the previous
year)
To avail benefit of this provision the transporter should furnish
declaration of not owning more than10 goods carriages along with
its PAN
27
All payment to NRs Form 15CA/CB
Presently, in case of payments to NRs, prescribed from (i.e. form
15CA/CB) is to be furnished only if the amounts are chargeable to
tax under the IT Act. Further, no penalty is leviable if such form is
not furnished
In order to increase scrutiny of all payments to NRs, it has been
proposed that the prescribed form will be required to be furnished
for all payment to non residents, whether taxable or not
Furthermore, penalty of INR 1 lakh has been proposed to be levied
on failure to furnish / furnishing inaccurate information in the
aforesaid prescribed form
28
Penalty for Concealment MAT
Taxpayers to which MAT / AMT is applicable, to be subjected to a
higher penalty for concealment of income, with reference to the tax
effect of such concealment on their MAT / AMT liability
Such incremental liability will be in addition to penalty on
concealment of income computed under normal provisions
29
Personal Tax Raining Deductions
It is proposed to allow following tax benefits
on investments made in Sukanya Samriddhi
Account Scheme, introduced in 2014:
- Investments made in the scheme will be
eligible for deduction u/s 80C of the Act
- Interest accrued on deposits made will be
exempt from tax
- Withdrawal from such account shall be
exempt from tax
The memorandum to Finance Bill / Notes to clauses specifies that
the said amendment is effective retrospectively from financial year
2014-15, the Finance Bill is however silent in this regard
30
Personal Tax Raining Deductions
The limit of deduction u/s 80 D for medical insurance premium has
been increased to INR 25,000 and for senior citizens to INR 30,000
Increase in limit to INR 25,000 for non senior citizens is mentioned
in the memorandum, however the Finance Bill inadvertently misses
the required amendment in this regard
Scope of section 80D has been widened to include medical
expenditure by or for very senior citizen (age exceeding 80 years).
The aggregate deduction would however not exceed INR 30,000
Annual ceiling for investment in annuity plan of LIC or any other
insurer for receiving pension from fund set up under a pension
scheme has been increased to INR 1,50,000 under section 80CCC
31
Personal Tax Raining Deductions
Under section 80CCD, restriction on deduction to INR 1,00,000 for
contribution in Notified Pension Scheme of Central Government is
proposed to be deleted
Further, an additional deduction up to INR 50,000 is proposed to be
provided to individual assessee for contribution to such scheme
32
PF payments Withholding tax
Under the existing provisions, in case of payments by Recognised
Provident Fund (RPF) to employees on account of pre-mature
withdrawal (i.e. before 5 years or transfer to new employer), tax is
to be deducted by computing year-wise amount of taxable income
In order to remove difficulties faced in calculation of tax, it has been
proposed to fix the rate of withholding tax @10% in case of pre-
mature withdrawal, if the amount exceeds INR 30,000. In the
absence of PAN, tax is to be deducted at Maximum Marginal Rate
This amendment is proposed to be effective from 01 June 2015
33
Foreign Tax Credit
To bring more clarity in availing credit of taxes paid outside India, it
is proposed that CBDT may make and notify rules containing the
procedure for granting credit of taxes paid by an Indian resident
outside India
This amendment will take effect from 01 June 2015
34
Tax Administration Revision of orders
Income tax provisions relating to revision
of order passed by assessing officer under
section 263 have been amended to include
situations in which such order shall be
deemed to be prejudicial to the interest of
revenue
This Amendment will take effect from 01 June 2015
These deeming provisions are extensively wide and provide
arbitrary powers to revenue authorities to revisit closed
assessments
Clarification is required on these provisions to prevent misuse
35
Tax Administration Reduced litigation
Presently, the assesse has the option of not filing an appeal against
an unfavorable order if the identical question of law in pending in
his own case at HC or SC level (subject to specified conditions).
