CORPORATE TAXATION

Table of content

1.0       INTRODUCTION

2.0       CORPORATE INCOME TAX

3.0       MINIMUM ALTERNATE TAX (MAT)

4.0       SECURITIES TRANSACTION TAX (STT)

5.0       CUSTOMS DUTY

6.0       CENTRAL EXCISE DUTY

7.0       SERVICE TAX

Introduction

A Company, whether Indian or foreign, is liable to taxes in India if it is resident in India. A corporation is resident if it is incorporated in India or wholly managed and controlled in India. Residents are taxed on all their income whether earned in India or outside India. Foreign income derived by a resident company is subject to corporation tax in the same way as Indian income. A branch of a foreign corporation is taxed as a foreign corporation.

There are various direct and indirect taxes and duties applicable to a company which will vary from situation to situation, like – Income Tax, Minimum Alternate Tax, Dividend Distribution tax, Securities Transaction Tax, Wealth Tax, Customs duty, Central Excise, Service Tax, Value Added Tax (VAT) etc. These taxes and duties chargeable to Indian Companies are governed by various legislations like – Income-tax Act 1961, Annual Finance Acts; Finance Act, 1994; Customs Act 1962; Central Excise Act 1944; State VAT and Central Sales Tax laws etc.

In India, the tax year is the fiscal year i.e from 1st April to 31st March and Companies are required to submit a final return of tax by 30 September (30 November for companies required to file a certificate on international transactions) of the assessment year, stating income, expenses, taxes paid and taxes due for the preceding tax year. Other than that, Advance Tax has to be paid by the companies during the year on 15 June (15% of total tax payable), 15 September (45% of total tax payable), 15 December (75% of total tax payable) and 15 March (100% of total tax payable).

Rates of Income Tax:

The Income Tax rate is 29% for domestic companies if Turnover/Gross Receipts is upto 5 Crore otherwise rate is 30% and 40% for foreign companies and branches of foreign companies. A Surcharge @ 7% also applies to domestic companies and @ 2% applies for foreign companies if taxable income exceeds Rs.1 Crore but limits upto 10 Crore and if taxable income exceeds Rs. 10 Crore surcharge applies @12% in case of domestic company and 7% in case of foreign company. An additional cess of 3% on income tax (inclusive of surcharge, if any) is payable towards Education and Secondary and Higher Education cess.

Surcharge at 12% is payable on additional taxes levied on distribution of profits by domestic companies / mutual funds / securitization trusts and on buybacks.

Important Changes in the Customs Act, 1962 and other related legislations and regulations vide Budget 2016-2017:

Section

Current Provision

Proposed Provision

Accelerated Depreciation

100%

40%

Expenditure on approved scientific research association with scientific research objective and certain specified institutions – Section 35(1)(ii)

175%

 

 

 

150 per cent from 1 April 2017 to 31 March 2020 and 100 per cent from1 April 2020 onwards

Expenditure on contribution to approved scientific research company-Section 35(1)(iia)

125%

100 per cent from 1 April 2017 onwards

Expenditure on Contribution to an approved research association, university, college, other institution to be used for research in social science or statistical research – Section 35(1)(iii)

125%

 

100 per cent from 1 April 2017 onwards

Payment to a National Laboratory or

a university or an Indian Institute of

Technology or a specified person for

the purpose of an approved scientific

research programme- Section 35(2AA)

200%

150 per cent from 1 April 2017 to 31 March 2020 and 100 per cent from 1 April 2020 onwards

 

Expenditure (other than the cost of any

land or building) on scientific research

in approved in-house research and

development facility incurred by the

company engaged in the business

of biotechnology or manufacture or

production of any article or thing except

specified items – Section 35(2AB).

