union budget 2016

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  • Union Budget

    2016-17

    - a Glimpse

  • Introduction

    Indirect Taxes Service tax

    CENVAT

    Central Excise

    Customs

    Direct Taxes

    INDEX

  • INTRODUCTION

    The Honble Finance Minister presented the Union Budget for the FY 2016-

    17 with positive note on the growth achieved so far. The budget was presented with an

    optimistic outlook for the years to come.

    The budget revolves around various reforms planned including in the area of

    taxation with an intent to rationalize taxes by restricting exemptions in some sectors

    and providing incentives to promote start-ups and boost manufacturing under the

    Make In India, Start Up India and Digital India Schemes.

    Various proposals include schemes to resolve tax disputes demonstrating the

    positive intent of the Government towards tax payers.

    Union Budget 2016-17 - a Glimpse3

  • Indirect Taxes

  • SERVICE TAX

    Krishi Kalyan Cess

    (Effective from June 01, 2016)

    Krishi Kalyan Cess (KKC) to levied with effect from June 01, 2016 on all taxable

    services at the rate of 0.5% on the value of Service. Further the CENVAT Credit of

    KKC to be utilized towards payment of KKC only.

    Exclusion from Negative List

    (Effective from enactment of Finance Bill 2016)

    Specified Education Services Primary and Secondary Education, Education as part

    of degree recognized by law & Approved Vocational Course (Simultaneously the

    definition of Approved Vocational Course in Section 65B stands omitted). But the

    same has been included in the exemption list.

    Transportation of Passengers by Stage Carriage (Effective from June 01, 2016).

    However, exemption has been provided to Transportation of Passengers by non air-

    conditioned Stage Carriage. Accordingly Service tax has been made applicable on

    Transportation of Passengers services by air-conditioned Stage Carriage.

    Union Budget 2016-17 - a Glimpse5

  • SERVICE TAX

    Exclusion from Negative List

    (Effective from enactment of Finance Bill 2016)

    Transportation of goods by aircraft or vessel from a place outside India up to

    customs station (Effective from June 01, 2016). However, exemption has been

    provided to Transportation of goods by aircraft from a place outside India up to

    customs station. Accordingly, tax is applicable on Transportation of goods by vessel

    from a place outside India up to customs station.

    Addition to Declared List

    (Effective from enactment of Finance Bill 2016)

    Right to use the radio-frequency spectrum and subsequent transfers thereof

    assigned by the Government has been included in the list of declared services.

    Accordingly, the same would be taxable. Further the CENVAT Credit availed on such

    service is to be apportioned over the years of right to use.

    Union Budget 2016-17 - a Glimpse6

  • SERVICE TAX

    New Services under Exemption List

    (Effective from April 01, 2016)

    Legal Services by a Senior Advocate to a person other than a person ordinarily

    carrying out any activity relating to industry, commerce or any other business or

    profession. Accordingly, service tax would be applicable on services provide by a

    Senior Advocate for services provided in relation to business or profession.

    Prescribed Educational Services provided by Indian Institute of Management

    (Effective from March 01, 2016).

    Assessment services by bodies appointed under Skill Development Initiative (SDI)

    Scheme.

    Services provided by trainers under Deen Dayal Upadhyaya Grameena Kaushalya

    Yojana providing Skill or Vocational Training.

    Construction and related services provided for rehabilitation of existing slum

    dwellers under scheme notified (Effective from March 01, 2016).

    Union Budget 2016-17 - a Glimpse7

  • SERVICE TAX

    New Services under Exemption List

    (Effective from April 01, 2016)

    Notified services provided to Government or Local Authority relating to

    construction & related services for contracts entered prior to March 01, 2015 only.

    Accordingly, construction and related services provided to Government or Local

    Authority for contracts entered into after March 1, 2015 would be liable to service

    tax. (Effective from March 01, 2016).

    Construction / enhancement of house under notified schemes (Effective from March

    01, 2016).

    Construction of low cost houses up to a carpet area of 60 Sq. Mtrs under Notified

    Schemes.

    Construction & related services provided in relation to Airports or Ports for

    contracts entered prior to March 01, 2015 (Effective from March 01, 2016).

    Services provided by the artist in relation to folk or classical art where the amount

    charged is not more than one lakh and fifty thousand rupees.

