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BUDGET BULLETIN

2016-17

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So, overall it’s again an average budget but surely
targeted for the wide spread growth and putting
From the CEO’s Desk development plans on a priority.

Be Positive!!

Alok Kumar Agarwal


CEO
ASC Group

Index Guide

TOPIC PAGE NO.


Dear Friends,
Income Tax 3-7
Despite the global slowdown and two consecutive years
of drought GDP has increased marginally and inflation has Service Tax 8 - 14
come down, said finance minister Mr. Jaitley when he
Excise 15 - 17
presented the Budget 2016-17 in the parliament. No
doubt in the turbulent time, the Government showed Custom 18 - 20
conviction and worked on many projects and schemes.
Our Contacts 21
To conclude the highlights of the budget I can say that this
time the emphasis was finally on the biggest sector of the
economy that is rural India. A lot of fund is allocated
towards the general welfare of the farmers and irrigation
projects. Schemes have been launched for giving better
price to the farmers for their products. Every Block in
drought and rural distress areas will be taken up under
Deen Dayal Antoyodaya Mission.

As far as the tax structure is concerned, major impact will


be of service tax as once again it is been increased from
14% to 15% in the current budget. Tax on luxury cars have
further increased and excise on tobacco products has also
been increased from 10% to 15%.

A lot of funds have been allocated for employment


generation and on infrastructure creation. Rs. 1,700 crore
has been allocated for 1500 multi-skill development
centers.

Banks get a big boost: Rs 25,000 crore has been awarded


towards recapitalization of public sector banks. Jaitley
says: Banking Board Bureau will be operationalized and
we stand solidly behind public sector banks.

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INCOME TAX
RATES OF INCOME TAX TAX COLLECTION AT SOURCE

 Individual Slab - It is proposed that there will be no To curb flow of unaccounted money in the trading system
change in the rate of personal income tax in respect of and to bring high value transaction within the tax
income earned in the financial year 2016-17, assessable ambiguity. This amendment will come into effect from 1st
in the assessment year 2017-18. The amount of income June, 2016. It is proposed to amend the section:
tax computed as per slab shall be increased by a Tax Proposed Amendment
surcharge at the rate of 15% of such income tax in case Rates
of a person having a total income exceeding Rs.1 crore. 1% Seller shall collect tax on sale of Motor Vehicle of
the value exceeding Rs.10 lac.
 Tax on Corporate - The rate of income tax shall be 29% of 1% Seller shall collect tax from customer on sale in
the total income, if the total turnover or gross receipts of cash of goods (other than bullion & jewelry
the company in the FY 2014-15 doesn’t exceed Rs.25cr exceeding Rs.2 lac.
and in all other cases the rate of income tax shall be 30% 1% Seller shall collect tax from customer providing
of the total income. any services (other than payments on which TDS is
To promote newly setup enterprises and Make in India paid) exceeding Rs.10 lac.
activity an option has been given to new entrant to pay Note: However the rules for the levy of TCS on goods &
tax at the rate of 25% on total income. Provided the services are yet to be prescribed.
company should fulfill the below mention point:
 Company incorporated on or after 1st March 2016; PHASING OUT OF DEDUCTION AND EXEMPTION
 Engaged in the business of manufacture or production
of article or thing and is not in any other business;
Section Proposed Phase Out
 The company has not claimed any benefit under section
Amendment
10AA, benefit of accelerated depreciation, benefit of
Section 10AA- Special Benefits of section-10AA
additional depreciation, investment allowance,
Provisions for new SEZ will be available to those
expenditure on scientific research and any deduction in
units. SEZ units which commence
respect of certain income under Chapter-VI-A other than
activity before 31.03.2020.
the provision of section 80JJAA;
Section 35AC- Expenditure No deduction shall be
 The option is furnished in the prescribed manner before
on eligible projects or available with effect from
the due date of furnishing of income.
scheme. 01.04.2017 (i.e. from
previous year 2017-18 and
 Taxation of Dividend Income- Rationalization of taxation
subsequent years).
of income by way of dividend that income by way of
Section 35CCD- Expenditure Deduction shall be
dividend in excess of Rs.10 lac shall be chargeable to tax
on skill development restricted to 100% from
in case of individual, HUF, or a Firm who is resident in
project. 01.04.2020 (i.e. from
India at the rate of 10%. The taxation of dividend income
previous year 2020-21
in excess of Rs.10 lac shall be on gross basis. This
onwards).
amendment is effective from 1st April, 2017 and shall
Section 80-IA- No deduction shall be
apply in relation to AY 2017-18 and subsequent years.
Development, operation available if the specified
and maintenance of an activity commence on or
infrastructure facility. after 1st April, 2017 (i.e.
Section 80-IAB- from previous year 2017-
Development of SEZ. 18 and subsequent years).a
Section 80-IB (9) -