200%

150 per cent from 1 April 2017 to 31 March 2020 and 100 percent from 1 April 2020 onwards

 

Expenditure on a cold chain facility, warehousing facility for storage of agricultural produce, hospital,affordable housing project and production of fertilizer- Section 35AD

150%

100 per cent from 1 April 2017

Expenditure on notified agricultural

extension project – Section 35CCC

150%

100 per cent from 1 April 2017

 

 

This amendment is applicable retrospectively from 01.04.2016 (Assessment Year 2016-17)

  1. The foreign company is resident of country or specified territory with which India has entered into an agreement/ adopted an agreement u/s 90(1)/ 90A(1) and the assesee does not have a permanent establishment in India, or
  2. Companies which are tax residents of those countries or territories with whom India has not entered into any agreement and such companies are not required to seek registration under any law for the time being in force

This amendment is applicable retrospectively from 01.04.2001

This amendment is applicable from 01.04.2017 (Assessment Year 2017-18)

Non-banking financial companies (NBFC) engaged in financial lending to different sector of societies are now also  eligible for deduction to the extent of 5% of its total income on account of  provision for bad and doubtful Debts under Section 36(i)(viia). This amendment is applicable from 01.04.2017(Assessment Year 2017-18

An additional condition for tax neutral conversion of a company into Limited Liability Partnership (LLP)  has been imposed where the  book  value of the total assets should not exceed five crore rupees in any of the three preceding years. This amendment is applicable from 01.04.2017(Assessment Year 2017-18)

A MAT is levied @ 18.5% on the adjusted book profit on those companies whose income tax payable on the taxable income computed according to the normal provisions of the Income tax Act 1961, is less than 18.5% of the book profits.
The MAT credit may be carried forward for offset against income tax payable in the following 10 years.

In case of MAT also, Surcharge as applicable as per the status of the company whether Domestic or Foreign as the case may be and Education cess (2%) and Secondary and Higher Education cess (1%) will be applicable.

STT will be levied on the value of taxable securities transactions as under:

Transactions  

Rates

Payable by

Purchase/Sale of equity shares (delivery based)

0.1%

Purchaser/Seller

Purchase of units of equity-oriented mutual fund (delivery based)

NIL

Purchaser

Sale of units of equity-oriented mutual fund (delivery based)

0.001%

Seller

Sale of equity shares, units of equity-oriented mutual fund (non-delivery based)

0.025

Seller

Sale of an option in securities

0.05%

Seller

Sale of an option in securities, where option is exercised

0.125%

Purchaser

Sale of a futures in securities

0.01%

Seller

Sale of unit of equity oriented fund to the Mutual Fund

0.001%

Seller

The Customs Act, 1962 is the basic Statute, which empowers the Government to lay down duties to be levied on goods imported into or exported from India. The categories of items and the rates of duties which are to be levied have been incorporated in two schedules to the Customs Tariff Act, 1975.

The first Schedule to the said Act specifies the various categories of import items, in accordance with the ‘harmonized system of commodity classification’ – an international scheme of classification of internationally traded goods. Different rates of duties are prescribed by the legislature on different commodities/group of commodities mentioned in the first Schedule. The duties are levied both on specific and ad-valorem basis, while there are few cases where at times specific-cum-ad valorem duties are also collected on imported items.

The Second Schedule to the Customs Tariff Act, 1975 incorporates items subject to exports duties and rates thereof.

Important Changes in the Customs Act, 1962 and other related legislations and regulations vide Budget 2016-2017:

