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Salient Features of Union Budget 2013-14 and Finance Bill, 2013

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Salient Features of Union Budget 2013-14 and Finance Bill, 2013
By: Dr. Sanjiv Agarwal
March 1, 2013

(Applicable to Service Tax)

i)           Indian GDP to grow about 5 percent in 2012-13 and growth expected at 6.1-6.7 percent in 2013-14.

ii)          Need to raise tax – GDP ratio which is presently around 6-7 percent.

iii)         Service sector growth @ 9%, much higher than the GDP growth itself.

iv)         Contribution of services sector in GDP at 64% including construction sector.

v)          No change in Service Tax rates.

vi)         No change in peak rates of customs and excise duties also.

vii)        Both education cesses will continue to be levied.

viii)      Stability in negative list maintained with only a few changes.

ix)         Vocational courses offered by institutes affiliated to the State Council of Vocational Training and testing activities in relation to agriculture and agriculture produce to be in the negative list.

x)          Definition of "process amounting to manufacture" will also include processes under Medicinal and toilet preparations (Excise Duties) Act, 1955.

xi)         Service Tax to be levied on all restaurants which are air conditioned. The condition of liquor license done away with.

xii)        Benefit of exemption to copyright on cinematography to be limited to films exhibited in cinema halls.

xiii)      Existing exemption from Service Tax for low cost housing and single residential units to continue.

xiv)       Certain exemptions curtailed / withdrawn in relation to auxiliary education service and renting by educational institutes, transportation of goods by railway / vessel, vehicle parking to general public, repair or maintenance of government aircrafts, charitable activities etc.

xv)        Retrospective exemption to Indian railways for services provided between 1st July, 2012 upto 28th February, 2013.

xvi)       Where it is held that extended period of limitation u/s 73 is not sustainable for making demands, then the Department's demand for normal period of 18 months shall be sustainable.

xvii)      Penalty u/s 77(a) (in case of registration) shall be restricted to Rs. 10,000.

xviii)    Abatement reduced from 75% to 70% in case of luxury apartments / residential complexes (with carpet area of 2000 sq. ft. or more or value of Rs. 1 crore or more).

xix)       New provisions for revised punishments for offences u/s 89, make certain offences cognizable and others non cognizable and bailable.

xx)        New Section 78A inserted to impose penalty on directors and officials of company for specified willful actions / offences.

xxi)       Power to arrest provided u/s 91.

xxii)     Advance Ruling can be sought to ascertain eligibility of Cenvat Credit on input services for a manufacturer of excisable goods.

xxiii)    Resident public limited companies also allowed to seek advance ruling from Advance Ruling Authority.

xxiv)    Stay orders of CESTAT to have a maximum period of 365 days upto which stay granted will be operational even when assessee is not at fault.

xxv)      In Cestat appeals, single member bench can hear and dispose off appeals upto a monetary limit of Rs. 50 lakhs (previously Rs. 10 lakh).

xxvi)    Mode of delivery of letters, orders etc will also include speed post and approved courier agency.

xxvii)   Voluntary Compliance Encouragement Scheme, 2013 (VCES) introduced as a one time amnesty measure to effect compliance and recovery and provide amnesty from interest and penalties (last date 31.12.2013) –

  • The scheme is applicable to only non filers or stop filers or who have not made truthful declaration in Service Tax returns.
  • Declaration to be made by defaulter assessees for pending dues from 1st October, 2007 and upto 31st December, 2012.
  • Scheme in not applicable to period before 1.10.2007 and beyond 31.12.2012
  • Not applicable to cases involving search, audit, investigation and summon issued cases.

xxviii)  No clear roadmap and commitment on time lines on GST implementation.

xxix)    Need for a constitutional amendment for GST emphasized.

xxx)      There is a need for State Governments and the Central Government to pass a GST law that will be drafted by the State Finance Ministers and the GST Council.

xxxi)    There is a need for the Centre to compensate the states for loss due to the reduction in CST rate.

xxxii)   Hope for consensus on GST in next few months.

xxxiii)  Rs. 9000 crore set apart towards the first installment of CST compensation to the states.

xxxiv)  Appeal made to state finance ministers to realize the serious intent of the Government to introduce GST.

xxxv)   Revised estimates for Service Tax collections for 2012-13 at Rs. 1,32,697 crore (Rs. 124000 BE).

xxxvi)  Budget estimate for Service Tax collection for 2013-14 at Rs. 1,80,141 crore. 

 

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By: Dr. Sanjiv Agarwal - March 1, 2013
 
 
 

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