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Section Proposed Phase Out Section Proposed Phase Out
Amendment Amendment
Production of mineral oils 01.04.2017.
and natural gas. These above amendments will take effect from 1st April
Section 32AC It is proposed to amend 2018 (i.e. from AY 2018-19 and onwards).
the section 32AC (1A) so as
to provide that the TAX INCENTIVES FOR START-UPS
acquisition of the plant &
machinery of the specified  Startups set up before March, 2019 to be eligible for
value has to be made in 100% deduction for 3 out of 5 years, MAT applicable.
the previous year.  It is envisaged in ‘Start-up India Action Plan’ to establish
However, installation may a fund of Funds which intends to raise Rs.2500 crores
be made by 31.03.2007 in annually for 4 years to finance the start-ups.
order to avail the benefit
of investment allowance of Section Proposed Amendments
15%. Section 54EE- It is proposed to provide
Section 32(1)(iia)- Benefit of It is proposed to amend exemption from long term
additional depreciation to this section so as to capital gain tax if long term
Power Sector provide that an assessee capital gains are invested by
engaged in the business of an assessee in units of such
transmission of power shall specified funds as may be
also be allowed additional notified by central
depreciation at the rate of government subject to the
20% of actual cost of new condition that amount
machinery or plant remain invested for 3 years.
acquired and installed in a The investment in specified
previous year. fund shall be allowed up to
These above amendments will take effect from 1st April, Rs.50 lac.
2017 (i.e. from AY 2017-18 and onwards). Section 54GB Long term capital gains
Section 32 read with rule 5 Accelerated depreciation arising on account of
of Income Tax Rules, 1962. wherever provided in IT transfer of a residential
Act would be limited to property shall not be
40% from 01.04.2017. charged to tax if such capital
Section 35(1)(ii) and Benefits of deduction for gain are invested in
35(2AA) expenditure on scientific subscription of shares of a
research would be limited company which qualifies to
to 150% from 01.4.2017 be eligible startups subject
and 100% from to the condition that the
01.04.2020. individual or HUF holds
Section 35(1)(iia) and Benefit of deduction for more than 50% shares of
35(1)(III) expenditure on scientific the company and such
research would be limited company utilizes the
to 100% from 01.04.2017 investment in purchase of
Section 35AD Benefit of deduction in new assets (including
respect of specified computers or computer
business on capital software) before due date
expenditure would be of filing of return by the
limited to 100% from investor.
01.04.2017 This amendment will take effect from 1st April, 2017
Section 35CCC Expenditure on notified (i.e. AY 2017-18 and subsequent years).
agricultural extension
project deduction would
be limited to 100% from

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INCREASE IN THRESHOLD LIMIT OF TDS Section Proposed Amendments
property from any financial
Section Heads Existing Proposed institution up to Rs.50000
(INR) (INR) for the house property of a
192A Payment of Accumulated 30,000 50,000 value less than Rs.50 lac has
balance to an employee been sanctioned during the
194BB Winnings from horse race 5,000 10,000 period from 1stApril, 2016 to
194C Payments to contractors Annual Annual 31stMarch, 2017.
limit of Limit
75,000 1,00,000 BENEFIT TO INDIVIDUAL TAXPAYER
194LA Compensation on 2,00,000 2,50,000
acquisition of certain Section Proposed Amendments
immovable property Section 24(b)- It is proposed to be
194D Insurance Commission 20,000 15,000 Deduction from house amended and time limit for
194G Commission on sale of 1,000 15,000 property income acquisition and construction
lottery tickets of house property is
194H Commission or brokerage 5,000 15,000 completed within 3 years is
amending to 5 year from the
end of the financial year
which capital was borrowed
REVISION IN RATES OF TDS
Section 47- It is proposed to amend
Sovereign Gold Bond Section 47 of the Act, so as
Section Heads Existing Proposed
Scheme to provide that any
Rates Rates
redemption of Sovereign
194DA Payment in respect of life 2% 1%
Gold Bond under the
insurance policy
Scheme, by an individual
194EE Payment in respect of NSS 20% 10% shall not be treated as
Deposits transfer and therefore shall
194D Insurance Commission 10% 5% be exempt from tax on
194G Commission on sale of 10% 5% capital gains.
lottery tickets Section 87A- Tax Rebate Tax Rebate for individuals
194H Commission or brokerage 10% 5% having income up to Rs.5
lacs under section 87A
AMENDMENTS IN SECTION 80 DEDUCTIONS raised from Rs.2000 to
Rs.5000.
Section Proposed Amendments Section 48- It is proposed to amend
Section 80JJAA – Deduction for wages of Rupee Dominated Bond section 48 of the Act, so as
Deduction in respect additional workmen, of the to provide that the capital
on new workmen Income Tax Act will be gains, arising in case of
employment available to all assesses who appreciation of rupee
are subject to statutory between the date of issue
audit under the ACT. The and the date of redemption
employee limit has been against the foreign currency
reduced from 300 to 240. in which the investment is
Section 80GG- Deduction Deduction of rent u/s 80GG made shall be exempt from
of Rent increased to Rs.60000 from tax on capital gains.
Rs.24000 per annum. Section 56(2) It is proposed to amend the
Section 80EE – To provide benefit to first- Act so as to provide that any
Incentives for promoting home buyer availing home shares received by an
Housing to All loans, by providing individual or HUF as a
additional deduction in consequence of demerger
respect of interest on loan or amalgamation of a
taken for residential house company shall not attract

