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Budget 2016-2017 Highlights & Changes In Indirect Taxes

AMLEGALS is pleased to share the highlights of changes and proposals in Union Budget 2016-2017 in Indirect Taxes .

The major changes on indirect taxes under this section  as the budget speech of  Shri Arun Jaitley, Finance Minister   today, at 11 a.m ,on 29 Feb 2016 are as below :

a. Major Export Boost by widening of Duty Drawback Scheme  for many new products and new countries .

b.FY17 fiscal deficit target at 3.5%

c.Suitable changes to be made in customs and excise duty rates to boost Make In India by reduction in duties as applicable

d.Service tax exempted for general insurance schemes under Niramayi Swasthya Bima Yojna

e.Service tax exempted for housing construction of houses less than 60 sq.m

f. Excise on readymade garments with retail price of ` 1000 or more raised to 2% without input tax credit or 12.5% with input tax credit.

g. Excise duty on tobacco increased by 10-15%, except for beedi

h.To levy 1% infra cess on small gasoline cars

I. 11 NEW CESTAT BENCHES TO BE SET UP TO REDUCE PENDENCY OF LITIGATION

J. Cenvat Credit Rules, 2004 is being amended to effect better input tax credit flow including apportionment of credit .

k.Clean energy cess increased from RS. 200/ton to 400/ton on coal, lignite and peat

l.Any appeal pending against an order of penalty can be settled by paying 25% of the imposed penalty amount .

m.Cenvat Credit Rules,2004  amended to allow credit in certain cases of exempted goods .

n.Single Member Bench of CESTAT  can handle litigation upto Rs 50 Lakhs .

o. Excise duty of ‘1% without input tax credit or 12.5% with input tax credit’ on articles of jewellery [excluding silver jewellery, other than studded with diamonds and some other precious stones], with a higher exemption and eligibility limits of ` 6 crores and ` 12 crores respectively.  .

p. 9% interest on refund ordered by appellate authorities 

q.No increase in service tax 

r.Krishi Kalyan Cess 0.5%to be levied on all taxable services w.e.f. 1 June 2016

s.Customs Act to provide for deferred payment of customs duties for 15 importers and exporters with proven track record.

t.Customs Single Window Project to be implemented at major ports and airports starting from beginning of next financial year.  Increase in free baggage allowance for international passengers.

u.Filing of baggage only for those carrying dutiable goods.

v.Revision of return extended to Central Excise assesses.

w. Additional options to banking companies and financial institutions, including NBFCs, for reversal of input tax credits with respect to non- taxable services

x. Infrastructure cess, of 1% on small petrol, LPG, CNG cars, 2.5% on diesel cars of certain capacity and 4% on other higher engine capacity vehicles 13 and SUVs. No credit of this cess will be available nor credit of any other tax or duty be utilized for paying this cess.

y. Exemption of service tax on services provided under Deen Dayal Upadhyay Grameen Kaushalya Yojana and services provided by Assessing Bodies empanelled by Ministry of Skill Development & Entrepreneurship.

z.Changes in customs and excise duty rates on certain inputs to reduce costs and improve competitiveness of domestic industry in sectors like Information technology hardware, capital goods, defence production, textiles, mineral fuels & mineral oils, chemicals & petrochemicals, paper, paperboard & newsprint, Maintenance repair and overhauling [MRO] of aircrafts and ship repair.

aa.Reduce service tax on Single premium Annuity (Insurance) Policies from 3.5% to 1.4% of the premium paid in certain cases.

ab.Extend excise duty exemption, presently available to Concrete Mix manufactured at site for use in construction work to Ready Mix Concrete.

ac.Assignment of right to use the spectrum and its transfers has been deducted as a service leviable to service tax and not sale of intangible goods.

ad.One-time scheme of Dispute Resolution for ongoing cases under retrospective amendment.

ae.Time limit of one year for disposing petitions of the tax payers seeking waiver of interest and penalty.

af.13 cesses, levied by various Ministries in which revenue collection is less than Rs. 50 crore in a year to be abolished.

ag.Basic custom and excise duty on refrigerated containers reduced to 5% and 6%.


We shall be further covering the changes in Excise , Service Tax and Customs with focus on changes for Goods & Service Tax (GST) in India under Budget 2016.

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