Instead, the assessing officer will apply the ratio of HC or SC as
and when its finalized mutatis mutandis to the present case
However, no parallel provision is available to revenue which has
lead to multiplicity of litigation
To avoid multiplicity of litigation, similar provisions have been
proposed to be introduced for revenue wherein in such cases, after
the order of CIT(A), the revenue can move to ITAT informing about
pendency of the issue - To be effective from 01 June 2015
36
Black Money Proposals
In his speech, the FM also referred to a proposed new law on black
money
Incentivizing credit / debit card transactions, and disincentivizing
cash transactions
Concealment of income / assets w.r.t. foreign assets to be
prosecutable with R.I. upto 10 years. The same shall be non-
compoundable, and without an option to approach the Settlement
Commission
Penalty for concealment in such a case shall be levied @ 300% of
tax sought to be evaded
37
Black Money Proposals (Cont.)
Non-disclosure / inadequate disclosure of foreign assets in return of
income to be liable for rigorous imprisonment up to 7 years
Income w.r.t. any undisclosed foreign asset / income therefrom to
be taxable at the maximum marginal rate, without any exemptions /
deductions
Beneficial owner / beneficiary of foreign assets to be mandatorily
required to file return, even if there is no taxable income
Abettors of above offences to be liable for prosecution and penalty
Concealment in relation to a foreign asset to be made a predicate
offence under PMLA, 2002
This would attachment and confiscation of unaccounted assets held
abroad
38
Black Money Proposals (Cont.)
Amendment also made to enable attachment and confiscation of
equivalent asset in India where foreign asset cannot be forfeited
FEMA to be amended to the effect that if any foreign exchange /
security / immovable property is held in contravention of FEMA,
then action may be taken for seizure and eventual confiscation of
assets of equivalent value situated in India
For curbing domestic black money, Benami Transactions
(Prohibition) Bill to be introduced to enable confiscation of benami
property and provide for prosecution
39
Acceptance / repayment of loan or
deposit for amount exceeding INR
20,000 is currently not allowed in cash
However, there was no specific
restriction relating to money received as
advance for transfer of immovable
property, and hence shelter was taken
by assesses to defeat the existing
provision, leading to generation of black
money
To curb generation of black money, the existing restriction on amount
exceeding INR 20,000 is also proposed to be applied to advance for
transfer of immovable property with effect from 01 June 2015
Black Money Proposals (Cont.)
40
Indirect Tax
Proposals
41
GST- Way Forward
The Goods and Service Tax (GST) is one of the
biggest taxation reforms in India. The Honble
Finance Minister in his Budget speech show
cased the Union Governments commitment to
implement Goods and Service Tax laws
The draft provisions of GST law would be made
available shortly on the public domain after the
Constitutional Amendment Bill is passed by the
Upper House and the President of India
assenting the same
India is expected to move to the new tax regime
from 01 April 2016
42
Service Tax
43
Change of Rate
Effective rate of Service tax increased from 12.36% (inclusive of cess)
to 14%. Education Cess and Secondary and Higher Education Cess
to be subsumed in the revised rate
Alternative tax rate applicable in case of Air Travel Agent, Insurer of
Life Insurance Business, Forex Conversion Agency and Distributor or
Selling Agent of Lottery, also changed
The above provision shall come into effect from the date to be Notified
after the enactment of the Finance Bill, 2015
An enabling provision to levy Swachchh Bharat Cess @ 2% or less
on all or certain services introduced
44
Negative List
Following services are taken out from the negative list and are brought
under the service tax net:
Services provided by Government / local authority to a business entity
Access to amusement facility such as rides, bowling alleys,
amusement arcades, water parks, etc.
