INDIRECT TAXES
A. Excise Duty
Manufacture of goods in India attracts Excise Duty under the Central Excise act 1944 and the central Excise Tariff Act 1985.Herein, the term Manufacture means bringing into existence a new article having a distinct name, character, use and marketability and includes packing, labeling etc.
Recent Budget Initiatives (2014-2015) are as follows:
• Colour picture tubes exempted from basic customs duty to make cathode ray TVs cheaper and more affordable to weaker sections.
• To encourage production of LCD and LED TVs below 19 inches in India, basic customs duty on LCD and LED TV panels of below 19 inches reduced from 10 percent to Nil.
• To give an impetus to the stainless steel industry, increase in basic customs duty on imported flat-rolled products of stainless steel from 5 percent to 7.5 percent.
• Concessional basic customs duty of 5 percent extended to machinery and equipment required for setting up of a project for solar energy production.
• Specified inputs for use in the manufacture of EVA sheets and back sheets and flat copper wire for the manufacture of PV ribbons exempted from basic customs duty.
• Reduction in basic customs duty from 10 percent to 5 percent on forged steel rings used in the manufacture of bearings of wind operated electricity generators. Exemption from SAD of 4 percent on parts and raw materials required for the manufacture of wind operated generators.
• Concessional basic customs duty of 5 percent on machinery and equipment required for setting up of compressed biogas plants (Bio-CNG).
• Anthracite coal, bituminous coal, coking coal, steam coal and other coal to attract 2.5 per cent basic customs duty and 2 per cent CVD to eliminate all assessment disputes and transaction costs associated with testing of various parameters of coal.
• Basic customs duty on metallurgical coke increased from Nil to 2.5 percent in line with the duty on coking coal.
• Duty on ship breaking scrap and melting scrap of iron or steel rationalized by reducing the basic customs duty on ships imported for breaking up from 5 percent to 2.5 percent.
• To prevent mis-use and avoid assessment disputes, basic customs duty on semi processed, half cut or broken diamonds, cut and polished diamonds and coloured gemstones rationalized at 2.5 percent.
• To encourage exports, pre-forms of precious and semi-precious stones exempted from basic customs duty.
• Duty free entitlement for import of trimmings, embellishments and other specified items increased from 3 percent to 5 percent of the value of their export, for readymade garments.
• Export duty on bauxite increased from 10 percent to 20 percent.
• For passenger facilitation, free baggage allowance increased from `.35,000 to `.45,000.
• To incentivize expansion of processing capacity, reduction in excise duty on specified food processing and packaging machinery from 10 percent to 6 percent.
• Reduction in the excise duty from 12 percent to 6 percent on footwear of retail price exceeding ` 500 per pair but not exceeding ` 1,000 per pair.
• Withdraw concessional excise duty (2 percent without Cenvat benefit and 6 percent with Cenvat benefit) on smart cards and a uniform excise duty at 12 percent.
• To develop renewable energy, various items exempted from excise duty.
• Exemption to PSF and PFY manufactured from plastic waste and scrap including PET bottles from excise duty with effect from 29th June, 2010 to 7th May, 2012.
• Prospective levy of a nominal duty of 2 percent without Cenvat benefit and 6 percent with Cenvat benefit on such PSF and PFY.
• Concessional excise duty of 2 percent without Cenvat benefit and 6 percent with Cenvat benefit on sports gloves.
• Specific rates of excise duty increased on cigarettes in the range of 11 per cent to 72 per cent.
• Excise duty increased from 12 percent to 16 percent on pan masala, from 50 percent to 55 percent on unmanufactured tobacco and from 60 percent to 70 percent on gutkha and chewing tobacco.
• Levy of an additional duty of excise at 5 percent on aerated waters containing added sugar.
• To finance Clean Environment initiatives, Clean Energy Cess increased from `.50 per tons to `.100 per tons.
B. Customs Duty
CHANGES IN CUSTOMS:
• Extension of full exemption from
customs duty on pulses: Full exemption from
Customs duty on pulses valid till 31.03.2014 has been extended by another 6 months i.e. up to 30.09.2014
[Amended vide notification No.5/2014-Customs dated 17.02.2014].
• Withdrawal of CVD exemption on specified road construction machinery: CVD exemption hitherto available on specified road construction machinery has been withdrawn. These specified machinery will henceforth attract CVD and SAD. Exemption from the basic customs duty will however continue.
