TaxTMI 
TaxTMI 
Clause by Clause – Finance bill 2012
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....lause by Clause – Finance bill 2012 <br>Customs, DGFT & SEZ<br>Dated:- 23-3-2012<br><BR>Clause by Clause - Finance bill 2012 Clause by Clause Analysis on DIRECT TAX Clause by Clause Analysis on SERVICE TAX Clause by Clause Analysis on EXCISE Clause by Clause Analysis on CUSTOM Changes in Central Excise Tariff Rates Changes in Custom Tariff Rates ============= Document 1 Income Tax & Wealth Tax 2012 - 13 FINANCE BILL (CLAUSE NO.) 3SECTIONNEW LAWAPPLI CABLE w.e fEXECUTIVE SUMMARY To be classified as capital asset under the act the precondition is that it has to be property of any kind held be the assessee. The amendment seems to overcome Vodafone Judgment in so far it alluded to distinction between legal or contractual rights to constitute property. It is being proposed in the amendment that property shall include and shall always deemed to have been included any rights in or in relation to an Indian company including rights of management or control or any other rights whatsoever. Noteworthy is the Fact that such deeming will not happen when such rights are held in the company but also when such rights are held in relation to an Indian Company. The implication of the amendm....
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....ent will abound not only for non residents assesses but for resident assessees as well. 2(14)Amendment of definition of property widen to include rights in or in relation to an Indian company including rights of management or control or any other rights whatsoever1.4.1962 32(16)'Commissioner' to include Director of Income-tax.AY 1988-89Definition of 'Commissioner' to include Director of Income-tax. 32(19AA)(iv)Requirement to issue shares to shareholders of demerged company, relaxedAY 2013-14In case where demerged company is a subsidiary company and resulting company is a holding when resulting company is the holding companycompany, it is not possible to satisfy the requirement of issue of shares to shareholders of demerged company, for obvious reasons. Accordingly, requirement to issue shares to shareholders of demerged company relaxed when resulting company is the holding company on demerger. 3 2(47)Amendment of definition of transfer to include disposing of or parting with an asset or any interest therein or creating any interest in any asset in any manner whatsoever, directly or indirectly, absolutely or conditionally, voluntarily or involuntarily by way of an agreement ( wheth....
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....er entered into India or outside India) or otherwise, notwithstanding that such transfer of rights has been characterized as being effected or dependent upon or flowing from the transfer of rights of a company registered or incorporated outside India.1.4.1962· The stated objective of the amendment through insertion of the explanation is to remove the doubt and hence clarificatory in nature. · The proposed explanation like the main definition is inclusive and thus wide enough to cover similar kinds and nature. . The main section which defines transfer to include certain types of transaction has not been altered. · What the explanation does is to widen the scope of transfer to include every mode and the manner of entering of the transaction in which the types of transactions mentioned in the main section will also get covered. The mode and manner of the transfer of the kinds mentioned in the main section is now being sought to be included are (i) directly or indirectly (ii) absolutely or conditionally (iii) voluntarily or involuntarily (iv) by way of agreement or otherwise (v) it is characterized as being effected or dependent upon or flowing from the transfer of a share or....
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.... shares of a company registered or incorporated outside India. 49(1)(i)Two new explanations number 4 and 5 are being inserted. By of explanation 4, a clarification for removal of doubt is being made to the effect that term through for the purpose of clause shall mean and include and shall be deemed to have always meant and included " by means of" " in consequence of" or " by reason ofʼ.1.4.1962The amendment through explanation 4 aims at a major shift in tax policy moving from the concept of "look at" to "look through" in order to nullify effect of Vodafone judgment. Explanation 5 somewhat is conceptually lifted from DTC 2010 the introduction of which is still in limbo. Other than the far reaching implication of the intended insertions, what should be highly surprising is the introduction of the significant concepts through Through insertion of explanation 5 the situs of share or interest in a company incorporated outside India shall be in India if the share or interest derives, directly or indirectly, its value substantially from the assets located in India.explanations, case of tail wagging the dog, leaving these open to fragility of judicial challenge. One may also note that ....
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....use of through in clause (i) is in relation to all limbs namely (a) business connection in India (b) property in India (c) any asset or source of income in India or ( d) transfer of capital situate in India. This artificial construction of the term through to mean and include "by means of" , " in consequence of" or " by reason of" is nothing but coining new taxonomies generally unknown in tax jurisprudence. It must also be underlined in the context of explanation 5 that the quantitative tests to determine "deriving, directly or indirectly its value substantially from the assets situate in India" is not provided unlike what is provided in DTC 2010. 49(1)(vi)Three new explanations numbering 4, 5 and 6 are being inserted in this clause.1.6.1976 5, 610(23C), 13, 143Non-availability of exemption to a Charitable Trust or Institution if it is engaged in an activity in the nature of trade, commerce or businessAY 2009-10A charitable trust or Institution does not get the benefit of tax exemption in the year in which its receipts from commercial activities exceeds the threshold limit, whether or not the registration or approval granted is cancelled, withdrawn or 510(10D)Eligibility condition....
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....s for exempt life insurance policiesAY 2013-14rescinded. Exemption for insurance policies issued on or after 1 April 2012 would only be available for policies where the premium payable for any of the years during the term of the policy does not exceed 10% of the actual capital sum assured. In order to ensure that life insurance products are not designed to circumvent the prescribed limits by varying capital sum assured from year to year, it is proposed to provide that the capital sum assured would be the minimum of the sum assured in any of the years of the policy. 732The units engaged in the business of generation or generation and distribution of power shall be allowed additional depreciation on the lines allowed to an assessee engaged in the business of manufacture or production of any article or thing.1.4.2013This amendment removes an obvious miss and in tune with the policy to provide boost to the infrastructure sector. 835Weighted deduction equal to two times of the expenditure1.4.2013The objective of the amendment is to boost research and development incurred on scientific research or in house research and development facility to the business engaged in biotechnology or bus....
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....iness of manufacture oractivities in the country. production of specified article or thing is being extended to expenditure incurred up to 31.3.2017 9Section 35ADAmendment to sub-01.04.2013Three new businesses - section (5 & 8)(a) Setting up and operating an inland container depot or a container freight station (b) Bee-keeping and production of honey and beeswax (c) Setting up and operating a warehousing facility for storage of sugar. Added to the defination of specified business and date of commencement of operations and business aforesaid three businesses on or after 01.04.2012. Sub-section (6A) and amendment to sub- section (5 & 8)Three new businesses - (d) Setting up and operating an inland container depot or a container freight station (e) Bee-keeping and production of honey and beeswax (f) Setting up and operating a warehousing facility for storage of sugar. Section 35ADInsertion of sub- section 6A01.04.2011Transferred the operation of 2 star or above category hotel by the owner to another person. The owner shall deemed to be carrying on the specified business of building and hotel. 10Section 35CCCInsertion of new section 35CCC01.04.2013Deduction equal to one and a half tim....
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....es of the expenditure on agriculture extension project notified by the board shall be allowed to the assessee. No other deduction for the above said expenditure in the same or any other assessment year. 11Section 40Insertion of new provio to sub clause (1a)01.04.2013It shall be deemed that the Assessee has deducted and paid the tax on such sum on the date of furnishing of the return of Income by the Resident payee referred to in the set proviso and meaning thereby no disallowance will be made on non deduction of TDS if the Resident payee has furnished the return of the Income in hands of the deductor 12S. 40AAmendment to section01/04/20131. Proviso inserted so 40A and insertion of new proviso.as to provide that no disallowance under this clause shall be made , on account of any expenditure being excessive or unreasonable having regard to the fair market value, in respect of a specified domestic transaction referred to in section 92BA, if such transaction is at arm's length price as defined in clause (ii) of section 92F. 2. Clause (b) of S. 40A(2) amended so as to include therein any other company carrying on a business or profession in which the company referred to in sub- clause ....
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....(b)(ii) has substantial interest. 1344ABExtension of time limit for furnishing tax audit report by assesses who have undertaken international transactionAY 2012-13Due date for furnishing tax audit report would be same as due date for furnishing return of income under section 139. 1444ADPresumptive taxation not to apply to professionals etc.AY 2011-12Presumptive taxation not to apply to professionals, persons earning commission or brokerage income, persons carrying on agency business. 1547(vii)Requirement to issue shares to shareholdersAY 2013-14In case where subsidiary company amalgamates into of amalgamating company, relaxed when subsidiary company amalgamates into holding companyholding company, it is not possible to satisfy the requirement of issue of shares to shareholders of amalgamating company, for obvious reasons. Accordingly, requirement to issue shares to shareholders of amalgamating company relaxed when subsidiary company amalgamates into holding company. 1649(1)(iii)(e)Cost of acquisition in case of conversion of sole-proprietor / firm into companyAY 1999-00In case of conversion of sole proprietor / firm into company which is not regarded as transfer of capital asset, ....
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....cost of acquisition of asset in hands of company would be the same as that in hands of sole proprietor / firm. 1750DFMV of capital asset to be considered where sales consideration cannot be determinedAY 2013-14Where in the case of transfer of capital asset, value of consideration is not determinable, FMV of the asset shall be taken to be full value of consideration received for the purpose of computing capital gains. 1854B(1)Exemption available to HUFAY 2013-14Rollover relief under section 54B on transfer of land is available not only to individual, but HUF also. 19Section 54GBInsertion of new Section 54GB01.04.2013Exemption of Long term Capital Gain Tax to an Individual or HUF on transfer of residential property (a house or a plot of land) on or before 31st March, 2017 upon reinvestment of sale consideration before the due date of furnishing the return of income as specified section 139 (1) in the Equity of ELIGIBLE BUSINESS (a new start up SME company in the manufacturing sector which is utilized by the company for the purchase of new plant & machinery as specified in the section in section in which in hold more than 50% share capital or voting rights). 2055AReference to Valuati....
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....on Officer in connection with fair market value of asset as on 1 April 19811 July 2012If AO is if the opinion that value taken by assessee as on 1-04-1981 is higher than FMV of the asset on that date, AO would be enabled to make a reference to Valuation Officer for determining FMV of the property. 21Section 56 (2) (A) (vii)Amendment of clause (e) of explanation01.10.2009Hitherto there was a confusion as to who are the relatives of an individual or HUF. There had been certain judicial pronouncements including of Ahmadabad ITAT Bench wherein it has been held that the list contained in the said clause is duly applicable to the members 22Section 68Insertion of New Proviso01.04.2013of HUF also. Through this amendment it has been specifically provided as to who are the relatives of individual and who are the relatives of an HUF. Any sum or property received without consideration or for inadequate consideration by HUF from its members would be excluded from taxation. The Theory of Shifting Onus presently requires the assessee, in receipt of share capital/share application, etc, to prove the identity, creditworthiness and genuineness of the Share Subscriber. There is presently, based on c....
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....atena of current and old case Laws, no requirement to prove the Source of the amount in the hands of Share Applicant, ie Source of Source is not required to be proved. [refer Gauhati HC in Nemi Chand Kothari, Orissa in Sarogi Credits, Delhi HC in Dwarkadhish Investments Ltd.]. By virtue of new 23New clause inserted after clause (ii) to explanation in sub section (6).01/04/2013amendment, the onus u/s 68 shall not be discharged unless the share applicant also furnishes the source of the amount out of which it/he has contributed in the share capital of the assessee company AND the AO is satisfied about the said source of the share subscriber. The existing provision of the Explanation to sub- section (6) of section 80A provides the definition of expression "market value" in relation to any goods or services sold or supplied and in relation to goods or services acquired. Amendment has been made to said Explanation so as to provide that "market value" in relation to any goods or services sold, supplied or acquired, in case of a transaction being a domestic transaction referred to in section 92BA shall be the arm's length price as defined in clause (ii) of section 92F S. 80A 2480CEligibi....
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....lity condition for deduction in respect of lifeAY 2013-14Deduction for life insurance premium on insurance policies issued on or after 1 insurance policiesApril 2012 shall be allowed for only so much of the premium payable as does not exceed 10% of the actual capital sum assured. 25Section 80DAmendment01.04.2013Additional rebate of Rs. 5000/- for expenditure on preventive health checkup of self, spouse, dependent children or parents. Payment by any other mode other than cash is now eligible for paying health insurance premium 26Section 80DDBAmendment01.04.2013The age of Senior Citizen is specified in section 80DDB is reduced to 60 years in place of 65 years 2780GProhibition of deduction of cash donations exceeding Rs.10,000.AY 2013-14Any payment exceeding Rs.10,000 shall be allowed as deduction only if paid by any mode other than cash. 2880GGAProhibition of deduction of cash donations exceeding Rs.10,000.AY 2013-14Any payment exceeding Rs.10,000 shall be allowed as deduction only if paid by any mode other than cash. 29Section 80- IA(4)(iv)Amendment01.04.20131.Terminal date extended for the further period of 1 year i.e. upto 31st March, 2013. 2. The existing Explanation to sub-sect....
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....ion (8) of section 80-IA provides for the definition of "market value" in relation to goods or services. 3. The same is substituted so as to include the arm's length price as defined in clause (ii) of section 92F, where the transfer of such goods or services is "specified domestic transaction" referred to in section 92BA within the definition of "market value" in relation to any goods or services 30Section 80TTAInsertion of new section01.04.2013Deduction of interest on Saving Account with banking companies/Co- operative Societies engaged in banking business includes Co-operative Land Mortgage or development bank/post office to an individual or HUF 31, 3290 & 90ANew insertion - Sub section (2A), (4) & explanation 3 to S. 90 and New insertion - Sub section (2A), (4) & explanation 3 to S. 90ASections inserted w.e.f 01/04/2013, explanation inserted w.e.f 01/10/20091. A new sub-section (2A) has been inserted in the section 90 so as to provide that the provisions of newly inserted Chapter X-A shall apply even if such provisions are not beneficial to the assessee. 2. A new sub-section (4) has been inserted in the aforesaid section so as to provide that an assessee, not being a resident, ....
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....to whom an agreement referred to in sub-section (1) applies, shall not be entitled to claim any relief under such agreement unless a certificate, containing prescribed particulars, of his being a resident in any country outside India or specified territory outside India, as the case may be, is obtained by him from the Government of that country or specified territory. 3. Section 90 of the Act has been amended to provide that any meaning assigned through notification to a term used in an agreement but not defined in the Act or agreement, shall be effective from the date of coming into force of the agreement. Similar amendment is also made u/s 90A. 33S. 92Amendment to section 92 and insertion of section (2A)01/04/20131. New sub-section (2A) inserted so as to provide that any allowance for an expenditure or interest or allocation of any cost or expense or any income in relation to the specified domestic transaction shall be computed having regard to the arm's length price. 2. Sub section (2) and (3) of section 92 are further amended to substitute the expression "international transaction or specified domestic transaction" in place of "international transaction" so as to include ther....
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....ein the specified domestic transaction and apply the provisions of sub-sections (2) and (3) to specified domestic transactions also. 3492BNew explanation to sub section (2) inserted.01/04/2002Explanation to s. 92B inserted so as to clarify the definition of the expressions "international transaction" and "intangible property. 3592BANew insertion01/04/2013New section 92BA inserted to provide for the meaning of specified domestic transaction with reference to which the income is computed under section 92 having regard to arm's length price 3692CTwo amendments are carried out through this clause. One relates to the proviso to sub section 2 inserted by finance act 2002 and now stands substituted by the finance (No 2) Act 2009. The controversyFirst amendment applies to AY 2002-03 and subsequent assessment years till substituted proviso cameThe amendments being proposed are to override the judicial controversies on the application of new and substituted proviso in order to cap some sort of stability on the issues on account of several conflicting decisions particularly at the level of the tribunal. It is a different with regard into being. to assessment years to which this proviso appli....
