Baroda Branch of WIRC of ICAI

March 2, 2013

Indirect Taxes – Analysis of

Union Budget 2013-14

& Recent Issues

Presented by : CA Anirudh Sonpal

• No direction towards GST

• Has largely ignored concerns and recommendations of trade & industry

CA Anirudh Sonpal

CA Anirudh Sonpal

“Clarity in Tax Laws, a Stable Tax Regime, a non-adversarial Tax Administration, a Fair Mechanism for Dispute Resolution, and an Independent Judiciary will provide great assurance.”

CA Anirudh Sonpal

No Change in Peak Rate Of

• Customs – 10%

• Central Excise – 12%

• Service Tax – 12%

CA Anirudh Sonpal

Products Existing(BCD) Rate

BCD Revised Change

Hazel Nuts 30% 10%

De-Hulled Oat 30% 15%

Bituminous Coal 5% + 6% CVD 2% + 2% CVD

Steam Coal Nil + 1% CVD 2% + 2% CVD

Raw Silk 5% 15%

Pre-Forms of Precious and Semi-Precious Stones

10% 2%

20 Specified machinery foruse in leather or footwearindustry

7.5 % 5%

Textile machinery and partsThereof

7.5% 5%

CA Anirudh Sonpal

Customs

Products Existing(BCD) Rate

BCD Revised Change

Set Top box 5% 10%

Cars/motor vehicles with CIF value > US $ 40,000 or with engine capacity > 3000 cc for petrol-run vehicles and > 2500 cc for diesel-run vehicles or with both

75% 100%

Import of old cars 100% 125%

New motorcycles with enginecapacity of 800cc or more

60% 75%

Yachts and other vessels 10% 25%

CA Anirudh Sonpal

Customs

• Validity Period of Exemption granted to Identified Parts of Hybrid and Electric Vehicles – Extended up to 31-3-2015.

• Exemption from Education Cess and Secondary and Higher Education Cess withdrawn on Aeroplanes, Helicopters and their Parts.

• Time period for Consumption/installation of Parts and testing Equipment imported for maintenance, repair and overhaul(“MRO”) of Aircraft by units engaged in such activities increase from 3 month to 1 Year.

Customs

CA Anirudh Sonpal

Customs

CA Anirudh Sonpal

• Limit of Jewellery allowed duty free to an Indian Passengers who has been residing abroad for more than 1 Year or coming to India for residency has been increased:

Old Value allowed duty free

Revised Value allowed duty free

Gentleman Passenger

Rs. 10,000 Rs.50,000

Lady Passenger Rs. 20,000 Rs.1,00,000

Products Existing BED Revised BED Change

Marble Slabs and Tiles 30 Per Sq. Meter

60 Per Sq. Meter

Silver Produced or Manufactured during the Process of Zinc or lead smelting starting from the stage of Zinc or lead ore or concentrate

Nil 4%

Compounded duty Rate on Stainless steel “patta – Patti”

Rs. 30,000 per Machine per Month

Rs. 40,000 per Machine per Moth

Mobile Handsets including cellular Phones having Sales Price > Rs.2,000

1% 6%

SUV/Utility Vehicles – Under Tariff Heading 8703 and Engine capacity >1500 CC

27% 30%

Chassis of diesel mother vehicles for the transport of good

14% 13%

CA Anirudh Sonpal

Excise

CA Anirudh Sonpal

Excise• Exemption- All handmade carpets and carpets

and other textile floor coverings of Coir and Jute, weather or not hand made

• Branded Aruvedic Medicaments and medicaments of Unani, Siddha, Homeopathy or Bio-Chemic system are brought under “MRP” based assessment with an abatement of 35% from MRP.

• Validity Period of Concessional Excise duty of 6% granted to Specified Parts of Hybrid and Electric Vehicles – Extended by 31-3-15.

• Excise duty on Cigarettes and other products – increased.

• Approved Vocational Course with also include Courses Conducted by State Council for Vocational Training.

• “Process Amounting to Manufacture or Production” with also include processes under the Medicinal & Toilet Preparations(Excise Duties) Act, 1955.

• Services in relation to Agriculture or Agricultural Produce will include all testing in relation to Agriculture or Agricultural Produce.

Service Tax – Changes in Negative List

CA Anirudh Sonpal

• Abatement for Construction of Complex, Building, Civil Structures(Notification 2/2013, w.e.f. 1-3-2013)

• Residential Unit having Carpet area upto 2000 sq. feet or Amount charged is < Rs. 1 Crore – 75%

• Other than above – 70%.