  1. section 2 Subsection (43) defining meaning of “warehouse” has being amended so as to add a new class of warehouses for enabling storage of specific goods under physical control of the department and omitted Section 2 (45) defining ‘warehousing station’ and CBEC power to declaring warehousing station u/s 9 of Custom Act.
  2. Section 47 and 51 has been amended so as to empower the Central Government to permit certain class of importers specified by notification to make deferred payment of duty or other charges.
  3. Section 156 has been amended so as to increase the period of limitation from one year to two years in cases not involving fraud, suppression of facts, wilful misstatement etc.
  4. Section 53 of the Customs Act is amended to enable the proper officer to allow transit of certain goods and conveyance without payment of duty, subject to the conditions specified by the Board by regulations.
  5. New section 58A is inserted to provide for a new class of warehouses which require continued physical control and will be licensed for storing goods, as may be specified.
  6. Section 58B is inserted so as to regulate the process of cancellation of licences which is a necessary concomitant of licensing.
  7. Warehousing bond amount to be at thrice the duty involved in terms of Sec 59 of Customs Act.
  8. Owner of Warehouse is not required to pay any rent or warehouse charges in respect of Sec 63 of Customs Act.
  9. No payment of fees to be paid by warehousing owners for supervision of manufacturing facilities under Bond in respect of Sec 65 of Customs Act.
  10. New Sec 73A is inserted so as to provide for custody of warehoused goods and responsibilities including the liabilities of warehouse keepers.
  1. The existing Baggage Rules, 1998 are being substituted with the Baggage Rules, 2016, so as to simplify and rationalize multiple slabs of duty free allowance for various categories of passengers. The new Rules are effective from 01.04.2016.
  2. The Customs Baggage Declaration Regulations, 2013 is amended so as to prescribe filing of Customs declaration only for those passengers who carry dutiable or prohibited goods.
  3. Increase in free baggage allowance for international passengers. Filing of baggage only for those carrying dutiable goods.
  1. The existing Customs (Import of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 1996 are substituted with the Customs (Import of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 2016 with a view to simplify the rules, including allowing duty exemptions to importer/manufacturer based on self-declaration instead of obtaining permissions from the Central Excise authorities. Need for additional registration is also being done away with. The new Rules will be effective from 01.04.2016.
  2. There have been amendments in the rates of BCD (Basic Customs Duty) / CVD (Additional Duty of Customs) / SAD (Special Additional Duty) / Excise Duty in certain important goods.

Changes in basic custom duty (BCD) rates and effective rates of duty:

 

Amendment affecting rates of duty

Items

Description

Current Rate

Proposed Rate

Articles of rubber

Natural latex rubber made balloons falling under specified headings

10%

20%

Metals

Primary aluminium

5%

7.5%

Zinc alloys

5%

7.5%

Jewellery

Imitation jewellery

10%

15%

Renewable Energy

Industrial solar water heater

7.5%

10%

Capital goods and parts thereof

Increase the tariff rate of BCD for 211 specified tariff lines in Chapters 84, 85 and 90

7.5%

10%

a)    The effective rates for 96 specified tariff lines

7.5%

10%

b)    The effective rate for 115 tariff lines will be maintained

7.5%

7.5%

Items

Ores and concentrates :
  1.  

 

Nil rate of duty respectively on Iron ore fines with Fe content below 58%, Iron ore lumps with Fe content below 58% and Chromium ores and concentrates.
  1.  

Decrease in rate of Bauxite (natural), not calcined or calcined from 20% to 15%.

Food Processing :

      1.

5% rate respectively on Cashew nuts in shell, Cold chain including pre-cooling unit, pack houses, sorting and grading lines and ripening chambers and  Refrigerated containers

Other Items

Current Rate

Proposed Rate

Mineral fuels and Mineral oils :

Coal; briquettes, ovoids and similar solid fuels manufactured from coal

2.5% / 10%

2.5%

Lignit, excluding jet and  Peat (including peat litter)

10%

2.5%

Coke and semi-coke of coal, of lignite or of peat

5% / 10%

5%

Coal gas, water gas, producer gas and similar gases, other than petroleum gases and  Tar distilled from coal, from lignite or from peat and other mineral tars 

10%

5%

Oils and other products of the distillation of high temperature coal tar

2.5% / 5% /10%

2.5%

Pitch and pitch coke, obtained from coal tar or from other mineral tars

5% / 10%

5%

 

Chemicals & Petrochemicals :                                    

