INDIRECT TAXES
SERVICE TAX
Amendments effective from 02.02.2017
Amendment in Mega Exemption Notification No. 25/2012 ST dated 20.06.2012
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 exempted from service tax vide new entry 26D inserted in Mega
Exemption notification.
Under the Regional Connectivity Scheme (RCS), exemption from service tax is
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 1 year from the
date of commencement of operations of the Regional Connectivity Scheme
(RCS) as notified by Ministry of Civil Aviation vide new entry S. No. 23A
inserted in Mega Exemption notification.
The entry 9B exempts services provided by Indian Institutes of Management
(IIMs) by way of two year full time residential Post Graduate Programmes
(PGP) in Management for the Post Graduate Diploma in Management
(PGDM), to which admissions are made on the basis of the Common
Admission Test (CAT), conducted by IIM. The said entry is amended so as to
omit the word ,residential appearing in the notification. The exemption
remains the same in all other respects.
Amendments to be effective from the date of enactment of the Finance Bill,
2017
The Negative List entry under section 66D(f) of the Finance Act, 1994
covering "services by way of carrying out any process amounting to
manufacture or production of goods excluding alcoholic liquor for human
consumption is proposed to be omitted. The said benefit would continue
by way of exemption under Mega Exemption Notification.
Consequently, the definition of `process amounting to manufacture' [Section
65B(40)] is also proposed to be omitted from the Finance Act, 1994 and to
be incorporated in the Mega Exemption Notification.
Research and Development (R & D) Cess Act, 1986 to be repealed.
Consequently, exemption from service tax equivalent to the amount of R &
D cess payable on the import of technology under the said Act under
Notification No. 14/2012 ST dated 17.03.2012 would not be available with
respect to a taxable service involving import of technology.
Rule 2A of the Service Tax (Determination of Value) Rules, 2006 to be
amended so as to clarify that value of service portion in execution of
works contract involving transfer of goods and land or undivided share
of land, as the case may be, shall not include value of property in such
land or undivided share of land. In view of the said amendment, the
recent Delhi High Court judgment in case of Suresh Kumar Bansal v. UOI
2016 (43) ST5R 3 (Del.) no longer holds good. In this the High Court held
that service tax cannot be charged in respect of composite contracts for
purchase of units in a complex, entered into by the buyers with the
builder, in view of the absence of the specific machinery provisions for
the valuation of the same.
Amendments in Provisions of Advance Ruling
Section 96A(d) relating to Advance Rulings proposed to be amended so
as to substitute the definit ion of ,Authority to mean the Authority for
Advance Ruling as constituted under section 28E of the Customs Act,
1962. Section 28 (E) of the Customs Act, 1962, is also to be amended so
as to substitute the definition of ,Authority to mean the Authority
for Advance Ruling as constituted under section 245-O of the Income-
tax Act, 1961.
Section 96B relating to vacancies not to invalidate proceedings also
proposed to be omitted.
Section 96C(3) to be amended so as to increase the application fee for
seeking advance ruling from ` 2,500 to ` 10,000.
Section 96D(6) to be amended so as to extend the existing time limit of
pronouncement of advance ruling by the authority from 90 days to 6
months.
A new section 96HA proposed to be 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.
Retrospective Exemptions
With effect from 22.09.2016, Notification No. 41/2016 ST dated 22.09.2016
exempted 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. It is proposed that service tax would also not be leviable
on such amounts during the period between 01.06.2007 [date on which
service tax was levied on renting of immovable property service] and
21.09.2016 (both days inclusive).
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 are proposed to be exempted from service tax
retrospectively during the period commencing from the 10.09.2004 [date
on which life insurance service became leviable to service tax] and
ending with the 01.02.2016 (both days inclusive).
EXCISE
Amendments to be effective from the date on which Finance Bill, 2017 receives the
assent of the President
Changes in the provision of Authority for Advance Ruling
Clause (e) of section 23A is being amended so as to substitute the definition of
,Authority to mean the Authority for Advance Ruling as constituted under
section 245-O of the Income-tax Act, 1961.
