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Analysis of Union Budget 2017 provisions of Income Tax Service Tax Excise Duty Custom Duty with Budget Highlights Commentary Speech, Notification, News & Articles.

Dr. Sanjiv Agarwal, FCA, FCS
Dr. Sanjiv Agarwal, FCA, FCS

Provision of Finance Act, 1994

a) Clause (f) of Negative List (Section 66 D) has been omitted, which provides as under:

“services by way of carrying out any process amounting to manufacture or production of goods excluding alcoholic liquor for human consumption”

However, the service tax exemption on them is being continued by incorporating them in the Notification No. 25/2012-ST dated 20.06.2012, i.e., general exemption.

b) The definition of ‘process amounting to manufacture’ [Section 65B (40)] has been omitted from the Finance Act, 1994 and same has been incorporated in the Notification No. 25/2012-ST dated 20.06.2012, i.e., general exemption.

c) The definition of ‘Authority’[ Clause (d) of section 96A of the Finance Act, 1994] is being amended to provide as:

‘Authority’ mean the Authority for Advance Ruling as constituted under section 28E of the Customs Act, 1962.

The definition of ‘Authority’ [Clause (E) of section 28 of the Customs Act, 1962] is being amended to provide as:

“Authority” to mean the Authority for Advance Ruling as constituted under section 245-O of the Income-tax Act, 1961.

d) Section 96B relating to vacancies not to invalidate proceedings is being omitted in view of the provisions provided under section 245P of the Income-tax Act, 1961 provides that

‘No proceeding before, or pronouncement of advance ruling by the Authority for Advance Ruling would be invalidated on the ground merely due to any vacancy or defect in the constitution of the Authority.’

e) The application fee for seeking advance ruling is to be increased from rupees two thousand five hundred(Rs 2500/-) to rupees ten thousand(Rs.10,000/-) on the lines of the Income Tax Act.( Section 96C(3) of the Finance Act, 1994)

f) The existing time limit is to be extending from ninety days (90 days) to six months (6 Months) by which time the Authority shall pronounce its ruling, on the lines of the Income Tax Act. ( Section 96D(6) of the Finance Act, 1994)

g) A new section 96HA is being inserted so as to provide for transferring the pending applications before the Authority for Advance Rulings (Central Excise, Customs and Service Tax) to the Authority constituted under section 245-O of the Income-tax Act from the stage at which such proceedings stood as on the date on which the Finance Bill, 2017 receives the assent of the President.

Changes in Exemptions

h) The exemption from service tax under notification No. 14/2012-ST would be not available to a taxable service involving import of technology on which Research and Development Cess is not payable. Full service tax along with cesses (Swachh Bharat Cess and Krishi Kalyan Cess) would be applicable to such taxable service.( W.e.f. the enactment of the Finance Bill, 2017)

i) Service tax exemption to taxable services provided or agreed to be provided by the Army, Naval and Air Force Group Insurance Funds by way of life insurance to members of the Army, Navy and Air Force under the Group Insurance Schemes of the Central Government,  has been made effective from 10th day of September, 2004, the date from when the services of life insurance became taxable.

j) Benefit of the exemption notification No. 41/2016-ST dated 22.09.2016 has been extended with effect from 1.6.2007, the date when the services of renting of immovable property became taxable. Vide Notification No. 41/2016-ST dated 22.09.2016, one time upfront amount (called as premium, salami, cost, price, development charges or by any other name) payable for grant of long-term lease of industrial plots (30 years or more) by State Government industrial development corporations/ undertakings to industrial units was exempted.

k) Insertion/amendment of entries in the Notification No. 25/2012-ST, dated 20.06.2012 to provide exemption from service tax. Entries are:

  • Services provided or agreed to be provided by the Army, Naval and Air Force Group Insurance Funds by way of life insurance to members of the Army, Navy and Air Force under the Group Insurance Schemes of the Central Government.(New entry at S. No. 26D of notification No. 25/2012-ST)
  • Under the Regional Connectivity Scheme (RCS), exemption from service tax is being provided in respect of the amount of viability gap funding (VGF) payable to the selected airline operator for the services of transport of passengers, with or without accompanied belongings, by air, embarking from or terminating in a Regional Connectivity Scheme (RCS) airport, for a period of one year from the date of commencement of operations of the Regional Connectivity Scheme (RCS) as notified by Ministry of Civil Aviation. (New entry at S. No. 23A of notification No. 25/2012-ST)

Changes in Cenvat Credit Rules, 2004

  • Explanation-I (e) applicable to sub-rule 3 and 3A of Rule 6 of CENVAT Credit Rules, 2004 has been amended so as to exclude banks and financial institutions including NBFCs engaged in providing services by way of extending deposits, loans or advances from its ambit. It has been provided in the said explanation that value for the purpose of reversal of common input tax credit taken on inputs and input services used in providing taxable and exempted services, shall not include the value of service by way of extending deposits, loans or advances against consideration in the form of interest or discount. (Amended by Notification No. 04/2017-C.E.(NT), dated 2nd February, 2017)
  • A new sub-rule 4 has been inserted in Rule 10 of CENVAT Credit Rules, so as to provide that transfer of CENVAT Credit by the jurisdictional Dy./Assistant Commissioner of Central Excise, shall be allowed within 3 months from the date of receipt of application from the manufacturer or service provider in this regard, subject to the fulfillment of the conditions prescribed under Rule 10 (3).(Inserted by notification No. 04/2017-C.E.(NT), dated 2nd February, 2017).

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Tags : Budget (1382) Budget 2017 (258) cenvat credit (35) Dr Sanjiv Agarwal (190)

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