Gist Of All Amendments In Indirect Tax Made By Budget 2014

(Applicable from the enactment of Finance Bill. Section 65B, 66D and 67A to be given effect from the date to be notified by CG)

1. Section 65B – Definition of Metered Cab and Print media changed.

2. Section 66D – Two Services of negative list amended.

Post amendment

–          All types of advertisement other than in print media is taxable.

–          Transportation services provided by radio taxi has been made taxable.

3. Section 67A – Manner for determination of Rate of exchange is being changed. Now, rate of exchange shall be determined by rules to be prescribed by CG.
4. Section 73 – Time limit for completion of adjudication is specified. Adjudication may have to be completed within 6months/ 1 year as the case may be.

5. Section 80 – Reasonable cause for waiver of penalty u/s 78 cannot be given in fraud cases.

6. Section 82 – Power to search premises has been given to some more authorities.

7. Section 83 – Certain more provisions of Excise made applicable to Service tax.

8. Section 87 – Service Tax dues can now be recovered from the successor of business in case of change in ownership.

9. Section 100 – Retrospective exemption has been given to taxable services provided by the Employees State Insurance Corporation.

–       E payment made mandatory for all irrespective of service tax paid.

Service Tax (Determination of Value)Rules,2006 amended (Notification No 11/2014 applicable w.e.f. 1^st Oct 2014)

–          The maintenance, repair, etc on immovable property has become costlier.

–          Works contract service in relation to Immovable Property now charged with 70% value instead of 60% value.

Point of Taxation Rules’ 2011 amended (Notification No 13/2014 applicable w.e.f. 1^st Oct 2014)

–          Rule 7 relating to POT under reverse charge cases amended.

–          The payment should be made to a service provider within 3 months instead of earlier 6 months.

–          If payment not made, then the POT shall be the date immediately following the said period of 3months.

–          New Rule 10 has been inserted to clarify that the amendment to Rule 7 will apply only to invoices issued after1st October,2014.

Place of Provision of Service Rules’ 2012 amended (Notification No 14/2014 applicable w.e.f. 1^st Oct 2014)

–          Definition of “Intermediary” substituted to cover supply of goods.

–          In case of commission agent, the place of provision shall be the location of the service provider.

–          Rule 9 amended. Hiring of vessels, or aircraft, irrespective of whether short term or long term, will be covered by the general rule, that is, the place of location of the service receiver.

–          Services by way of transportation of cotton,ginned or baled by GTA, Rail or Vessel has been made exempted.

–          Services by way of loading, unloading, packing, storage or warehousing of cotton, ginned or baled has also been made exempted;

–          Life micro-insurance schemes approved by IRDA, where sum assured does not exceed Rs. 50,000 are being exempted.

–          Specialized financial services received by the RBI, from outside India are exempted.

–          Services provided by a tour operator to a foreign tourist in relation to a tour conducted wholly outside India has been made exempted.

–          Entry No 9 relating to Education services substituted to give more clarity.

–          Services by way of technical testing or analysis of newly developed drugs by a clinical research organization has been excluded from exemption notification and made taxable.

–          Entry No 18 relating to hotel, inn, etc revised to give more clarity.

–          Transportation of organic manure by GTA, Rail or a Vessel has also been made exempted.

–          Air conditioned contract carriage has been excluded from exemption notification and made taxable.

–          Entry No 25, relating to services ordinarily provided by a Municipality revised.

2. SEZ Exemption Procedure amended (Notification No 07/2014 applicable w.e.f. 11^th July, 2014)
Abatement Notification Amended (Notification No 08/2014 applicable w.e.f. 11^th July, 2014 as well as 1^st Oct’ 2014, See our newsletter)

–          Clarificatory amendment issued for GTA (w.e.f. 11^th July 2014)

–          Conditions for claiming abatement in relation to Motor Vehicle revised. Now cenvat credit of another rent a cab service provider is available. (w.e.f. 1^st Oct’ 2014)

–          Abatement for “Transport of goods in a vessel” increased from 50% to 60% (w.e.f. 1^st Oct’ 2014)

–          Conditions for Abatement available to “Tour Operator” amended. Tour operator service providers are allowed to avail cenvat credit on the input service of another tour operator. (w.e.f. 1^st Oct’ 2014)

