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Social Welfare Surcharge exemption for specified minerals and metal inputs removes surcharge on listed imported goods.
Amendment to Notification No. 11/2018 exempts a specified list of imported goods from the levy of the Social Welfare Surcharge with effect from 24 July 2024, covering raw minerals, metal ores and concentrates, high purity silicon and silicon products, rare earth metals and compounds, various oxides, hydroxides, salts and carbonates, graphite and a range of unwrought metals, powders, waste and scrap.
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Agriculture Infrastructure and Development Cess rate reduction alters customs duty incidence on specified precious metal imports.
Amendment revises the Agriculture Infrastructure and Development Cess (AIDC) rates on specified precious metal goods by modifying Notification No. 11/2021 - Customs, effective 24 July 2024, reducing AIDC and altering the effective customs duty incidence on listed tariff entries including gold, silver, platinum group metals, coins of precious metals, and related findings.
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Exemption of Clean Environment Cess on stock, subject to GST compensation cess on subsequent supplies.
The amendment extends the submission period for the final Mega Power Project certificate under Notification No.12/2012 Central Excise from 120 to 156 months. It also exempts Clean Environment Cess on excisable goods in stock as of 30 June 2017, conditional on payment of applicable GST Compensation Cess on supplies of those goods on or after 1 July 2017. Both changes take effect from the date of enactment of the Finance (No. 2) Bill, 2024.
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Limitation on GST demand determination: new unified regime for post-change periods with restructured penalties and appeal pre-deposit rules.
Insertion of Section 74A establishes a separate regime for determination of tax not paid, short paid, erroneously refunded or incorrect input tax credit for periods from the Financial Year 2024-25 onwards, prescribes a uniform limitation period for issuing demands and orders for those periods, retains higher penalties where fraud, wilful misstatement or suppression is found, and triggers consequential amendments across assessment, recovery, credit, return-filing and appeal provisions to align procedures and pre-deposit requirements.
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Zero rating changes in IGST allow notified classes to claim refunds subject to prescribed conditions and export duty restrictions.
The Bill amends IGST to exempt Extra Neutral Alcohol used in making alcoholic liquor from integrated tax; empowers the Government to regularize non levy or short levy arising from established general practice; revises the zero rating regime to allow notification of classes eligible for zero rated supplies and corresponding refunds under Central GST refund rules while barring refunds where export duty applies; and reduces maximum pre deposit amounts required to file appeals before the appellate authority and the Appellate Tribunal.
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Tax exemption for extra neutral alcohol removes union territory tax when used to make alcoholic liquor, altering levy scope.
Amendment excludes union territory tax on Extra Neutral Alcohol used in manufacture of alcoholic liquor for human consumption, narrowing the UTGST taxable base and requiring suppliers and manufacturers to adjust tax treatment. A newly inserted Section 8A authorizes the government to regularize non-levy or short levy of union territory tax where such shortfall resulted from a general practice, creating a mechanism to validate or correct historical under-collection attributable to systemic practices.
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Regularisation of cess shortfalls where non levy arose from general practice allows government to sanction corrective levy.
Section 8A empowers the government to regularize cases of non-levy or short-levy of the compensation cess where such under-collection arose from a prevailing general practice, providing an administrative mechanism to treat practice-driven cess shortfalls as regularizable liabilities under the GST compensation framework.
Case Laws Income Tax
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Deduction eligibility for operational hotels affirmed despite administrative delay in star classification, focusing on substantive compliance.
The court addressed entitlement to a deduction under Section 35AD(5)(aa) where a hotel began operations and generated income in the relevant year and a timely application for star classification was submitted, but formal certification was delayed due to administrative inspections; the court applied a purposive construction to allow the deduction when substantive operational conditions were satisfied and delay was not the assessee's fault.
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Depreciation entitlement for leasing companies where contractual ownership and business use are established, allowing higher depreciation rates.
A lessor retains entitlement to depreciation where lease terms demonstrate exclusive ownership rights, repossession power, return obligations and inspection rights, and where the asset is used in the course of the lessor's leasing business; actual physical use by the lessor is not required. Leasing activity that functionally equates to hiring can qualify assets for an enhanced rate of depreciation despite registration in the lessee's name.
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Revenue classification of debenture issuance expenses upheld as revenue expenditure despite later conversion into equity.
Expenses incurred to issue convertible debentures that are raised to provide working capital are to be treated as revenue expenditure because classification depends on the purpose and usage of the expenditure, and future conversion into shares does not change its revenue character.
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Classification of feasibility study costs: expansion-related studies without new assets qualify as revenue expenditure.
