SERVICE TAX AMENDMENTS in Budget 2014

(A)    Review of the Negative List of services

·        Levy of Service Tax on Radio-taxis/cabs

The government has proposed to levy Service Tax on Radio-taxis/cabs whether or not air-conditioned. Earlier the same was exempted from the purview of Service Tax as it was covered under the Negative list [Section 66D (o)]. In order to remove disparity between the two, the abatement presently available to rent-a-cab service would also be made available to Radio-taxis/cabs. The abatements were notified by the government vide Notification No. 25/2012-ST dated 26-06-2012. The definition of radio taxi is being included in the exemption notification No.25/2012-ST which reads as mentioned here-in-below:

“a taxi including a radio cabby whatever name called which is in two way radio communicationwith a central control office and is enabled for tracing using Global Positioning System (GPS) or General Packet Radio Service (GPRS)”.

Applicable From:

It will come into effect from a date to be notified later, after the Finance (No.2) Bill, 2014 receives the assent of the President.

·        Service Tax extended to be levied on sale of space or time for advertisements on online & mobile advertising

Earlier Service Tax was leviable on sale of space or time for advertisements in broadcast media such as ‘radio’ or ‘television’. It has been now proposed to be extended to cover:-

§  Such sales on other segments like ‘online’ and ‘mobile’ advertising;

§  Advertisements in internet websites;

§  Out-of-home media;

§  On film screen in theatres;

§  Bill boards;

§  Conveyances;

§  Buildings;

§  Cell phones;

§  Automated Teller Machines;

§  Tickets;

§  Commercial publications;

§  Aerial advertising, etc..

In this regards, it would be relevant to note that the sale of space for advertisements in print media would continue to be in the negative list and hence remain excluded from the ambit of service tax.

Now one may be in dilemma over here as in what will happen if a person provides a composite service of providing space for advertisement that is covered in the negative list entry coupled with taxable service relating to design and preparation of the advertisement. How will its taxability be determined?

This would be a case of bundled services taxability of which has to be determined in terms of the principles laid down in section 66F of the Act. Bundled services have been defined in the said section as provision of one type of service with another type or types of services. If such services are bundled in the ordinary course of business then the bundle of services will be treated as consisting entirely of such service which determines the dominant nature of such a bundle. If such services are not bundled in the ordinary course of business then the bundle of services will be treated as consisting entirely of such service which attracts the highest liability of service tax.

Applicable From:

It will come into effect from a date to be notified later, after the Finance (No.2) Bill, 2014 receives the assent of the President.

(B)    Review of General Exemptions

For ease of reference and simplicity most of the exemptions were incorporated under one single mega exemption notification 25/2012-ST dated 20/6/12. Out of 39 such entries in the Mega Exemption Notification, entry no. 7 & 23(b) stands to be withdrawn which are mentioned here-in-below for ease of reference:

·        Exemption extended to clinical research on human participants is being withdrawn [Entry No. 7]

Services by way of technical testing or analysis of newly developed drugs, including vaccines and herbal remedies, on human participants by a clinical research organisation approved to conduct clinical trials by the Drug Controller General of India has been withdrawn vide Notication No. 06/2014-ST dated 11^TH July, 2014.

For this purpose ‘contract carriage’ has the meaning assigned to it in clause (7) of section 2 of the Motor Vehicles Act, 1988 (59 of 1988)

·        Exemption extended to ‘air-conditioned’ contract carriages like buses is being withdrawn [Entry No. 23(b)]

Earlier under the entry no. 23(b) exemption was for the transportation of passengers, with or without accompanied belongings, by a contract carriage excluding tourism, conducted tour, charter or hire whether air condition or not.

In this regards, it must be noted that the exemption has been withdrawn only for ‘air-conditioned’ contract carriages like buses vide Notication No. 06/2014-ST dated 11^TH July, 2014 and hence shall now be chargeable to Service Tax. . As a result, any service provided for transport of passenger by air-conditioned contract carriage including which are used for point to point travel, will attract service tax, with immediate effect. Service tax will be charged at an abated value of 40% of the amount charged from service receiver and the effective tax will be 4.944%

 Applicable From:

Both the aforesaid exemptions withdrawn shall be chargeable to Service Tax with immediate effect.