CA Anirudh Sonpal

Issue – Rate under Works Contract?

• Exemptions withdrawn

• Services Provided by an Educational Institution by way of Auxiliary Educational Services and Renting of Immovable Property.

• Vehicle Parking to General Public

Modifications in Exemptions

CA Anirudh Sonpal

• Temporary Transfer or Permitting use or enjoyment of copyright – only to films exhibited in cinema halls

• Restaurant/Eating Joint/ Mess – Taxable if having facility of Air Conditioning or Central Air Heating.

Exemptions

CA Anirudh Sonpal

• Transportation by Rail or Vessel – Exemption withdrawn for Petroleum, Postal Mails & Household effects; Few Harmonized with Exemption to GTA.

• Service by Entities Registered under Section 12 AA of the I.T Act – Charitable Activities will not include Advancement of any other Object for General Public Utility.

Exemptions

CA Anirudh Sonpal

• Vacation of Stay order – Max 365 days

• Power of Single Bench to hear and Dispose Appeals – limit increased from Rs.10 lacs to Rs.50 lacs.

• Excise – Modes of Recovery – from Refund and Third Party.

Customs & Central Excise – Other Changes

CA Anirudh Sonpal

• Recovery (Section 73) – if demand for intended period fails on account of charges not having been established, the CEO will determine tax for 18 months(Normal Period)

• Penalty (Section 77) – Restricted to Rs.10,000.

• Penalty (Section 78A) – Upto 1 lacs on directors/Manager/Secretory/Officer in charge – specified contraventions by Company – Wilful Actions

Service Tax – Recovery & Penalties

CA Anirudh Sonpal

• Monetary limit increased from Rs. 30 lacs to Rs. 50 lacs for Specified offences inviting imprisonment (Section 89) – similar changes also incorporated under Central Excise

• Section 90 - Offence cognizable(Failure to deposit tax collected); - Other specified offences Non Cognizable & Bailable

Service Tax - Offences

CA Anirudh Sonpal

• Section 91 • Power to Arrest - CCE to

authorize Superintendent;• Release by Asst/Deputy Com for non-

cognizable and bailable offences

Service Tax - Offences

CA Anirudh Sonpal

• Custom & Excise – New Activity / Business by Existing Eligible Applicants.

• Excise – Cenvat Credit of Service Tax on Input Service used in Manufacture.

• Excise & Service Tax – Resident Public Limited Company – Eligible.

Advance Ruling

CA Anirudh Sonpal

Service Tax – Voluntary Compliance Encouragement Scheme, 2013

CA Anirudh Sonpal

Amnesty or

Facilitation for Non-Filers and Stop-Filers, as claimed?

• Declaration of Tax Dues• Payable from 1-10-2007 to

31-12-2012 but not paid till 1-3-2013.

• Conditions• No Notice till 1-3-2013• Not Eligible if Return Filed but Tax

Disclosed and Not Paid.

Service Tax – Voluntary Compliance Encouragement Scheme, 2013

CA Anirudh Sonpal

• Liable to be rejected vide an order if Enquiry/Summons/Audit etc. pending as on 1-3-2013.

• Declaration before 31-12-2013

Service Tax – Voluntary Compliance Encouragement Scheme, 2013

CA Anirudh Sonpal

• Payment • Not less than 50% before 31-12-

2013• Balance -before 30-6-2014 without interest -till 31-12-2014 with interest

• Immunity from Penalty/Interest etc.

• Acknowledgement & Discharge

Service Tax – Voluntary Compliance Encouragement Scheme, 2013

CA Anirudh Sonpal

• Revised ST 3 Return – Due date 25-3-13 for the period July-September 2012

• Reimbursement of Expenses – Delhi High Court in the matter of Intercontinental Consultants Technocrats Pvt. Ltd.

Other Issues

CA Anirudh Sonpal

• POT- Circular 158/9/2012 dated 8-5-2012 – Rate of Tax - Delhi High Court – in the matter of Delhi Chartered Accountants Society

• Recovery even if stay application not disposed of – CBEC Circular 976/01/2013 dated 1-1-2013

Other Issues

CA Anirudh Sonpal

TAMSO MA JYOTIRGAMAYA

CA Anirudh Sonpal