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Section Proposed Amendments  Automatic stay of demand when assessee pays 15% of
the provision of section disputed demand & issue is pending before CIT (A).
56(2) (vii).  Government will pay interest of 9% instead of 6% on
refunds of income tax, in case there is a delay in
THE INCOME DECLARATION SCHEME, 2016 appellate cases beyond 90 days.
 It is proposed to amend section 139(4) according to
 Domestic tax payers can declare undisclosed income or which time allotted for filing of return under this section
such income represented in the form of any assets by is before the expiry of one year from the end of relevant
paying tax at the rate of 30% plus surcharge 7.5% plus assessment year or before the completion of
penalty 7.5% total 45%. Declarant will have immunity assessment whichever is earlier.
from prosecution. Surcharge will be called Krishi Kalyan
Surcharge and will be used for agriculture and rural INTERNATIONAL TAXATION
economy.
 Equalisation levy :
THE DIRECT TAX DISPUTE RESOLUTION SCHEME, 2016 Equalisation levy of 6% shall be attracted on the
consideration paid to non-resident not having
 New dispute Resolution Scheme to be introduced. No permanent establishment in India in respect to specified
penalty in respect of cases with disputed tax up to Rs.10 services services such as digital advertisement. It shall
Lac to be subjected to 25% of the minimum of be applicable if the aggregate amount of payment to a
imposable penalty and tax interest on quantum non- resident exceeds Rs.1 lac in any previous year.
addition.  Section 206AA:
Non-resident, not being a company or foreign company,
OTHER PROPOSED AMENDMENTS UNDER INCOME TAX would not be liable for higher tax deduction under
section 206AA on account of not having a PAN in India
 Securities Transaction Tax increased from 0.017% to subject to the condition as may be prescribed.
0.05% in case of sale of an option in securities where
option is not exercised the amendment will effect from  Place of Effective Management (“POEM”):
1st June, 2016. The implementation of POEM has been deferred by one
 It is proposed to insert new section 115BBF where year and the determination of residence based on
income by way of royalty in respect of a patent POEM would be effective from 1st April, 2016 and shall
developed and registered in India, then such royalty apply from the assessment year 2017-18 and onwards.
income shall be taxable at the rate of 10% (plus
applicable surcharge and cess) on the gross amount of  BEPS action plan- Country by Country Report:
royalty and no expenditure or allowance in respect of Keeping in mind the OECD report on Action 13 of BEPS
such income shall be allowed under the Act. Action Plan related to revised standards for transfer
 The NDA government providing incentives for pricing documentation, the multinational companies
promoting Housing for All by providing 100% for profit are now required to report their business activities
to an undertaking in housing project for flats up to 30 using a template on a country by country basis. A three-
sq. mt. in 4 metro cities and 60 sq. mt. in other cities, tiered structure has been mandated consisting of
approved during June, 2016 to March, 2019 and master file, local file and country by country report. The
completed in 3 years, MAT applicable. threshold limit for the applicability of country by
 Turnover limit under section 44AD is increased to Rs.2 country reporting is the consolidated revenue
crores from Rs.1 crores. The presumptive taxation amounting to Euro 750 million of an international group
scheme extended to professionals with gross receipts having Indian parent.
up to Rs.50 lakhs with profit deemed to be 50% of gross
receipts.  Applicability of Minimum Alternate Tax (MAT) on
 NBFC shall be eligible for deduction to the extent of 5% foreign companies:
of its income in respect of provision for bad and With effect from 1st April 2001, the provision of section
doubtful debts. 115JB shall not be applicable to a foreign company if:
 Penalty rates rationalize to 50% of tax in case of under  The assessee is a resident of a country with which India
reporting of income and 200% of tax where there is has a tax treaty, provided that such assessee does not
misreporting of facts. have a permanent establishment in India; or

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 The assessee is a resident of a country with which India
does not have a tax treaty and it is not required to seek
registration under any law pertaining to companies in
India.

OTHER AMENDMENT

 Exemption from Dividend Distribution Tax (“DDT”)


DDT shall not be levied on the distribution of dividend
by Special Purpose Vehicle (SPV) to the business trust
comprising of Real Estate Investment Trust and
Infrastructure Investment Trust regulated by SEBI. The
exemption can only be availed if the business trust
holds 100% of the share capital of the SPV or holds all
the share capital other than which is mandatorily
required to be owned by other person under any law or
direction of the Government.

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 higher and secondary school or equivalent, (b)
education as a part of a curriculum for obtaining a
qualification recognized by any law for the time being in
SERVICE TAX force and (c) education as a part of an approved
vocational education course shall be omitted.

KRISHI KALYAN CESS  The Negative List entry that covers ‘service of
transportation of passengers, with or without

BRIEF: Clause 158 of the Bill seeks to introduce Krishi accompanied belongings, by a stage carriage’ &
Kalyan Cess @ 0.5%. services by way of transportation of goods by an aircraft
or a vessel from a place outside India to the first
OUR TAKE: An enabling provision is being made to levy customs station of landing in India is being omitted with
Krishi Kalyan Cess on all taxable services with effect from effect from 1st June, 2016.
1st June, 2016, to finance and promote initiatives to
improve agriculture. SECTION 66E –DECLARED SERVICES

SECTION 65B - INTEPRETATIONS BRIEF: Clause 146 of the Bill seeks to amend section 66E
of 1994 Act, after clause (i), the following clause shall be
BRIEF 1: Clause 145 of the Bill seeks to amend section 65B of inserted.
1994; clause (11) shall be omitted; & in clause (44), in
Explanation 2, in sub-clause (ii), for item (a), the following OUR TAKE: Section 65D of the Finance Act, 1994 provides
item shall be substituted. for declared Services. Following amendments have been
proposed.
OUR TAKE: Section 65D of the Finance Act, 1994 provides for
interpretations. Following amendments have been proposed. Clause ‘j’ has been inserted namely “assignment by the
Government of the right to use the radio-frequency
Clause 11 shall be omitted “"approved vocational education spectrum and subsequent transfers thereof”.
course" and in sub clause in clause (44), in Explanation 2, in
sub-clause (ii), for item (a), the following item shall be SECTION 67A – VALUATION OF TAXABLE SERVICES
substituted “by a lottery distributor or selling agent on behalf
of the State Government, in relation to promotion, BRIEF: Clause 147 of the Bill seeks to amend section 67A
marketing, organising, selling of lottery or facilitating in of 1994 Act so as the existing section shall be
organising lottery of any kind, in any other manner, in renumbered as sub-section (1) thereof, and after sub-
accordance with the provisions of the Lotteries (Regulation) section (1) as so renumbered, the following sub-section
Act, 1998”. shall be inserted.