(C)      Rationalisation of Exemptions

Amendments in EXCISE in Budget 2014

                                  EXCISE
                AMENDMENTS IN THE CENTRAL EXCISE ACT, 1944:
 
1) The Central Excise Act, 1944 or Finance Act, 1994 is being amended so that a reference in that Act to a Chief Commissioner of Central Excise or a Commissioner of Central Excise may also include a reference to the Principal
Chief Commissioner of Central Excise or the Principal Commissioner of Central Excise, as the case may be. It also seeks to provide for consequential amendments in the Act. [Clause 88]
2) Section 2(b) is being amended so as to provide for inclusion of Principal Chief Commissioner of Central Excise and Principal Commissioner of Central Excise in the definition of the Central Excise Officer. [Clause 89]
3) Section 15A is being inserted so as to empower the Central Government to prescribe an authority or agency to whom the information return shall be filed by the specified persons such as Income Tax Authorities, State Electricity Boards, VAT or Sales Tax Authorities, Registrar of Companies. Information can be collected for the purposes of the Act, such as, to identify tax evaders or recover confirmed dues. It is also proposed to insert a new section 15B which provides for imposition of penalty if the information return is not submitted. [Clause 90]
4) Section 31(g) and section 32(1) is being amended to change the name of the ‘Customs and Central Excise Settlement Commission’ to the ‘Customs, Central Excise and Service Tax Settlement Commission’ as the scope of the functioning
of the Customs and Central Excise Settlement Commission was expanded in the year 2012 so as to include settlement of Service Tax matters as well. [Clause 91, 92]
5) Section 32E(1) is being amended to replace the reference to section 11AB with a reference to section 11AA since section 11AB has been omitted by the Finance Act, 2011. [Clause 93]
6) Section 32E(1) is also being amended to allow filing of applications of settlement before the Settlement Commission in cases where the applicant has not filed the returns after recording reasons for the same. [Clause 93]
7) Section 32E is being amended to omit sub-section (2) since the same is redundant. [Clause 93]
8) Section 32O(1) is being amended so as to insert an Explanation that the concealment of particulars of duty liability relates to any such concealment made from the officer of central excise and not from the Settlement Commission.[Clause 94]
9) Section 35B(1) is being amended so as to increase the discretionary powers of the Tribunal to refuse admission of appeal from the existing Rs.50,000 to Rs.2 lakh. [Clause 95]
10) Section 35B(1B) is being amended to substitute the words “by notification in the official gazette” with “by order” so as to enable the Board to constitute a Review Committee by way of an order instead of by way of a notification.
[Clause 95]
11) Section 35C(2A) is being amended to omit the first, second and third proviso in view of substitution of section 35F with a new section. [Clause 96]
12) Section 35E is being amended to insert a proviso in sub-section (3) to vest the Board with powers to condone delay for a period upto 30 days for review by the Committee of Chief Commissioners of the orders in original passed by the
Commissioner of Central Excise. [Clause 97]
13) Section 35F is being substituted with a new section to prescribe a mandatory fixed pre-deposit of 7.5% of the duty demanded or penalty imposed or both for filing appeal with the Commissioner (Appeals) or the Tribunal at the first stage and 10% of the duty demanded or penalty imposed or both for filing second stage appeal before the Tribunal. The amount of pre-deposit payable would be subject to a ceiling of Rs. 10 crores. [Clause 98]
14) Section 35L is being amended so as to clarify that determination of disputes relating to taxability or excisability of goods is covered under the term ‘determination of any question having a relation to rate of duty’ and hence, appeal against
Tribunal orders in such matters would lie before the Supreme Court. [Clause 99]
15) Section 35R is being amended so as to enable the Commissioner (Appeal) to take into consideration the fact that a particular order being cited as a precedent decision on the issue has not been appealed against for reasons of low amount. [Clause 100]
16) The Third Schedule to the Central Excise Act, 1944 is being aligned with noti fication No. 49/2008-CE (NT) dated 24.12.2008 which specifies goods liable for assessment based on Retail Sale Price (RSP). [Clause 104]
The change at para 16) will come into effect immediately owing to a declaration under the Provisional Collection of Taxes Act, 1931.

