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Union Budget 2015: Key Changes in Indirect Taxes

Other Topics - By: - Bimal jain - Dated:- 2-3-2015 Last Replied Date:- 30-12-1899 - Dear Professional Colleague, Amidst huge expectations, the Hon ble Finance Minister Shri. Arun Jaitley presented the first full-year Budget of the Hon ble Prime Minister Shri. Narendra Modi's Government on February 28, 2015, Saturday in the backdrop of easing inflation and interest rates but continued growth challenges which the Government needs to address. While considering Goods and Service Tax ( GST ) as a .....

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ome into effect from a date to be notified; Review of the Negative List: Service tax to be levied on the services provided by way of access to amusement facility such as rides, bowling alleys, amusement arcades, water parks, theme parks, etc; Service tax to be levied on services by way of admission to entertainment event of concerts, non-recognized sporting events, pageants, music concerts and award functions, if the amount charged for admission is more than ₹ 500. Services by way of ad .....

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mendment is given effect to, all services provided by the Government to business entities, unless specifically exempt, shall become taxable. Review of General Exemptions: Exemption presently available on specified services of construction, repair of civil structures, etc. when provided to Government shall be restricted only to: a historical monument, archaeological site; canal, dam or other irrigation work; pipeline, conduit or plant for (i) water supply (ii) water treatment, or (iii) sewer .....

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limited to transportation of food grains including rice and pulses, flours, milk and salt only. Transportation of agricultural produce is separately exempt which would continue; Exemptions are being withdrawn on the following services: services provided by a mutual fund agent to a mutual fund or assets management company; distributor to a mutual fund or AMC; and; selling or marketing agent of lottery ticket to a distributor of lottery. Exemption is being withdrawn on the following services: .....

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ts have been excluded from the tax net. Relief measures under Service tax: Services of pre-conditioning, pre-cooling, ripening, waxing, retail packing, labeling of fruits and vegetables are being exempted; Life insurance services provided by way of Varishtha Pension Bima Yojna is being exempted; Services provided by way of exhibition of movie by the exhibitor/theatre owner to the distributor or association of persons consisting of exhibitor as one of it s member is being exempted; All ambul .....

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ontext of the Negative List and Service tax exemptions; Definition of the term Service provided under Section 65B(44) of the Finance Act has been amended to specifically state the intention of legislature to levy Service tax on: chit fund foremen by way of conducting a chit; and; distributor or selling agent of lottery, as appointed or authorized by the organizing State for promoting, marketing, distributing, selling, or assisting the State in any other way for organizing and conducting a lot .....

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of the stated provision. Rationalization of abatement: A uniform abatement is being prescribed for transport by rail, road and vessel to bring parity in these sectors. Service tax shall be payable on 30% of the value of such service subject to a uniform condition of non-availment of Cenvat credit on inputs, capital goods and input services. Presently, tax is payable on 30% of the value in case of rail transport, 25% in case of road transport and 40% in case of transport by vessels; The abate .....

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er; Consequent to the upward revision in Service tax rate, the composition rate on specified services, namely, life insurance service, services of air travel agent, money changing service provided by banks or authorized dealers, and service provided by lottery distributor and selling agent, is proposed to be revised proportionately. Changes in Reverse charge mechanism: Manpower supply and security services when provided by individual, HUF, partnership firm to a body corporate are being brough .....

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12% to 6%; Inputs for use in the manufacture of LED drivers and MCPCB for LED lights, fixtures and LED lamps from 12% to 6%; Mobiles handsets, including cellular phones from 1% without Cenvat credit or 6% with Cenvat credit to 1% without Cenvat credit or 12.5% with Cenvat credit. NCCD of 1% on mobile handsets including cellular phones remains unchanged; Tablet computers from 12% to 2% without Cenvat credit or 12.5% with Cenvat credit; Specified raw materials [battery, titanium, palladium wir .....

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in alloys for use in the manufacture of Solar PV ribbon for manufacture of solar PV cells to Nil subject to certification by Department of Electronics and Information Technology (DeitY). Reduction in number of levies: Education Cess and Secondary and Higher Education Cess leviable on excisable goods are being subsumed in Basic Excise duty. Consequently, Education Cess and Secondary and Higher Education Cess leviable on excisable goods are being fully exempted; The standard ad valorem rate of .....

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ation of the goods for the purposes of levy of Excise Duty: All goods falling under Chapter sub-heading 2101 20, including iced tea has been notified under Section 4A of the Central Excise Act, 1944 ( the Excise Act ) for the purpose of assessment of Central Excise Duty with reference to the Retail Sale Price with an abatement of 30%. Such goods are also being included in the Third Schedule to the Excise Act; Goods, such as lemonade and other beverages, have also been notified under Section 4A .....