All acyclic hydrocarbons and all cyclic hydrocarbons [other than  para-xylene which attracts Nil BCD and styrene which attracts 2% BCD]

5% / 2.5%

2.5%

Denatured ethyl alcohol (Ethanol) subject to actual user condition

5%

2.5%

Orthoxylene for the manufacture of phthalic anhydride subject to actual user condition

SAD – 4%

SAD – 2%

Electrolysers, membranes and their parts required by caustic soda / potash unit using membrane cell technology

2.5%

Nil

Paper, Paperboard and newsprint :

Wood in chips or particles for manufacture of paper, paperboard and news print

5%

Nil

Plans, drawings and designs

Nil

10%

 Textiles :

Specified fibres and yarns

5%

2.5%

Specified fabrics of value equivalent to 1% of FOB value of exports in the preceding financial year subject to the specified conditions.

 

Applicable BCD

Nil

Electronics / Hardware :

Polypropylene granules / resins for manufacture of capacitor grade plastic films

7.5%

Nil

E-Readers

Nil

7.5%

Parts of E-readers

Applicable BCD

5%

Magnetron of capacity of 1 KW to 1.5 KW for use in manufacture of domestic microwave ovens.

10%

Nil

Machinery, electrical equipment and instrument and parts thereof (except populated PCBs) for semiconductor wafer fabrication / LCD fabrication unitsimported for Assembly, Test, Marking and Packaging of semiconductor chips (ATMP

Applicable BCD SAD

Nil BCD

Nil SAD

The exemption from basic customs duty, CV duty, SAD on charger / adapter, battery and wired headsets / speakers for manufacture of mobile phone being withdrawn

BCD-Nil

CVD – Nil

SAD – Nil

Applicable BCD

CVD – 12.5%

SAD – 4%

To exclude specified telecommunication equipment from the purview of the other exemption.

Nil BCD

10%

Preform of silica for manufacture of telecom grade optical fibre /cables

Nil

10%

Neodymium Magnet (before Magnetization) and Magnet Resin for manufacture of BLDC  motors

Applicable BCD

2.5%

Populated PCBs for manufacture of personal computers (laptop or desktop)

Nil SAD

4% SAD

Populated PCBs for manufacture of mobile phone/tablet computer

Nil SAD

2% SAD

 

 

Metals, glass and ceramics :

Silica sand &  Brass scrap

5%

2.5%

Other aluminium products

7.5%

10%

Jewellery :

Gold dore bars.

8% CVD

8.75% CVD

Silver dore.

7% CVD

7.75% CVD

Automobiles :

Golf cars

10%

60%

Specified parts of electric and hybrid vehicles

BCD-Nil

CVD – 6%

Upto

31.03.2016

BCD-Nil

CVD – 6%

Without time

limit

Aluminium Oxide for use in the manufacture of Wash Coat, which is used in the manufacture of catalytic converters, subject to actual user condition

7.5%

5%

Engine for xEV (hybrid electric vehicle)

Applicable BCD and CVD

Nil BCD

 6% CVD

  Capital Goods :

Specified machinery required for construction of roads

 

CVD – Nil

CVD – 12.5%

  Miscellaneous :

Braille paper

10%

Nil

Solar tempered glass / solar tempered (anti-reflective coated) glass, subject to actual user condition

Nil

5%

Medical Use Fission Molybdenum-99 imported by Board of Radiation and Isotope Technology (BRIT) for manufacture of radio pharmaceuticals

7.5%

Nil

Pulp of wood for manufacture of sanitary pads, napkins & tampons

5%

2.5%

Super Absorbent Polymer when used for the manufacture of sanitary pads, napkins & tampons

7.5%

5%

 Applicable rate of BCD, CVD & SAD is reduced to Nil in case of following goods :

Excise duty is a tax on manufacture or production of goods. Excise duty on alcohol, alcoholic preparations, narcotic substances and certain hazardous substances is collected by the State Government and is called “State Excise” duty. The Excise duty on rest of goods is called “Central Excise” duty and is collected in terms of Section 3 of the Central Excise Act, 1944. Sales Tax is different from Excise Duty as it is a tax on the act of sale while Excise Duty is a tax on the act of manufacture or production of goods.