AMENDMENTS IN THE FIRST SCHEDULE TO THE CENTRAL EXCISE TARIFF ACT, 1985:1) Excise duty on cigarettes is being increased by 72% for cigarettes of length not exceeding 65 mm and by 11% to 21% for cigarettes of other lengths. Similar increases are proposed on cigars, cheroots and cigarillos.
2) Basic excise duty is being increased from 12% to 16% on pan masala, from 50% to 55% on unmanufactured tobacco and from 60% to 70% on jarda scented tobacco, gutkha and chewing tobacco.
3) Tariff item 2402 20 60 is being omitted.
4) The entry 2403 19 occurring against the description “Other than paper rolled biris, manufactured without the aid of machine” is being substituted with 2403 19 21.
5) The unit quantity code against certain entries is being changed. [Clause 105]
The changes at 1) to 4) will come into effect immediately owing to a declaration under the Provisional Collection of Taxes Act, 1931.

RETROSPECTIVE AMENDMENT TO RULES:
1) Rule 8 of the Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008 is being amended with retrospective effect from 13.04.2010 to provide that where a manufacturer manufactures pouches of
different RSPs on a single machine, the duty liability for that month would be the duty applicable to the highest of the RSP so manufactured. This will align the Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008 with the Chewing Tobacco and Unmanufactured Tobacco Packing Machines (Capacity Determination and Collection of Duty) Rules, 2010 with regard to manufacture of pouches of different RSPs on a single machine under the compounded levy scheme. [Clause 101]

RETROSPECTIVE EXEMPTIONS:
1) Un-branded articles of precious metals are being exempted from excise duty for the period 01.03.2011 to 16.03.2012 so as to remove the unintended levy of excise duty on un-branded articles of precious metals for the said period.
[Clause 102]
2) Excise duty on Polyester Staple Fiber (PSF) and Polyester Filament Yarn (PFY) manufactured from plastic waste or scrap or plastic waste including waste polyethylene terephthalate (PET) bottles (which is already exempt w.e.f. 08.05.2012) is being exempted retrospectively w.e.f. 29.06.2010 to 07.05.2012 and intermediate product ‘Tow’ arising during the course of manufacture of such PSF/PFY is being exempted retrospectively w.e.f. 29.06.2010 to 10.07.2014 so as to provide relief to the manufacturers of such PSF/PFY and to rectify the unintended levy of central excise duty on tow (an intermediate product) arising during the course of manufacture of such PSF/PFY. [Clause 102, 103]
3) Full exemption from Central Excise duty is being provided to Liquefied Propane and Butane mixture, Liquefied Propane, Liquefied Butane and Liquefied Petroleum Gases (LPG) for supply to Non-Domestic Exempted Category (NDEC)
customers by the Indian Oil Corporation Limited, Hindustan Petroleum Corporation Limited or Bharat Petroleum
Corporation Limited retrospectively from 08.02.2013 so as to treat NDEC customers, such as, hospitals, government canteens, BSF/CISF mess, etc., at par with domestic customers for the purposes of supply of LPG. [Clause 103]
 
