Overview of Budget Changes 2016
The Budget Changes 2016 introduced various modifications in central excise, tax on jewelry and garments, infra cess on cars, and miscellaneous provisions. Highlights include simplified registration processes, exemptions for small businesses, and adjustments in indirect tax dispute resolution. Important alterations in CENVAT credit rules were made to benefit businesses.
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BUDGET - 2016 - an overview swamy associates 5.3.16 1
T A X O N J E W E L L E R Y 1 % ED on all articles of jewellery without Cenvat Credit. Simplified and centralised registration. SSI exemption of Rs.6 crores (for 3/2016 - Rs.50 lakhs), subject to previous year turnover < Rs.12Cr. 3
T A X O N G A R M E N T S 12.5 % ED with Cenvat Credit or 2 % ED without Cenvat Credit. On 60% of RSP. On branded readymade garments having a RSP of Rs.1000 or above SSI Exemption for March 2016 upto Rs. 12.50 lakhs. 4
I N F R A C E S S 4 % on BIG cars. 1 % on small petrol cars ( <1200 cc & 4000mm). 2.5 % on small diesel cars ( < 1500 cc & 4000mm). Ambulance and Taxi exempted. To be paid in cash. Applicable only for cars manufactured on or after 1.3.16. 5
MISCELLANEA Interest for provisional assessment clarified. ER4, ER5, ER 6 & ER 7 to be unified. Facility to file revised return introduced. Refund under Rule 5 of CCR, 2004 - Relevant date for service exporters Date of realisation of export proceeds. Single Registration for inter linked manufacturing units within the same Range jurisdiction. 6
MISCELLANEA RMC given a reprieve. ( L&T decision undone). 2% duty on parts and components of mobile phones. Demand under normal period raised to 2 years from 1 year. Indirect Tax Dispute Resolution Scheme 2016 - Pending appeals before Commissioner (Appeals) can be closed by paying full duty / tax, interest and 25 % of the penalties. Interest rates reduced to 15 % from 18% 7
IMPORTANT CHANGES Office equipments and appliances eligible for credit. All capital goods having value of below Rs.10,000 would be inputs. Credit for services in instalments on long time assignment of rights. Rule 6 goes for a revamp - 6 % / 7 % subject to maximum of available credit . - Option of proportionate reversal for banking companies. - Rigour to apply only on common credit. 9
IMPORTANT CHANGES Non - service is exempted service effect on works contracts. Input Service Distribution - Revamped to include outsourced units also. Wrong credit taken but not utilised method of computation made easy. 10
IMPORTANT CHANGES Demand under normal period raised to 30 months - Effectively 36 months. Interest rates reduced to 15 %. (For ST collected and not paid 24 %). Inward ocean freight taxed - Outward ocean freight is not an exempted service but not taxable! Assignment of spectrum by Government to be a service. Arrest only in cases of ST collected and not paid involving more than Rs.2 crores. Construction related exemptions withdrawn from 01.04.2015, restored for contracts entered before 01.03.2015 and upto 31.03.2020. Krishi Kalyan Cess @ 0.5 % on all services from 01.06.2016 Cenvatable. 12
MISCELLANEA Senior Advocates to pay ST themselves (No reverse charge). Construction related exemption to monorail and metro rail projects, withdrawn prospectively. Performing artists threshold exemption per performance raised from 1 to 1.5 lakhs. Transport of passengers by ropeway, cable car, aerial tramway Exemption withdrawn. New levies and New services ST payable for all the amounts received after the introduction of the new service / new levy - Rule 5 of POT Rules amended. NO ST on software if ED/CVD paid on MRP basis - Segregation of value between sale and service recognised. An Annual Return to be filed by Service providers. OPCs, given the benefit of quarterly payment and non-observance of POT rules. 13
ABATEMENTS Service Earlier Taxable portion after abatement Now Taxable portion after abatement Other changes Transport of goods by rail 30% 30% Earlier no cenvat credit could be taken. Now only credit on inputs and capital goods cannot be taken Transport of goods by rail in containers by persons other than railways No such separate provision 40% No credit on inputs and capital goods can be taken Transport of passengers by rail 30% 30% Earlier no cenvat credit could be taken. Now only credit on inputs and capital goods cannot be taken GTA Service for household goods 30% 40% No cenvat credit could be taken Transportation of passengers by Stage CArriage 40% No cenvat credit can be taken Transport of goods in a vessel 50% 50% Earlier no cenvat credit could be taken. Now only credit on inputs and capital goods cannot be taken Tour operator 25 %; 10 %; 30 % Rationalised. 25 % for package tour removed. 30 % raised to 40 % Construction of complex 25 %; 30 % 30% Distinction removed Renting of motor cab 40% 40% Value of Diesel borne by service receiver to be added 14
THANKS G. Natarajan 93400 54477 nuts@swamyassociates.com www.swamyassociates.com 15