OUR TAKE: Section 67A of the Finance Act, 1994 provides


for valuation of taxable services. Following amendments
SECTION 66D - NEGATIVE LIST OF SERVICES
have been proposed.
BRIEF: Clause 146 of the Bill seeks to amend section 66D
Section 67A is being amended to obtain rule making
of 1994, clause (l) shall be omitted; further with effect
powers in respect of the Point of Taxation Rules, 2011, so
from the 1st day of June, 2016— (i) in clause (o), sub-
as to provide that the point in time when service has been
clause (i) shall be omitted; (ii) in clause (p), sub-clause (ii)
provided or agreed to be provided shall be determined by
shall be omitted.
rules made in this regard. Point of Taxation Rules, 2011 is
being amended accordingly.
OUR TAKE: Section 66D of the Finance Act, 1994 provides
for the negative list of services. Following amendments
SECTION 73 – RECOVERY OF SERVICE TAX
have been proposed.
BRIEF: Clause 149 of the Bill seeks to amend section 73 of
 The Negative List entry covering ‘educational services 1994 Act.
by way of (a) pre-school education and education up to

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OUR TAKE: In sub-sections (1), (1A), (2A) and (3), for the
words “eighteen months”, wherever they occur, and the OUR TAKE: Provision is self explanatory.
words “thirty months” shall be substituted;
In sub-section (4B), in clause (a), for the words “whose SECTION 90 – COGNIZANCE OF OFFENCES.
limitation is specified as eighteen months in”, the words
“falling under” shall be substituted. BRIEF: Clause 153 of the Bill seeks to amend in section
90, wherein sub-section (2) “Notwithstanding anything
contained in the Code of Criminal Procedure, 1973, all
SECTION 75 – INTEREST ON DELAYED PAYMENT OF offences, except the offences specified in sub-section (1),
SERVICE TAX shall be non-cognizable and bailable” shall be omitted.

BRIEF: Clause 150 of the Bill seeks to amend section OUR TAKE: Provision is self explanatory.
section 75 of 1994 Act; for the words ‘‘Provided that’’, the
following shall be substituted. SECTION 91 – POWER TO ARREST

OUR TAKE: Section 75 of the Finance Act, 1994 provides BRIEF: Clause 154 of the Bill seeks to amend n section 91;
for the interest on delayed payment of service tax. in sub-section (1), the words, brackets and letter “clause
Following amendments have been proposed. (i) or” shall be omitted; & sub-section (3) shall be
omitted.
For the words ‘‘Provided that’’, the following shall be
substituted, namely “‘Provided that in the case of a person OUR TAKE: Readers are requested to read said amendment
who collects any amount as service tax but fails to pay the as it is self explanatory.
amount so collected to the credit of the Central
Government, on or before the date on which such SECTION 93A– POWER TO GRANT REBATE
payment is due, the Central Government may, by
notification in the Official Gazette, specify such other rate BRIEF: Clause 155 of the Bill seeks to amend in section
of interest, as it may deem necessary”. 93A, wherein for the word “prescribed”, the words
“prescribed or specified by notification in the Official
Gazette” shall be substituted.
SECTION 78A – PENALTY FOR CONTRAVENTIONS
COMMITTED BY COMPANY
OUR TAKE: Provision is self explanatory.
BRIEF: Clause 151 of the Bill seeks to amend section 78A,
SECTION 101, 102 & 103– NEWLY INSERTED
the following Explanation shall be inserted.
BRIEF: Clause 156 of the Bill seeks to insert the following
OUR TAKE: Section 78A of the Finance Act, 1994 provides
sections after section 100 as follows:
for penalty for contraventions committed by company.
Following explanation has been inserted.
OUR TAKE: The newly inserted sections are as follows:
Section 101:
For the removal of doubts, it is hereby clarified that where
 Notwithstanding anything contained in section 66B, no
any service tax has not been levied or paid or has been
service tax shall be levied or collected during the period
short-levied or short-paid or erroneously refunded, and
commencing from the 1st day of July, 2012 and ending
the proceedings with respect to a notice issued under sub-
with the 29th day of January, 2014 (both days inclusive) in
section (1) of section 73 or the proviso to sub-section (1) of
respect of taxable services provided to an authority or
section 73 is concluded in accordance with the provisions
aboard or any other body––
of clause (i) of the first proviso to section 76 or clause (i) of
(i) Set up by an Act of Parliament or a State Legislature; or
the second proviso to section 78, as the case may be, the
(ii) Established by the Government,
proceedings pending against any person under this section
with 90% or more participation by way of equity or
shall also be deemed to have been concluded.”
control, to carry out any function entrusted to a
SECTION 89 – OFFENCES & PENALTIES
municipality under article 243W of the Constitution, by
way of construction, erection, commissioning, installation,
BRIEF: Clause 152 of the Bill seeks to substitute penalty
completion, fitting out, repair, maintenance, renovation
amount for offenses committed to 2lakhs from 50
or alteration of canal, dam or other irrigation works.
thousand wherever applicable.