Proposals involving changes in rates of duty:
I. AGRICULTURE/AGRO PROCESSING/PLANTATION SECTOR:1) Excise duty on machinery for the preparation of meat, poultry, fruits, nuts or vegetables, and on presses, crushers and similar machinery used in the manufacture of wine, cider, fruit juices or similar beverages and on packaging machinery is being reduced from 10% to 6%.
II. AUTOMOBILES:
1) Excise duty is being exempted on parts of tractors removed from one or more factories of a tractor manufacturer to another factory of the same manufacturer for manufacture of tractors.
III. METALS:
1) Excise duty on winding wires of copper is being increased from 10% to 12%.
IV. PRECIOUS METALS
1) Un-branded articles of precious metals are being exempted from excise duty for the period 01.03.2011 to 16.03.2012.
V. TEXTILES:
1) Excise duty on Polyester Staple Fiber (PSF) and Polyester Filament Yarn (PFY) manufactured from plastic waste or scrap or plastic waste including waste polyethylene terephthalate (PET) bottles (which is already exempt w.e.f. 08.05.2012) is being exempted retrospectively w.e.f. 29.06.2010 to 07.05.2012 and intermediate product ‘Tow’ arising during the course of manufacture of such PSF/PFY is being exempted retrospectively w.e.f. 29.06.2010 to 10.07.2014.
2) Excise duty at the rate of 2% (without CENVAT) or 6% (with CENVAT) is being imposed on Polyester Staple Fiber and Polyester Filament Yarn manufactured from plastic waste or scrap or plastic waste including waste polyethylene terephthalate (PET) bottles w.e.f. 11th July, 2014.
VI. HEALTH:
1) Full exemption from excise duty is being provided to DDT manufactured by Hindustan Insecticides Limited for supply to the National Vector Borne Diseases Control Programme (NVBDCP) of the Ministry of Health & Family Welfare.
2) Full exemption from excise duty is being provided for HIV/AIDS drugs and diagnostic kits supplied under National AIDS Control Programme (NACP) funded by the Global Fund to Fight AIDS, TB and Malaria (GFATM).
3) Excise duty on cigarettes is being increased by 72% for cigarettes of length not exceeding 65 mm and by 11% to 21% for cigarettes of other lengths. Similar increases are proposed on cigars, cheroots and cigarillos.
4) Basic excise duty is being increased from 12% to 16% on pan masala, from 50% to 55% on unmanufactured tobacco and from 60% to 70% on jarda scented tobacco, gutkha and chewing tobacco.
VII. ELECTRONICS/HARDWARE:
1) Excise duty on recorded smart cards is being increased from 2% without CENVAT and 6% with CENVAT to a uniform rate of 12%.
2) Full exemption from Excise Duty is being provided to reverse osmosis (RO) membrane element used in water filtration or purification equipment (other than household type filter). Excise duty on RO membrane element used in household
type filters is being reduced from 12%/10% to 6%.
3) Excise duty on Metal Core PCB and LED driver for use in the manufacture of LED lights and fixtures and LED lamps, is being reduced from 12%/10% to 6%.
VIII. RENEWABLE ENERGY
1) Excise duty is being reduced from 12% to Nil on forged steel rings used in the manufacture of bearings of wind operated electricity generators.
2) Full exemption from excise duty is being provided for solar tempered glass used in the manufacture of solar photovoltaic cells/modules, solar power generating equipment/system, and flat plate solar collectors.
3) Full exemption from excise duty is being granted in respect of machinery, equipments, etc. required for setting up of solar energy production projects.
4) Full exemption from excise duty is being provided to backsheet and EVA sheet used in the manufacture of photovoltaic cells/modules and specified raw materials used in their manufacture.
5) Full exemption from excise duty is being provided to parts consumed within the factory of production for the manufacture of non-conventional energy devices [Sl.No.332 of notification No.12/2012-CE, dated 17.03.2012].
6) Full exemption from Excise Duty is being provided on flat copper wire used in the manufacture of PV ribbons (tinned copper interconnect) for use in the manufacture of solar cells/modules.
7) Full exemption from excise duty is being provided on machinery, equipments, etc. required for setting up of compressed biogas plant (Bio-CNG).
IX. CONSUMER GOODS
1) The scope of the phrase “not mixed with any other ingredient” in the context of excise duty exemption on “heena powder or paste, not mixed with any other ingredient” is being clarified so as to provide that the exemption is available to heena powder mixed with a liquid, so far that the liquid is a medium to change the form of heena powder into paste but excludes products like heena dye and such other products which are cosmetics and have no ceremonial or traditional value.