Admission to entertainment event of concerts, non-recognized
sporting events, pageants, music concerts and award functions, if the
amount charged for admission is more than Rs 500
Carrying out any processes as job work for production or manufacture
of alcoholic liquor for human consumption
The above provisions will come into effect from the date to be notified
after the enactment of the Finance Bill, 2015
45
Exemptions Withdrawn
Exemption in respect of following services is withdrawn:
Services of construction, repair of civil structures, etc. when provided
to Government in respect of:
Civil structure or any other original works meant predominantly for
use other than for commerce, industry, or any other business or
profession
A structure meant predominantly for use as an educational,
clinical, or an art / cultural establishment
A residential complex predominantly meant for self-use or the use
of their employees or other specified persons
Construction, erection, commissioning or installation of original works
pertaining to an airport or port
46
Exemptions Withdrawn
Transportation of food stuff by rail / vessels / road will be limited to
transportation of food grains including rice and pulses, flours, milk
and salt
Services provided by a performing artist in folk or classical art form
of music, dance or theater, will be limited only to such cases where
amount charged is upto Rs 1,00,000 for a performance (except
Brand ambassador)
Services provided by departmentally run public telephone,
guaranteed public telephone operating only local calls
Service by way of making telephone calls from free telephone at
airport and hospital where no bill is issued
47
Exemptions Withdrawn
Services provided by a mutual fund agent to a mutual fund or assets
management company
Services provided by distributor to a mutual fund or AMC
Services provided by selling or marketing agent of lottery ticket to a
distributor of lottery
The above provisions will come into effect from the 01 April 2015
48
Exemptions
Exemption is extended to following services :
Ambulance services provided to patients
Services provided by Common Effluent Treatment Plant operator for
treatment of effluent
Services of pre-conditioning, pre-cooling, ripening, waxing, retail
packing, labeling of fruits and vegetables
Life insurance service provided by way of Varishtha Pension Bima
Yojna
Service provided by way of exhibition of movie by the exhibitor/
theatre owner to the distributor or association of persons consisting
of exhibitor as one of its member
49
Exemptions
Service provided by way of
admission to a museum, zoo,
national park, wild life sanctuary
and a tiger reserve
Transport of goods for export by
road from the factory/ place of
removal to a Land Customs
Station (LCS)
The above provisions will come into effect from the 01 April 2015
50
Abatement
A uniform abatement has been proposed for transport by rail, road
and vessel to bring parity in these sectors. Service Tax shall be
payable on 30% of the value of such services subject to condition of
non-availment of Cenvat Credit on inputs, capital goods and input
services
The abatement for executive (business/first class) air travel, wherein
the service element is higher, has been reduced from 60% to 40%
Abatement is being withdrawn on chit fund services
The above provisions will come into effect from the 01 April 2015
51
Changes in Service Tax Rules
Simplification of registration process. Registration shall now be
granted within two days
A provision for issuing digitally signed invoices is being added along
with an option of maintaining records in electronic form and their
authentication by means of digital signatures
The above provisions will come into effect from the 01 April 2015
52
Reverse Charge
Manpower supply and security services when provided by individual,
HUF, partnership firm to a body corporate are being brought to full
reverse charge. Presently, these are taxed under partial reverse
charge mechanism
Following services are brought under reverse charge mechanism (full
reverse charge):
Services provided by mutual fund agents and mutual fund
distributors
Services provided by agents of lottery distributor
Services provided by a person involving an aggregator (applicable
from 01.03.2015)
The above provisions will come into effect from the 01 April 2015
53
Penalty
Penalty provisions substituted to rationalize penalties as follows:
In cases not involving fraud / collusion / wilful mis-statement /
suppression of facts or contravention of any provision of the Act or
rules with the intent to evade payment of service tax:
In addition to the service tax determined, a penalty not
exceeding 10% of the service tax so determined shall be