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notified by the Central Government in this behalf
provided on or after the commencement of this Chapter.
Readers are requested to read chapter once it shall come
Section 102: into force on such date as the Central Government may,
 Notwithstanding anything contained in section 66B, no by notification in the Official Gazette, appoint.
service tax shall be levied or collected during the
period commencing from the 1st day of April, 2015 and OTHER AMENDMENTS
ending with the 29th day of February, 2016 (both days
inclusive), in respect of taxable services provided to the  Notification No. 41/2012- ST, dated the 29th June,
Government, a local authority or a Governmental 2012 was amended by notification No.1/2016-ST
authority, by way of construction, erection, dated 3rd February, 2016 so as to, inter alia, allow
commissioning, installation, completion, fitting out, refund of Service Tax on services used beyond the
repair, maintenance, renovation or alteration certain factory or any other place or premises of production
services as per the section. or manufacture of the said goods for the export of the
said goods. This amendment is being made effective
Section 103: from the date of application of the parent notification
 Notwithstanding anything contained in section 66B, no (i.e. 1st July 2012).
service tax shall be levied or collected during the
period commencing from the 1st day of April, 2015 and  The benefit of quarterly payment of Service Tax is
ending with the 29th day of February, 2016 (both days being extended to ‘One Person Company’ (OPC) and
inclusive), in respect of services provided by way of HUF with effect from 1st April, 2016.
construction, erection, commissioning or installation of
original works pertaining to an airport or port, under a  The facility of payment of Service Tax on receipt basis
contract which had been entered into before the 1st is being extended to ‘One Person Company’ (OPC)
day of March, 2015 and on which appropriate stamp with effect from 1st April, 2016.
duty, where applicable, had been paid before that
date, subject to the condition that Ministry of Civil  Interest rates on delayed payment of duty/tax across
Aviation or, as the case may be, the Ministry of all indirect taxes are being rationalized and made
Shipping in the Government of India certifies that the uniform at 15%, except in case of Service Tax collected
contract had been entered into before the 1st day of but not deposited to the exchequer, in which case the
March, 2015. rate of interest will be 24% from the date on which
the Service Tax payment became due. In case of
Common Provision of Section 101,102,103: assessee, whose value of taxable services in the
preceding year/years covered by the notice is less
 Refund shall be made of all such service tax which has than Rs. 60 Lakh, the rate of interest on delayed
been collected but which would not have been so payment of Service Tax will be 12%. [The above
collected had sub-section (1) been in force at all changes will come into effect on the day the Finance
material times. Bill receives the assent of the President.]
 Notwithstanding anything contained in this Chapter, an
application for the claim of refund of service tax shall be
 Indirect tax Dispute Resolution Scheme, 2016, wherein
made within a period of six months from the date on
a scheme in respect of cases pending before
which the Finance Bill, 2016 receives the assent of the
Commissioner (Appeals), the assessee, after paying
President.
the duty, interest and penalty equivalent to 25% of
 duty, can file a declaration, is being introduced. In
BRIEF: Clause 160 of the Bill seeks to introduce such cases the proceedings against the assessee will
Equalization Levy. It shall extend to whole of India be closed and he will also get immunity from
except Jammu & Kashmir. prosecution. However, this scheme will not apply in
cases:
OUR TAKE: It shall apply to consideration received or a) where prosecution has already been launched
receivable for specified services such as online b) involving narcotics & psychotropic substances
advertisement, any provision for digital advertising space c) involving detention under COFEPOSA.
or any other facility or service for the purpose of online
advertisement and includes any other service as may be

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 Notification No. 27/2012 – C.E. (N.T.) dated SERVICES Existing Proposed
18.06.2012 is being amended with effect from 1st pertaining to monorail or metro,
March, 2016 so as to provide that time limit for filing in respect of contracts entered
application for refund of CENVAT Credit under Rule 5 into on or after 1stMarch 2016, is
of the CENVAT Credit Rules, 2004, in case of export of being withdrawn with effect from
services, is 1 year from the date of : 1st March, 2016.
(a) Receipt of payment in convertible foreign exchange, Exemption on the services of NIL 14%
where provision of service has been completed prior transport of passengers, with or
to receipt of such payment; or without accompanied belongings,
(b) Issue of invoice, where payment, for the service has by ropeway, cable car or aerial
been received in advance prior to the date of issue of tramway is being withdrawn with
the invoice. effect from 1st April, 2016.
The Negative List entry that covers NIL 5.6%
 To reduce compliance cost, the number of returns to ‘service of transportation of
be filed by a central excise assessee, above a certain passengers, with or without
threshold, is being drastically reduced, from 27 to 13, accompanied belongings, by a
one annual and 12 monthly return. Monthly returns stage carriage’ is being omitted
are already being e-filed. CBEC will provide for e-filing with effect from 1st June, 2016.
of annual return also. The annual return will also have Service Tax is being levied on
to be filed by Service Tax assessee, above a certain transportation of passengers by
threshold, taking total number of returns to three in a air conditioned stage carriage with
year for them. This change shall come into effect from effect from 1st June, 2016, at the
1st April, 2016. same level of abatement as
applicable to the transportation of
 To provide level playing field to Indian Shipping lines passengers by a contract carriage,
vis-a-vis foreign shipping lines, it is being proposed to: that is, 60% without credit of
a) zero rate the services provided by Indian Shipping lines inputs, input services and capital
by way of transportation of goods by a vessel to goods.
outside India with effect from 1st March, 2016, and
b) Impose Service Tax on services provided by them by
NEW EXEMPTIONS UNDER SERVICE TAX
way of transportation of goods by a vessel from
outside India up to the customs station in India with
 Services by way of construction etc. in respect of-
effect from 1st June, 2016 so as to complete the credit
(i) Housing projects under Housing for All (HFA)
chain and enable Indian Shipping Lines to avail and
(Urban) Mission/ Pradhan Mantri Awas Yojana;
utilize input tax credits.
(ii) low cost houses up to a carpet area of 60 square
meters in a housing project under “Affordable housing
SERVICES BROUGHT UNDER SERVICE TAX
in Partnership” component of PMAY,
(iii) low cost houses up to a carpet area of 60 square
SERVICES Existing Proposed
meters in a housing project under any housing scheme
Exemption on services provided NIL 14% of the State Government, are being exempted from
by,- Service Tax with effect from 1st March, 2016.
a senior advocate to an advocate
or partnership firm of advocates
 The service of life insurance business provided by way
providing legal service; and
of annuity under the National Pension System
(ii) a person represented on an
regulated by Pension Fund Regulatory and
arbitral tribunal to an arbitral
Development Authority (PFRDA) of India is being
tribunal, is being withdrawn with
exempted from Service Tax with effect from 1st April,
effect from 1st April, 2016 and
2016.
Service Tax is being levied under
forward charge.
 Services provided by Employees’ Provident Fund
Exemption on construction, NIL 5.6%
Organization (EPFO) to employees are being exempted
erection, commissioning or
from Service Tax with effect from 1st April, 2016
installation of original works