    Union Budget 2016-17 - a Glimpse8

  • SERVICE TAX

    New Services under Exemption List

    (Effective from April 01, 2016)

    Transportation of passengers by a non air conditioned stage carriage (Effective from

    June 01, 2016).

    General Insurance services under Niramaya Health Insurance Scheme.

    Services of Life Insurance Business by the way of annuity under National Pension

    Scheme.

    Services by EPFO to the persons governed under Employees Provident Funds and

    Miscellaneous Provisions Act, 1952 .

    Services by IRDA to the insurers under Insurance Regulatory and Development

    Authority of India Act, 1999.

    Services provided by SEBI by way of protecting the interest of investors in securities

    and to promote the development and regulation of securities market.

    Union Budget 2016-17 - a Glimpse9

  • SERVICE TAX

    New Services under Exemption List

    (Effective from April 01, 2016)

    Services by National Centre for Cold Chain Development under Ministry of

    Agriculture, Cooperation and Farmers Welfare by way of cold chain knowledge

    dissemination.

    Transportation of goods by an aircraft from a place outside India up to the customs

    station of in India (Effective from June 01, 2016).

    Services by way of Information Technology Software recorded on Media under

    Chapter 85 of Central Excise Tariff Act and also requires declaration of MRP under

    Legal Metrology regulations subject to conditions prescribed.

    10Union Budget 2016-17 - a Glimpse

  • SERVICE TAX

    Services removed from Exemption List

    (Effective from April 01, 2016)

    Construction or related services relating to Monorail or Metro (Effective from March

    01, 2016). However the exemption from Service Tax is still applicable for contracts

    entered prior to March 01, 2016.

    Transportation of passengers by Ropeway, Cable Car or Aerial Tramway.

    Union Budget 2016-17 - a Glimpse11

  • SERVICE TAX

    Abatements

    (Effective from April 01, 2016)

    Below are the changes in the abatement rates applicable for the notified services:

    Sl. No. Description of Service

    Value of Service

    chargeable after

    abatement

    1 Transport of goods in containers by rail by any

    person other than Indian Railways40%

    2 Household goods transported by GTA 40%

    3 Goods transported by GTA other than household

    goods.30%

    4 Service provided in relation to chit fund foremen 70%

    5 Transportation of passengers by Air-Conditioned

    Stage Carriage (Effective from June 01, 2016)40%

    Union Budget 2016-17 - a Glimpse12

  • SERVICE TAX

    Abatements

    (Effective from April 01, 2016)

    Below are the changes in the abatement rates applicable for the notified services:

    The condition of non-availment of CENVAT Credit on Input Services stands

    removed for Transportation of passengers by Rail and Transportation of Goods

    by Vessel if abatement is availed.

    Sl. No. Description of Service

    Value of Service

    chargeable after

    abatement

    1Services of Tour Operator with respect to

    arranging and booking of accommodation10%

    2

    Services of Tour Operator with respect to Services

    other than arranging and booking of

    Accommodation

    30%

    3 Construction of Civil Structures 70%

    Union Budget 2016-17 - a Glimpse13

  • SERVICE TAX

    Point of Taxation Rules

    (Effective from March 01, 2016)

    Rule 5 Point of Taxation with respect to levy of Service Tax on new services shall

    also apply in cases of new Service Tax rate or introduction of Cess, if any.

    Reverse Charge Mechanism (RCM)

    (Effective from April 01, 2016)

    Following Services are removed from the list of Services taxable under RCM:

    Services provided by a Mutual Fund agent or Distributor to a Mutual Fund or Asset

    Management Company.

    Legal Services by Senior Advocates.

    Union Budget 2016-17 - a Glimpse14

  • SERVICE TAX

    Reverse Charge Mechanism (RCM)

    (Effective from April 01, 2016)

    Following Services are amended in the list of Services taxable under RCM:

    Any Services provided by a Government or Local Authority to any business entity

    liable to tax. Earlier only Support Services was taxable.

    Services of Lottery Agent under the provisions of the Lottery (Regulations) Act,

    1998.

    Union Budget 2016-17 - a Glimpse15

  • SERVICE TAX

    Service Tax Rules

    (Effective from April 01, 2016)

    Quarterly payment of Service Tax is now extended to One Person Company whose

    aggregate value of Taxable Turnover from all premises