Whether feasibility study expenditures are revenue or capital depends on purpose and benefit: costs to obtain an enduring benefit or create a new capital asset are capital; costs incurred to expand the same business, under unity of control and without creation of new assets, are revenue in nature.
Case Laws Income Tax
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Section 43B actual-payment requirement prevents deduction of unutilised MODVAT credit and sales tax recoverable balances.
Section 43B permits deduction only for sums payable as tax, duty, cess or fee that are actually paid in the relevant previous year (or paid before the return due date where a statutory liability existed). Unutilised MODVAT credit is an entitlement to adjust future excise liabilities and not an actual payment; sales tax in a recoverable account is a cost adjustment, not discharge of statutory liability. Because no excise liability existed at the relevant year end, the proviso does not apply and such credits do not meet the Section 43B payment requirement for deduction.
Case Laws Income Tax
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Retrospective application of curative amendment to TDS deadline clarified, affecting disallowance of expenses under the tax provision.
The Court addressed whether an amendment extending the time to deposit TDS should be applied retrospectively to govern the operation of a statutory disallowance provision. After reviewing prior amendments, explanatory materials, and precedent on curative measures, the Court characterised the later amendment as curative and directed its retrospective application to the date of insertion of the original provision, thereby affecting the applicability of the disallowance to expenses where TDS was deposited by the extended deadline.
Case Laws Income Tax
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Bad debt deduction criteria clarified under Sections 36 and 37 - stricter substantiation required; capital expenditure excluded.
Entitlement to a bad debt deduction requires statutory compliance and adequate substantiation; an accounting write off alone does not suffice. The assessee's failure to produce coherent documentary evidence of the nature and terms of the advance, inconsistent characterisation of the payment, and the capital nature of the outflow precluded treatment as a business deduction. The general business expenditure provision does not avail items that are within or expressly excluded by the bad debt framework.
Case Laws Income Tax
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Commission characterization: discounts to franchisees are sales margins, not commission; therefore no TDS obligation under Section 194-H.
The Court held that the characterisation of receipts as commission or brokerage under Section 194-H requires agency relationships established by control, fiduciary obligations and the ability to bind the principal. Franchisees/distributors who buy prepaid products at discounts, bear commercial risk, determine resale margins and lack pricing control operate independently. Their discounted purchase price and resale margin constitute sale proceeds, not commission for services rendered on behalf of the provider, and thus do not fall within Section 194-H's withholding obligation.
Case Laws Income Tax
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Procedural timelines for charitable registration may be treated as directory to mitigate transitional electronic filing hardships and enable merit review.
The tribunal treated administrative timeline extensions and electronic-filing difficulties as relevant to construing statutory deadlines for charitable approval, regarding the contested filing timelines as directory rather than strictly mandatory where substantive compliance existed, and directed merit-based reconsideration instead of dismissal solely for technical delay.
Case Laws IBC
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CoC negotiation rights preserved after challenge mechanism, allowing revised proposals to maximize corporate value under insolvency framework.
The CoC retains authority to negotiate with resolution applicants and to call for revisions to resolution plans post-challenge mechanism to maximize corporate value; Regulation 39(1A) is procedural and does not bar such substantive negotiation, and the conclusion of a challenge mechanism does not vest the highest bidder with an automatic right to approval, leaving the CoC's commercial judgment paramount.
Case Laws IBC
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Limitation period for IBC appeals runs from e filing date, with time to obtain certified copies excluded.
The period for filing an appeal under the Insolvency and Bankruptcy Code is to be computed from the date of e filing, with allowance for later submission of a physical copy; time taken to obtain certified copies is excluded from the limitation calculation in line with the Limitation Act, producing a framework harmonising tribunal rules, statutory principles, and technological filing practices.
Case Laws Income Tax
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Incriminating evidence requirement for search-based tax assessments: without it, 153 C assessments fail; reassessment under 147/148 remains possible.
Assessments under Section 153-C require incriminating material discovered during search and seizure; absent such material, those assessments lack evidentiary foundation and may be set aside, though the Revenue may pursue reassessment under alternate provisions if independent legal grounds exist.
Case Laws Income Tax
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Post-search assessment requires reliance on incriminating material discovered during search to validate reassessment of income.
Post-search assessments must be founded on incriminating material discovered during the search; reassessments cannot be based on material unconnected to search records. Third party assessments require a demonstrable link between the impugned income and the incriminating material within those records. The court reaffirmed precedent distinguishing ordinary reassessment from search triggered reassessment and directed re determination consistent with those legal principles to preserve procedural fairness.