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....ed was whether or not the tolerance band of five percent linked to arithmetical mean arrived at as per the proviso is a matter however that all clarifications, as is usual, lean in favor of the department. The second amendment shall apply to all assessments pending as on 1.10.2009 standard deduction. The amendment clarifies that the intent of the law was never to allow this tolerance band to work as standard deduction. Second amendment also resolves a with controversy regard to applicability of the proviso to sub section 2 of section 92C as substituted by the Finance Act 2009 as to all pending proceedings as on 1.10.2009, the date on which this proviso became effective or to assessment year following the said date. Through an explanation to section 2 of section, it is clarified that substituted proviso shall apply to all pending assessment years. 37 3892C, 92D & 92E 92CAAmendment This amendment empowers the TPO on reference by AO to determine ALP of the international transactions noticed by him in the course of proceeding0s. -* / before him provided that the assessee has not furnished a report u/s 92E of the Act. But no reopening/rectificatio....
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....n of assessment shall be undertaken by AO on account of this amendment for any assessment year proceedings for which has been completed before 1.7.201201/04/2013 1.6.2002Amendment made to respective sections to substitute the words "international transaction or specified domestic transaction", for the words "international transaction" wherever they occur so as to extend the provisions of the aforesaid sections to the specified domestic transaction. The careful reading of the clause reveal that such power can be exercised by TPO only when no report u/s 92E is filed and such transaction comes to his notice in the course of proceedings referred to him by AO. The explanatory memorandum however goes to suggest that this power can be exercised in all those cases in which such transactions are omitted from being reported. 3992CC & 92CDNew Section inserted01/07/20121. Board is empowered to enter into an advance pricing agreement with any person undertaking an international transaction. 2. Such APAs shall include determination of the arm's length price or specify the manner in which arm's length price shall be determined, including method those provided in subsection (1) of section 92C. 3.....
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.... The APA shall be valid for such previous years as specified in the agreement which in no case shall exceed five consecutive previous years. 4. The APA shall be binding only on the person and the Commissioner (including income- tax authorities subordinate to him). 5. The Board is empowered to declare, with the approval of Central Government, any such agreement to be void ab initio. 6. For computing period of limitation under the Act, the period beginning with the date of such APA and ending on the date of order declaring the agreement void ab- initio shall be excluded. However if after the exclusion of the aforesaid period, the period of limitation is less than sixty days, such remaining period shall be extended to sixty days. 7. The person entering in to such APA shall necessarily have to furnish a modified return within a period of three months from the end of the month in which the said APA was entered 8. Where the assessment or reassessment proceedings for an assessment year relevant to the previous year to which the agreement applies are pending on the date of filing of modified return, the Assessing Officer shall proceed to complete the assessment or rea....
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....ssessment in proceedings accordance with the agreement taking into consideration the modified return so filed and normal period of limitation of completion of proceedings shall be extended by one year. 9. In case assessment proceedings already completed, before the expiry of period allowed for furnishing of modified return , the Assessing Officer shall, in a case where modified return is filed, proceed to assess or reassess or recompute the total income of the relevant assessment year having regard to and in accordance with the APA and to such assessment. 40Chapter X -ANew chapter inserted1 st April, 2013General Anti Avoidance Rule 41111AClerical error pertaining to rate of tax in the Proviso rectified.AY 2009-10In case of equity shares / units on which STT is paid, Short term capital gains tax rate is 15%. In the Proviso, the rate is erroneously mentioned as 10%. It is accordingly proposed to amend the Proviso. 42Section 115AInsertion of new sub clause and amendment of existing clauses01.07.2012The interest payable to a non resident by an Indian company engaged in certain specified business relating to generation or distribution of power, operation of aircraft, manufacture or ....
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....production of fertilizer, construction of road, toll road, bridge, port, inland port, shipyard, ship or dam shall be taxed under section 115A under newly inserted clause (iiaa) of sub section(1). Consequential amendment to provide the tax rate at the rate 5% has been carried out u/s 115A (1)(BA). Concessionary tax regime as applicable to non citizen and non resident sportsperson available under Section 115BBA of the Income Tax Act has been extended to a non-resident entertainer. In a view that similar tax regime i.e. taxation on basis of gross receipts rather than net income would simplify the process of taxation in the case of entertainer. Further the rate of tax applicable u/s 115BBA has been increased from 10% to 20%. 43S. 115BBA(1)Amendment of sub section (1) & (2) and insertion of clause (c)01/04/2013 44Section 115BBDExtension of concessional taxed on Dividend Income of Indian Companies received from Foreign CompaniesExtended till 31.03.2013The concessional tax on Dividend Income received from Foreign Companies by Indian Companies continues till 31.03.2013. 45Section 115BBENew Section Inserted01.04.2013Incase of incomes/additions made u/s 68, 69, 69A, 69B, 69C and 68D, prese....
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....ntly the addition was being subjected to normal rates of taxation and the assessee (incase of Indl and HUF) could claim benefit of maximum amount not chargeable to tax. By virtue of this new section, it has been provided that the incomes of the nature as referred in the said section shall be taxes at flat rate of 30% and no allowance of any expense/exemption limit shall be permitted. 46115JBBook profit in cases of companies not required to prepare P/ L a/c as per Companies law. Gain on revaluation of asset subject to MAT liability.AY 2013-14For companies not required to prepare P/L a/c as per Schedule VI of Companies Act, P/L a/c prepared as per their respective regulatory Act shall be taken as basis for computing MAT. Book profits for the purpose of section 115JB shall be increased by the amount standing in revaluation reserve relating to the revalued asset which has been disposed, if the same has not been credited to P/L a/c. 47Chapter -XII- BAAmendment to chapter heading01.04.2013Hitherto the provisions of AMT were applicable to LLP's only, the Chapter heading has been changed to 'Persons other then a company", ie. Firms, HUF's, Sole proprietorship, AOP's, BOI's, etc fulfilling....
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.... certain conditions of the said Chapter. 48Section 115JCSubstitution of the Old Section01.04.2013The extent and scope of the AMT provisions have been extended to all persons other then companies, enjoying profit based incentive deductions under Chapter VI-A (part-C). To this extent the newly substituted section has engulfed more Persons. 49Section 115JD(1)Substitution of New Words01.04.2013The words, 'LLP u/s 115JC shall be allowed to it', has been replaced by 'A person u/s 115JC, other then a company shall be allowed to him". The amendment intends to permit the tax credit of AMT to all entities, who have been made liable/subjected to AMT as per newly substituted section 115JC. 50Section 115JESubstitution of New Words01.04.2013The words, 'A LLP', has been replaced by 'A Person", meaning thereby that subject to the provisions of Chapter XII- BA, other provision of the Act shall also be applicable to entities/persons made subjected to payment of AMT. 51Section 115JEEInsertion of New Section01.04.2013Under the existing provisions of Chapter XII- BA, though the meaning and applicability of the provisions were clear, yet there was no express provision as to who are the assessee's to wh....
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....om this chapter applies to and the provisions were applicable to all LLP's despite any restriction to the Adjusted Total Income. Henceforth, all Individuals, Huf's, APO's, BOI's, having Adjusted Total Income Upto Rs.20 Lakhs, would not be liable to pay AMT. 52Section 115JFOmission of Clause (c) and amendment to Clause (d)01.04.2013By Omission of Clause (c) the definition of LLP has been Omitted. Also in Clause (d) defining "Regular Income Tax", the Words "A LLP on its total income" has been substituted with "A person on his total income", in accordance with the change in Extent and Scope of the Section 115OAmendment to existing section.01.07.2012Chapter. In order to reduce the cascading effect on dividend distribution tax in respect of dividends received by a domestic company, the existing stipulation u/s 115O(1A) have been clearly spelled out so as to remove the ambiguity, if any. 53 54Section 115UAmendment to existing section01.04.2013The provision of section 115U have been amended so as to make a reference to the expression income accruing or arising to or received by a venture capital fund. 55Section 115VGSubstitution to the Table01.04.2013Amount of presumptive daily tonnage i....
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....ncome of ships increased. 56S. 139Amendments made to S. 139 and insertion of new proviso.01/04/20121. Fourth Proviso inserted to provide that a person, being a resident, who is not required to furnish a return under this sub-section and who during the previous year has any asset (including any financial interest in any entity) located outside India or signing authority in any account located outside India, shall furnish, on or before the due date, a return in 57Section 140Arespect of his income or loss for the previous year in such form and verified in such manner and setting forth such other particulars as may be prescribed. 2. Clause (a) and (aa) of explanation 2 to Section 139 amended so as to extend due date of filling return of income in case of all assessee to who needs to furnish report under section 92E .. Presently, there were no enabling provision u/s 140A, relating to payment of self assessment tax, wherein the credit of AMT paid u/s 115JD would be admissible. By virtue of amendments in present clause, credit of AMT paid u/s 115JD, would also be permissible u/s 140A. Amedment in sub- sections01.04.2013 58143 (3)Third proviso inserted to S. 143(3).01/04/2009Consequential....
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.... changes made to s. 143(3) to enable AO to frame assessment overriding the first and second proviso where , charitable trust or Institution does not get the benefit of tax exemption in the year in which its receipts from commercial activities exceeds the threshold limit, whether or not the registration or approval granted is cancelled, withdrawn or rescinded as provided under clause 5 & 6 here in above. 143(1D)Processing of return not necessary where notice has been issued u/s 143(2)1 July 2012Some returns of income are selected for scrutiny which may lead to raising a demand for taxes although refunds may have been issued earlier at the time of processing. Accordingly, processing of return is not necessary where process for scrutiny is initiated by way of issue of notice u/s 143(2). 5995 to 102, 14, 144BAGeneral Anti Avoidance Rule (GAAR)AY 2013-14GAAR introduced to deal with ‘aggressive tax planning'. Where an arrangement is held to be an 'impermissible avoidance arrangement', consequences in relation to benefit under a tax treaty can be determined keeping in view circumstances of the case, with certain illustrative steps having been specified in the Act. Procedure for inv....
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....oking GAAR to include reference by AO to Commissioner, who will further make reference to an ‘Approving Panel' (consisting of atleast 3 members of the rank of Commissioner or above). Final order to be passed by AO only after obtaining approval of Commissioner. 60144CDRP empowered to consider a matter not covered by draft assessment orderAY 2009-10DRP's power to enhance income to include considering any matter, whether or not such matter was raised by the assessee. 61Section 147Insertion of Second Proviso01.07.2012Enabling amendment to provide for reopening of assessments incase of residents having assets (including financial interest in any entity) located abroad, disregarding the fact that the details may have been disclosed by such assessee earlier in his/its return of income fully and truly or any assessment u/s 143[3] may have taken place, provided the AO has reasons to believe. 62Section 149Insertion of clause (c) to sub-section [1]01.07.2012A new Clause has been provided so as to enable the reopening of assessments incase of discovery of any asset (including financial interest )located outside India by a person, for and upto 16 years from the end of the relevant assess....
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....ment year Section 149Amendment to sub- section (3)01.07.2012The present time limit of two (02) years for issuance of notice u/s 148 in order to treat a assessee, an agent of Non Resident, has been extended to Six (06) years. Section 149New Explanation 301.07.2012The provision of sub- section (1) & (3), as amended by Finance Act 2012, shall be applicable for any assessment year beginning on or before 01.04.12. 63, 65153, 153BTime limits for completion of assessments and reassessments increased by 3 months1 July 2012 ProceedingsExtended time period Assessment in non TP cases24 months from end of FY Assessment in TP cases36 months from end of FY Reassessment in non TP cases12 months from end of FY in which notice is issued Reassessment in TP cases24 months from end of FY in which notice is issued Assessment pursuant to order of CIT(A) / ITAT / CIT (erroneous and prejudicial to interests of Revenue) in non TP cases12 months from end of FY in which order is received Assessment pursuant to order of CIT(A) / ITAT / CIT (erroneous and prejudicial to interests of Revenue) in TP cases24 months from end of FY in which order is received 64, 66, 108153A, 153C, 296Notification of a class of se....
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....arch cases where compulsory reopening of past 6 years not required1 July 2012Central Govt. is empowered to notify cases in which Assessing Officer shall not issue notice for initiation of proceedings for preceding 6 AYs. However, action for completion of assessment proceedings for the year in which search or requisition has been made, would be taken. 67Section 54Insertion of new clause C in sub01.07.2012The Income Tax Authority may amend any intimation issued under sub section (1) section 1of sub section 200A The words ʻby the Assessee" in sub section (2) will be substituted by the words "by the Assessee or by the deductor" The words "the Assessee" in sub section (3) will be substituted by the words "the Assessee or the deductor" Enabling Assessing Officer to refund as may be due to the deductor if the rectification have the effect of reducing the liability of the deductor (Sub section 5) Enabling Assessing Officer to serve notice of demand u/s 156 as may be payable by the deductor if the rectification have the effect of increasing the liability of the deductor (Sub section 6) The words "the Assessee" in sub section (8) will be substituted by the words "the Assessee or the dedu....
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....ctor" 68Section 156Substitution of words01.07.2012Enlarging the scope by insertion of the words deductor and or sub section (1) of section 200A. Meaning thereby intimation u/s 200A (1) will also be deemed to be notice of demand for the purpose of this section. 69Section 193Increase in Threshold limit01.07.2012The present limit of Rs. 2500 has been announced to Rs. 5000 70194EAmendment to section 194E01/07/2012Consequential amendment with respect to amendment in S. 115BBA is made in section 194E to provide for withholding of tax at the rate of 20% from income payable to non-resident, non-citizen, entertainer, or sportsmen or sports association or institution. 71Section 194JAmendment to Section 194J01.07.2012TDS @10% on any remuneration, fees or commission other tan those on tax is deductible u/s 192 to director. 72Section 194LASubstitution of limit01.07.2012The limit raised to Rs. 2,00,000/- from Rs. 1,00,000 for non deduction of tax. 73Section 194LAAInsertion of New Section01.10.2012TDS @1% on transfer of immovable properties exceeding 50 lacs in specified urban area and 20 lacs in other areas by the transferee on the consideration or value assessable under state stamp duty which....
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....ever is higher. No need to obtain TAN by transferee. New single page challans having details including PAN of transferor and transferee. No registration without submission of payment proof of TDS before the registering authority. 74Section 194LCInsertion of new section01.07.2012The interest payable to a non resident by an Indian company engaged in certain specified business relating to generation or distribution of power, operation of aircraft, manufacture or production of fertilizer, construction of road, toll road, bridge, port, inland port, shipyard, ship or dam shall be subjected to withholding tax @ 5% at the time of payment or accrual whichever is earlier. Also refer clause 42 so as to appreciate the taxation of the said interest u/s 115A. 75195Two amendments are brought through this clause in section 195. . As per the firstThe first amendment will apply from 1.4.1962 andThe first amendment aims to remove ambiguity cropped up by way of the concurring judgment of Vodafone by incorporating amendment non residents are being specifically brought in the ambit of section 195 whether or not such non- resident has a residence or place of business or business connection in India or a....