There has been no change in the general Excise Duty rate, which is at present 12%.

 

Important Changes in the Central Excise Act 1944:

 

Food Processing Sector

Category

Current Rate

Proposed Rate

Refrigerated containers

12.5%

6%

Fertilizers

Category

Current Rate

Proposed Rate

Micronutrients (Sr. No. 1(f) of Schedule 1 Paert (A) of the Fertlizer Control Order, 1985)

12.5%

6%

Physical Mixture of Fertilizers, manufactured by & to be supplied to members of Co-operative Societies  holding certificate to manufacture it under Fertilizer Control Order, 1985, made with excise duty-paid chemical fertilizers for which no cenvat credit has been availed

1% (Without CENVAT Credit)

6% (With CENVAT Credit)

NIL

 

Textiles

Category

Current Rate

Proposed Rate

Readymade Garments & Articles (Made up of Textiles)                                   

30% of Retail Sale Price

60% of Retail Sale Price

Branded Readymade Garments & Articles (Made up of Textiles) having a Retail Sale Price ≥ Rs. 1000

NIL (Without CENVAT credit)

6% / 12.5% (With CENVAT Credit)

2% (Without CENVAT credit)

12.5% (With CENVAT Credit)

PSF (Polyester Staple Fibre)/PFY (Polyester Filament Yarn)

2% (Without CENVAT Credit)

6% (With CENVAT Credit)

2% (Without CENVAT Credit)

12.5% (With CENVAT Credit)

Electronics/ IT Hardware

Category

Current Rate

Proposed Rate

Charger / adapter, battery and wired headsets / speakers for supply to mobile phone manufacturers as original equipment manufacturer

NIL

2% (Without CENVAT Credit)

12.5% (With CENVAT Credit)

Inputs, parts and components, subparts for manufacture of charger / adapter, battery and wired headsets / speakers of mobile phone, subject to actual user condition

12.5% / Nil

NIL

Routers, broadband Modems, Set-top boxes for gaining access to internet, set top boxes for TV, digital video recorder (DVR) / network video recorder (NVR), CCTV camera / IP camera, lithium ion battery [other than those for mobile handsets]

12.5%

4% (Without CENVAT Credit)

12.5% (With CENVAT Credit)

Parts and components, subparts for manufacture of Routers, broadband Modems, Set-top boxes for gaining access to internet, set top boxes for TV, digital video recorder (DVR) / network video recorder (NVR), CCTV camera / IP camera, lithium ion battery [other than those for mobile handsets]

12.5%

NIL

Food Processing Sector

Category

Current Rate

Proposed Rate

Refrigerated containers

12.5%

6%

Fertilizers

Category

Current Rate

Proposed Rate

Micronutrients (Sr. No. 1(f) of Schedule 1 Paert (A) of the Fertlizer Control Order, 1985)

12.5%

6%

Physical Mixture of Fertilizers, manufactured by & to be supplied to members of Co-operative Societies  holding certificate to manufacture it under Fertilizer Control Order, 1985, made with excise duty-paid chemical fertilizers for which no cenvat credit has been availed

1% (Without CENVAT Credit)

6% (With CENVAT Credit)

NIL

 

Textiles

Category

Current Rate

Proposed Rate

Readymade Garments & Articles (Made up of Textiles)                                   

30% of Retail Sale Price

60% of Retail Sale Price

Branded Readymade Garments & Articles (Made up of Textiles) having a Retail Sale Price ≥ Rs. 1000

NIL (Without CENVAT credit)

6% / 12.5% (With CENVAT Credit)