2) Excise duty is being reduced from 12% to 6% on footwear of retail price exceeding Rs.500 per pair but not exceeding Rs.1,000 per pair. Footwear of retail price upto Rs.500 per pair will continue to remain exempted.
3) Excise duty on hand operated sewing machine (2% without CENVAT / 6% with CENVAT) is being rationalized by levying concessional excise duty on sewing machines other than those operated with electric motors (whether in-built or attachable to the body)
4) Semi- mechanized units manufacturing safety matches, which attract concessional excise duty of 6%, are being allowed to carry out the processes of ‘Pasting of labels’ and ‘Packing’ with the aid of power.
5) Concessional excise duty of 2% without CENVAT credit and 6% with CENVAT credit is being extended to gloves specially designed for use in sports.
6) An additional duty of excise is being levied at the rate of 5% ad valorem on aerated waters containing added sugar.
X. ENERGY SECTOR
1) Central Excise duty on Branded Petrol is being reduced from Rs.7.50 per litre to Rs. 2.35 per litre.
2) Full exemption from Central Excise duty is being provided to Liquefied Propane and Butane mixture, Liquefied Propane, Liquefied Butane and Liquefied Petroleum Gases (LPG) for supply to Non-Domestic Exempted Category (NDEC)
customers by the Indian Oil Corporation Limited, Hindustan Petroleum Corporation Limited or Bharat Petroleum Corporation Limited retrospectively from 08.02.2013.
3) The rate of Clean Energy Cess levied on coal, lignite and peat is being increased from Rs.50 per tonne to Rs. 100 per tonne.
XI. SECURITY AND STRATEGIC PURPOSES:
1) Full exemption from Excise Duty is being provided to goods supplied to National Technical Research Organisation (NTRO).
2) Full exemption from excise duty is being provided for security threads and security fibre supplied to Security Paper Mill Corporation of India Limited (SPMCIL) and Bank Note Paper Mill India Private Limited (BNPMIPL).
XII. MISCELLANEOUS
1) Optional excise duty of 2% (without CENVAT)/6% (with CENVAT) on writing and printing paper for printing of educational textbooks is being withdrawn and instead a uniform excise duty of 6% with CENVAT is being levied.
2) Intermediate goods manufactured and consumed captively for further manufacture of matches is being fully exempted.
3) The scope of the Excise Duty exemption to “all goods supplied against International Competitive Bidding” is being clarified to the effect that the said exemption is also available to sub-contractors for manufacture and supply of goods to the main contractor (who has won the bid for the project through ICB) for execution of the said project.
4) Full exemption from Excise duty is being provided on plastic materials reprocessed out of the scrap or waste and cleared into the DTA by an EOU.
5) Education cess and secondary & higher education cess (customs component) is being exempted on goods cleared by an EOU into the DTA.
6) A clarification is being issued that the exemption from education cess and secondary & higher education cess under notifications No.28/2010-CE and No.29/2010-CE, both dated 22.06.2010 is applicable only in respect of the clean
energy cess leviable on coal and not in respect of excise duty leviable on coal.
7) It is being clarified that all goods falling under headings 8601 to 8606 (except 8604) attract 6% excise duty with CENVAT benefit.
MISCELLANEOUS
1) The Seventh Schedule to the Finance Act, 2001 dealing with National Calamity Contingent Duty is being amended to omit the tariff item 2402 20 60 as a consequential change to amendment in the First Schedule to the Central Excise Tariff Act.
This change will come into effect immediately owing to a declaration under the Provisional Collection of Taxes Act, 1931.
[Clause 107]
2) The Seventh Schedule to the Finance Act, 2005 dealing with Additional Excise Duty is being amended so as to:
(a) impose an additional duty of excise at the rate of 5% ad valorem on aerated waters containing added sugar.(b) omit the tariff item 2402 20 60 as a consequential change to amendment in the First Schedule to the Central Excise Tariff Act.
These changes will come into effect immediately owing to a declaration under the Provisional Collection of Taxes Act, 1931.
[Clause 110]
3) The Tenth Schedule to the Finance Act, 2010 dealing with Clean Energy Cess is being amended so as to expand the scope of purposes of levy of the said cess to include clean environment initiatives and funding research in the area of
clean environment. [Clause 111]