payable
if service tax and interest payable thereon is paid within 30 days
of issue of show cause notice, no penalty shall be payable
if service tax and interest payable thereon is paid within 30 days
of the date of communication of order, the amount of penalty
shall be equal to 25% of the penalty so imposed
54
Penalty
In cases involving fraud / collusion / wilful mis-statement of
suppression of facts or contravention of any provision of the Act or
rules with the intent to evade payment of service tax:
a penalty equal to the service tax shall be payable
if service tax and interest payable thereon is paid within 30 days
of communication of show cause notice, the amount of penalty
payable shall be 15% of the service tax
if service tax and interest payable thereon is paid within 30 days
of the date of communication of order of the Central Excise
Officer, the amount of penalty shall be equal to 25% of the
service tax so determined
The above provisions will come into effect from the date of
enactment of Finance Bill, 2015
55
Others
The value of reimbursable expenditure is now included as
consideration for services provided subject to certain exceptions
The option of advance ruling is now extended to all resident firms
as defined
Matters pertaining to rebate of export of services shall now lie with
Government after the adjudication of matters by Commissioner
(Appeals) i.e. review of orders by Central Government
Service definition amended to clarify inclusion of services
provided by chit foremen and agents of lottery tickets
56
Central Excise
57
Central Excise
Standard ad valorem rate of central excise duty increased from existing
12% to 12.5%
Rate of excise duty applicable to goods covered by the Medicinal and
Toilet Preparations Act, 1955 is also increased from 12% to 12.5% ad
valorem
Education Cess (2%) and Secondary and Higher Education Cess (1%)
leviable on excisable goods as a duty of excise is fully exempted
Other Basic Excise Duty rates (ad valorem as well as specific) with a few
exceptions are not being changed
58
Central Excise
Existing excise duty exemption on solar water heater and system replaced
by optional excise duty of Nil without CENVAT credit / 12.5% with CENVAT
credit
Excise duty of 2% without CENVAT credit / 12.5% with CENVAT credit
provided to tablet computer. Full exemption granted to parts & components
for use in manufacture of tablet computer
Excise duty on mobile handsets including cellular phone is changed from
1% without CENVAT credit/ 6% with CENVAT credit to 1% without
CENVAT credit/ 12.5% with CENVAT credit
59
Central Excise
Excise duty exempted on specified raw materials for use in manufacture of
pacemakers, subject to actual user condition
Goods manufactured domestically and supplied against International
Competitive Bidding exempted from excise duty subject to condition that
such goods when imported attract Nil Basic Customs Duty and Nil CVD
if imported goods are eligible for Nil Basic Customs Duty and Nil CVD
subject to certain conditions, then the said conditions shall also apply
mutatis mutandis to such goods when manufactured domestically and
supplied against International Competitive Bidding
The above provisions will come into effect from 1st day of March 2015
60
Change in Rates
Item/ Products Increase/
Decrease
Existing
Rate
New Rate
Peanut Butter NIL 2% without Credit
6% with Credit
Waters, including mineral waters and aerated
waters, containing added sugar or other sweetening
matter or flavoured1
12% 18%
Goods falling under Chapter sub-heading 2523 29 900
per tonne
1000
per tonne
Goods falling under tariff item 3923 21 00 and
Chapter sub-heading 3923 29
12%
18%
Leather footwear of Retail Sale Price exceeding
Rs.10002
12%
6%
1 Additional duty of excise levied @ 5% on the said products under seventh schedule to CETA exempted
2 Exemption not available to footwear of leather sole with textile upper
61
Change in Rates
Item/ Products Increase/
Decrease
Existing
Rate
New Rate
Pig iron SG grade (7201 1000) and ferro-silicon-
magnesium (7202 2900) for manufacture of cast
components of wind operated electricity generators
12%
NIL
Round copper wire and tine alloys for use in the
manufacture of PV ribbon (tinned copper
interconnect) for manufacture of solar PV cells and
modules
12% NIL
Wafers for use in the manufacture of IC modules for
smart cards
12% 6%#
Inputs for use in manufacture of LED driver and
MCPCB for LED lights and Fixtures & LED Lamps
12% 6%#
Chassis for ambulance
24% 12.5%#
# Subject to actual user condition
The above provisions will come into effect from 1st day of March 2015
62
Condensed milk put in unit containers are liable for MRP Valuation with an