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....ny other presence in India.the second one from 1.7.2012reference Eli Lilly case with regard to applicability of section 195 to not residents especially in case their presence in India is altogether missing. Despite this, one must note that in the absence of machinery and procedural mechanism to effectuate implementation of the section to non -residents, the larger difficulty still looms large. • A new sub section 7 is being proposed by which board is empowered to notify a class of persons or cases where application to the AO for determination of proportion of income chargeable in the payments made to persons specified has to be made and tax at source has to be deducted under this section accordingly. 76Section 197AAmendment01.07.2012The age of Senior Citizen is specified in section 197A is reduced to 60 years in place of 65 years 77Section 201Insertion of new proviso in sub- section(1)01.07.2012The Deductor will not to be treated as assessee in Default provided the resident payee has furnished his return u/s 139 and has taken into account such amount for computing income in such Return of Income and has paid the Tax Due on the income declared by him in such return of income ....
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....and furnishes a certificate to this effect, duly certified by a CA, in the prescribed form. This form is yet to be notified. However, the interest for not deducting tax would be payable from the date on which such tax was collectible till the date of furnishing of return of income by the resident payee. The limit of passing orders under sub section (1) increased from 2 years to 6 years (retrospective amendment wef 1-04-2010) 78Section 204Insertion of new clause01.07.2012 01.07.2012The drawing and disbursting or any other person by whatever name called, responsible for crediting, or as case may be, paying such sum (in case of payment of any sum chargeable under the provision of this Act made by Central or State Govt.) will be treated as "person responsible for paying" TCS @ 1% on Sale of Coal, Lignite, Iron ore and Bullion or jewellery in cash above 2 Lakh Rupees. The Collector of TCS not to be treated as assessee in Default except incase of Sale of Bullion or Jewellery above Rs. 2,00,000/- in cash, provided the buyer or licensor or licensee has furnished his return u/s 139 and has taken into account such amount for computing income in such Return of Income and has paid the Tax Due....
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.... on the income declared by him in such return of income and furnishes a certificate to this effect, duly certified by a CA, in the prescribed form. This form is yet to be notified. 79Section 206CAmendment to section 206C However, the interest for not collecting the TCS would be payable from the date on which such tax was collectible till the date of furnishing of return of income by such buyer or licensee or lessee. Also by not treating the collector of TCS as assessee in default the Revenue intends to accept placidly the ratio of Supreme Court in Hindustan Coco-Cola Beverage Pvt. Ltd. in 293 ITR 226. 80Section 207Renumber of existing section and insertion of new sub section01.04.2012By virtue of insertion of sub section 2 it has been provided that a senior citizen (being of the age of 60 year or more at any time during the previous year) and not having income chargeable under the head PGBP shall not be liable to pay advance tax. 81209Advance tax payable where income is received without deduction or collection of tax at sourceAY 2013-14It has been held by Courts that a person is not liable to pay advance tax to the extent tax is deductible or collectible at source. To negate this ....
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....position, it is proposed that advance tax is payable where income is received without deduction or collection of tax at source. 82Section 234AAmedment in sub- sections01.04.2013Presently, there is no enabling provision u/s 234A, wherein before charging of interest, the credit of AMT paid u/s 115JD would be admissible. By virtue of amendments in present clause, credit of AMT paid u/s 115JD, would also be permissible as prepaid tax before computing the interest u/s 234A. 83Section 234BAmedment in sub- sections01.04.2013Presently, there no enabling provision u/s 234B, wherein before charging of interest, the credit of AMT paid u/s 115JD would be admissible. By virtue of amendments in present clause, credit of AMT paid u/s 115JD, would also be permissible as prepaid tax before computing the interest u/s 234B. 84Section 234CAmedment in sub- sections01.04.2013Presently, there is no enabling provision u/s 234C, wherein before charging of interest, the credit of AMT paid u/s 115JD would be admissible. By virtue of amendments in present clause, credit of AMT paid u/s 115JD, would also be permissible as prepaid tax before computing the interest u/s 234C. 85234DInterest applicable to any pr....
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....oceeding which is completed on or after 1 June 20031 June 2003Interest u/s 234D is applicable to any proceeding which is completed on or after 1 June 2003, irrespective of the AY to which it pertains. 86Section 234EInsertion of new sub heading "G and insertion of new section 243E01.07.2012New sub-heading "G-levy of fee in certain cases" inserted failure to deliver statement within a time prescribed in section 200 (3) or the proviso to sub-section (3) of section 206C make the person liable to pay by way of fee a sum of Rs. 200 per day or which the failure continues subject to maximum limit of the amount tax deductible or collectible, as the case may be. This fee shall be paid before delivering the afforsaid statement. 87245CRelated person for the purpose of making application before Settlement Commission1 July 2012A person shall be deemed to have substantial interest in a business or profession if such person is a beneficial owner of not less than 20% of shares / share in profits on the date of search. 88245QIncrease in fee for filing application before AAR1 July 2012Fee for filing application before AAR increased from Rs.2500 to Rs.10000 or such fee as may be prescribed, whichever....
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.... is higher. 89Section 246A(b)(j)Insertion of new clause01.07.2012Words Section 271AAB has been added meaning thereby order imposing penalty u/s 271AAB can be appealed. 89Section 246AAmendment01.07.2012Order of assessment or reassessment passed with approval of Commissioner under sub-section (12) of newly inserted section 144BA or any order under section 154/155 passed in relation to such an order shall not be appealable before Commissioner (Appeals) w.e.f. 01.04.2013 An order of assessment under sub-section (3) of section 92CD made appealable Deductor also allowed to file appeal w.e.f. 01.07.2012 Retrospective amendment w.e.f. 01.10.2009 - an order pass in pursuance of the direction of the dispute Resolution Panel is directly appealable to the ITAT. Section 246AAmendment existing clauses insertion of clausesand new ofDifferent datesThe existing provisions of section 246A provides for orders appealable before CIT(A). Sub section (1) of section 246A till now only permitted an assessee aggrieved to prefer and appeal before CIT(A). An amendment vide clause (i) of clause 89 of Finance Bill, 2012 has enlarged the scope of appeals before CIT(A) in so far as now any assessee or any deduct....
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....or aggrieved against the order (s) as provided therein may now appeal CIT(A). We understand that there being a specific provision u/s 248 in respect of tax deduction on account of payment to non residence u/s 195, the inclusion of expression`any deductor' refers to deductors making payment of TDS under various section of chapter XVII-B other than section 195. Similar amendment permitting filing of appeal in respect of orders u/s 200A(1) relating to processing of TDS statements have also been Amendment existing clauses insertion of clauses and new of made appealable before CIT(A). Since a new section 144BA relating to reference of certain transactions to CIT in certain cases have been inserted, the appeals against the orders passed in pursuance of directions u/s 144BA(12) shall not be permissible before CIT(A) (the same is appealable before ITAT - refer clause 90 of Finance Bill 2012. Similarly search assessment orders passed u/s 153A, in pursuance of DRP directions shall not be appealable before CIT(A) retrospectively w.e.f. 01.10.2009. Orders of assessment or reassessment u/s 92CD(3) on account of advance pricing agreement have been made appealable before CIT(A) w.e.f. 01.0....
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....7.2012. Lastly, the order of penalty 271AAB (newly inserted vide clause no. 96) have also been made appealable before CIT(A) w.e.f. 01.07.2012. 90Section 253Amendment to existing section and insertion of new clausesDifferent datesSub clause (d) of section 253(1) provides that an order of passed by an AO in pursuance of directions of DRP, u/s 143(3) or 147, is appealable before ITAT directly. Vide clause (a) of the existing clause, the orders of search assessment passed u/s 153A or 153C in pursuance of directions of DRP have been made directly appealable before ITAT and not CIT(A). A new clause (e) is proposed to be inserted u/s 253(1) so as to provide that orders passed with the approval of CIT u/s 144BA(12) read with section 143(3) or 147 or 153A or 153C or 154 or 155 in respect of such orders shall be directly appealable before ITAT. Presently only an assessee can file an appeal before ITAT against an order passed in pursuance of directions of the DRP u/s 144C. w.e.f. 01/07/12, a new sub section (2A) is proposed to be inserted so as to provide that even the department can prefer an appeal in case the CIT objects to any direction issued by DRP. Sub section (3A) has also been sim....
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....ilarly inserted so as to provide that the appeal by the department against the directions issued by the DRP should be furnished within a period of 60 days of the date on which the orders sought to be appeal against is passed by the AO in pursuance of the direction of DRP. It is interesting to note here that the time limit in case of filing of an appeal generally commences with the date on which the order sought to be appeal against is received / served on the aggrieved party whereas in this case the time limit begins from the date on which the order is passed and not served. Lastly the existing sub section (4), relating to filing of cross of objections within 30 days of the intimation of receipt of notice of filing of appeal by the other party before ITAT, has been substituted w.e.f. 01.07.2012, so as also to include a reference to the orders passed in pursuance of directions of DRP. 91Section 254Amendment to existing section01.07.2012Sub section 2A of section 254 has been amended so as to provide a reference to the departmental appeals filed against the directions issued by the DRP (refer clause 90 supra also). 92Section 271(1) Explanation 7Amendment to existing explanation01.04.....
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....2013The scope of explanation has been enlarged so as to cover not only the international transactions define u/s 92B but also specified domestic transactions as defined in section 92BA(see clause 35 for meaning of specified domestic transaction) Penalty to include domestic transactions subject to TP regulations 93, 94271AAPenalty for failure to maintain adequate documentation to cover domestic transactions subject to TP regulationsAY 2013-14Penalty for failure to keep and maintain adequate documentation to cover domestic transactions subject to TP regulations also, besides International transaction. 95Section 271AAA(1)Sun-set Clause01.07.2012Under the present provisions, incase of searches, no penalty u/s 271AAA is impossible @ 10% of Undisclosed Income. Since new section 271AAB is sought to be inserted by clause 96, providing for a new regime of penalty in case of searches conducted on or after 01.07.2012, the provisions of section 271AAA would be redundant. 96Section 271AABNew-Section01.07.2012Under the present provisions, incase of searches, no penalty u/s 271AAA is impossible @ 10% of Undisclosed Income. Incase, the additional income is offered during the course of search (i.e....
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.... on or before conclusion of last panchanama), there would not be any penalty, subject to certain conditions u/s 271(1)(c.) Explanation (5A). Inorder to strengthen the penal provisions, it has been provided in newly inserted section 271AAB that incase Section 271GAmendmentadditional income is admitted during course of search, penalty would be 10% of undisclosed income. Incase additional income is not admitted during course of search but is disclosed in return of income filed after search, penalty would be 20% of undisclosed income. Incase other case, (where the additional income is not admitted during course of search nor is disclosed in return of income filed after search), penalty would vary between 30% to 90% of undisclosed income. 9701.07.2012Under the existing provisions of section 271G, penalty on account of failure to furnish information or documents u/s 92D in respect of international transaction under taken by a person is imposable. The expression 98Section 271H`International Transaction' has been substituted at each place wherein it occurs in the said section by the expression `International Transaction and specified Domestic Transaction' so as to make the person enterin....
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....g into specified domestic transactions also liable for penalty for not furnishing the details of transaction. Failure to deliver statement within time prescribed u/s 200 (3) or to the proviso to sub-section (3) of section 206C may liable to penalty which shall not be less than Rs. 10,000/- but which may extend to Rs. 1,00,000/ -. No penalty if payment of tax deducted or collected alongwith fee or interest and delivering the statement afforsaid before the expiry of 1 year from the time prescribed for delivering the such statement. Insertion of new Section01.07.2012 99Section 272AInsertion of new proviso01.07.2012No penalty under clause a of section 272A (2) if the statement relates to the period commencing on or after 01.07.2012 Consequential to amendment of newly inserted section 271H 100Section 273BAmendment01.07.2012No penalty shall be imposed u/s 271H if the person proves that there was reasonable cause for the failure. 101, 102, 103, 104 and 105Section 276C, 276CC, 277, 277A and 278Scope of Section Enlarged01.07.2012Under these sections, the monitory limits determining the period of imprisonment (in case the prosecution get sanctions and confirmed) was Rs.1 Lac. The said limit....
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.... has now been revised w.e.f. 01/07/2012 to Rs.25 Lacs. It is also being provided that the maximum term of imprisonment which was earlier 3 years in each of these sections, be reduced to 2 years. 106Insertion of new sections.01.07.2012These new sections (4 in nos.) have been inserted so as to provide for a speedy, quicker, prosecution mechanism through constitution of special courts of law, conducting of summons trials and also for appointment of public prosecutors. 107Section 292CCInsertion of new section01.04.1976 (retrospective amendment)In order to curtail and nullify various judicial pronouncements lying that joint panchnamas or search authorization in joint names are invalid, it has been provided by way of clarificatory retrospective amendment that a) Joint panchnama does not refers that it has been issued in the name of AOP or BOI consisting such persons b) Notwithstanding Authorisation or Requisition u/s 132 or 132A in more than one name, assessment shall be made separately in name each of the such persons. Whereas clause 64 of the finance bill 2012 provides that the Central Govt. may by rules specify the class or classes of cases (subjected to search u/s 132 and in whose ....
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....case assessment is pending u/s 153A), in which the AO shall not be required to issue the notice for assessing or reassessing the total income for six assessment years, enabling provisions for making rules and notifications in this regard, which are to be placed before the Parliament, have been referred by way of the amendment vide instant clause. 108Section 296Insertion of new words01.07.2012 1092(ea)(i)(1)Exclusion of house from purview of1 April 2013Definition of 'assets' for the purpose of Wealth-tax not (WT Act)'assets'to include a house meant exclusively for residential purposes and which is allotted by a company to an employee or an officer or a director who is in whole- time employment, having a gross annual salary of less than ten lakh rupees; 110Section 17 of Wealth Tax Act01.07.2012Amendments analogous to enable reopening of income tax assessments in respect of assets located abroad as contained in clauses 61 and 62, also made under Wealth Tax Act. 11117A (WT Act)Extension of time limit for assessment and reassessment1 July 2012Consequential amendment for increasing time limit by three months for completion of assessment / reassessment proceedings. 11245Wealth tax not ap....
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....plicable for RBI1 April 1957Wealth tax not applicable in respect of net wealth of RBI. 113-Validation clause - Validation of demand etc. under Income-tax Act in certain casesComing into force of Finance Act, 2012Any notice sent or purporting to have been sent, taxes levied, demanded, assessed or collected during any period prior to coming into force of the validating clause shall be deemed to have been validly made. Such notice or levy of tax shall not be called in question on the ground that tax was not chargeable or that it is a tax on capital gains arising out of transactions which have taken place outside India. The validating clause shall operate notwithstanding anything contained in any judgment, decree or order of any Court of Tribunal or Authority. Document 2 SERVICE TAX FINAN C E BILLSECTI ONNEW LAWAPPLI CABL E w.e fEXECUTIVE SUMMARY (CLAUS E NO.) 143(A)65(121)Words and expressions used but not defined in this Chapter and defined in the Central Excise Act, 1944 (1 of 1944) or the rules made thereunder, shall apply, so far as may be, in relation to service tax as they apply in relation to a duty of excise. Explanation .- For the purposes of this section, taxable service ....