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Review of Customs duty Exemptions - Review of conditional exemption rates of BCD

24 July, 2024

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Union Budget 2024-25 (Full) + FINANCE (No.2) Bill, 2024

(i) The BCD exemption for the goods covered under following serial numbers of the notification are being extended upto 31st March, 2026 unless specified otherwise.

S. No.

S N of 50/17-Cus

Brief Description

1.

17

Specified Planting materials, namely, oilseeds, seeds of vegetables, tubers, etc.

2.

80A

Algal oil for manufacturing of aquatic feed

3.

90

Lactose for use in manufacture of homeopathic medicines

4.

104

Specified goods used in processing of sea-food

5.

133

Gold ores and concentrates

6.

139

Bunker Fuels namely: (i). IFO 180 CST; (ii). IFO 380 CST; (iii). VLSFO (CTH 27)

7.

150

Naphtha for manufacture of Fertilisers (scope of exemption is being reduced only to Naphtha)

8.

155

Liquefied petroleum gases (LPG) received from unit in SEZ and returned by the DTA unit to the SEZ unit

9.

164

Electrical energy supplied from SEZ unit to DTA

10.

165

Electrical energy supplied from SEZ to DTA

11.

172

Specified goods used in manufacture of silicon wafers or solar wafers, for manufacture of solar cell or module

12.

183

Medical use fission Molybdenum-99 (Mo-99) for use in manufacture of radio pharmaceuticals

13.

184

Pharmaceutical Reference Standard

14.

188

Goods for manufacture of ELISA Kits

15.

191

Maltol for manufacture of deferiprone

16.

204

Anthraquinone or 2-Ethyl Anthraquinone for use in manufacture of Hydrogen peroxide

17.

237

Specified material for manufacture of EVA (Ethylene Vinyl Acetate) sheets or backsheet, which are used in the manufacture of solar photovoltaic cells or modules (Scope of materials which can be imported is being increased)

18.

253

Specified Goods for manufacture of Brushless Direct Current (BLDC) motors

19.

257

Tags, labels, stickers, belts, buttons, hangers or printed bags, imported by bonafide exporters

20.

257A

Specified goods used in manufacture of handicraft items for export when imported by bonafide exporter

21.

257B

Specified goods used in manufacture of textile or leather garments for export when imported by bonafide exporter

22.

257C

Specified goods used in manufacture of leather or synthetic footwear or other leather products for export when imported by bonafide exporter

23.

258

Security fibre, threads, Paper based Taggant, M-feature for use in manufacture of security paper by Security Paper Mill, Hoshangabad and Bank Note Paper Mill India Pvt Ltd, Mysore.

24.

259

Raw materials for manufacture of security fibre and security thread for supply to Security Paper Mill, Hoshangabad and Bank Note Paper Mill India Pvt. Ltd, Mysore for use in manufacture of security paper

25.

260

Goods for the manufacture of specified orthopedic implants (902110)

26.

261

Raw material for manufacture of Copper-T Contraceptive

(i) Alatheon

(ii) Copper Wire

27.

265

Capacitor grades polypropylene granules for manufacture of Capacitor grade plastic

28.

269

Super absorbent polymer for manufacture of adult diapers and specified goods

29.

271

Polytetrametylene ether glycol, (PT MEG) for use in manufacture of spandex yarn

30.

276

Ethylene- propylene- non-conjugated diene rubber (EPDM) for manufacture of insulated wire and cables

31.