2% (Without CENVAT credit)

12.5% (With CENVAT Credit)

PSF (Polyester Staple Fibre)/PFY (Polyester Filament Yarn)

2% (Without CENVAT Credit)

6% (With CENVAT Credit)

2% (Without CENVAT Credit)

12.5% (With CENVAT Credit)

Electronics/ IT Hardware

Category

Current Rate

Proposed Rate

Charger / adapter, battery and wired headsets / speakers for supply to mobile phone manufacturers as original equipment manufacturer

NIL

2% (Without CENVAT Credit)

12.5% (With CENVAT Credit)

Inputs, parts and components, subparts for manufacture of charger / adapter, battery and wired headsets / speakers of mobile phone, subject to actual user condition

12.5% / Nil

NIL

Routers, broadband Modems, Set-top boxes for gaining access to internet, set top boxes for TV, digital video recorder (DVR) / network video recorder (NVR), CCTV camera / IP camera, lithium ion battery [other than those for mobile handsets]

12.5%

4% (Without CENVAT Credit)

12.5% (With CENVAT Credit)

Parts and components, subparts for manufacture of Routers, broadband Modems, Set-top boxes for gaining access to internet, set top boxes for TV, digital video recorder (DVR) / network video recorder (NVR), CCTV camera / IP camera, lithium ion battery [other than those for mobile handsets]

12.5%

NIL

Machinery

Category

Current Rate

Proposed Rate

Electric motor, shafts, sleeve, chamber, impeller, washer required for the manufacture of centrifugal pump

12.5%

6%

Automobiles

Category

Current Rate

Proposed Rate

Specified parts of Electric Vehicles and Hybrid Vehicles

6% Upto 31.03.2016

6% Without Time Limit

Engine for xEV (hybrid electric vehicle)

12.5%

6%

Category

Current Rate

Proposed Rate

Specified parts of Electric Vehicles and Hybrid Vehicles

6% Upto 31.03.2016

6% Without Time Limit

Engine for xEV (hybrid electric vehicle)

12.5%

6%

 

Renewable Energy

Category

Current Rate

Proposed Rate

Unsaturated Polyester Resin (polyester based infusion resin and hand layup resin), Hardeners/Hardener for adhesive resin, Vinyl Easter Adhesive (VEA) and Epoxy Resin used for manufacture of rotor blades and intermediates, parts and sub parts of rotor blades for wind operated electricity generators

NIL

6%

Carbon pultrusion used for manufacture of rotor blades and intermediates, parts and sub-parts of rotor blades for wind operated electricity generators

12.5%

6%

Solar lamp

12.5%

NIL

“A valid agreement between importer / producer of power with urban local body for processing of municipal solid waste for not less than ten years from the date of commissioning of project” has been prescribed as an alternative to the condition of “production of valid power purchase agreement between the importer/producer of power and the purchaser, for the sale and purchase of electricity generated using non-conventional materials” for availing concessional customs/excise duty benefits in case of power generation project based on municipal and urban waste.

Civil Aviation

Category

Current Rate

Proposed Rate

Aviation Turbine Fuel [ATF] other than for supply to Scheduled Commuter Airlines (SCA) from the Regional Connectivity Scheme airports

8%

14%

Precious metals & Jewellery

Category

Current Rate

Proposed Rate

Refined gold bars manufactured from gold dore bar, silver dore bar, gold ore or concentrate, silver ore or concentrate, copper ore or concentrate; Gold Bars & Coins (Pirurity≥99.5%) produced during copper smelting (Existing Area-Based exemptions on refined gold withdrawn)

                                     

9%

9.5%

Refined silver manufactured from silver ore or concentrate, silver dore bar, or gold dore bar; Silver in any form including Silver Coins (Purity≥99.9%) produced during copper smelting or zinc or lead smelting (Existing Area-Based exemptions on refined silver withdrawn)

 

8%

8.5%

Articles of Jewellery [excluding silver jewellery, other than studded with diamonds or other precious stones namely, ruby, emerald and sapphire] with a higher SSI threshold exemption upto Rs. 6 crore in a year and eligibility limit of Rs.12 crore, along with simplified compliance procedure. 