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....includes any taxable service provided or to be provided by any unincorporated association or body of persons to a member thereof, for cash, deferred payment or any other valuable consideration. Provided that the provisions of this section shall not apply with effect from such date as the Central Government may, by notification, appoint.Date to be notified by Central GovernmentNegative list of services are proposed in new service tax law whereby only specified services will remain outside the service tax net and rest all others would be put to tax at normal rates. In this regard, new section for definitions is being inserted i.e., section 65B and currently applicable section 65 will be withdrawn as soon as the new scheme would be applicable. 143(B)65A(3)The provisions of this section shall not apply with effect from such date as the Central Government may, by notification, appoint.Date to be notified by Central GovernmentNegative list of services are proposed in new service tax law whereby only specified services will remain outside the service tax net and rest all others would be put to tax at normal rates. Classification of taxable services would no longer be required in view of t....
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....he new scheme as made applicable. 143(C)65BIn this Chapter, unless the context otherwise requires,- (1) "actionable claim" shall have the meaning assigned to it in section 3 of the Transfer of Property Act, 1882; (2) "advertisement" means any form of presentation for promotion of, or bringing awareness about, any event, idea, immovable property, person, service, goods or actionable claim through newspaper, television, radio or any other means but does not include any presentation made in person; (3) "agriculture" means the cultivation of plants and rearing of all life-forms of animals, except the rearing of horses, for food, fibre, fuel, raw material or other similar products; (4) "agricultural extension" means application of scientific research and knowledge to agricultural practices through farmer education or training; (5) "agricultural produce" means any produce of agriculture on which either no further processing is done or such processing isDate to be notified by Central GovernmentNegative list of services are proposed in new service tax law whereby only specified services will remain outside the service tax net and rest all others would be put to tax at normal rates. Thereby....
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.... this new section for definitions is being inserted. done as is usually done by a cultivator or producer which does not alter its essential characteristics but makes it marketable for primary market; (6) "Agricultural Produce Marketing Committee or Board" means any committee or board constituted under a State law for the time being in force for the purpose of regulating the marketing of agricultural produce; (7) "aircraft" has the meaning assigned to it in clause (1) of section 2 of the Aircraft Act, 1934; (8) "airport" has the meaning assigned to it in clause (b) of section 2 of the Airports Authority of India Act, 1994; (9) "amusement facility" means a facility where fun or recreation is provided by means of rides, gaming devices or bowling alleys in amusement parks, amusement arcades, water parks, theme parks or such other places but does not include a place within such facility where other services are provided; (10) "Appellate Tribunal" means the Customs, Excise and Service Tax Appellate Tribunal constituted under section 129 of the Customs Act, 1962; (11) "approved vocational education course" means,- (i) a course run by an industrial training institute or an industria....
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....l training centre affiliated to the National Council for Vocational Training offering courses in designated trades notified under the Apprentices Act, 1961; or (ii) a Modular Employable Skill Course, approved by the National Council of Vocational Training, run by a person registered with the Directorate General of Employment and Training, Union Ministry of Labour and Employment; or (iii) a course run by an institute affiliated to the National Skill Development Corporation set up by the Government of India; (12) "assessee" means a person liable to pay tax and includes his agent; (13) "associated enterprise" shall have the meaning assigned to it in section 92A of the Income-tax Act, 1961; (14) "authorised dealer of foreign exchange" shall have the meaning assigned to "authorized person" in clause (c) of section 2 of the Foreign Exchange Management Act, 1999; (15) "betting or gambling" means putting on stake something of value, particularly money, with consciousness of risk and hope of gain on the outcome of a game or a contest, whose result may be determined by chance or accident, or on the likelihood of anything occurring or not occurring; (16) "Board" means the Central Board o....
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....f Excise and Customs constituted under the Central Boards of Revenue Act, 1963; (17) "business entity" means any person ordinarily carrying out any activity relating to industry, commerce or any other business; (18) "Central Electricity Authority" means the authority constituted under section 3 of the Electricity (Supply) Act, 1948; (19) "Central Transmission Utility" shall have the meaning assigned to it in clause (10) of section 2 of the Electricity Act, 2003; (20) "courier agency" means any person engaged in the door-to- door transportation of time-sensitive documents, goods or articles utilising the services of a person, either directly or indirectly, to carry or accompany such documents, goods or articles; (21) "customs station" shall have the meaning assigned to it in clause (13) of section 2 of the Customs Act, 1962; (22) "declared service" means any activity carried out by a person for another person for consideration and declared as such under section 66E; (23) "electricity transmission or distribution utility" means the Central Electricity Authority; a State Electricity Board; the Central Transmission Utility or a State Transmission Utility notified under the Electrici....
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....ty Act, 2003; or a distribution or transmission licensee under the said Act, or any other entity entrusted with such function by the Central Government or, as the case may be, the State Government; (24) "entertainment event" means an event or a performance which is intended to provide recreation, pastime, fun or enjoyment, by way of exhibition of cinematographic film, circus, concerts, sporting event, pageants, award functions, dance, musical or theatrical performances including drama, ballets or any such event or programme; (25) "goods" means every kind of movable property other than actionable claim and money; and includes securities, growing crops, grass, and things attached to or forming part of the land which are agreed to be severed before sale or under the contract of sale; (26) "goods transport agency" means any person who provides service in relation to transport of goods by road and issues consignment note, by whatever name called; (27) "India" means,- (a) the territory of the Union as referred to in clauses (2) and (3) of article 1 of the Constitution; (b) its territorial waters, continental shelf, exclusive economic zone or any other maritime zone as defined in the T....
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....erritorial Waters, Continental Shelf, Exclusive Economic Zone and other Maritime Zones Act, 1976; (c) the seabed and the subsoil underlying the territorial waters; (d) the air space above its territory and territorial waters; and (e) the installations, structures and vessels located in the continental shelf of India and the exclusive economic zone of India, for the purposes of prospecting or extraction or production of mineral oil and natural gas and supply thereof; (28) "information technology software" means any representation of instructions, data, sound or image, including source code and object code, recorded in a machine readable form, and capable of being manipulated or providing interactivity to a user, by means of a computer or an automatic data processing machine or any other device or equipment; (29) "inland waterway" means national waterways as defined in clause (h) of section 2 of the Inland Waterways Authority of India Act, 1985 or other waterway on any inland water, as defined in clause (b) of section 2 of the Inland Vessels Act, 1917; (30) "interest" has the meaning assigned to it in clause (28A) of section 2 of the Income-tax Act, 1961; (31) "local authority" ....
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....means- (a) a Panchayat as referred to in clause (d) of article 243 of the Constitution; (b) a Municipality as referred to in clause (e) of article 243P of the Constitution; (c) a Municipal Committee and a District Board, legally entitled to, or entrusted by the Government with, the control or management of a municipal or local fund; (d) a Cantonment Board as defined in section 3 of the Cantonments Act, 2006; (e) a regional council or a district council constituted under the Sixth Schedule to the Constitution; (f) a development board constituted under article 371 of the Constitution; or (g) a regional council constituted under article 371A of the Constitution; (32) "metered cab" means any contract carriage on which an automatic device, of the type and make approved under the relevant rules by the State Transport Authority, is fitted which indicates reading of the fare chargeable at any moment and that is charged accordingly under the conditions of its permit issued under the Motor Vehicles Act, 1988 and the rules made thereunder; (33) "money" means Indian legal tender, cheque, promissory note, bill of exchange, letter of credit, draft, pay order, traveller cheque, money orde....
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....r, postal or electronic remittance or any such similar instrument when used as consideration to settle an obligation or exchange with Indian legal tender of another denomination but shall not include any currency that is held for its numismatic value; (34) "negative list" means the services which are listed in section 66D; (35) "non-taxable territory" means the territory which is outside the taxable territory; (36) "notification" means notification published in the Official Gazette and the expressions "notify" and "notified" shall be construed accordingly; (37) "person" includes,- (i) an individual, (ii) a Hindu undivided family, (iii) a company, (iv) a society, (v) a limited liability partnership, (vi) a firm, (vii) an association of persons or body of individuals, whether incorporated or not, (viii) Government, (ix) a local authority, or (x) every artificial juridical person, not falling within any of the preceding sub-clauses; (38) "port" has the meaning assigned to it in clause (q) of section 2 of the Major Port Trusts Act, 1963 or in clause (4) of section 3 of the Indian Ports Act, 1908; (39) "prescribed" means prescribed by rules made under this Chapter; (40) "pro....
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....cess amounting to manufacture or production of goods" means a process on which duties of excise are leviable under section 3 of the Central Excise Act, 1944 or any process amounting to manufacture of alcoholic liquors for human consumption, opium, Indian hemp and other narcotic drugs and narcotics on which duties of excise are leviable under any StateAct for the time being in force; (41) "renting" means allowing, permitting or granting access, entry, occupation, use or any such facility, wholly or partly, in an immovable property, with or without the transfer of possession or control of the said immovable property and includes letting, leasing, licensing or other similar arrangements in respect of immovable property; (42) "Reserve Bank of India" means the bank established under section 3 of the Reserve Bank of India Act, 1934; (43) "securities" has the meaning assigned to it in clause (h) of section 2 of the Securities Contract (Regulation) Act, 1956; (44) "service" means any activity carried out by a person for another for consideration, and includes a declared service, but shall not include- (a) an activity which constitutes merely,- (i) a transfer of title in goods or immovable....
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.... property, by way of sale, gift or in any other manner; or (ii) a transaction in money or actionable claim; (b) a provision of service by an employee to the employer in the course of or in relation to his employment; (c) fees taken in any Court or tribunal established under any law for the time being in force. Explanation 1 .- For the removal of doubts, it is hereby declared that nothing contained in this clause shall apply to,- (A) the functions performed by the Members of Parliament, Members of State Legislative, Members of Panchayats, Members of Municipalities and Members of other local authorities who receive any consideration in performing the functions of that office as such member; or (B) the duties performed by any person who holds any post in pursuance of the provisions of the Constitution in that capacity; or (C) the duties performed by any person as a Chairperson or a Member or a Director in a body established by the Central Government or State Governments or local authority and who is not deemed as an employee before the commencement of this section. Explanation 2 .- For the purposes of this Chapter,- (a) an unincorporated association or a body of persons, as the ....
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....case may be, and a member thereof shall be treated as distinct persons; (b) an establishment of a person in the taxable territory and any of his other establishment in a non-taxable territory shall be treated as establishments of distinct persons. Explanation 3 .- A person carrying on a business through a branch or agency or representational office in any territory shall be treated as having an establishment in that territory; (45) "Special Economic Zone" has the meaning assigned to it in clause (za) of section 2 of the Special Economic Zones Act, 2005; (46) "stage carriage" shall have the meaning assigned to it in clause (40) of section 2 of the Motor Vehicles Act, 1988; (47) "State Electricity Board" means the Board constituted under section 5 of the Electricity (Supply) Act, 1948; (48) "State Transmission Utility" shall have the meaning assigned to it in clause (67) of section 2 of the Electricity Act, 2003; (49) "support services" means infrastructural, operational, administrative, logistic, marketing or any other support of any kind comprising functions that entities carry out in ordinary course of operations themselves but may obtain as services by outsourcing from others f....
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....or any reason whatsoever and shall include advertisement and promotion, construction or works contract, renting of immovable property, security, testing and analysis; (50) "tax" means service tax leviable under the provisions of this Chapter; (51) "taxable service" means any service on which service tax is leviable under section 66B; (52) "taxable territory" means the territory to which the provisions of this Chapter apply; (53) "vessel" has the meaning assigned to it in clause (z) of section 2 of the Major Port Trusts Act, 1963; (54) "works contract" means a contract wherein transfer of property in goods involved in the execution of such contract is leviable to tax as sale of goods and such contract is for the purpose of carrying out construction, erection, commissioning, installation, completion, fitting out, improvement, repair, renovation, alteration of any building or structure on land or for carrying out any other similar activity or a part thereof in relation to any building or structure on land; (55) words and expressions used but not defined in this Chapter and defined in the Central Excise Act, 1944 or the rules made thereunder, shall apply, so far as may be, in relation ....
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....to service tax as they apply in relation to a duty of excise. 143(D)66There shall be levied a tax (hereinafter referred to as the service tax) at the rate of twelve per cent. of the value of taxable services referred to in sub-clauses (a), (d), (e), (f), (g,) (h), (i), (j),(k), (l), (m), (n), (o), (p), (q), (r), (s), (t), (u), (v), (w), (x), (y), (z), (za), (zb),(zc), (zh), (zi), (zj), (zk),(zl), (zm), (zn), (zo), (zq), (zr), (zs),Date to be notified by Central GovernmentIn view of the new scheme of taxation (i.e. negative list of services) is being inserted and old provision of charge of service tax will not apply from the date to be notified by Central Government. (zt), (zu), (zv), (zw), (zx), (zy), (zz), (zza), (zzb), (zzc), (zzd), (zze), (zzf), (zzg), (zzh), (zzi), (zzk), (zzl), (zzm), (zzn), (zzo), (zzp), (zzq), (zzr), (zzs), (zzt), (zzu), (zzv), (zzw), (zzx), (zzy), (zzz), (zzza), (zzzb), (zzzc), (zzzd), (zzze), (zzzf), (zzzg,) (zzzh), (zzzi), (zzzj), (zzzk), (zzzl), (zzzm), (zzzn), (zzzo), (zzzp), (zzzq), (zzzr), (zzzs), (zzzt), (zzzu), (ZZZV), (ZZZw), (ZZZx), (zzzy), (zzzz), (zzzza), (zzzzb), (zzzzc), (zzzzd), (zzzze), (zzzzf), (zzzzg), (zzzzh), (zzzzi), (zzzzj), (zzzzk), ....
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....(zzzzl), (zzzzm), (zzzzn), (zzzzo), (zzzzp),(zzzzq) (zzzzr) (zzzzs) (zzzzt) and (zzzzu) of clause (105) of section 65 and collected in such manner as may be prescribed. Provided that the provisions of this section shall not apply with effect from such date as the Central Government may, by notification, appoint. 143(E)66A(3)The provisions of this section shall not apply with effect from such date as the Central Government may, by notification, appoint.Date to be notified by Central GovernmentNew provisions has been proposed in new scheme of service tax, thereby old provision related with reverse charges mechanism given in this section would not apply from the date to be notified by Central Government. 143(F)66B, 66C, 66D, 66E & 66F66B. There shall be levied a tax (hereinafter referred to as the service tax) at the rate of twelve per cent. on the value of all services, other than those services specified in the negative list, provided or agreed to be provided in the taxable territory by one person to another and collected in such manner as may be prescribed. 66C. (1) The Central Government may, having regard to the nature and description of various services, by rules made in this re....
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....gard, determine the place where such services are provided or deemed to have been provided or agreed to be provided or deemed to have been agreed to be provided. (2) Any rule made under sub-section (1) shall not be invalid merely on the ground that either the service provider or the service receiver or both are located at a place being outside the taxable territory. 66D. The negative list shall comprise of the following services, namely :- (a) services by Government or a local authority excluding the following services to the extent they are not covered elsewhere- - (i) services by the Department of Posts by way of speed post, express parcel post, lifeinsurance and agency services provided to a person other than Government; (ii) services in relation to an aircraft or a vessel, inside or outsideDate to be notified by Central GovernmentGovernment has proposed to introduce a new scheme for charging service tax, whereby except small list of negative services all other services would be brought to tax net at normal rates. With this step Govt. plans to align provisions of service tax with the proposed scheme of Goods and Service Tax (we hereby remind you that since 1st April, 2010 every ....