Amendments in CUSTOMS ACT in Budget 2014

A. General
1) Baggage Rules are being amended to,-
(i) raise the free baggage allowance from Rs.35,000 to Rs.45,000.
(ii) reduce the duty free allowance of cigarettes from 200 to 100, of cigars from 50 to 25 and of tobacco from 250 gms to 125 gms.

B. Proposals involving changes in rates of duty:
I. AGRICULTURE/AGRO PROCESSING/PLANTATION SECTOR:
1) Description of the product “sun dried dark seedless raisins” in notification No.12/2012-Customs, dated 17.03.2012, which attracts concessional Basic Customs Duty of 30% is being changed to “dark seedless raisins”.
2) Full exemption from customs duty is being granted to de-oiled soya extract, groundnut oil cake/oil cake meal, sunflower oil cake/oil cake meal, canola oil cake/oil cake meal, mustard oil cake/oil cake meal, rice bran/rice bran oil cake and palm kernel cake, up to 31.12.2014.

II. CHEMICALS AND PETROCHEMICALS
1) Basic Customs duty on reformate is being reduced from 10% to 2.5%. Basic Customs duty on propane, ethane, ethylene, propylene, butadiene is being reduced from 5% to 2.5%.
2) Basic Customs Duty on ortho-xylene is being reduced from 5% to 2.5%.
3) Basic Customs Duty on denatured ethyl alcohol and methyl alcohol is being reduced from 7.5% to 5%.
4) Basic Customs Duty on crude naphthalene is being reduced from 10% to 5%.
5) Basic Customs Duty on fatty acids, crude palm stearin, RBD and other palm stearin and specified industrial grade crude oils is being reduced from 7.5% to Nil for manufacture of soaps and oleochemicals subject to actual user condition.
Basic Customs Duty is also being reduced on crude glycerine from 12.5% to 7.5% in general and from 12.5% to Nil for manufacture of soaps subject to actual user condition.

III. ENERGY SECTOR
1) The duty structure on non-agglomerated coal of various types is being rationalized at 2.5% BCD and 2% CVD. Accordingly, the BCD on Coking coal is being increased from NIL to 2.5% and on steam coal and bituminous coal from
2% to 2.5%. The BCD on anthracite coal and other coal is being reduced from 5% to 2.5%. The CVD on Anthracite coal, Coking coal and other Coal is being reduced from 6% to 2%.
2) Basic Customs Duty on metallurgical coke is being increased from Nil to 2.5%.
3) Exemption from Basic Customs Duty is being granted on re-gasified LNG for supply to Pakistan.
4) Liquefied Propane and Butane mixture, Liquefied Propane, Liquefied Butane and Liquefied Petroleum Gases (LPG) imported by the Indian Oil Corporation Limited, Hindustan Petroleum Corporation Limited or Bharat Petroleum
Corporation Limited, for supply to Non-Domestic Exempted Category (NDEC) customers is being fully exempted retrospectively w.e.f. 08.02.2013.

IV. TEXTILES:
1) The duty free entitlement for import of trimmings & embellishments used by the readymade textile garment sector for manufacture of garments for export is being increased from 3% to 5%.
2) Non-fusible embroidery motifs or prints are being included in the list of items eligible to be imported duty free for manufacture of garments for export.
3) The list of specified goods required by handicraft manufacturer-exporters is being expanded by including wire rolls so as to provide Customs Duty exemption on import by handicraft manufacturer-exporters.
4) Fusible embroidery motifs or prints, anti-theft devices, pin bullets for packing, plastic tag bullets, metal tabs, bows, ring and slider hand rings are being included in the list of items eligible to be imported duty free for  manufacture of handloom made ups or cotton made ups or manmade made ups for export.
5) Specified goods imported for use in the manufacture of textile garments for export are fully exempt from BCD and CVD subject to the condition that the manufacturer produces an entitlement certificate from the Apparel Export Promotion Council. In addition, Indian Silk Export Promotion Council (ISEPC) is being authorised to issue entitlement certificate.
6) Basic Customs Duty on raw materials for manufacture of spandex yarn viz. Polytetramethylene ether glycol (PT MEG) and Diphenylmethane 4,4 di-isocyanate (MDI) is being reduced from 5% to Nil.