279

New or retreated Pneumatic tyres of rubber for use in servicing, repair of maintenance of aircrafts used for operating scheduled air transport service or scheduled air cargo service etc

32.

280

New or retreated Pneumatic tyres of rubber for use in servicing, repair or maintenance of aircraft imported or procured by Aero Club of India/ for flying training purpose/ operating non-scheduled (passenger or charter) services/ AAI for flight calibration purpose

33.

290

Wood pulp for manufacture of newsprint, paper or paperboard

34.

292

Goods imported for manufacture of paper, paper boards, newsprint

35.

293A

Newsprint and uncoated paper imported for printing of newsprint

36.

296A

Lightweight coated paper imported by actual users for printing of magazines

37.

326

Hydrophilic /Hydrophobic Non- Woven, imported for use in the manufacture of Adult Diapers

38.

329

Pile fabrics for the manufacture of toys

39.

333

Moulds, tools and dies, for the manufacture of parts of electronic components or electronic equipment

40.

334

(i) Graphite Felt or Graphite pack for growing silicon ingots (ii) Thin Steel wire used in wire saw for slicing of silicon wafers

41.

345A

Simply Sawn Diamonds

42.

364A

Spent catalyst or ash containing precious metals

43.

368

Ferrous Scrap

44.

374

Magnesium Oxide (MgO) coated cold rolled steel coils for use in manufacture of cold rolled grain oriented (CRGO) steel

45.

375

Specified items for manufacture of cold rolled grain-oriented steel (CRGO) steel

46.

378

Metal parts for manufacture of electrical insulators falling under heading 8546

47.

379

Pipes and tubes for use in manufacture of boilers

48.

380

Forged steel rings for manufacture of special bearings for use in wind operated electricity generators

49.

381

Flat copper wire for use in the manufacture of photo voltaic ribbon for manufacture of solar photovoltaic cell or modules

50.

392

Dies for drawing metal, where imported after repairs from abroad

51.

403

Parts and raw materials for offshore oil exploration

52.

404

Specified items including capital goods and raw materials for off shore oil exploration

53.

415

Parts for manufacture of catalytic convertors

54.

415A

Platinum or Palladium for manufacture of Noble Metal Compounds & Noble Metal Solutions

55.

416

Ceria zirconia compounds for use in the manufacture of washcoat for catalytic converters

56.

417

Cerium compounds for use in the manufacture of washcoat for catalytic converters

57.

418

Zeolite for use in the manufacture of washcoat for catalytic converters

58.

422

Machinery, electrical equipment for use in semiconductor wafer and LCD

59.

423

Machinery, electrical equipment for use in marking and packaging of semiconductor chips

60.

426

Specified goods for the manufacture of semiconductor devices, memory card, IC, solar cell

61.

435

Capital goods for printing industry

62.

442

Bushings made of Platinum and Rhodium alloy when imported in exchange of worn out or damaged bushings exported out of India

63.

446

Parts and components for manufacture of tunnel boring machines

64.

451

Evacuated tubes with three layers of solar selective coating for use in manufacture of solar water heater

65.

462

Ball screws for use in the manufacture of CNC Lathes

66.

463

Linear Motion Guides for use in the manufacture of CNC Lathes

67.

464

CNC Systems for use in the manufacture of CNC Lathes

68.

464A

Goods for manufacture of plastic processing machineries

69.

467

Parts and components of cash dispenser or automatic bank note dispenser

70.

468

Parts for manufacture of Micro ATM, Fingerprint reader/scanner, Iris scanner, Miniaturised POS (Scope of exemption is being limited to import of raw materials only)

71.

471

All parts for use in the manufacture of LED lights

72.

472

All inputs for use in the manufacture of LED driver or MCPCB for LED lights

73.

476

Television equipment, cameras etc for taking films, imported by a foreign film unit or television team

74.

477

Filming equipment of foreign origin if imported into India after having been exported therefrom.

75.

480

Goods imported for being tested in specified test centers

76.

489B

Goods for manufacturing of Microphones

77.

504

Parts and Components of Digital Still Image Video Cameras

78.

509

Parts, components and accessories for manufacture of Digital Video Recorder

79.

