Budget 2016-2017Budget 2016 -Reduce litigation and providing certainty in taxation

Budget 2016 -Reduce litigation and providing certainty in taxation

1. An Indirect tax Dispute Resolution Scheme, 2016, being introduced wherein in respect of cases pending before Commissioner (Appeals), the assesse, after paying the duty, interest and penalty equivalent to 25% of penalty imposed, can file a declaration. The proceedings against the assessee will be closed and he will also get immunity from prosecution. However, this scheme will not apply in certain cases.
2. Retail Sale Price [RSP] based assessment of excise duty being extended to all goods falling under heading 3401 and 3402 with the abatement rate of 30%.
3. Retail Sale Price [RSP] based assessment of excise duty being extended to: a) aluminium foils of a thickness not exceeding 0.2 mm [with abatement of 25%]; b) wrist wearable devices (commonly known as ‘smart watches’) [with abatement of 35%]; and c) accessories of motor vehicle and certain other specified goods [with abatement of 30%].
4. Exemptions being restored , with effect from 01.04.2015, in relation to contracts which had been entered into prior to 01.03.2015 for services of: a) construction provided to the Government,

a local authority or a governmental authority, in respect of construction of govt. schools, hospitals etc.

1. b) construction of ports, airports.

    Existing     Proposed

5.6%             Nil

5. Exemption from service tax being extended to services provided by way of construction, maintenance etc. of canal, dam or other irrigation works provided to bodies set up by Government, during the period from the 1st July, 2012 to 29th January, 2014.

    Existing     Proposed

5.6%             Nil

6. Section 67A being amended to obtain rule making powers in respect of the Point of Taxation Rules, 2011. Point of Taxation Rules, 2011 being amended accordingly, with effect from date of enforcement of Finance Bill, 2016.
7. Section 93A of the Finance Act, 1994 being amended so as to allow rebate by way of notification also, with effect from date of enforcement of Finance Bill, 2016.
8. Explanation 2 in section 65B(44) of the Finance Act, 1994 being amended so as to clarify that any activity carried out by a lottery distributor or selling agent are liable to service tax, with effect from date of enforcement of Finance Bill, 2016.
9. Cenvat Credit Rules, 2004 being amended so as to provide for reversal of Cenvat Credit of inputs/input services which have been commonly used in providing taxable output service and an activity which is not a ‘service’, with effect from 01.04.2016.
10. Notification No. 27/2012 – C.E. (N.T.) being amended so as to provide that time limit for filing application for refund of Cenvat Credit, in case of export of services, is 1 year from the specified date, with effect from 01.03.2016.
11. A condition mandating inclusion of cost of fuel in the consideration for the services of renting of motor-cab services for availing abatement from service tax, being introduced with effect from 01.04.2016.
12. Being clarified that service provided by the Indian Railways to Container Train Operators (CTOs) of haulage of their container train is a service of ‘Transport of Goods by Rail’

Existing     Proposed

14%            4.25%

13. Services provided by the Indian Institutes of Management (IIM) by way of 2 year full time Post Graduate Programme in Management (PGPM), Integrated Programme in Management and Fellowship Programme in Management (FPM) being exempted, with effect from 01.03.2016

Existing     Proposed

14%             Nil

14. Assignment by the Government of the right to use the radio-frequency spectrum and its subsequent transfers being declared as a service so as to make it clear that assignment of right to use the spectrum is a service leviable to service tax and not sale of intangible goods, with effect from date of enforcement of Finance Bill, 2016.

Existing     Proposed

14%             14%

15. Service tax on the services of Information Technology software on media bearing RSP, being exempted, provided appropriate Central Excise duty is paid, with effect from 01.03.2016.

Existing     Proposed

Nil                  Nil

16.Mutual exclusiveness of levy of excise duty and service tax on information technology software [in respect of Software recorded on media “NOT FOR RETAIL SALE”] being ensured by exempting from excise duty only that portion of the transaction value on which service tax is paid, with effect from 01.03.2016.

Existing     Proposed

14%             14%