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....year Government tries to apply GST on PAN India basis whereby all states and central indirect taxes would be subsumed in this regime. There is no major success in this direction because of adamant outlook of various State Govt. for non- introduction of this tax.) SECTION 66B Proposed section 66B is the new charging section of service tax. This section seeks to levy service tax at the rate of 12% on the value of all services, except services specified in the negative list (in section 66D). These services would be chargeable to tax if these are provided by any person to any person. As per section 65B(37) person includes an individual, a Hindu undivided family, a company, a society, a limited liability partnership, a firm, an association of persons or body of individuals, whether incorporated or not, Government, a local authority, or every artificial juridical person, not falling within any of the preceding sub-clauses. the precincts of a port or an airport; (iii) transport of goods or passengers; or (iv) support services, other than services covered under clauses (i) to (iii) above, provided to business entities; (b) services by the Reserve Bank of India; (c) services by a forei....
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....gn diplomatic mission located in India; (d) services relating to agriculture by way of- Definition of word "person" is given in inclusive manner which indicates that service tax would be charged by all categories of persons. (i) agricultural operations directly related to production of any agricultural produce including cultivation, harvesting, threshing, plant protection or seed testing; (ii) supply of farm labour; Section 66C (iii) processes carried out at an agricultural farm including tending, pruning, cutting, harvesting, drying, cleaning, trimming, sun drying, fumigating, curing, sorting, grading, cooling or bulk packaging and such like operations which do not alter the essential characteristics of agricultural produce but make it only marketable for the primary market; Proposed section 66C seeks to empower the CentralGovernment to make rules which will contain principles on the basis of which taxing jurisdiction of a service can be determined. These rules would be known as Place of Provision of Services Rules, 2012. When these rules come into effect, existing 'Export of Services Rules, 2005' and 'Taxation of Services (Provided from outside india and received in india) R....
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....ules, 2006' will be rescinded. (iv) renting or leasing of agro machinery or vacant land with or without a structure incidental to its use; (v) loading, unloading, packing, storage or warehousing of agricultural produce; (vi) agricultural extension services; (vii) services by any Agricultural Produce Marketing Committee or Board or services provided by a commission agent for sale or purchase of agricultural produce; (e) trading of goods; Section 66D Proposed section seeks to specify the list of such services which will be outside the ambit of service tax. After reading the complete list we feel that numerous services mentioned in earlier service tax law are imported in this provision also. Besides this list of negative services mentioned in Task Force Report on GST are also imbibed in this new proposed regime. (f) any process amounting to manufacture or production of goods; (g) selling of space or time slots for advertisements other than advertisements broadcast by radio or television; (h) service by way of access to a road or a bridge on payment of toll charges; (i) betting, gambling or lottery; (j) admission to entertainment events or access to amusement facilities; (k) tran....
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....smission or distribution of electricity by an electricity transmission or distribution utility; (1) services by way of- Gist of non-taxable services Generally speaking following broad categories of services would be outside the service tax law: 1. Services provided by Govt. of India; 2. Services provided by Local Authority; (i) pre-school education and education up to higher secondary school or equivalent; 3. Services by the Reserve Bank of India; 4. Services by a foreign diplomatic mission located in India; (ii) education as a part of a curriculum for obtaining a qualification recognised by any law for the time being in force; (iii) education as a part of an approved vocational education 5. Services relating to agriculture; 6. Trading of goods; course;7. Manufacturing of goods; (m) services by way of renting of residential dwelling for use as residence; (n) services by way of- (i) extending deposits, loans or advances in so far as the consideration is represented by way of interest or discount; (ii) inter se sale or purchase of foreign currency amongst banks or authorised dealers of foreign exchange or amongst banks and such dealers; (o) service of transportation of pas....
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....sengers, with or without accompanied belongings, by- (i) a stage carriage; (ii) railways in a class other than- - (A) first class; or (B) an airconditioned coach;8. Gambling; 9. Transmission or distribution of electricity; 10. Preschool Education, education for obtaining a recognized degree; 11. Renting of residential building for residential purposes; 12. Interest or discount on loans or deposits; 13. Inter se sale or purchase of foreign currency amongst banks or authorized dealers; 14. Public transport of passengers through stage carriage, railways, radio taxies and metro; 15. Transportation of goods by road (except courier agency); (iii) metro, monorail or tramway; (iv) inland waterways; (v) public transport, other than predominantly for tourism purpose, in a vessel of less than fifteen tonne net; and (vi) metered cabs, radio taxis or auto rickshaws; (p) services by way of transportation of goods- - (i) by road except the services of- (A) a goods transportation agency; or (B) a courier agency; (ii) by an aircraft or a vessel from a place outside India to the first customs station of landing in India; or (iii) by inland waterways; (q) funeral, burial, crematorium or mortuary ser....
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....vices including transportation of the deceased. 66E. The following shall constitute declared services, namely :- (a) renting of immovable property; (b) construction of a complex, building, civil structure or a part thereof, including a complex or building intended for sale to a buyer, wholly or partly, except where the entire consideration is received after issuance of completion-certificate by the competent authority. Explanation .- For the purposes of this clause,- (I) the expression "competent authority" means the Government or any authority authorized to issue completion certificate under any law for the time being in force and in case of nonrequirement of such certificate from such authority, from any of the following, namely :-Section 66E Proposed section 66E seeks to specify declared services which are as under: 1. Renting of immoveable properties; 2. Construction of complexes; 3. Use of any intellectual property right; 4. Information technology software services; 5. Agreeing to the obligation to refrain from an act, or to tolerate an act or a situation, or to do an act; 6. Transfer of goods without transfer of right to use such goods; 7. Delivery of goods on hire purchase ....
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....or any system of payment by instalments; 8. Service portion in the execution of a works contract; 9. Service portion in an activity wherein food or any other article of human consumption is supplied as a part of the activity. It is generally seen that all these services mentioned above has a portion of service and a portion of goods embedded in them. It is difficult to bifurcate services and goods, thereby abatement was given in earlier law by way of notifications. In this new law, abatements may again be given in the form of rules to be notified from time to time. However there is no clarity till now on rates of abatement. (A) architect registered with the Council of Architecture constituted under the Architects Act, 1972; or (B) chartered engineer registered with the Institution of Engineers (India); or (C) licensed surveyor of the respective local body of the city or town or village or development or planning authority; Section 66F (II) the expression "construction" includes additions, alterations, replacements or remodeling of any existing civil structure; (c) temporary transfer or permitting the use or enjoyment of any intellectual property right; Proposed section 66F see....
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....ks to provide for principles of interpretation of specified descriptions of services or bundled services. (d) development, design, programming, customisation, adaptation, upgradation, enhancement, implementation of information technology software; (e) agreeing to the obligation to refrain from an act, or to tolerate an act or a situation, or to do an act; (f) transfer of goods by way of hiring, leasing, licensing or in any such manner without transfer of right to use such goods; (g) activities in relation to delivery of goods on hire purchase or any system of payment by instalments; (h) service portion in the execution of a works contract; (i) service portion in an activity wherein goods, being food or any other article of human consumption or any drink (whether or not intoxicating) is supplied in any manner as a part of the activity. 66F. (1) Unless otherwise specified, reference to a service (herein referred to as main service) shall not include reference to a service which is used for providing main service. (2) Where a service is capable of differential treatment for any purpose based on its description, the most specific description shall be preferred over a more genera....
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....l description. (3) Subject to the provisions of sub-section (2), the taxability of a bundled service shall be determined in the following manner, namely :- (a) if various elements of such service are naturally bundled in the ordinary course of business, it shall be treated as provision of the single service which gives such bundle its essential character; (b) if various elements of such service are not naturally bundled in the ordinary course of business, it shall be treated as provision of the single service which results in highest liability of service tax. Explanation .- For the purposes of sub-section (3), the expression "bundled service" means a bundle of provision of various services wherein an element of provision of one service is combined with an element or elements of provision of any other service or 143(G)services.Date to be notified by Central GovernmentSection 65B (33) of new scheme defines the meaning of "Money" that is why same has been omitted from the said clause of existing law. Clause (b) of Explanat ion to Sec 67Omitted 143(H)67A67A. The rate of service tax, value of a taxable service and rate of exchange, if any, shall be the rate of service tax or value of ....
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....a taxable service or rate of exchange, as the case may be, in force or as applicable at the time when the taxable service has been provided or agreed to be provided. Explanation .- For the purposes of this section, "rate of exchange" means the rate of exchange referred to in the Explanation to section 14 of the Customs Act, 1962.The date on which this Bill receives the assent of the President.It is proposed to insert new section 67A, which provides that date of determination of rate of tax, value of taxable service and rate of exchange will be the time when taxable services has been provided or agreed to be provided. 143(I)68 (2)Notwithstanding anything contained in sub-section (1), in respect of such taxable services as may be notified by the Central Government in the Official Gazette, the service tax thereon shall be paid by such person and in such manner as may be prescribed at the rate specified in section 66 and all the provisions of this chapter shall apply to such person as if he is the person liable for paying the service tax in relation to such service Provided that the Central Government may notify the service and the extent of service tax which shall be payable by such p....
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....erson and the provisions of this Chapter shall apply to such person to the extent so specified and the remaining part of the service tax shall be paid by the service provider.The date on which this Bill receives the assent of the President.Section 68(2) of the Finance Act, 1994 is being amended to put the onus of payment of service tax on reverse charge basis partly on service provider and partly on service receiver. The scheme is proposed to be made applicable on three specific services i.e. hiring of means of transport; construction and man power supply. A notification will be issued after the Finance Bill, 2012 receives the assent of the President, in which the manner and extent of service tax payable by service provider and service receiver in the case of the three services will be specified. 143(J)72A72A. (1) If the Commissioner of Central Excise, has reasons to believe that any person liable to pay service tax (herein referred to as "such person"),- (i) has failed to declare or determine the value of a taxable service correctly; or (ii) has availed and utilized credit of duty or tax paid- (a) which is not within the normal limits having regard to the nature of taxable service....
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.... provided, the extent of capital goods used or the type of inputs or input services used, or any other relevant factors as he may deem appropriate; or (b) by means of fraud, collusion, or any willful misstatement or suppression of facts; or (iii) has operations spread out in multiple locations and it is not possible or practicable to obtain a true and complete picture of hisThe date on which the bill receives the assent of the President.Provisions relating to special audit are inserted in the service tax law on the lines of Section 14A and section 14AA of the Central Excise Act, 1944. From now onwards Commissioner of Central Excise can direct any person to get his Accounts audited. This Audit shall be conducted by a Chartered Accountant or a Cost Accountant nominated by him. Report of this Audit shall be submitted to Commissioner himself who will then assess Service Tax payable by the assessee. Commissioner is required to give opportunity of being heard to assessee before utilizing this report for levy of tax, interest or penalty on assessee. accounts from the registered premises falling under the jurisdiction of the said Commissioner, he may direct such person to get his accounts....
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.... audited by a chartered accountant or cost accountant nominated by him, to the extent and for the period as may be specified by the Commissioner. (2) The chartered accountant or cost accountant referred to in sub- section (1) shall, within the period specified by the said Commissioner, submit a report duly signed and certified by him to the said Commissioner mentioning therein such other particulars as may be specified by him. (3) The provisions of sub-section (1) shall have effect notwithstanding that the accounts of such person have been audited under any other law for the time being in force. (4) The person liable to pay tax shall be given an opportunity of being heard in respect of any material gathered on the basis of the audit under sub-section (1) and proposed to be utilized in any proceeding under the provisions of this Chapter or rules made there under. Explanation .- For the purposes of this section,- (i) "chartered accountant" shall have the meaning assigned to it in clause (b) of sub-section(1) of section 2 of the Chartered Accountants Act, 1949; (ii) "cost accountant" shall have the meaning assigned to it in clause (b) of sub-section (1) of section 2 of the Cost and Wo....
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....rks Accountants Act, 1959. 143(K)73(1) Where any service tax has not been levied or paid or has been short-levied or short-paid or erroneously refunded, the Central Excise Officer may, within eighteen months from the relevant date, serve notice on the person chargeable with the service tax which has not been levied or paid or which has been short-levied or short-paid or the person to whom such tax refund has erroneously been made, requiring him to show cause why he should not pay the amount specified in the notice : Provided that where any service tax has not been levied or paid or has been short-levied or short-paid or erroneously refunded by reason of - (a) fraud; or (b) collusion; or (c) willful misstatement; or (d) suppression of facts; or (e) contravention of any of the provisions of this Chapter or of the rules made there under with intent to evade payment of serviceThe date on which the bill receives the assent of the President.Notices for recovery of Service Tax not levied or not paid or short levied or short paid or erroneously refunded can now be issued within a period of 18 months from relevant date, earlier this period was 12 months. If a central excise officer sends a ....
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....notice to an assessee for any particular grounds, then on the same grounds he may raise only a statement which mentions Service Tax amount for subsequent periods also without giving any grounds for taxation. These statements would be deemed as valid notice. tax, by the person chargeable with the service tax or his agent, the provisions of this sub-section shall have effect, as if, for the words "eighteen months", the words "five years" had been substituted. Explanation. - Where the service of the notice is stayed by an order of a court, the period of such stay shall be excluded in computing the aforesaid period of "eighteen months or five years, as the case may be. (1A) Where any service tax has not been levied or paid or has been short-levied or short paid or erroneously refunded, by reason of fraud, collusion or any willful misstatement or suppression of facts, or contravention of any of the provisions of this Chapter or the rules made there under, with intent to evade payment of service tax, by such person or his agent, to whom a notice is served under the proviso to sub-section (1) by the Central Excise Officer, such person or agent may pay service tax in full or in part as m....
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....ay be accepted by him, and the interest payable There on under section 75 and penalty equal to twenty-five per cent. of the service tax specified in the notice or the service tax so accepted by such person within thirty days of the receipt of the notice. (2) The Central Excise Officer shall, after considering the representation, if any, made by the person on whom notice is served under sub-section (1), determine the amount of service tax due from, or erroneously refunded to, such person (not being in excess of the amount specified in the notice) and thereupon such person shall pay the amount so determined. Provided that where such person has paid the service tax in full together with interest and penalty under sub-section (1A), the proceedings in respect of such person and other persons to whom notices are served under sub-section (1) shall be deemed to be concluded: Provided further that where such person has paid service tax in part along with interest and penalty under sub-section (1A), the Central Excise Officer shall determine the amount of service tax or interest not being in excess of the amount partly due from such person. (3) Where any service tax has not been levied ....
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....or paid or has been short-levied or short-paid or erroneously refunded, the person chargeable with the service tax, or the person to whom such tax refund has erroneously been made, may pay the amount of such service tax, chargeable or erroneously refunded, on the basis of his own ascertainment thereof, or on the basis of tax ascertained by a Central Excise Officer before service of notice on him under sub- section (1) in respect of such service tax, and inform the Central Excise Officer of such payment in writing, who, on receipt of such information shall not serve any notice under sub-section (1) in respect of the amount so paid : Provided that the Central Excise Officer may determine the amount of short payment of service tax or erroneously refunded service tax, if any, which in his opinion has not been paid by such person and, then, the Central Excise Officer shall proceed to recover such amount in the manner specified in this section, and the period of "EIGHTEEN MONTHS" referred to in sub-section (1) shall be counted from the date of receipt of such information of payment. Explanation-3(1) For the removal of doubts, it is hereby declared that the interest under section 75 sh....