V. METALS:
1) Basic Customs Duty on stainless steel flat products (CTH 7219 and 7220) is being increased from 5% to 7.5%
2) The BCD on ships imported for breaking up is being reduced from 5% to 2.5%.
3) Export duty on bauxite is being increased from 10% to 20% .
4) Basic Customs Duty on coal tar pitch is being reduced from 10% to 5%.
5) Basic Customs Duty on battery waste and battery scrap is being reduced from 10% to 5%
6) Basic Customs Duty on steel grade limestone and steel grade dolomite is being reduced from 5% to 2.5%.

VI. PRECIOUS METALS:
1) Basic Customs Duty on half-cut or broken diamonds is being increased from NIL to 2.5% and on cut & polished diamonds and colored gemstones from 2% to 2.5%.
2) Full exemption from Basic Customs Duty is being granted to pre-forms of precious and semi-precious stones.
3) The variation level and the parameter of measurement in respect of re-import of cut and polished diamonds after certification/grading from a foreign laboratory/agency are being increased as a trade facilitation measure.

VII. ELECTRONICS/HARDWARE:
1) Basic Customs Duty on LCD and LED TV panels of below 19 inches is being reduced from 10% to NIL.
2) Basic Customs Duty is being exempted on specified parts of LCD and LED panels for TVs.
3) Basic Customs Duty on colour picture tubes for manufacture of cathode ray TVs is being reduced from 10% to NIL.
4) Basic Customs Duty on specified telecommunication products not covered under the ITA (Information Technology Agreement) is being increased from NIL to 10%.
5) Special Additional Duty (SAD) on all inputs/components used in the manufacture of Personal Computers (laptops/ desktops) and tablet computers is being exempted, subject to actual user condition.
6) Education cess and Secondary and Higher Education (SHE) cess is being levied on imported electronic products.
7) Full exemption from Special Additional Duty (SAD) is being provided on specified inputs (PVC sheet & Ribbon) used in the manufacture of smart cards.
8) Basic Customs Duty is being reduced from 7.5% to NIL on E-Book readers.
9) CVD exemption on portable X-ray machine / system is being withdrawn.

VIII. RENEWABLE ENERGY:
1) Basic Customs Duty is being reduced from 10% to 5% on forged steel rings used in the manufacture of bearings of wind operated electricity generators.
2) Full exemption from Special Additional Duty is being provided on parts and components required for the manufacture of wind operated electricity generators.
3) Basic customs duty on machinery, equipments, etc. required for setting up of solar energy production projects is being reduced to 5%.
4) Full exemption from Basic Customs Duty is being provided on specified raw materials used in the manufacture of solar backsheet and EVA sheet.
5) Full exemption from Basic Customs Duty is being provided on flat copper wire used in the manufacture of PV ribbons (tinned copper interconnect) for solar PV cells/modules.
6) Concessional customs duty of 5% is being provided on machinery, equipments, etc. required for setting up of compressed biogas plant (Bio-CNG).

IX. CAPITAL GOODS/INFRASTRUCTURE:
1) It is being clarified that road construction machinery imported duty free can be sold within 5 years of importation subject to payment of customs duty on depreciated value and that individual constituents of the consortium whose names appear in the contract can import goods without payment of duty.
2) State Governments concerned are being notified as sponsoring authority for Metro Rail Projects covered under the Project Import Regulations, 1986.
3) Plants & Equipment imported prior to 2008 for use in projects financed by the UN or an international organization, which hitherto could not be transferred / sold / re-exported out of the project site, are now being allowed to be transferred / sold / re-exported from the project site.
4) The requirement of certification by Ministry of Road Transport (or NHAI) for availing of customs duty exemption on specified goods required for construction of roads is being done away with. 
5) Director (Electrical) is being authorized to issue the requisite certificate to enable Delhi Metro Rail Corporation to avail of Nil BCD and Nil CVD benefits in respect of their Phase-1 and Phase-2 projects instead of Director (Rolling Stock,
Electrical & Signalling) at present.