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h an abatement of 30%; Excise Duty of 2% without Cenvat credit or 6% with Cenvat credit has been levied on peanut butter. Relief measures under the Central Excise: Full exemption from Excise Duty is being extended to captively consumed intermediate compound coming into existence during the manufacture of Agarbattis. Agarbattis attract Nil Excise Duty. Miscellaneous: Excise Duty on leather footwear (footwear with uppers made of leather of heading 4107 or 4112 to 4114) of Retail Sale Price of .....

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s, cheroots and cigarillos; Maximum speed of packing machine is being specified as a factor relevant to production for determining Excise Duty payable under the Compounded Levy Scheme presently applicable to pan masala, gutkha and chewing tobacco. Accordingly, deemed production and duty payable per machine per month has been notified with reference to the speed range in which the maximum speed of a packing machine falls; The entry waters, including mineral waters and aerated waters, containing .....

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ndsets including cellular phones is being changed from 1% without Cenvat credit or 6% with Cenvat credit to 1% without Cenvat credit or 12.5% with CENVAT credit; Excise duty structure of 2% without Cenvat credit or 12.5% with Cenvat credit is being prescribed for tablet computers. PART C: UNDER THE CUSTOMS: Reduction in duty on certain inputs to address the problem of duty inversion: Metal parts for use in the manufacture of electrical insulators; Ethylene-Propylene-non-conjugated-Diene Rub .....

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converters; Anthraquinone for manufacture of hydrogen peroxide; Sulphuric acid for use in the manufacture of fertilizers; Parts and components of Digital Still Image Video Camera capable of recording video with minimum resolution of 800 x 600 pixels, at minimum 23 frames per second, for at least 30 minutes in a single sequence, using the maximum storage (including the expanded) capacity. Reduction in Basic Customs Duty to reduce the cost of raw materials: Ethylene dichloride (EDC), vinyl ch .....

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telecommunication grade optical fibre cables from 7.5% to Nil; Black Light Unit Module for use in the manufacture of LCD/LED TV panels from 10% to Nil; Organic LED (OLED) TV panels from 10% to Nil; CVD and SAD are being fully exempted on specified raw materials [battery, titanium, palladium wire, eutectic wire, silicone resins and rubbers, solder paste, reed switch, diodes, transistors, capacitors, controllers, coils (steel), tubing (silicone)] for use in the manufacture of pacemakers; Evacu .....

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AD. Reduction in SAD to address the problem of Cenvat credit accumulation: All goods except populated PCBs, falling under any Chapter of the Customs Tariff Act, 1975 ( the Customs Tariff Act ), for use in manufacture of ITA bound goods from 4% to Nil; Naphtha, ethylene dichloride (EDC), vinyl chloride monomer (VCM) and styrene monomer (SM) for manufacture of excisable goods from 4% to 2%; Metal scrap of iron and steel, copper, brass and aluminium from 4% to 2%; Inputs for use in the manufac .....

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commercial vehicles in Completely Knocked Down (CKD) kits and electrically operated vehicles including those in CKD condition will continue to be at 10%. Relief measures under the Customs: Exemption to artificial heart (left ventricular assist device) from Basic Customs Duty of 5% and CVD. Miscellaneous: Export Duty on upgraded ilmenite is being reduced from 5% to 2.5%; Basic Customs Duty on Digital Still Image Video Camera capable of recording video with minimum resolution of 800 x 600 pi .....

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2016. PART D: UNDER THE CENVAT CREDIT RULES, 2004 ( THE CREDIT RULES ): The Credit Rules have been amended to allow Cenvat credit of Service tax paid under partial reverse charge by the service receiver without linking it to the payments of value of service to service provider as a trade facilitation measure. PART E: ALLOCATION OF ADDITIONAL RESOURCES FOR INFRASTRUCTURE: The Scheduled rates of Additional Duty of Customs/ Excise levied on Petrol and High Speed Diesel Oil [commonly known as Roa .....

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ly so as to subsume Education Cess and Secondary and Higher Education Cess presently levied on them. Thus, the net decrease in Basic Excise Duty on branded petrol is ₹ 3.46 per litre, on unbranded petrol is ₹ 3.49 per litre, on branded diesel is ₹ 3.63 per litre and on unbranded diesel is ₹ 3.70 per litre. However, total incidence of Excise Duties on petrol and diesel remains unchanged. PART F: SWACHH BHARAT INITIATIVES Under the Customs and the Central Excise: The Sche .....

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ene other than for industrial use is being increased from 12% to 15%. Under the Service tax: An enabling provision is being made to empower the Central Government to impose a Swachh Bharat Cess on all or certain taxable services at a rate of 2% on the value of such taxable services. The proceeds from this Cess would be utilized for Swachh Bharat initiatives. This Cess will be effective from a date to be notified; Service provided by a Common Effluent Treatment Plant operator for treatment of .....

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