Section 23B relating to vacancies (in the Authority for advance ruling) not to
invalidate proceedings is being omitted.
The application fee for seeking advance ruling has been increased from Rs.
2,500/- (Rupees two thousand five hundred) to Rs. 10,000/- (Rupees ten
thousand) - Section 23C (3).
The time limit for pronouncing judgement by Authority for Advance Ruling has
been extended from ninety days to six month - Section 23D (6).
The pending applications before the Authority for Advance Rulings (Central
Excise, Customs and Service Tax) would stand transferred 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 - new Section 23-I
Changes in the provisions of Settlement Commission:
A new sub-section (5) has been inserted in Section 32E so as to enable any
person, other than assessee, referred to in sub-section (1) to make an application
to the Settlement Commission.
A new sub-section (5A) has been inserted in Section 32F to enable the Settlement
Commission to rectify the error in the order passed by it under sub-section (5),
which are apparent on the face of record.
Amendment effective from 02.02.2017
Amendment in Central Excise Rules, 2002
Rule 21 provides for the remission of duty in case the goods have been lost or
destroyed etc. A new sub-rule (2) has been inserted providing a time limit of
three months [further extendable by 6 months] for granting such remission of
duty from the receipt of application under this rule read with section 5 of the
Central Excise Act, 1944.
Amendments in CENVAT Credit Rules, 2004
Rule 10 of the CENVAT Credit Rules, 2004 provides for transfer of CENVAT
credit in different cases. In this regard, a new sub-rule (4) has been inserted so
as to provide for a time limit of three months [further extendable by 6
months] for approval of requests regarding transfer of CENVAT credit on
shifting, sale, merger, etc. of the factory.
Explanation-I(e) to rule 6 of the CENVAT Credit Rules, 2004 amended so as
to exclude banks and financial institutions including non-banking financial
companies engaged in providing services by way of extending deposits, loans
or advances from its ambit.
CUSTOMS
Amendments to be effective from the date on which Finance Bill, 2017 receives the
assent of the President
Definition of following terms is proposed to be incorporated in section 2 of the
Customs Act, 1962:
Beneficial owner
Passenger Name Record Information
Foreign Post Office and
International Courier Terminal
Section 2 of the Customs Act, 1962 is further proposed to be amended to include:
Foreign Post Office and International Courier Terminal in the definition of a
customs station.
Beneficial owner in the existing definitions of exporter as well as importer.
Section 7 of the Customs Act, 1962 to be amended to empower the Board to notify
Foreign Post Offices and International Courier Terminals.
Section 17 of the Customs Act, 1962 is proposed to be amended to rationalize the
requirement of documents for verification of self-assessment.
Section 27(2) of the Customs Act, 1962 to be amended so as to keep outside the ambit
of unjust enrichment, the refund of duty paid in excess by the importer before an
order permitting clearance of goods for home consumption is made, where-
such excess payment is evident from the bill of entry in the case of self-
assessed bill of entry or
the duty actually payable is reflected in the reassessed bill of entry in the case
of reassessment.
Section 28E(e) of the Customs Act, 1962 is proposed to be amended so as to
substitute the definition of `Authority for Advance Ruling' to mean the Authority for
Advance Ruling as constituted under section 245-O of the Income-tax Act, 1961.
Section 28F of the Customs Act, 1962 to be amended so as to provide that the
Authority for Advance Rulings constituted under section 245-O of the Income-tax
Act, 1961 shall be the Authority for giving advance rulings for the purposes of the
Customs Act, 1962.
It is further sought to provide that the Member of the Indian Revenue Service
(Customs and Central Excise), who is qualified to be a Member of the Board, shall be
the revenue Member of the Authority for the purposes of Customs Act.
The pending applications are proposed to be transferred 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.
Section 28H(3) of the Customs Act, 1962 is proposed to be amended so as to increase
the application fee for seeking advance ruling from ` 2,500 to ` 10,000 on the lines of
the Income-tax Act.
Section 28-I(6) of the Customs Act, 1962 to be amended so as to provide time of limit
of 6 months by which Authority shall pronounce its ruling on the lines of the
Income-tax Act.