Page 11 of 21
 Exemptions on services of:
 Services provided by Insurance Regulatory and a) Construction provided to the Government, a local
Development Authority (IRDA) of India are being authority or a governmental authority, in respect of
exempted from Service Tax with effect from 1st April, construction of govt. schools, hospitals etc.
2016. b) construction of ports, airports, [which were
withdrawn with effect from 01.04.2015], are being
 The regulatory services provided by Securities and restored in respect of services provided under
Exchange Board of India (SEBI) are being exempted contracts which had been entered into prior to
from Service Tax with effect from 1st April, 2016. 01.03.2015 on payment of applicable stamp duty, with
retrospective effect from 01.04.2015.
 The rate of Service Tax on Single premium annuity
(insurance) policies is being reduced from 3.5% to 1.4%  Services provided by way of construction, maintenance
of the premium, in cases where the amount allocated etc. of canal, dam or other irrigation works provided to
for investment, or savings on behalf of policy holder is bodies set up by Government but not necessarily by an
not intimated to the policy holder at the time of Act of Parliament or a State Legislature, during the
providing of service, with effect from 1st April, 2016. period from the 1st July, 2012 to 29th January, 2014,
are being exempted from Service Tax with
 The services of general insurance business provided consequential refunds, subject to the principle of
under ‘Niramaya’ Health Insurance scheme launched unjust enrichment.
by National Trust for the Welfare of Persons with
Autism, Cerebral Palsy, Mental Retardation and  Services provided by the Indian Institutes of
Multiple Disability in collaboration with private/public Management (IIM) by way of 2 year full time Post
insurance companies are being exempted from Service Graduate Programme in Management (PGPM) (other
Tax with effect from 1st April, 2016 than executive development programme), Integrated
Programme in Management and Fellowship
 Services provided by National Centre for Cold Chain Programme in Management (FPM) are being exempted
Development under Department of Agriculture, from Service Tax with effect from 1st March, 2016.
Cooperation and Farmer’s Welfare, Government of
India, by way of knowledge dissemination are being RATIONALISATION OF ABATEMENTS
exempted from Service Tax with effect from 1st April,
2016. SERVICES Existing Proposed
Credit of input services is being 4.2% 4.2%
 Services provided by Biotechnology Industry Research allowed on transport of Without With input
Assistance Council (BIRAC) approved biotechnology passengers by rail at the existing credit service credit
incubators to incubates are being exempted from rate of abatement of 70%.
Service Tax with effect from 1st April, 2016. Credit of input services is being 4.2% 4.2%
allowed on transport of goods, Without With input
 Services provided by way of skill/vocational training by other than in containers, by rail at credit service credit
training partners under Deen Dayal Upadhyay the existing rate of abatement of
Grameen Kaushalya Yojana are being exempted from 70%..
Service Tax with effect from 1st April, 2016. Credit of input services is being 4.2% 4.2%
allowed on transport of goods in Without With input
 Services of assessing bodies empanelled centrally by containers by rail at a reduced credit service credit
Directorate General of Training, Ministry of Skill abatement rate of 60%.
Development & Entrepreneurship are being exempted Credit of input services is being 4.2% 4.2%
from Service Tax with effect from 1st April, 2016. allowed on transport of goods by Without With input
vessel at the existing rate of credit service credit
 The threshold exemption to services provided by a abatement of 70%.
performing artist in folk or classical art forms of music, The abatement rate in respect of 3.5%/ 4.2%
dance or theatre is being enhanced from Rs 1 lakh to services by way of construction of 4.2%
Rs 1.5 Lakh charged per event with effect from 1st residential complex, building, civil
April, 2016. structure, or a part thereof, is
being rationalized at 70% by

Page 12 of 21
SERVICES Existing Proposed litigation, particularly those relating to
merging the two existing rates apportionment of credit between exempted and
(70% for high end flats and 75% non-exempted final products / services. Changes
for low end flats). are also being made in the provisions relating to
The abatement rate in respect of 3.5%/ 4.2% of input service distributor, including extension of this
services by a tour operator in 5.6% of amount facility to transfer input services credit to
relation to packaged tour (defined amount charged outsourced manufacturers, under certain
where tour operator provides to charged circumstances. The amendments in these rules will
the service recipient also enable manufacturers with multiple
transportation, accommodation, manufacturing units to maintain a common
food etc) and other than packaged warehouse for inputs and distribute inputs with
tour is being rationalized at 70%. credits to the individual manufacturing units.
The abatement on shifting of used 4.2% 5.6%
household goods by a (GTA) is  The rules are being amended to provide for reversal
being rationalized at the rate of of CENVAT Credit of inputs/input services which
60%, without CENVAT credit on have been commonly used in providing taxable
inputs, input services and capital output service and an activity which is not a
goods. (The existing rate of ‘service’ under the Finance Act, 1994.
abatement of 70% allowed on
transport of other goods by GTA  The CENVAT credit rules are being amended so as to
continues unchanged) allow CENVAT credit of Service Tax paid on amount
The abatement rate on services of 14% 9.8% charged for assignment by Government or any
a foreman to a chit fund is being other person of a natural resource, over such period
rationalized at the rate of 30%, of time as the period for which the rights have been
without CENVAT credit on inputs, assigned.
input services and capital goods.
Note: The above changes will come into effect from 1st April,
2016. DEFINITION OF CAPITAL GOODS EXPANDED
CENVAT CREDIT RULES
 Wagons of sub heading 8606 92 of the First
AMENDMENTS EFFECTIVE FROM 1st MARCH 2016 Schedule to the CETA.