510

 Parts, components and accessories for use in manufacture of reception apparatus for television

80.

511

Parts, components and accessories for manufacture of CCTV Camera

81.

512

Specified Parts, components and for use in manufacture of Lithium-ion battery and battery pack

82.

512A

Inputs, parts or sub-parts for use in the manufacturing of Printed Circuit Board Assembly

83.

515A

Open Cell for manufacture of TV Panel

84.

516

The following goods for use in the manufacture of Liquid Crystal Display (LCD) /LED TV Panel

85.

517

Magnetrons for manufacture of domestic microwave ovens

86.

519

Raw materials or parts for use in manufacture of e-Readers

87.

523A

Parts, sub-parts, inputs or raw material for use in manufacture of Lithium-ion cells

88.

527

Lithium-ion cell use in manufacture of battery or battery pack

89.

527A

Lithium-Ion Cell for use in manufacture of battery or battery pack of cellular mobile

90.

527B

Lithium-Ion Cell manufacture of battery or battery pack of EV

91.

534

Parts of gliders or simulators of aircrafts (excluding rubber tyres and tubes of gliders)

92.

535

Raw materials for manufacture of aircraft and parts of aircraft

93.

535A

Parts of aircraft for manufacture of aircraft or for manufacture of parts of aircraft by PSU under Min of Defence

94.

536

Parts, testing equipment, tools and tool-kits for maintenance, repair, and overhauling of aircraft, components or parts of aircrafts

95.

537

All goods of Heading 8802 (except 88026000-spacecraft)

96.

538

Components or parts, including engines, of aircraft of heading 8802

97.

539

(a) Satellites and payloads; (b) Ground equipment brought for testing of (a)

98.

539A

Scientific and technical instruments etc for launch vehicles and satellites

99.

540

Specified goods imported by scheduled air transporter

100.

542

Specified goods imported by Aero Club, Flying Training Institutes

101.

543

Specified goods imported by non-scheduled air transporter

102.

544

Parts (other than rubber tubes), of aircraft of heading 8802

103.

546

Parts (other than rubber tubes), of aircraft of heading 8802

104.

548

Barges or pontoons imported along with ships

105.

551

Cruise ships, Excursion ships

106.

553

Fishing vessels, Tugs and Pusher crafts, light vessels excluding vessels and floating structure imported for break up

107.

555

Vessels like warships, lifeboats excluding vessels and floating structure imported for break up

108.

567

Stainless steel tube and wire, for manufacture of Coronary stents /artificial valve

109.

569

Parts required for manufacture of Ostomy products

110.

570

Medical and surgical instruments, apparatus and appliances including spare parts and accessories thereof

111.

575

Specified Hospital Equipment for use in specified hospitals

112.

578A

Raw materials, for the manufacture of Cochlear Implants

113.

580

X-Ray Baggage Inspection Systems and parts thereof

114.

581

Portable X-ray machine / system

115.

583

Parts and cases of braille watches, for the manufacture of Braille watches

116.

591

Parts of electronic toys

117.

593

Parts of video games for the manufacture of video games

Note: Description of entries is indicative. Notification may be referred to for complete description.

(ii) The BCD exemption for the goods covered under following serial numbers of the notification no 50/2017-Customs is being extended upto 31st March 2029.

S. No.

S. No. of 50/2017Cus

Brief Description

1.

212A

Medicines/drugs/vaccines supplied free by United  Nations International Children's Emergency Fund (UNICEF), Red Cross etc

2.

213

Drugs and materials

3.

428

Specified goods imported by accredited press cameraman

4.

429

Specified goods, imported by accredited journalist

5.

549

Capital goods, raw materials and spares for repairs of ocean-going vessels

6.

550

Spare parts and consumables for repairs of ocean going vessels registered in India.

7.

577

Lifesaving medical equipment for personal use

8.

607

Life Saving drugs like Keytruda etc

9.

607A

Lifesaving drugs/medicines for personal use

10.

611

Archaeological artefacts for exhibition in a museum

11.

612

Specified raw material for sports goods

Note: Description of entries is indicative. Notification may be referred to for complete description.


Full Text:

Union Budget 2024-25 (Full) + FINANCE (No.2) Bill, 2024

Topics

Acts Income Tax