abatement of 30%
Extracts, essences and concentrates of tea or mate including iced tea are
now notified for MRP Valuation with an abatement of 30%
Lemonade, Soya milk drinks, fruit pulp based drinks and beverages
containing milk are now liable for MRP Valuation with an abatement of 35%
The abatement percentage has been reduced from 35% to 25% for all kind
of footwear
MRP based assessment is being prescribed expressly for LED Lights or
fixtures including LED lamps with an abatement of 35%
MRP Valuation
63
Penalty
Penalty provisions substituted to rationalize the penalty as follows:
In cases not involving fraud or collusion or wilful mis-statement or
suppression of facts or contravention of any provision or rules with the
intent to evade payment of excise duty:
in addition to the duty determined, a penalty not exceeding 10% of the
duty so determined, or, Rs 5,000 whichever is higher shall be payable
if duty and interest payable thereon is paid either before issue of show
cause notice or within 30 days of issue of show cause notice, no
penalty shall be payable and all proceedings shall be deemed to be
concluded
if duty and interest payable thereon is paid within 30 days of the date of
communication of order, the amount of penalty shall be equal to 25% of
the penalty so imposed
64
In cases involving fraud or collusion or wilful mis-statement of suppression
of facts or contravention of any provision or rules with the intent to evade
payment of excise duty:
a penalty equal to the duty shall be payable. In respect of cases where
the details relating to such transactions are recorded in the specified
record, penalty payable shall be 50% of the duty so determined
if duty and interest payable thereon is paid within 30 days of
communication of show cause notice, the amount of penalty payable
shall be 15% of the duty
if duty and interest payable thereon is paid within 30 days of the date of
communication of order of the Central Excise Officer, the amount of
penalty shall be equal to 25% of the duty so determined
Above provisions will be effective from date of enactment of Finance Bill 2015
Penalty
65
Central Excise Rules
Manufacturer allowed to issue invoice authenticated by means of
a digital signature
Manufacturer allowed to maintain and preserve the daily stock
account in electronic form provided each page of the record
shall be authenticated by means of digital signatures
Registration to be granted within 2 days. Process simplified to
benefit manufacturers and dealers
66
Central Excise Rules
Rules amended to specifically allow:
goods to be dispatched directly to the job-worker on the
direction of the manufacturer or service provider, subject to the
condition that the invoice shall contain the specified particulars
goods to be sent directly to any person on the direction of the
registered dealer, subject to the condition that the invoice shall
contain the detail of the dealer as buyer and such person as
consignee
goods imported can be sent directly to buyer, provided the
invoice issued by importer mention that goods are sent directly
to buyer
The above provisions will come into effect from 01 March 2015
67
Cenvat Credit Rules
The period for taking Cenvat Credit is extended from six months
to one year from the date of invoice
Cenvat Credit of Service Tax paid under partial reverse charge
was available on making payment to the services provider. The
said provision has been amended to allow the credit after such
service tax is paid by the service recipient
The above provisions will come into effect from 01 March 2015
68
Petrol & Diesel- Change in duty structure
The above provisions will come into effect from 01 March 2015
Duty Rates applicable upto 28.02.2015 Duty Rates applicable with effect from 01.03.2015
CENVAT
Rs. / Ltr
SAED
Rs/ Ltr
AED
Rs/ Ltr
Edu
Cess
Total
Rs / Ltr
CENVAT
Rs. / Ltr
SAED
Rs. / Ltr
AED
Rs. / Ltr
Ed. Cess
Rs. / Ltr
Total
Rs. / Ltr
Unbranded Petrol
8.95 6 2 3% 17.46 5.46 6 6 NIL 17.46
Branded Petrol
10.10 6 2 3% 18.64 6.64 6 6 NIL 18.64
Unbranded Diesel
7.96 NIL 2 3% 10.26 4.26 NIL 6 NIL 10.26
Branded Diesel
14% + Rs
5/ltr or Rs
10.25/Ltr
whichever is
lower
NIL 2 3% 12.62 6.62 NIL 6 NIL 12.62
69
Others Changes
Excise Duty on cut tobacco is being increased from Rs.60 per kg to
Rs.70 per kg
With respect to Pan Masala, Gutkha and Chewing Tobacco, the
maximum speed of packing machines has been specified as a
relevant factor for determining the duty under Compounded Levy
Scheme
There has been a change in the mechanism for levy of duty on
cigarettes and other products
Clean Energy Cess on coal, ignite and peat increased from Rs.100
per tonne to Rs.300 per tonne
70
Customs
71
Exemption