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....all be payable on the amount paid by the person under this sub-section and also on the amount of short payment of service tax or erroneously refunded service tax, if any, as may be determined by the Central Excise Officer, but for this sub-section. (2) For the removal of doubts, it is hereby declared that no penalty under any of the provisions of this Act or the rules made there under shall be imposed in respect of payment of service-tax under this sub-section and interest thereon. (4) Nothing contained in sub-section (3) shall apply to a case where any service tax has not been levied or paid or has been short-levied or short paid or erroneously refunded by reason of- (a) fraud; or (b) collusion; or (c) willful misstatement; or (d) suppression of facts; or (e) Contravention of any of the provisions of this Chapter or of the rules made there under with intent to evade payment of service tax. (4A) Notwithstanding anything contained in sub-sections (4), where during the course of any audit, investigation or verification, it is found that any service tax has not been levied or paid or has been short-levied or short-paid or erroneously refunded, but the true and complete details of t....
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....ransactions are available in the specified records, the person chargeable to service tax or to whom erroneous refund has been made, may pay the service tax in full or in part, as he may accept to be the amount of tax chargeable or erroneously refunded along with interest payable thereon under section 75 and penalty equal to one per cent of such tax, for each month, for the period during which the default continues, up to a maximum of twenty five per cent of the tax amount, before service of notice on him and inform the Central Excise Officer of such payment in writing, who, on receipt of such information, shall not serve any notice under sub-section (1) in respect of the amount so paid and proceedings in respect of the said amount of service tax shall be deemed to have been concluded: Provided that the Central Excise Officer may determine the amount of service tax, if any, due from such person, which in his opinion remains to be paid by such person and shall proceed to recover such amount in the manner specified in sub-section (1). Explanation .- For the purposes of this sub-section and section 78, "specified records" means records including computerized data as are required to be....
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.... maintained by an assessee in accordance with any law for the time being in force or where there is no such requirement, the invoices recorded by the assessee in the books of account shall be considered as the specified records. 5) The provisions of sub-section (3) shall not apply to any case where the service tax had become payable or ought to have been paid before the 14th day of May, 2003. (6) For the purposes of this section, "relevant date" means :- (i) in the case of taxable service in respect of which service tax has not been levied or paid or has been short-levied or short-paid — (a) where under the rules made under this Chapter, a periodical return, showing particulars of service tax paid during the period to which the said return relates, is to be filed by an assessee, the date on which such return is so filed; (b) where no periodical return as aforesaid is filed, the last date on which such return is to be filed under the said rules; (c) in any other case, the date on which the service tax is to be paid under this Chapter or the rules made there under; (ii) in a case where the service tax is provisionally assessed under this Chapter or the rules made there under, ....
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....the date of adjustment of the service tax after the final assessment thereof; (iii) in a case where any sum, relating to service tax, has erroneously been refunded, the date of such refund. 143(L)80Notwithstanding anything contained in the provisions of section 76, Section 77 or section 78,no penalty shall be imposable on the assessee for any failure referred to in said provisions, if the assessee proves that there was reasonable cause for the saidThe date on which the bill receives the assent of theConstitutional validity of the levy of service tax on renting of immovable property has been the subject matter of constant litigation leading to pronouncement of court judgments favorable to revenue, including those failure. (2) Notwithstanding anything contained in the provisions of section 76 or section 77 or section 78, no penalty shall be imposable for failure to pay service tax payable, as on the 6th day of March, 2012, on the taxable service referred to in sub-clause (zzzz) of clause (105) of section 65,subject to the condition that the amount of service tax along with interest is paid in full within a period of six months from the date on which the Finance Bill, 2012 receives t....
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....he assent of the President."President.of Honorable Delhi High Court and Honorable Supreme Court. In view of these litigations several parties have refrained from depositing service tax on these services. Now Government has decided to waive the penalty for those taxpayers only who pay the service tax due on the renting of immovable property service, in full along with interest. This scheme of penalty waiver will be open only for a period of six months from the date of enactment of the Finance Bill, 2012. No penalty will be imposed, if the amount due on renting of immovable property till 06.03.2012 along with full interest is deposited to Service Tax Department within 6 Months. 143(M)83The provisions of the following section of the Central Excise Act, 1944 as in force from time to time, shall apply, so far as may be, in relation to service tax as they apply in relation to a duty of excise: - 9C, 9D, 11B, 11BB, 11C,12, 12A, 12B. 12C, 12D, 12E, 14, 15, 31, 32, 32A to 32P (both inclusive), 33A, 34A, 35EE, 35F, 35FF to 35-O (both inclusive), 35Q, 36, 36A, 36B, 37A, 37B, 37C, 37D, 38A and 40.The date on which the bill receives the assent of the President.Section 83 is being amended to mak....
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....e Settlement Commission provisions applicable to service tax inline with the similar provisions contained in sections 31, 32, 32A to 32P of the Central Excise Act, 1944. 143(N)85(1) Any person aggrieved by any decision or order passed by an adjudicating authority subordinate to the Commissioner of Central Excise may appeal to the Commissioner of Central Excise (Appeals). (2) Every appeal shall be in the prescribed form and shall be verified in the prescribed manner. (3) An appeal shall be presented within three months from the date of receipt of the decision or order of such adjudicating authority relating to service tax, interest or penalty under this Chapter: made before the date on which the Finance Bill, 2012 receives the assent of the President" Provided that the Commissioner of Central Excise (Appeals) may, if he is satisfied that the appellant was prevented by sufficient cause from presenting the appeal within the aforesaid period of three months, allow it to be presented within a further period of three months. (ii) after sub-section (3), the following sub-section shall be inserted, namely :-The date on which the bill receives the assent of the President.Period of limitatio....
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....n for filing an appeal application to Commissioner of Central excise (Appeals) has been reduced from a period of 3 months to 2 months. However commissioner is given of Central Excise (Appeal) is given further power to admit appeal application even after completion of 2 months if sufficient cause for the same is being given (extended period shall be for 1 month only would be given.) "(3A) An appeal shall be presented within two months from the date of receipt of the decision or, order of such adjudicating authority, made on and after the Finance Bill, 2012 receives the assent of the President, relating to service tax, interest or penalty under this Chapter." Provided that the Commissioner of Central Excise (Appeals) may, if he is satisfied that the appellant was prevented by sufficient cause from presenting the appeal within the aforesaid period of two months, allow it to be presented within a further period of one month. (4) The Commissioner of Central Excise (Appeals) shall hear and determine the appeals and, subject to the provisions of this Chapter, pass such orders as he thinks fit and such orders may include an order enhancing the service tax, interest or penalty : Provided t....
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....hat an order enhancing the service tax, interest or penalty shall not be made unless the person affected thereby has been given a reasonable opportunity of showing cause against such enhancement. (5) Subject to the provisions of this Chapter, in hearing the appeals and making orders under this section, the [Commissioner] of Central Excise (Appeals) shall exercise the same powers and follow the same procedure as he exercise and follows in hearing the appeals and making orders under the Central Excise Act, 1944 (1 of 1944). 143(O)86(1) Any assessee aggrieved by an order passed by a Commissioner of Central Excise under section 73 or section 83A or an order passed by a Commissioner of Central Excise (Appeals) under section 85, may appeal to the Appellate Tribunal against such order "within three months of the date of receipt of the order" (1A) (i) The Board may, by notification in the Official Gazette, constitute such Committees as may be necessary for the purposes of this Chapter. (ii) Every Committee constituted under clause (i) shall consist of two Chief Commissioners of Central Excise or two Commissioners of Central Excise, as the case may be. (2) The Committee of Chief Commissione....
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....rs of Central Excise may, if it objects to any order passed by the Commissioner of Central Excise under section 73 or section 83A, direct the Commissioner of Central Excise to appeal to the Appellate Tribunal against the order. Provided that where the Committee of Chief Commissioners of Central Excise differs in its opinion against the order of theThe date on which the bill receives the assent of the President.Committee of Commissioner or Committee of Chief commissioners may direct Central Excise Officer or commissioner of central excise respectively to file an appeal in appellate tribunal within a period of 4 months. This period was 3 months in earlier law. Extended period for 4 months would be applicable only for decisions or orders passed after the date on which Finance Bill, 2012 received the assent of the President. Commissioner of Central Excise, it shall state the point or points on which it differs and make a reference to the Board which shall, after considering the facts of the order, if is of the opinion that the order passed by the Commissioner of Central Excise is not legal or proper, direct the Commissioner of Central Excise to appeal to the Appellate Tribunal against....
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.... the order. (2A) The Committee of Commissioners may, if he objects to any order passed by the Commissioner of Central Excise (Appeals) under section 85, direct any Central Excise Officer to appeal on his behalf to the Appellate Tribunal against the order: Provided that where the Committee of Commissioners differs in its opinion against the order of the Commissioner of Central Excise (Appeals), it shall state the point or points on which it differs and make a reference to the jurisdictional Chief Commissioner who shall, after considering the facts of the order, if is of the opinion that the order passed by the Commissioner of Central Excise (Appeals) is not legal or proper, direct any Central Excise Officer to appeal to the Appellate Tribunal against the order. Explanation :- For the purposes of this sub-section, "jurisdictional Chief Commissioner" means the Chief Commissioner having jurisdiction over the concerned adjudicating authority in the matter. (3) Every appeal under sub-section (2) or sub-section (2A) shall be filed within four months from the date on which the order sought to be appealed against is received by the Committee of Chief Commissioners or, as the case may be,....
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.... the Committee of Commissioners." (4) The Commissioner of Central Excise or any Central Excise Officer subordinate to him] or the assessee, as the case may be, on receipt of a notice that an appeal against the order of the Commissioner of Central Excise or the Commissioner of Central Excise (Appeals) has been preferred under sub-section (1) or sub- section (2) or sub-section (2A)] by the other party may, notwithstanding that he may not have appealed against such order or any part thereof, within forty-five days of the receipt of the notice, file a memorandum of cross-objections, verified in the prescribed manner, against any part of the order of the Commissioner of Central Excise or the Commissioner of Central Excise (Appeals), and such memorandum shall be disposed of by the Appellate Tribunal as if it were an appeal presented within the time specified in sub-section (3). (5) The Appellate Tribunal may admit an appeal or permit the filing of a memorandum of cross-objections after the expiry of the relevant period referred to in sub-section (3) or sub-section (4) if it is satisfied that there was sufficient cause for not presenting it within that period. (6) An appeal to the Appe....
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....llate Tribunal shall be in the prescribed form and shall be verified in the prescribed manner and shall, irrespective of the date of demand of service tax and interest or of levy of penalty in relation to which the appeal is made, be accompanied by a fee of, - a) where the amount of service tax and interest demanded and penalty levied by any Central Excise Officer in the case to which the appeal relates is five lakh rupees or less, one thousand rupees; b) where the amount of service tax and interest demanded and penalty levied by any Central Excise Officer in the case to which the appeal relates is more than five lakh rupees but not exceeding fifty lakh rupees, five thousand rupees; c) where the amount of service tax and interest demanded and penalty levied by any Central Excise Officer in the case to which the appeal relates is more than fifty lakh rupees, ten thousand rupees: Provided that no fee shall be payable in the case of an appeal referred to in sub-section (2) or sub-section (2A) or a memorandum of cross objections referred to in sub-section(4). (6A) Every application made before the Appellate Tribuna :- a) in an appeal for grant of stay or for rectification of mistak....
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....e or for any other purpose; or b) for restoration of an appeal or an application, shall be accompanied by a fee of five hundred rupees : Provided that no such fee shall be payable in the case of an application filed by the Commissioner of Central Excise or Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise, as the case may be under this sub-section. (7) Subject to the provisions of this Chapter, in hearing the appeal and making orders under this section, the Appellate Tribunal shall exercise the same powers and follow the same procedure as it exercise and follows in hearing the appeals and making orders under the Central Excise Act, 1944. 143(P)88Notwithstanding anything to the contrary contained in any Central Act or State Act, any amount of tax, penalty, interest, or any other sum payable by an assessee or any other person under this Chapter, shall, save as otherwise provided in section 529A of the Companies Act, 1956 and the Recovery of Debts Due to Banks and the Financial Institutions Act, 1993 and the Securitisation and Reconstruction of Financial Assets and the Enforcement of Security Interest Act, 2002, be the first charge on the property of....
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.... the assessee or the person as the case may be.The date on which the bill receives the assent of the President.For the word "duty", the word "tax" shall be substituted. This is not a major amendment in law. 143(Q)89(1) Whoever commits any of the following offences, namely,- (a) Knowingly evades the payment of service tax under this Chapter.The date on which the bill receives the assent of the President.Earlier penalty was leviable if services are rendered without issue of an invoice, now penalty would be leviable if assessee knowingly evades payment of Service Tax. The word "knowingly" will create litigation as every assessee will contend that nonpayment of Service Tax was un intentional (unknowingly). This would attract biasness in the workings of Central Excise officer. It is still not clear who will bear the onus of proving that assessee was in good faith or bad faith. 143(R)93AWhere any goods or services are exported, the Central Government may grant rebate of service tax paid on taxable services which are used as input services for the manufacturing or processing or removal or export of such goods or for providing any taxable services and such rebate shall be subject to such e....
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....xtent and manner as may be prescribed: Provided that where any rebate has been allowed on any goods or services under this section and the sale proceeds in respect or removal or export of such goods or consideration in respect of such services are not received by or on behalf of the exporter in India within the time allowed by the Reserve Bank of India under section 8 of the Foreign Exchange Management Act, 1999 (42 of 1999), such rebates shall be deemed never to have been allowed and the Central Government may recover or adjust the amount of such rebate in such manner as may be prescribed.The date on which the bill receives the assent of the President.This section is amended so as to provide that Central Government may grant rebate of service tax paid on taxable services which are used as inputs even after the stage of manufacture, processing or removal. 143(S)93B(Ne w)"93B. All rules made under section 94 and applicable to the taxable services shall also be applicable to any other service in so far as they are relevant to the determination of any tax liability, refund, credit of service tax or duties paid on inputs and input services or for carrying out V"The date on which the bi....
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....ll receives the assent of the President.This section provides that all the rules made under Section 94 and applicable to taxable services shall also be applicable to services other than taxable services in so far as they are relevant to the determination of any tax liability, refund, credit of service tax or duties paid on inputs and input services or for carrying out the provisions of Chapter V of the Finance Act, 1994. Central Government. is now empowered to make rules 143(T) (1) The Central Government may, by notification in the Official Gazette, make rules for carrying out the provisions of this Chapter. The 94 date on the in relation to :- which bill 1)compounding of offences receives the (2) In particular, and without prejudice to the generality of the foregoing power, such rules may provide for all or any of the following matters, namely: - the of 2) settlement of cases assent President. (a) collection and recovery of service tax under sections 66 and 68; (aa) the determination of amount and value of taxable service under section 67; (b) the time and manner and the form in which application for registration shall be made under sub-sections (1) and (2) ....