 The time limit for filing refund claim in respect of  Capital goods used as equipment and appliance
export of services shall be before the expiry of one used in an office in the factory are now creditable.
year from the date of:
 receipt of payment in convertible foreign exchange,
 CENVAT credit on inputs and capital goods used for
where provision of service has been completed
pumping of water, for captive use in the factory, will
before such receipt; or
be allowed even when such capital goods are
 Issue of invoice, where payment for the service had
installed outside the factory.
been received prior to the date of issue of the
invoice.
 All capital goods having value up to INR 10,000 per
piece are being included in the definition of inputs.
AMENDMENTS EFFECTIVE FROM 1st APRIL 2016

 The rules are being amended so as to allow banks RULE 6 OF CCR, DEALING WITH CENVAT CREDIT ON
and other financial institutions to reverse credit in EXEMPTED GOODS/ SERVICES RATIONALIZED
respect of exempted services on actual basis in
addition to the option of 50% reversal.  Full CENVAT Credit of service tax paid on input
services exclusively used for manufacturing non-
 The rules are being amended to improve credit exempted goods and provision of non-exempted
flow, reduce the compliance burden and associated services will be allowed.

Page 13 of 21
 Rules amended to restrict the credit of duties/taxes,
 Definition of exempted services widened for the except credit of NCCD, for payment of NCCD.
purpose of Rule 6 reversals to include an activity
which is not a service.  CENVAT credit will not be available for payment of
Infrastructure cess levied on motor vehicles.
 Increased disclosure to avoid subsequent disputes
with the revenue authorities.  CENVAT credit of Capital goods used for
manufacture of exempted goods/services for a
 Banking and final institutions including a NBFC will period of two years shall not be available.
be allowed to either opt for payment of 7% of value
of exempted services or pro-rata reversal or reversal
of 50% of the CENVAT credit availed.

OTHER AMENDMENTS

 CENVAT credit of service tax paid on upfront charges


for assignment of natural resources such as
spectrum, mining rights will be allowed over a period
of right to use such assigned resources.

 Rule 7 of the CCR, dealing with distribution of


CENVAT credit on input services revamped to allow
distribution of the credit to an outsourced
manufacturing unit. Further, it is now clearly
prescribed that Rule 6 reversals will not be
applicable at Input Service Distributor stage.

 Service by way of transportation of goods by a vessel


from customs station of clearance in India to a place
outside India is specifically excluded from the
definition of “exempted service”‟.

 Manufacturer of final products will be allowed to


take CENVAT credit on tools sent to a job worker.

 Permission given to a manufacturer to send inputs/


partially processed inputs to a job-worker and
clearance of final products there from extended
from one financial year to three financial years.

 Rule 7B is inserted in CCR to enable manufacturers


for maintaining a common warehouse for inputs and
distribute credits to the individual manufacturing
units by following the ‘dealer registration’
compliances prescribed under the Central Excise
laws.

 Invoice issued by a Service provider for clearance of


inputs and capital goods will be considered as a valid
document for claiming CENVAT credit.

Page 14 of 21
from 27 to 13, that is, one annual and 12 monthly
returns. Monthly returns are already being e-
filed. CBEC will provide for e-filing of annual
CENTRAL EXCISE return also. This annual return will have to be
filed by service tax assessee also, above a certain
threshold, taking total number of returns to
RATE OF EXCISE DUTY three in a year for them,

 Median excise duty rate retained at 12.50%. b. Extend the facility for revision of return, hitherto
available to a service tax assessee only, to
AMENDMENT IN CENTRAL EXCISE manufacturers also

c. Provide that in cases where invoices are digitally


 Clause 139 of the Bill seeks to amend Section 5A so
signed, the manual attestation of copy of invoice,
as to omit the requirement of publishing and
meant for transporter, is done away with.
offering for sale any notification issued, by the
Directorate of Publicity and Public Relations of
CBEC. d. Provide that in case of finalization of provisional
assessment, the interest will be chargeable from
the original date of payment of duty.
 Clause 140 of the Bill seeks to amend Section 11A so
as to increase the period of limitation from one year
to two years in cases not involving fraud,
suppression of facts, willful mis-statement, etc. AMENDMENT EFFECTIVE FROM 1st APRIL 2016

 Clause 141 of the Bill seeks to amend Section 37B so  Interest rate on delayed payment of duty reduced
as to empower the Board for implementation of any from 18% to 15%.
other provision of the said Act in addition to the
power to issue orders, instructions and directions.  EOUs would now be required to submit annual return.

 Clause 142 (2),141 (1) of the finance bill seeks to


amend The Third Schedule so as to: AMENDMENT EFFECTIVE FROM 1st JUNE 2016

a. Make some editorial changes, consequent to 2017  Introduction of Indirect tax Dispute Resolution
Scheme, 2016 to bring down litigations pending
Harmonized System of Nomenclature First and
before Commissioner (Appeals).
Second Schedules, to be effective from
01.01.2017.
b. include therein: AMENDMENT EFFECTIVE FROM ENACTMENT OF BILL

 All goods falling under heading 3401 and 3402;  Period of limitation increased from 1 year to 2 years
 Aluminum foils of a thickness not exceeding 0.2 mm; in cases not involving fraud, suppression of facts,
 Wrist wearable devices (commonly known as ‘smart willful misstatement etc.
watches’); and
 Accessories of motor vehicle and certain other
AMENDMENT EFFECTIVE FROM DATE TO BE NOTIFIED
specified goods. Changes at (b) above will come
into effect immediately owing to a declaration
under the Provisional Collection of Taxes Act, 1931.  Monthly excise returns can be revised before end of
the month in which the original was submitted by
the due date.
AMENDMENT IN CENTRAL EXCISE RULES, 2002
AMENDMENT EFFECTIVE FROM 1st MARCH 2016