For the month of March, 2016, the SSI exemption for such articles of jewellery is being restricted to Rs. 50 lakh.                                                               

NIL

1% (Without CENVAT Credit)

12.5% (With CENVAT Credit)

Optional centralized Registration now allowed to manufacturers of above Articles of Jewellery.
         

 

Maintenance, repair and overhaul [MRO] of aircrafts

Category

Current Rate

Proposed Rate

Tools and tool kits when procured by MROs for maintenance, repair, and overhauling [MRO] of aircraft subject to a certification by the Directorate General of Civil Aviation

Applicable excise duty

NIL

Procedure for availing exemption from excise duty on parts, testing equipment, tools and tool-kits for maintenance, repair and overhaul of aircraft based on records has been simplified

The restriction of one year for utilization of duty free parts for maintenance, repair and overhaul of aircraft Has been removed.

Metals

Category

Current Rate

Proposed Rate

Disposable Containers made of Aluminium foils

2% (Without CENVAT Credit)

6% (With CENVAT Credit)

2% (Without CENVAT Credit)

12.5% (With CENVAT Credit)

Aerated Beverages

Category

Current Rate

Proposed Rate

Waters, including mineral waters and aerated waters, containing added sugar or other sweetening matter or flavoured.

18%

21%

Tobacco & Tobacco Products

Category

Current Rate

Proposed Rate

Cigar and cheroots,  Cigarillos,  Cigarillos and other products of tobacco substitutes.

12.5% or Rs.3375 per thousand, whichever is higher

12.5% or Rs.3755 per thousand, whichever is higher

Cigarettes of tobacco substitutes

 

Rs.3375 per thousand

Rs.3755 per thousand

Gutkha, chewing tobacco (including filter khaini) and jarda scented tobacco

70%

81%

Unmanufactured tobacco

55%

64%

Paper rolled biris [whether handmade or machine made] and other biris [other than handmade biris]

However, the effective rate of basic excise duty of Rs.21 per thousand shall remain unchanged.

Rs.30 per thousand

Rs.80 per thousand

 

Miscellaneous

Category

Current Rate

Proposed Rate

Sacks and bags of all plastics

12.5% / 15%

15%

Improved cook stoves including smokeless chulhas for burning wood, agro-waste, cow-dung, briquettes, and coal have been unconditionally exempted.

Disposable sterilized dialyzer and micro barrier of artificial kidney

12.5%

NIL

Ready Mix Concrete manufactured at the site of construction for use in construction work at such site

2% (Without CENVAT Credit)

6% (With CENVAT Credit)

NIL

Parts of railway or tramway locomotives or rolling stock and railway or tramway track fixtures and fittings, railway safety or traffic control equipment, etc

12.5%

6%

Remnant kerosene, presently available for manufacture of Linear alkyl Benzene [LAB] and heavy alkylate [HA] to N-paraffin. At present, exemption is restricted to manufacturers of LAB and HA.

14%

NIL

Clean Energy Cess / Clean Environment Cess on coal, lignite or peat produced or extracted as per traditional and customary rights enjoyed by local tribals without any license or lease in the State of Nagaland

Rs. 200 per tonne

NIL

Retail Sale Price (RSP) based assessment of Excise Duty extended to the following categories :

With Abatement rate of 30%

·       All goods mentioned under heading 3401 & 3402 like soaps & washing agents, etc.