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....of section 69; (c) the form, manner and frequency of the returns to be furnished under sub-sections (1) and (2) and the late fee for delayed furnishing of return under sub-section (1) of section 70;] (cc) the manner of provisional attachment of property under sub- section (1) of section 73C; (ccc) publication of name of any person and particulars relating to any proceeding under sub-section (1) of section 73D; (d) the form in which appeal under section 85 or under sub-section (6) of section 86 may be filed and the manner in which they may be verified; (e) the manner in which the memorandum of cross objections under sub-section (4) of section 86 may be verified; (eee) the credit of service tax paid on the services consumed or duties paid or deemed to have been paid on goods used for providing a taxable service ; (eeee) the manner of recovery of any amount due to the Central government under section 87 (f) provisions for determining export of taxable services; g) grant of exemption to, or rebate of service tax paid on, taxable services which are exported out of India; (h) rebate of service tax paid or payable on the taxable services consumed or duties paid or deemed to have b....
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....een paid on goods used for providing taxable services which are exported out of India; (hh) rebate of service tax paid or payable on the taxable services used as input services in the manufacturing or processing of goods exported out of India under Section 93A; (hhh) the date for determination of rate of service tax and the place of "under section 66C" "(i) provide for the amount to be paid for compounding and the manner of compounding of offences; (j) provide for the settlement of cases, in accordance with sections 31, 32 and 32A to 32P (both inclusive), in Chapter V of the Central Excise Act, 1944 as made applicable to service tax vide section 83; (k) any other matter which by this Chapter is to be or may be prescribed. 143(U)951If any difficulty arises in giving effect to section 143 of the Finance Act, 2012, in so far as it relates to insertion of sections 65B, 66B, 66C, 66D, 66E and section 66F in Chapter V of the Finance Act, 1994, the Central Government may, by order published in the Official Gazette, which is not inconsistent with the provisions of this Chapter, make such provisions, as may be necessary or expedient for the purpose of removing the difficulty from such dat....
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....e, which shall include the power to give retrospective effect from a date not earlier than the date of coming into force of the Finance Act, 2012: "Provided that no such order shall be made after the expiry of a period of two years from the date of coming into force of these provisions.";The date on which the bill receives the assent of the President.Central Government is now empowered to issue orders for removal of difficulty in case of applicability of new service tax provisions relating to Negative List. This power can be exercised by central Government up to 2 years from the date of enactment of the Finance Bill, 2012. 143(V)96C(1) An applicant desirous of obtaining an advance ruling under this Chapter may make an application in such form and in such manner as may be prescribed, stating the question on which the advance ruling is sought. (2)The question on which the advance ruling is sought shall be in respect of,- (a) classification of any service as a taxable service under Chapter V; (b) the valuation of taxable services for charging service tax; (c) the principal to be adopted for the purposes of determination of value of the taxable service under the provisions of Chapter V....
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....; (d) applicability of notifications issued under Chapter V; (e) admissibility of credit of duty or tax in terms of the rules made in this regard (f) Determination of the liability to pay service tax on a taxable service under the provisions of Chapter V (3) The application shall be made in quadruplicate and be accompanied by a fee of two thousand five hundred rupees. (4) An applicant may withdraw an application within thirty days from the date of the application.The date on which the bill receives the assent of the President.Earlier application for advance ruling could be made in case of admissibility of Service Tax Credit. However now this admissibility of credit would be subject to rules which are prescribed here under. These rules are not formed till now & would be prescribed after Finance Bill, 2012 becomes law. on These new sections are being inserted to extend service tax exemption retrospectively for repair of roads and receives 97. (1) Notwithstanding anything contained in section 66, no service tax shall be levied or collected in respect of management, maintenance or repair of roads, during the period on and from the 16th day of June, 2005 to the 26th day of July, 2009 ....
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....(both days inclusive). The 143(W) 97 (New) & 98 (New) date which the bill non-commercial Government buildings for the period the of specified in the respective sections. the assent President. (2) Refund shall be made of all such service tax which has been collected but which would not have been so collected had sub- section (1) been in force at all material times. (3) Notwithstanding anything contained in this Chapter, an application for the claim of refund of service tax shall be made within a period of six months from the date on which the Finance Bill, 2012 receives the assent of the President. 98. (1) Notwithstanding anything contained in section 66, no service tax shall be levied or collected in respect of management, maintenance or repair of non-commercial Government buildings, during the period on and from the 16th day of June, 2005 till the date on which section 66B comes into force. (2) Refund shall be made of all such service tax which has been collected but which would not have been so collected had sub- section (1) been in force at all material times. (3) Notwithstanding anything contained in this Chapter, an application for the claim of refund of ser....
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....vice tax shall be made within a period of six months from the date on which the Finance Bill,2012 receives the assent of the President.". Document 3 ANALYIS OF INDIAN UNION BUDGET 2012-13 CENTRAL EXCISE - NON TARIFF (Central Excise Act, 1944) CLAUSE NO.SECTION OF CEA, 1944CHANGE AT GLANCEAPPLICABLE w.e fEXECUTIVE SUMMARY 1294 - Valuation of Excisable Goods for purposes of charging of duty of excise.A New definition of 'Inter- connected Undertaking' has been introduced. Previously, the definition was as per the provision of Monopolies and Restrictive Trade Practices Act, 1949 which has been repealed.Date of enactment of the Finance Bill, 2012Section 4 prescribes for determination of value for charging excise duty. The new definition has incorporated almost all combination of relations/association to term it as 'inter-connect undertakings. It includes cases, where an undertaking, directly or indirectly, owns, controls, is being owned or is being controlled, or under the same management, or is subsidiary, holding company, being managed by same group, associated person etc. 1309 - Offences and PenaltiesSection 9 provides, in case of evasion, an imprisonment upto 7 years with fine, i....
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....f the evaded amount of duty is Rs. 1 Lac or more.Date of enactment of the Finance Bill, 2012Now, the imprisonment of 7 years with fine, may be awarded the evasion cases, where the evaded duty of excise is Rs. 30 Lacs or more. The evaded duty amount has been increased to Rs. 30 Lacs or more. 1319A - Certain offences to be non- cognizableSection 9A is being amended to provide that all offences under the Act, except an offence punishable with imprisonment of three years or more under section 9, shall be non- cognizable.Date of enactment of the Finance Bill, 2012The offences punishable (i) with imprisonment of 3 years or more shall be cognizable, and (ii) with imprisonment of less than 3 year shall be non-cognizable. 13211A - Recovery of duties ...Section 11A is being amended to exclude the period of stay in computing the period of one year or five years, as the case may be, for issuance of show cause notice where service of notice is stayed by an order of a court or tribunal.Date of enactment of the Finance Bill, 2012Only the stay on service of notice by any court, or tribunal, shall be considered for this purpose. 13311AC - Penalty for short levy or non-levy of duty inSection 11AC p....
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....rovides for reduced penalty if the duty along with interest is paid within a 30 days of the communication of the order. It is being amended to make availableDate of enactment of the Finance Bill, 2012Previous to this amendment, there was a benefit to assessee that the benefit of reduced penalty would be available even if such reduced penalty is not paid within 30 days. This benefit has been taken away certain casesthe benefit of reduced penalty only if the reduced penalty is also paid within the specified period of thirty days. 13412F - Power of Search and SeizureSection 12F is being amended to assign the powers of Search and Seizure to CCE instead of ‘Magistrate' as prescribed under Code of Criminal Procedure, 1973.Date of enactment of the Finance Bill, 2012Section 12F relating to search and seizure is being amended to align the provisions with Customs Act. 13513 - Power to arrestSection 13 is being amended to assign the powers of arrest, bail of any person who has committed an offence under the Act. Such Excise officer have been given the powers of Officer -in- Charge of Police Station as prescribed under Code of Criminal Procedure, 1973, subject to curtain conditions.Date....
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.... of enactment of the Finance Bill, 2012Section 13 dealing with the power to arrest is being substituted to align the provisions with Customs Act and also to provide that offences punishable with imprisonment of three years or more under section 9 shall be cognizable. 13513A- New Insertion - Bail forSection 13A is being inserted to provide that bail in the case of offences punishable with a term ofDate of enactment of the Finance Bill, 2012The newly inserted section 13A has given a wide range of powers to Excise Officer for arrest and bail related cases. This offences ...imprisonment of 3 years or more under section 9 shall not be granted by a Court or Magistrate without an opportunity being given to the Public Prosecutor to present his case. It also provides that in the case of minors, infirm and women the Magistrate may grant bail. It also excludes the jurisdiction of police officers to initiate investigation of offences under the Central Excise Act, unless authorized in this behalf by the Central Government by a special or general order.process shall result in more case of offences and arrest. 13618 - Searches and Arrests how to be madeSection 18 is being substituted to provide ....
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....that save as provided under the Central Excise Act, searches shall be carried out as per the procedure laid down in the Code of Criminal Procedure.Date of enactment of the Finance Bill, 2012Through this amendments, an attempt has been made to carry out the process of search or seizure in accordance with Code of Criminal Procedure. 13719 - OmittedOmittedDate of enactment of the Finance Bill, 2012The provision of erstwhile provision 19 has been considered in section 13 and 13A. Hence, it has been omitted as a consequential change. 13820 - Procedure ... ..Section 20 relating to procedure to be followed by officer-in-charge of police station, is being amended to carry out consequential changes in view of omission of section 19.Date of enactment of the Finance Bill, 2012Further, due to amendment in section 12F, in case of search and seizure, the person shall be appeared before Commissioner of Central Excise instead of Magistrate. 139Notification No.1/2010- CE dated 6th February, 2010It is being amended retrospectively from the date of issue of the said notification to provide that for units undertaking substantial expansion in terms of the notification, the exemption period of ten year....
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....s would be computed from the date of commercial production from the expanded capacity.Retrospectively from date of notificationNotification No.1/2010-CE dated 6th February, 2010 provides exemption from Central Excise duty to goods cleared from new units or units that have undertaken substantial expansion in the State of Jammu and Kashmir. This amendment would clarify the policy intent. Further, any act or omission which has become punishable due this change, shall not be punishable. 140Third Schedule ofThe Third Schedule of the Central Excise Act relating to the deemingCome into force immediatelyAccordingly, the packing, or repacking in a unit container, labeling or relabeling of Containers including the declaration or alteration of Retail Sale Price on cigarettes or adoption of any treatment to render cigarettes marketable shall be processes amounting to manufacture. CEA of certain processes as amounting to "manufacture" is being amended to include cigarettes. Document 4 ANALYIS OF INDIAN UNION BUDGET 2012-13 CUSTOM - NON TARIFF (Custom Act, 1962) CLAUSE NO.SECTION OF CEA, 1944CHANGE AT GLANCEAPPLICABLE w.e fEXECUTIVE SUMMARY 1142 clause 10 - definition of 'Custom Airport'Th....
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....e definition of 'Custom Airport' is being amended to include 'Air freight station',Date of enactment of the Finance Bill, 2012 1157 - Appoint- ment of Custom Port ..Clause (aa) of Section 7 is being amended to include "air-freight stations".Date of enactment of the Finance Bill, 2012These amendments would empower the Central Board of Excise and Customs to appoint air freight stations for unloading of import cargo and loading of export cargo as in the case of Inland Container Depots. 11628AAA- New Insertion - Recovery of duty in certain casesA new section 28AAA is being inserted to provide for recovery of duties, from the person to whom the instrument which was obtained through collusion etc, was issued without prejudice to any action that may be taken against the importer.Date of enactment of the Finance Bill, 2012Certain cases have been detected relating to utilization of instruments, such as duty credit scrips, where the instrument was obtained by means of collusion or wilful mis-statement or suppression of facts by the person to whom the instrument was issued or his agent or employee and not by the importer who utilized it. 11728BA - Provisional attachment ...Section 28BA is be....
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....ing amended to make the provisions relating to provisional attachment of property applicable to the proposed Section 28AAA.Date of enactment of the Finance Bill, 2012 11847 - Clearance of goods for home consump- tionSection 47 is being amended to insert a new proviso therein to provide that the Central Government may, by notification in the official gazette, specify the class or classes of importers who shall pay customs duty electronically.Date of enactment of the Finance Bill, 2012The CG is going to introduce the schema of electronic payment which shall be announced shortly. 11975A - Interest on DrawbackSection 75A is being amended to substitute the reference to section 28AB with section 28AA. The amendment is also being given retrospective effect from 08.04.2011.Date of enactment of the Finance Bill, 2012Sections 28AA and 28AB of the Customs Act were merged through the provisions of the Finance Act, 2011. 120104 - Power to arrestSection 104 is being amended to provide that notwithstanding anything contained in the Code of Criminal Procedure, 1973, all offences under the Act (except an offence punishable with term ofDate of enactment of the Finance Bill, 2012This amendment has be....
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....en made in line with amendment in section 13 of Central Excise Act, 1944. It also provides that all offences punishable with a term of imprisonment of 3 years or more under section 135 shall be cognizable. imprisonment of 3 years or more under section 135) shall be non- cognizable and bailable. 121104A - Bail for offencesSection 104A is being inserted to provide that bail in the case of offences punishable with a term of imprisonment of 3 years or more under section 135 shall not be granted by a Court or Magistrate without an opportunity being given to the Public Prosecutor to present his case. It also provides that in the case of minors, infirm and women, the Magistrate may grant bail. It also excludes the jurisdiction of police officers to initiate investigation of offences under the Customs Act, unless authorized in this behalf by the Central Government by a special or general order.Date of enactment of the Finance Bill, 2012This amendment has been made in line with amendment in section 13A of Central Excise Act, 1944. 122122 - Adjudication of confiscations and penaltiesSection 122 is being amended to enhance the monetary limits for adjudication of cases involving confiscation....
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.... of goods andDate of enactment of the Finance Bill, 2012The coverage for Assistant Commissioner and lower category officers have been increased for adjudication. imposition of penalty from Rs. 2 lakhs to Rs. 5 Lakh for Deputy/ Assistant Commissioners and from Rs.10,000 to Rs. 50,000 for Gazetted officer lower in rank to Assistant/ Deputy Commissioner. 123138 - Offences to be tried summarilyThis section is being amended to exclude offences punishable with term of imprisonment of three years or more under section 135 since it is being proposed that such offences shall be cognizable.Date of enactment of the Finance Bill, 2012Section 138 deals with summary trial of offences. 124153 - Service of order, decision etcSection 153 is being amended to bring 'courier services' within its ambit for the purpose of serving any order/decision/ summons/notice by the Commissioner.Date of enactment of the Finance Bill, 2012Now, any order or decision may be sent through courier and such delivery shall be valid. 125FirstExemption from additional duty isRetrospectively Schedule of Custom Tariff Act,being provided retrospectively to "foreign going vessels" for the period from 1st March, 2011 to 16th Mar....