X. HEALTH
1) Full exemption from customs duty is being provided for HIV/AIDS drugs and diagnostic kits imported under National AIDS Control Programme (NACP) funded by the Global Fund to Fight AIDS, TB and Malaria (GFATM).

XI. SECURITY AND STRATEGIC PURPOSES:
1) Full exemption from Basic customs Duty is being provided to goods imported by National Technical Research Organisation (NTRO).
2) Full exemption of customs duty is being provided on security fibre, security threads and M-feature imported by Bank Note Paper Mill India Private Limited (BNPMIPL), Mysore. Full exemption from BCD and CVD is also being provided for raw materials required for manufacture of security threads and security fibre subject to actual user condition.
3) The scope of exemption notification No.39/96-Customs dated 23.07.1996 [S.No.7] granting full exemption from BCD and CVD on goods imported for use in the manufacture of aircrafts for the Ministry of Defence is being clarified to the effect that the exemption is available to all materials in any form and articles thereof, subject to the overall condition that they conform to aeronautical specification accompanied with certificate of conformance/release note/airworthiness certificate for development.

XII. AIRCRAFTS & SHIPS:
1) It is being clarified that aircraft engines and parts thereof are eligible for duty exemption when imported for servicing, repair or maintenance of aircrafts used for scheduled operations.

XIII. MISCELLANEOUS:
1) Tariff item 3903 19 90 is being deleted from notification No.10/2008-Customs, [India-Singapore Comprehensive Economic Co-operation Agreement (CECA)]. As a result, Basic Customs Duty on Polystyrene (other than moulding
powder) is being increased from 1.15% to 7.5%.
2) Basic Customs Duty is being reduced from 5% to 2.5% on electrolysers and their parts/spares required by caustic soda or caustic potash units and membranes and their parts/spares required by industrial plants based on membrane cell technology. The BCD on other spares (other than membranes and parts thereof) is also being reduced from 7.5% to 2.5%.
3) A provision is being made for refund of Customs duty paid at the time of import of scientific and technical instruments, apparatus, etc. by public funded and other research institutions, subject to submission of a certificate of registration from the Department of Scientific & Industrial Research (DSIR).
4) Section 8B of the Customs Tariff Act, 1975 is being amended so as to provide for levy of safeguard duty on inputs/raw materials imported by an EOU and cleared into DTA as such or are used in the manufacture of final products & cleared into DTA.

Direct tax mop-up touches revised estimates

We also bring to you latest news from Tax in India. Below is the article published in one of the News Tabloid in India.

 

Efforts to shore up tax revenue appear to be showing results, with the direct tax collection set to exceed the revised estimate.

Finance Ministry officials said the total direct taxes collection had touched Rs. 6.36 lakh crore in 2013-14. Direct taxes include personal income tax, corporate tax and wealth tax. Originally, the Budget estimate for direct tax collection was Rs. 6.67 lakh crore.

Revenue authorities made intense efforts to collect taxes, especially from non-filers of returns. The department’s business intelligence project identified 2.1 million potential non-filers, and sent 50,000 letters in the first phase. More such letters were sent in phase two.

Indirect taxes

However, there are doubts over achieving the revised estimates for indirect tax collection, which include customs/import duty, excise duty and service tax.

The Finance Ministry has scaled down the target to Rs. 5.20 lakh crore from the Budget estimate of Rs. 5.65 lakh crore.

Although officials refused to quantify the shortfall, collections are not likely to cross Rs. 5 lakh crore.

The slowdown in manufacturing and lower growth in services have affected collection of excise and service taxes, respectively, said officials.

(This article was published in the Business Line print edition dated April 5, 2014)