BUDGET 2015CENTRAL EXCISE, CUSTOMS, &

SERVICE TAX PROPOSALS

by

SUSHIL SOLANKICOMMISSIONER,

SERVICE TAX, MUMBAI

BUDGET THEME

Move towards GST - ST rate increase, removing exemptions to sync with State VAT levy.

Improve Ease of doing businessRemove ambiguity by changes in law &

clarificationsBoost to domestic manufacturing by

reducing tax burden2

CENTRAL EXCISE & CUSTOMS CHANGES

Central Excise duty rate increased from 12.36% to 12.5% with abolition of education

cesses.

Issue of balance credit of Education Cess as on 1st March under consideration of Govt.

Reduction of Customs duty on raw-materials, intermediate and components (22 items) to promote domestic manufacturing and minimise

duty inversion on items used by polymers, Telecom, IT and Power Sector.

3

CENTRAL EXCISE & CUSTOMS CHANGES

Reduction in SAD to minimise CENVAT Credit accumulation and liquidity issues. IT Sector items, Polymers, metals and LED light goods benefited.

Tablet Computers and their parts manufacturing given boost by reduction of import duties

Excise duty increased on Cigarettes by 15 -25%. Excise duty structure on Pan Masala and Gutka also modified.

Clean Energy Cess increased from Rs 100 to 200 per MT to fund Swatcha Bharat Mission

4

EASE OF DOING BUSINESS.

On-line Central Excise & Service Tax registration within 2 working days.

Tax payers allowed to use digitally signed invoices.

Time limit for taking CENVAT Credit increased from 6 months to 1 year from date of invoice.

Facility of direct dispatch of goods to the customer of a dealer or job worker of manufacturer allowed.

Time limit for return of capital goods from job worker increased from 6 months to 2 years.

5

EASE OF DOING BUSINESS.

Clarification also issued for garnishing provision and providing instalments for recovery of arrears.

Withdrawal of prosecution cases permitted if the adjudication proceedings are dropped on merit.

Exporters allowed credit of services used between factory and port – clarification

Advance ruling facility extended to Indian firms also.

Valuation provisions amended to add reimbursement 6

MODIFIED PENAL PROVISIONS - Encouraging Voluntary Compliance (All 3 taxes)

Non-suppression casescan be closed on payment of Tax and interest,

if paid within 30 days of issue of SCN

25% of penalty if paid within 30 days of OIO

Max Penalty 10% of Tax amt

SUPPRESSION Cases Only 15% penalty, if tax and interest is paid within

30 days of SCN.

Only 25% penalty if tax n interest is paid within 30 days of issue of order.

For existing cases also benefit available after enactment of Finance Bill

7

Service Tax rate increased from 12.36% to 14%. Levy of Swatch Bharat Cess at the rate of

2%.

New Levy on Tickets of amusement park, Theme Park, Water parks etc.

New levy on entry ticket to concerts, award functions, non-recognised sport events if the ticket charge is more than Rs.500/-. However, Cinema, Circus, dance, drama tickets remain exempted.

8

SERVICE TAX CHANGES

Service Tax on contract manufacturing/job work for alcoholic liquor liable to Service Tax.

Services provided by Govt. or local authorityto business entities charged Service Tax

Construction/repair services provided to Govt. would be taxable except like canals, dam, irrigation, water supply. (wef 1/4/15)

Construction of Airport and port also made taxable.

9

SERVICE TAX CHANGES

Services provided by Mutual fund or Lottery agents or chit fund selling agent made taxable on reverse charge basis.

Services provided by the Banks on behalf of RBI or similar services also taxable.

In case of foreign aggregator model (like UBER taxi) the aggregator is liable to pay tax in India.

For transport of goods by Road and vessel uniform abatement of 30% allowed.

10

SERVICE TAX CHANGES

In the case of executive air travel abatement reduced from 60% to 40%.

Partial reverse charge on manpower supply and security services made to full reverse charges.

CENVAT Credit allowed under partial reverse charge without linking it to the payment to service

provider.

Section 73 being amended to provide that if the short payment has been declared, for recovery

purpose no need to issue any SCN.

11

SERVICE TAX CHANGES

THANK YOU