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....ch, 2012. End Document 5 ANALYIS OF INDIAN UNION BUDGET 2012-13 CENTRAL EXCISE - TARIFF (Central Excise Tariff Act, 1985) GENERAL - PROPOSALS INVOLVING CHANGES IN RATES OF DUTY 1. The effective rate of excise duty of 10% on non-petroleum products is being increased to 12% with a few exceptions where exemptions/ concessions have been given. 1. For petroleum goods, the ad valorem rate or ad valorem component (where the rates are mixed) is being revised to 14% 2. Concessional rate of excise duty of 5% on non-petroleum products is being increased to 6%. 3. The lower rate of 1% on non-petroleum products is being increased to 2%. However, precious metal jewellery, coal and fertilizers would remain at 1%. SECTOR SPECIFIC PROPOSALS I. CEMENT: The graded RSP slabs for the purpose of charging of duty on cement manufactured and cleared in packaged form are being done away with. In order to rationalize the excise duty structure on cement manufactured and cleared in packaged form, the tariff has been revised as under: - DescriptionRevised Rate of Duty 1. cement manufactured and cleared in packaged form: -6% ad valorem + Rs.120 per tonne a) from mini cement plants12% ad valorem + Rs.1....
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....20 per tonne b) from other than mini cement plants 2. Cement cleared other than in packaged form.12% ad valorem 3. Cement Clinker12% ad valorem Cement is also being notified under section 4A, that is, retail sale price (RSP) based assessment with an abatement of 30% from RSP. II. PRECIOUS METALS: 1. At present, branded jewellery of precious metals attracts excise duty of 1%. The scope of the levy is extended to include unbranded jewellery within its ambit. However, the duty on such unbranded jewellery would be charged on 30% of transaction value declared in the invoice. 2. Unbranded silver jewellery is already exempt. Branded silver jewellery is being exempted from excise duty. 3. Excise duty on gold jewellery sold from EOUs into domestic tariff area (DTA) is being increased from 5% to 10%. 4. Excise duty on refined gold is being increased from 1.5% to 3%. 5. Excise duty on gold produced from copper smelting is being increased from 2% to 3%. 6. Excise duty on silver produced from copper smelting is being reduced from 6% to 4%. 7. Full exemption from excise duty is being provided on articles of goldsmith and silversmith wares of precious metals or of metals coated with prec....
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....ious metals, not bearing a brand name. 8. Gold coins of purity 99.5% and above and silver coins of purity 99.9% and above are being fully exempted from excise duty. III. TOBACCO PRODUCTS: 1. Enhancement in rates of excise duty on cigarettes (both filter and non-filter) of length exceeding 65 millimetres by adding an ad valorem rate of 10% to the existing specific rates of duty. 2. Cigarettes are being notified under section 4A for RSP based assessment with abatement of 50% from RSP. 3. Enhancement of excise duty on cigars, cheroots and cigarillos to "12% or Rs.1370 per thousand, whichever is higher". 4. The basic excise duty on hand-rolled bidis is being increased from Rs.8 to Rs.10 per thousand and on machine-rolled bidis from Rs.19 to Rs.21 per thousand. 5. The rates of duty per machine applicable to pan masala, guthka, chewing tobacco, zarda scented tobacco and unmanufactured tobacco under the compounded levy scheme are being increased. IV. MASS CONSUMPTION ITEMS: 1. Refills and inks used for the manufacture of writing instruments of value not exceeding Rs.200 per piece are being fully exempted from excise duty subject to actual user condition. 2. Exemption limit on fo....
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....otwear is being enhanced from Rs.250 per pair to Rs.500 per pair. Footwear above Rs.500 per pair would attract excise duty of 12%. 3. Excise duty on iodine is being reduced from 10% to 6%. V. ENVIRONMENT FRIENDLY GOODS: 1. Excise duty is being reduced from 10% to 6% on battery packs supplied to manufacturers of electric vehicles for use as spares and OEMs subject to end-use condition. 2. Excise duty is being reduced from 10% to 6% on specific parts of Hybrid vehicles supplied to manufacturers of hybrid vehicles subject to end-use condition. 3. Excise duty on LED lamps is being reduced to 6%. VI. TEXTILES: For the purpose of charging excise duty on ready-made garments bearing a brand name or sold under a brand name, the level of abatement from the retail sale price (RSP) is being increased from 55% to 70%. VII. MISCELLANEOUS: 1. Full exemption from excise duty is being provided to food preparations containing fruits and vegetables falling under Chapter 20, which are prepared in a hotel, restaurant or a retail outlet, whether or not such food is consumed in such hotels/restaurants/retail outlets. 2. Excise duty on parts of mobile phones, other than those cleared to a manu....
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....facturer of mobile phones, is being reduced from 10% to 2%, provided no Cenvat credit is taken. 3. Excise duty is being reduced from 10% to 6% on: (a) Matches manufactured by semi-mechanized units (c) Processed food products of soya 4. Exemption from excise duty is being restored on intra ocular lens. 5. Enhancement the rate of excise duty from 5% to 6% on certain goods and from 22% to 24% and from "22%+ Rs.15000 per vehicle" to 27% on certain categories of automobiles. The composite rate applicable to automobile chassis is being converted into an ad valorem rate and is being fixed at 15% or 25%. Note: - All the above amendments shall be effective from immediate effect. End Document 6 ANALYIS OF INDIAN UNION BUDGET 2012-13 CUSTOM - TARIFF (Custom Tariff Act, 1975) GENERAL PROPOSALS 1. Enhancement in the rate of basic customs duty on bicycles from 10% to 30% and on parts of bicycles from 10% to 20%. 2. The method of computation of Education Cess and Secondary & Higher Education cess on imported goods is being simplified. Currently, these cesses are first charged on the CVD portion of customs duty and thereafter on the aggregate of customs duties (excluding special CVD). T....
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....he portion of cesses leviable on the CVD portion of customs duty is being exempted so as to avoid computation of such cesses twice. 3. The duty-free allowance under the Baggage Rules is being increased from Rs.25000 to Rs.35000 for adult passengers of Indian origin and from Rs.10,000 to Rs. 15,000 for children upto 10 years of age. PROPOSAL INVOLVING CHANGES IN RATES OF DUTY I. AGRICULTURE/AGRO PROCESSING/PLANTATION SECTOR: 1. Basic customs duty on sugarcane planter, root or tuber crop harvesting machine and rotary tiller & weeder, parts & components for their manufacture is being reduced from 7.5% to 2.5%. 2. At present, project import status is available to installation of Mechanized Handling Systems & Pallet Racking Systems in mandis or warehouses for food grains and sugar, with concessional rate of basic customs duty of 5%. Such systems are also exempt from additional duty of customs (CVD) and special additional duty of customs (SAD). The same dispensation [i.e. 5% BCD + Nil CVD + Nil SAD] is also being extended to such systems for horticultural produce. 3. Project imports status is being granted to the green houses set up for protected cultivation of horticulture and flo....
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....riculture produce. As such, these projects would attract concessional rate of basic customs duty of 5%. 4. Basic customs duty is being reduced from 10%/7.5% to 5% on specified coffee plantation and processing machinery. The concessional duty would be available upto 31.3.2014. 5. Basic customs duty is being reduced from 10% to 5% on coffee brewing and vending machines (commercial type). The concessional duty would be available upto 31.3.2014. Basic customs duty is also being reduced to 2.5% on parts required for manufacture of such coffee vending and brewing machines. 6. Basic customs duty is being reduced on specified soluble fertilizers and liquid fertilizers, other than urea, from 7.5% to 5% and from 5% to 2.5% respectively. II. AUTOMOBILES: 1. Basic customs duty on Completely Built Units (CBUs) of large cars/ MUVs/ SUVs permitted for import without type approval (value exceeding US$40,000 and engine capacity exceeding 3000cc for petrol and 2500cc for diesel) is being increased from 60% to 75%. III. METALS: 1. Basic customs duty on coating material for manufacture of electrical steel is being reduced from 10% to 5% subject to actual user condition. 2. Basic customs duty o....
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....n ammonium meta-vanadate used in the manufacture of ferro- vanadium is being reduced from 7.5% to 2.5%. 3. Nickel oxide/ hydroxide and nickel ore/ concentrate are being fully exempted from basic customs duty. 4. Exemption from SAD currently available to CRGO steel is being restricted to prime quality of such steel. 5. Basic customs duty on flat rolled products (HR and CR) of non-alloy steel is being increased from 5% to 7.5%. IV. PRECIOUS METALS: 1. Basic customs duty on standard gold bars and platinum bars is being increased from 2% to 4%. 2. Basic customs duty on non-standard gold is being increased from 5% to 10%. 3. Basic customs duty on gold ore for refining is being increased from 1% to 2%. 4. Basic customs duty of 2% is being imposed on cut and polished coloured gemstones. V. CAPITAL GOODS/INFRASTRUCTURE: 1. Basic customs duty on capital goods, plant and equipment imported for setting up or substantial expansion of iron ore pellet plants or iron ore beneficiation plants is being reduced from 7.5% to 2.5%. 2. Full exemption from basic customs duty is being provided to initial setting up and substantial expansion of fertilizer projects. The exemption would be valid ....
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....till 31.03.2015. 3. Steam coal is being fully exempted from basic customs duty. CVD is also being reduced from 5% to 1% on such coal. This dispensation would be valid upto 31.3.2014. 4. Natural gas/Liquified Natural Gas imported for power generation by a power generation company is being fully exempted from basic customs duty. 5. Full exemption from basic customs duty is being provided to uranium concentrate, sintered natural uranium dioxide, sintered uranium dioxide pellets for generation of nuclear power. 6. Full exemption from basic customs duty, CVD and SAD is being extended to equipment imported for road construction projects awarded by Metropolitan Development Authorities. 7. Full exemption from basic customs duty and CVD at present available to tunnel boring machines for hydel and road projects is being extended to all infrastructure projects. The exemption shall also be available for parts required for assembly of such machines. 8. At present, full exemption from basic customs duty and CVD is available to specified road construction equipment. This exemption is now being extended to tunnel excavation and specified lining equipment also. 9. Full exemption from basic c....
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....ustoms duty is being extended to coal mining projects. 10. At present machinery and instruments for surveying and prospecting of mines attract basic customs duty of 10% and 7.5% respectively. These rates are being reduced and unified at 2.5%. 11. Basic customs duty on Railway safety (Train Protection and Warning System) equipment and railway track laying machines is being reduced from 10% to 7.5% VI. AIRCRAFTS & SHIPS: 1. Full exemption from basic customs duty and CVD is being provided to new and retreaded aircraft tyres. 2. Full exemption from basic customs duty and CVD is being extended to parts of aircraft and testing equipment for maintenance and repair of aircraft imported by third-party Maintenance, Repair and Overhaul (MRO) units. 3. CVD on foreign-going vessels on conversion for coastal trade shall now be charged on proportionate basis depending on the period for which it operates as a coastal vessel in India. The value shall be taken as the lease value when the import is against a lease agreement/ contract. VII. ENVIRONMENT PROTECTION: 1. Equipments for setting up of solar thermal projects are being fully exempted from SAD. 2. Concessional rate of 5% basic customs....
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.... duty is being extended to raw materials for the manufacture of intermediates, parts and sub-parts of blades for rotors for wind energy generators. 3. Full exemption from basic customs duty is being extended to tri band phosphor for use in the manufacture of Compact Fluorescent Lamps. 4. At present, full exemption from basic customs duty and SAD alongwith 6% CVD is available to specified parts for the manufacture of hybrid vehicles. This dispensation is now being extended to some additional parts for the manufacture of such vehicles. 5. The customs duty regime of Nil basic customs duty alongwith Nil SAD and 6% CVD is being extended to lithium ion batteries for the manufacture of battery packs for supply to electric or hybrid vehicle manufacturers. VIII. HEALTH: 1. Basic customs duty is being reduced from 5% to 2.5% on iodine. 2. Basic customs duty is being reduced on isolated soya protein and soya protein concentrate from 15% and 30% respectively to 10%. 3. Basic customs duty is being reduced from 10% to 5% on probiotics. 4. Customs duty on six specified life saving drugs/vaccines and their bulk drugs is being reduced from 10% to 5% with Nil CVD (by way of excise duty exemp....
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....tion). 5. A concessional import duty regime of 2.5% basic customs duty with 6% CVD and Nil SAD is being prescribed for specified raw materials for the manufacture of syringes, needles, catheters, cannulae subject to actual user condition. 6. A concessional import duty regime of 2.5% basic customs duty with 6% CVD and Nil SAD is also being extended to parts and components for the manufacture of blood pressure monitors and blood glucose monitoring systems (Gluco-meters). 7. Full exemption from basic customs duty and CVD is being extended on steel tube & wire, cobalt chromium tube, Hayness Alloy-25 and polypropylene mesh for the manufacture of coronary stents/coronary stent systems and artificial heart valves subject to actual user condition. IX. TEXTILES: 1. Basic customs duty on shuttleless looms, alongwith parts and components for their manufacture, is being reduced from 5% to Nil. The exemption would apply only to new machinery. 2. Basic customs duty on automatic silk-reeling and processing machinery and raw silk testing equipments is being reduced from 5% to Nil. The exemption would apply only to new machinery. 3. The concessional rate of basic customs duty of 5% is being ....
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....restricted only to new textiles machinery. Consequently, second hand machinery would now attract basic customs duty of 7.5%. 4. Basic customs duty on wool waste and wool tops is being reduced from 10% and 15% respectively to 5%. 5. Basic customs duty on titanium dioxide is being reduced from 10% to 7.5%. 6. Full exemption from basic customs duty is being extended to aramid yarn and fabric when used in the manufacture of bullet proof helmets for supply to defence and police. X. ELECTRONICS/ HARDWARE: 1. Full exemption from basic customs duty is being provided to LCD and LED TV panels of 20 inches and above. 2. LEDs required for the manufacture of LED lamps are also being exempted from SAD. 3. The scope of full exemption from basic customs duty, CVD and SAD presently available to parts, components and accessories for manufacture of mobile handsets including cellular phones is being amplified to include parts of memory cards. The validity of the exemption from SAD is also being extended from 31.03.2012 to 31.03.2013. 4. Full exemption from basic customs duty currently available to copper, brass and phosphor bronze strips and similar items imported for the manufacture of connec....
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....tors is being withdrawn. 5. Full exemption from basic customs duty currently available to poly-laminated aluminium tape and poly-laminated steel tape presently exempt if imported for the manufacture of cables and conductors for telecom use is also being withdrawn. XI. EXPORT PROMOTION: 1. Basic customs duty is being reduced from 10% to 5% on Marine seawater pumps with fibre impellers and Automatic fish/prawn feeders for aquaculture. 2. Basic customs duty on artemia is being reduced from 30% to 5%. XII. PAPER: Waste paper is being fully exempted from basic customs duty. XIII. SPECIAL ADDITIONAL DUTY OF CUSTOMS: Brass scrap, timber logs and dredgers are being fully exempted from SAD. XIV. MISCELLANEOUS: 1. A basic customs duty of 10% is being imposed on Digital Still Cameras of certain specifications. 2. Basic customs duty on boric acid is being increased from 5% to 7.5%. 3. Basic customs duty on boiler quality tubes and pipes for the manufacture of boilers is being reduced from 10% to 7.5% subject to end use condition. 4. A concessional customs duty dispensation of 5% basic customs duty + 6% CVD+ Nil SAD is being prescribed for imports of hydrophilic non-woven, hydropho....
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....bic non-woven and super absorbent polymer for manufacture of adult diapers subject to actual user condition. 5. Enhancement of the length of the lowest slab of both filter and non-filter cigarettes of length not exceeding 60 millimetres or exceeding 60 millimetres to length exceeding 65 millimetres or not exceeding 65 millimetres respectively. Note: - All the above amendments shall be effective from immediate effect, End<BR> News - Press release - PIB....