CVD and SAD fully exempted on specified raw materials namely
battery, titanium, palladium wire, eutectic wire, silicone resins and
rubbers, solder paste, reed switch, diodes, transistors, capacitors,
controllers, coils (steel), tubing (silicone) for use in the manufacture
of pacemakers
In order to address the issue of Cenvat Credit accumulation of SAD
Exemption granted to all goods (except PCBs) required for use
in the manufacture of specified goods (IT Agreement products)
Exemption granted to inputs for use in the manufacture of LED
drivers and MCPCB for LED lights, fixtures and LED lamps
The above provisions will come into effect from 01 March 2015
72
Exemption
Exemption from BCD is granted to following items:
Parts and components of Cash Dispenser and automatic bank note dispensers
Evacuated Tubes with three layers of solar selective coating for use in the
manufacture of solar water heater and system
High Density Polyethylene for manufacture of telecommunication grade optical
fibres or optical fibres cables
Digital Still Image Video Camera of specified configuration and Parts and
Components of these cameras
Organic LED TV panels
Black Light Unit Module for use in the manufacture of LCD/ LED TV panels
Magnetron upto 1 KW for use in the manufacture of microwave ovens
Parts, components and accessories for use in the manufacture of tablet computers
exempted from BCD, CVD and SAD
The above provisions will come into effect from 01 March 2015
73
Rate Change
Items / products Existing Rate New Rate
Ulexite ore 2.5% NIL
Liquefied butanes 5% 2.5%
Sulphuric acid for the manufacture of fertilizer 7.5% 5%
Isoprene 5% 2.5%
Styrine, Ethylene Dichloride (EDC) and Vinly Chloride
Monomer (VCM)
2.5% 2%
Anthraquinone 7.5% 2.5%
Butyl Acrylate 7.5% 5%
Antimony Metal and Antinomy Waste & Scrap 5% 2.5%
Rate of BCD reduced in respect of following items:
The above provisions will come into effect from 01 March 2015
74
Rate Change
Items/ products Existing
Rate
New
Rate
C-Block Compressor, Over Load Protector (OLP) &
Positive thermal co-efficient and Crank Shaft for
compressor, for use in the manufacture of Refrigerator
compressors
7.5% 5%
Specified Components of CNC lathe machines and
machining centers, namely Ball screws, linear Motion
Guides and CNC Systems
7.5% 2.5%
Zeolite, ceria zirconia compounds and cerium
compounds for use in the manufacture of wash coats,
which are further used in manufacture of catalytic
converters
7.5% 5%
The above provisions will come into effect from 01 March 2015
75
Rate Change
Items/ products Existing
Rate
New
Rate
Water blocking tape, Ethylene-Propylene-non-
conjugated-Diene Rubber (EPDM) and Mica glass
tape for use in the manufacture of insulated wires and
cables
10% 7.5%
Metal parts for use in the manufacture of electrical
insulators subject to actual user condition
10% 7.5%
Certain specified inputs for use in the manufacture of
flexible medical video endoscopes
5% 2.5%
Artificial heart (left ventricular assist device) 5% NIL
The above provisions will come into effect from 01 March 2015
76
Rate Change
Rate of duty increased in respect of following items:
BCD on Metallurgical coke (2701 12 00) is increased from 2.5% to 5%
Tariff rate on iron & steel and articles of iron or steel, falling under Chapters 72
and 73 of the Customs Tariff, increased from 10% to 15% - However, there is no
change in the effective rates of basic customs duty on these goods
Tariff rate on Commercial Vehicles increased from 10% to 40% and effective
rate from 10% to 20%. Customs duty on commercial vehicles in Completely
Knocked Down (CKD) kits and electrically operated vehicles including those in
CKD condition will continue to be at 10%
Additional Duty of Customs on imported Motor Spirit (Petrol) and High Speed
Diesel Oil (commonly known as Road Cess) is being reduced from Rs. 2 to Rs.
8 litre. However, effective rate of Additional Duty of Customs levied on imported
petrol and diesel is increased from Rs. 2 to Rs. 6 per litre
The above provisions will come into effect from 01 March 2015
77
Others
Concessional BCD is extended to Active Energy Controller for
manufacture of renewable power system inverters subject to
conditions
SAD on Naphtha (2710) , Styrine, Ethylene Dichloride (EDC) and
Vinyl Chloride Monomer (VCM) for use in manufacture of excisable
goods reduced from 4% to 2%
SAD on melting scrap of iron or steel, scrap for the purpose of
melting, copper scrap, brass scrap and aluminium scrap reduced to
2%
The above provisions will come into effect from 01 March 2015
78
Gaurav Singhal,
Chartered Accountant
Manish Khurana,
Chartered Accountant
Malav Shah
Chartered Accountant
Pawan Kumar Pahwa
Advocate
Anuj Mahajan,
Chartered Accountant