4. Reverse Charge Notification Amended (Notification No 10/2014 applicable w.e.f. 11^th July, 2014 as well as 1^st Oct’ 2014, See our newsletter)–          Services provided by a Recovery Agent to a Banking company or a financial institution or NBFC introduced in reverse charge. (w.e.f. 11^th July, 2014)

–          Service provided by Directors to body corporate is covered in reverse charge. Earlier, only the directors of company were covered. (w.e.f. 11^th July, 2014)

–          Percentage of partial reverse charge in case of motor vehicle amended. Now it 50:50.(w.e.f. 1^st Oct’ 2014)

5. Interest Rates Revised (Notification No 12/2014 applicable w.e.f. 1^st Oct 2014)–          Rate of interest for delay in payment of service tax has gone upto 30%.

–          New rates are 18%/ 24%/ 30% as the case may be.

6. Notification No 15/2014 (applicable w.e.f. 11^th July 2014)

Resident Private Limited Company Allowed For Advance Rulings.

1. Section 15A – New concept of Information Return introduced (Same as Annual Information Return in Income Tax).
2. Section 15B – Penalty for not filing Information Return.
   

3. Section 32E – Application for settlement of cases to be allowed, even though the return is not filed.
   

4. Section 32-O – Clarificatory amendment.
   

5. Section 35B – Limit for refusal to admit appeal by Tribunal has been raised to Rs. 2 lac from Rs. 50,000.
   

6. Section 35C – Provisions for stay of demand upto the period of 365 days deleted. Section 35F substituted.
   

7. Section 35E – Power given to Board for condoning delay by 30 days.
   

8. Section 35F – Mandatory deposit of certain percentage of duty demand before filing of appeal introduced with a ceiling of Rs. 10 crores.
   

9. Section 35L – Question relating to determination of taxability or excisability to be treated as relating to Rate of Duty. Appeal directly lies to Supreme Court after Tribunal.
   

1. Third Schedule – Goods specified for Retail Sale Price.

–       E payment made mandatory for all irrespective of duty paid. (w.e.f. 1^st Oct’ 2014)

–       Draconian Rule 8(3A) substituted. Now, only penalty @ 1% per month is payable if the default in paying duty exceed 1 month. (w.e.f. 11^th July’ 2014)

Central Excise Valuation Rules, 2000 amended (Notification No 20/2014 applicable w.e.f. 11^th July’ 2014)

–       Fiat Case nullified.

–       Sale Price shall be the assessable value even if goods are sold below the Cost of Production.

Cenvat Credit Rules, 2004 amended (Notification No 21/2014 w.e.f.)

–       Rule 4 amended with major impact. Now cenvat credit on Input and Input Services cannot be taken after 6 month of the date of invoice. (w.e.f. 1^st Sept’ 2014)

–       Cenvat Credit on reverse charge case can be taken after payment of service tax. No ceiling to pay the value to the service provider. (w.e.f. 11^th July’ 2014)

–       Rule 6 amended to give relief. If payment for export of service is received after 6 months but within 1 year, the reversed cenvat credit can be retaken. (w.e.f. 11^th July’ 2014)

–       Rule 12A is being amended to disallow transfer of credit by a large taxpayer from one unit to another. (w.e.f. 11^th July’ 2014)

Resident Private Limited Company Allowed For Advance Rulings

1. Section 15 – Advance bill of entry can now be presented in case of Vehicle/ Land Routes.
2. Section 127B – Application for settlement of cases allowed in case of Bill of Export, etc.
   

3. Section 129A – Limit for refusal to admit appeal by Tribunal has been raised to Rs. 2 lac from Rs. 50,000.
   

4. Section 129B – Provisions for stay of demand upto the period of 365 days deleted. Section 129E substituted.
   

5. Section 129D – Power given to Board for condoning delay by 30 days.
   

6. Section 129E – Mandatory deposit of certain percentage of duty demand before filing of appeal introduced with a ceiling of Rs. 10 crores.

–       Free baggage allowance raised from Rs.35,000 to Rs.45,000.

–       Free baggage allowance raised from Rs.15,000 to Rs.17,500.

–       Reduction of duty free allowance of cigarettes from 200 to 100, of cigars from 50 to 25 and of tobacco from 250 gms to 125 gms.

Resident Private Limited Company Allowed For Advance Rulings