A new section 30A to be introduced in the Customs Act, 1962 so as to make it
obligatory on the person-in-charge of a conveyance that enters India from any place
outside India or any other person as may be specified by the Central Government by
notification in the Official Gazette, to deliver to the proper officer the passenger and
crew arrival manifest before arrival in the case of an aircraft or a vessel and upon
arrival in the case of a vehicle; and passenger name record information of arriving
passengers in such form, containing such particulars, in such manner and within
such time as may be prescribed. The section also intends to provide for imposition of
a penalty not exceeding ` 50,000, as may be prescribed, in the case of delay in
delivering the information.
A new section 41A to be introduced in the Customs Act, 1962 so as to make it
obligatory on the person-in-charge of a conveyance that departs from India to a place
outside India or any other person as may be specified by the Central Government by
notification in the Official Gazette, to deliver to the proper officer the passenger and
crew departure manifest and passenger name record information of departing
passengers before the departure of the conveyance in such form, containing such
particulars, in such manner and within such time as may be prescribed. The section
also intends to provide for a penalty not exceeding ` 50,000, as may be prescribed in
the case of delay in delivering the information.
Section 46(3) of the Customs Act, 1962 is to be substituted so as to make it mandatory
to file the bill of entry before the end of the next day following the day (excluding
holidays) on which the vessel or aircraft or vehicle carrying the goods arrives at a
customs station at which such goods are to be cleared for home consumption or
warehousing and to provide for imposition of such charges for late presentation of
the bill of entry, as may be prescribed.
Section 47(2) of the Customs Act, 1962 is to be amended so as to provide the manner
of payment of duty and interest thereon in the case of self-assessed bills of entry or,
as the case may be, assessed, reassessed or provisionally assessed bills of entry.
Section 49 of the Customs Act, 1962 provides the facility of storage of imported
goods entered for home consumption in a warehouse pending their clearance. The
said section is proposed to be amended to extend the said facility to imported goods
entered for warehousing before their removal.
Section 82 relating to label or declaration accompanying goods to be treated as entry
for import or export is proposed to be omitted.
Consequently, section 69 of the Customs Act, 1962 relating to clearance of
warehoused goods for exportation is proposed to be accordingly amended to align it
with the proposed omission of section 82.
Further, Board is proposed to be empowered to make regulations to provide for the
form and manner in which an entry may be made in respect of goods imported or to
be exported by post by amending section 84 of the Customs Act, 1962.
A new sub-section (5) to be inserted to section 127B of the Customs Act, 1962 to
enable any person, other than applicant, referred to in sub-section (1) to make an
application to the Settlement Commission.
Section 127C(3) of the Customs Act, 1962 is to be amended so as to substitute certain
words therein. It further seeks to insert a new sub-section (5A) therein to enable the
Settlement Commission to amend the order passed by it under sub-section (5), to
rectify any error apparent on the face of record.
Section 157 of the Customs Act, 1962 is to be amended so as to empower Board to
make regulations for specifying the form, particulars, manner and time of providing
the passenger and crew manifest for arrival and departure and passenger name
record information and penalty in the case of delay in delivering the information.
Section 9(3)(c) of the Customs Tariff Act, 1975 is to be substituted so as to withdraw
the exemption to three categories of non-actionable subsidies specified therein from
the scope of anti-subsidy investigations.
BUDGET ESTIMATE FOR REVENUE COLLECTION FROM
INDIRECT TAXES
Actual Budget Revised Budget
Head of taxes 2015-2016 2016-2017 2016-2017 2017-2018
Customs Duties-
Import Duty 2,03,074.88 2,23,204.00 2,09,950.00 2,38,200.00
Exporty Duty 7,263.12 6,796.00 7,050.00 6,800.00
Union Excise Duties 2,88,072.89 3,18,669.50 3,87,368.58 4,06,900.00
Service Tax 2,11,414.25 2,31,000.00 2,47,500.00 2,75,000.00
Taxes on union territories 3,878.26 4,121.08 4,277.16 4,679.46
Total Indirect Tax Revenue 7,13,703.40 7,83,790.58 8,56,145.74 9,31,579.46
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