Indirect Tax in India – II

By | January 3, 2017

44717458-indirect-tax-red-stamp-text-on-whiteThe table below summarizes the changes in Customs, Central Excise and Service Tax rate structures and law and procedures.

Sl. No.ChangesExistingProposed
IPromoting Agriculture and food processing
 1.Krishi Kalyan Cess proposed to be levied on all taxable services to finance and promote initiatives to improve agriculture, w.e.f. 01-06-16.0.5% provided by National Centre for Cold Chain development under department of  agriculture, cooperation and farmers’ welfare, GOI, by way of knowledge dissemination, being exempted from service tax, w.e.f. 01-04-2016.14%
 3.Excise duty on electric motor, shafts, sleeve, chamber, impeller, washer required for the manufacture of  centrifugal pump being reduced. More than 50% of such pumps are used in agriculture.12.5%6%
 4.Concessional 5% basic custom duty as presently available under project imports for cold storage, cold room (including for farm level pre-cooling) being extended for ‘cold chain including pre-cooling unit, pack houses, sorting and grading lines and ripening chambers, also.10%5%
 5.BCD on refrigerated containers being reduced.10%5%
 6.Excise duty on refrigerated containers being reduced.12.5%6%
 7.Excise duty on micronutrients being reduced.12.5%6%
 8.Excise duty on physical mixture of fertilizers, made out of chemical fertilizers on which duty of excise has been paid, by cooperative societies, holding certificate of manufacture for mixture of fertilizers under the Fertilizer Control Order 1985, for supply to the members of such cooperative societies, being exempted.1% w/o ITC or 6% with ITC
IIBroadening of Tax Base
1.Exemption on services provided by-

(i) a senior advocate to an advocate or partnership firm of advocates providing legal service; and

(ii) a person represented on an arbitral tribunal to an arbitral tribunal,

being withdrawn and service tax being levied under forward charge, w.e.f. 01-04-16.

2.Exemption to construction, erection, commissioning or installation of original works pertaining to monorail or metro, in respect of contracts entered into on or after 01.03.16 being withdrawn, w.e.f.
3.Exemption to the services of transport of passengers, by rope way, cable car or aerial tramway bring withdrawn, w.e.f.
4.Negative list entry that covers ‘service of transportation of passengers, with or w/o accompanied belongings, by a stage carriage’ being omitted and tax proposed  to be levied on service of transportation of passengers by air conditioned stage carriage, at the abatement of 60% w/o input tax credit, w.e.f.
5.Abatement on shifting of used household goods by a goods transport agency is being rationalized @ 60%, w/o input tax credit, w.e.f.
 IIIMeasures to boost construction sector and promote affordable housing
1.Service Tax on services in respect of-

(i) construction services under Housing for all (HFA)(urban)mission/ PM Awas Yojana (PMAY)

(ii) construction projects under ‘affordable housing in partnership’ component of PMAY, subject to carpet area of dwelling units of such projects not exceeding 60 sq.mtrs.

(iii) low cost houses up to a carpet area of 60 sq.mtrs. per house in a housing scheme of the state govt.

being exempted, w.e.f. 01.03.16.

2.Excise duty exemption, presently available to concrete mix manufactured at site for use in construction work at such site being extended to ready mix concrete manufactured at site of construction for use in construction work at such site.12.5%
IVPromoting social security and moving towards a pensioned society
1.Service tax on service of life insurance business provided by way of annuity under the national pension system regulated by pension fund regulatory and development authority (PFRDA) being exempted, w.e.f.
2.Service tax on services provided by employees’ provident fund organiation (EPFO) to employees, being exempted, w.e.f.
3.Composition rate of service tax on single premium annuity (insurance) policies being reduced from 3.5% to 1.4% of the premium charged, w.e.f.
4.Service tax on the services of general insurance business provided under ‘Niramaya’ health insurance scheme launched by national trust for the welfare of persons with multiple disability being exempted, w.e.f.
VFinancial, Banking & Insurance Sector
1.The services provided by mutual fund agent/ distributor to a mutual fund or asset management company being taxed under forward charge, w.e.f.
2.Service tax on the regulatory services provided by securities and exchange board of India and insurance regulatory development authority being exempted, w.e.f.
3.Service tax on services provided by insurance regulatory and development authority of India (IRDA), being exempted, w.e.f.

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