·       Aluminium foils of a thickness not exceeding 0.2mm

With Abatement rate of 25%

·       Wrist wearable devices (commonly known as smart watches)

With Abatement rate of 35%

·       Accessories of motor vehicles and certain other specified goods

With Abatement rate of 30%

Cheif Commisioners of Central Excise to file application to Courts to withdraw prosecution in cases involving duty < 5 lakh & pending for > 15 years

OTHER CHANGES

  1. Rate @ 1% on Petrol/LPG/CNG driven motor vehicles of length upto 4m & engine capacity upto 1200cc
  2. Rate @ 2.5% on Diesel driven motor vehicles of length upto 4m & engine capacity upto 1500cc
  3. Rate @ 4% on Other higher engine capacity vehicles & SUVs and bigger sedans.

Three wheeled vehicles,  electrically operated vehicles, Hybrid vehicles, Hydrogen vehicles based on fuel cell technology, Motor vehicles which after clearance have been registered for use solely as taxi, Cars for physically handicapped persons and Motor vehicles cleared as ambulances or registered for use solely as ambulance will be exempt from this Cess. No credit of this Cess will be available, and credit of no other duty can be utilized for payment of this Infrastructure Cess. The cess will attract the same provisions as applicable to any duty under the Central Excise Act, 1944.

 

Old Rule

Revised Rule

Purpose

Baggage Rules, 1998

Baggage Rules, 2016

Simplifying and rationalizing multiple slabs of duty-free allowance for various passenger categories (effective 01.04.2016)

Customs (Import of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 1996

Customs (Import of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 2016

Simplifying the rules, including allowing duty exemptions to importer/manufacturer based on self-declaration instead of obtaining permissions from the Central Excise authorities. Now, Additional registration is not required. The new Rules will be effective from 01.04.2016.

Customs Baggage Declaration Regulations, 2013

Amended

To prescribe filing of Customs declaration only for those passengers who carry dutiable or prohibited goods.

CENVAT Credit Rules, 2004

Amended

Improving credit flow, reducing compliance burded and introducing credit distribution measures.

Central Excise (Removal of Goods at Concessional Rate of Duty for Manufacture of Excisable and Other Goods) Rules, 2001

Central Excise (Removal of Goods at Concessional Rate of Duty for Manufacture of Excisable and Other Goods) Rules, 2016

Simplifying the procedure for availing duty exemptions by importers/ manufacturers.

 

 

Service Tax is the tax payable on services provided. Although it is a tax which is payable by the provider of service, however, it can be collected from the recipient of service. The Central Board of Excise & Customs (CBEC), Department of Revenue, Ministry of Finance, deals with the task of formulation of policy concerning levy and collection of Service Tax. The rate of Service Tax is being increased from 14.5% to 15% (inclusive of krishi kalyan cess) effective from 01st June 2016.

Certain changes have been made in the service tax provisions upon the enactment of the Finance Bill 2016. These are as follows:

  1. Transportation of passenger by rail at the existing rate of 4.2% (Abatement of 70%)
  2. Transportation of goods by rail at the existing rate of 4.2% (Abatement of 70%)
  3. Transportation of goods by vessel at the existing rate of 4.2% (Abatement of 70%)
  1. GTA Service by way of shifting of used household goods.
  2. Services of a foreman to a chit fund.
  3. Transportation of stage carriage (effective from 1st June 2016)

 

Services relating to:-

Service Tax Rate

Existing

Proposed

Construction of residential complex, civil structure or a part thereof

3.5%/4.2%

4.2%

 Tour operator Services

 

3.5%/5.6% of amount charged

4.2% of amount charged

Shifting of used household goods by GTA

4.2%

5.6%

Foreman services to a chit fund

14%

9.8%

Transportation of passenger by AC stage carriage w.e.f 1STJune,2016

Nil

5.6%

Service tax on single premium annuity policies

3.5%

1.4%

Transportation of goods in container by rail

4.2%

5.6%

 

     Credit reversal under sub-rule (1), (2) and (3) of the Rule 6 along with rule 6(3B) of the Cenvat Credit Rules,

     2004.

as well as an activity which is not a “service‟.