[Amended vide notification No.5/2014-Customs dated 17.02.2014]
• Rationalisation of basic
customs duty structure on certain items: The basic
customs duty structure on non-edible grade industrial oils and its fractions, palm stearin, fatty acids and fatty alcohols has been rationalised at 7.5%.
[Amended vide notification No.5/2014-Customs dated 17.02.2014].
• Exemption from BCD and CVD on LNG consumed in ONGC SEZ and cleared into DTA: LNG consumed in the authorized operations in the ONGC SEZ unit at Dahej and the remnant LNG cleared into the domestic tariff area (DTA) has been exempted from basic
customs duty and CVD.
[Amended vide notification No.5/2014-Customs, dated 17.02.2014].
• Concessional basic customs duty on capital goods imported by or on behalf of Bank Note Paper Mill India Private Limited: A concessional basic customs duty of 5% [CVD (Nil) + SAD (Nil)] has been provided to capital goods imported by or on behalf of Bank Note Paper Mill India Private Limited. The exemption is valid up to 31.12.2014.
[Amended vide notification No.5/2014-Customs, dated 17.02.2014 and notification No.6/2014-Customs dated 17.02.2014].
• Human embryo has been fully exempted from
customs duty.
C. Service Tax.
CHANGES IN SERVICE TAX:
• Exemption on handling, storage or warehousing of rice: The definition of ‘agricultural produce’ in section 65B(5) of the Finance Act, 1994, leads to a differential treatment between paddy and rice. Paddy is covered by the definition of agricultural produce which loses its essential characteristic after milling into rice. Notification 25/2012 dated June 20, 2012 (“the Mega Exemption Notification”) has been amended to insert an entry at Sl. No. 40 which reads as “services by way of loading, unloading, packing, storage or warehousing of rice” to exempt levy of
service tax on handling, storage and warehousing of rice.
[Amended vide Notification No.4/2014-ST dated 17th February 2014].
• Exemption on transportation of rice: A clarification has been issued vide Circular No. 177/3/2014 dated 17th February 2014 (“the Circular”) that “food stuff” includes rice and hence service tax on transportation of rice by rail or a vessel or by a Goods Transport Agency by way of transport in a goods carriage, is exempt vide Sl. Nos. 20(i) and 21(d) of the Mega Exemption Notification.
• Exemption on milling of rice: Para 1.2 of the Circular clarifies that milling of paddy into rice carried out as job work is covered by the exemption at Sl. No.30 of the Mega Exemption Notification since such milling of paddy into rice is an intermediate production process.
• Services provided by cord blood banks: Entry no. 2A has been inserted in the Mega Exemption Notification, which reads as “Services provided by cord blood banks by way of preservation of stem cells or any other service in relation to such preservation”. Therefore, services provided by cord blood banks, such as collection of umbilical cord blood, processing the same for segregation of stem cells, testing and cryo-preservation of stem cells will be exempt from levy of
service tax.
D. Securities Transaction Tax
STT Computation
As per the Finance Act 2004, and modified by Finance Act 2008 (18 of 2008)
STT on the transactions executed on the Exchange shall be as under:
Sr. No. |
|
Taxable securities transaction |
|
New rate from
01.06.2013 |
|
Payable by |
|
A |
|
Sale of an option in securities |
|
0.017 per cent |
|
Seller |
|
B |
|
Sale of an option in securities, where option is exercised |
|
0.125 per cent |
|
Purchaser |
|
C |
|
Sale of a futures in securities |
|
0.01 per cent |
|
Seller |
|
• Value of taxable securities transaction relating to an "option in securities" shall be the option premium, in case of sale of an option in securities.
• Value of taxable securities transaction relating to an "option in securities" shall be the settlement price, in case of sale of an option in securities, where option is exercised.
The following procedure is adopted by the Exchange in respect of the calculation and collection of
STT:
•
STT is applicable on all sell transactions for both futures and option contracts.
• For the purpose of
STT, each futures trade is valued at the actual traded price and option trade is valued at premium. On this value, the
STT rate as prescribed is applied to determine the
STT liability. In case of final exercise of an option contract
STT is levied on settlement price on the day of exercise if the option contract is in the money.
•
STT payable by the clearing member is the sum total of
STT payable by all trading members clearing under him. The trading member's liability is the aggregate
STT liability of clients trading through him.
Information to members
A report is provided to the members at the end of each trading day. The report contains information on the total
STT liability, trading member wise
STT liability, client wise
STT liability and also the detailed computations for determining the client wise
STT liability.