The Central Excise Rules, 2002 are being amended so as to:


a. Reduce the number of returns to be filed by a
central excise assessee above a certain threshold

Page 15 of 21
 Two or more premises of the same factory located
within jurisdiction of a range, can operate under single
registration subject to certain conditions.
 Interest under provisional assessment to be levied on AED per AED per
unpaid amount from the due date till the date of Description 1,000 1,000
actual payment. sticks sticks

 Provisions of deemed manufacture and MRP valuation From TO


extended to the following goods: Non filter not exceeding 70 215
65 mm
PARTICULARS ABATEMENT Non-filter exceeding 65 110 370
but not exceeding 70 mm
Filter not exceeding 65 mm 70 215
Aluminum foils of a thickness not 25%
Filter exceeding 65 mm 70 260
exceeding more than 0.2mm
but not exceeding 70 mm
Smart watches 35%
Filter exceeding 70 mm 110 370
Accessories of motor vehicles and 30% but not exceeding 75 mm
certain other specified goods
Soap, organic surface-active product and 30%
 Infrastructure cess imposed on motor vehicles of
preparation for use
heading 8703 as follows:
as soap, etc.
ITEMS INFRASTR
 Basic excise duty of 2% (without CENVAT credit) or UCTURE
12.5% (with CENVAT credit) levied on branded
readymade garments and made-up articles of CESS
textiles with an MRP of INR 1,000 or above.
Three wheeled vehicles, electrically NIL
 Basic excise duty of 1% (without CENVAT credit) or operated vehicles, hybrid vehicles,
12.5% (with CENVAT credit) levied on articles of hydrogen vehicles based on fuel cell
jewellery (excluding silver jewellery, other than technology, motor vehicles which after
studded with diamonds and other precious stones) clearance have been registered for use
subject to specified threshold. solely as taxi (subject to prescribed
conditions), cars for physically
 Basic excise duty of 2% (without CENVAT credit) or handicapped persons(subject to
12.5% (with CENVAT credit) levied on charger, prescribed conditions), and motor
battery, wired headsets/speakers, for use in vehicles cleared as ambulances or
manufacture of mobile handsets. registered for use solely as
ambulance(subject to prescribed
 Basic excise duty of 4% (without CENVAT credit) or conditions)
12.5% (with CENVAT credit) levied on routers, Petrol / LPG / CNG driven motor 1%
broadband modems, set-top boxes, digital video vehicles of length not exceeding 4m
recorder, close circuit camera, etc. and engine capacity not exceeding
1200cc
Diesel driven motor vehicles of length 2.5%
 Changes in the additional duty of excise levied not exceeding 4m and engine capacity
under the Seventh Schedule to the Finance Act, not
2005 on non-filter and filter cigarettes as follows: exceeding 1500cc
Other higher engine capacity motor 4%
vehicles and special utility vehicles and
bigger sedans

Page 16 of 21
 Changes in the basic excise duty rates on some other
key items are set out below: EXEMPTIONS INTRODUCED / EXTENDED

BASIC DUTY  Ready mix concrete manufactured at the site of


DESCRIPTION construction.
From TO
Aviation turbine fuel other than 8 14  Tools and tools kits procured by MRO entities for
for supply to scheduled maintenance, repair of aircraft subject to
commuter airlines from the certifications by Director General of Civil Aviation.
regional connectivity schemes
airports
 Inputs, parts and components, subparts for
manufacture of charger/ adapter, battery and wired
Certain parts of railway, 12.5 6
headsets/ speakers of mobile phone, subject to
tramway locomotives or rolling
actual user condition.
stock

Engine for hybrid electric 12.5 6  Parts, components, accessories and subparts for
vehicles manufacture of routers, broadband modems, set-top
boxes, digital video recorder, close circuit camera,
Gold bars manufactured from 9 9.5 etc.
gold ore or concentrate; gold
dore bar and silver dore bar  Exemption to canned software and packaged
software extended to media with recorded
Gold bars and gold coins of 9 9.5 information technology software on which MRP is
purity not below 99.5%, not required to be declared where service tax is
produced during the process of leviable.
copper smelting
 Disposable sterilized dialyzer and micro barrier of
Water, including mineral waters 18 21 artificial kidney.
and aerated waters, containing
added sugar or other
sweetened matter or flavoured

 Abatement rate from MRP for footwear increased


from 25% to 30%.

 Tariff value on readymade garments increased from


30% to 60%.

 Oil Industries Development cess reduced from INR


4,500 per metric tonne to 20% ad valorem on
domestically produced crude oil.

 Increase in clean energy cess from INR 200 to INR 400


per ton on coal, lignite and peat.

Page 17 of 21
SECTION 28 - NOTICE FOR PAYMENT OF DUTIES,
CUSTOMS INTEREST ETC.
SECTION 47 - CLEARANCE OF GOODS FOR HOME
CONSUMPTION.
RATE OF CUSTOMS DUTY
SECTION 51 - CLEARANCE OF GOOD FOR EXPORTATION”
SECTION 156 “GENERAL POWER TO MAKE RULES “.
 Median rate of BCD retains at 10%.
 Effective peak rate of customs duty remains at 29.44%.
BRIEF: Clause 117,118,119 & 135 of the finance bill
seeks to amend section 28, 47, 51 & 156.
SECTION 2 SUB SECTION 43 - DEFINITIONS
 OUR TAKE: Section 28, 47, 51,156 is being amended so
BRIEF: Clause 113 of the finance bill seeks to amend as to
section 2, subsection 43. a. Increase the period of limitation from one year to
two years in cases not involving fraud,
OUR TAKE: Subsection (43) of Section 2 is being amended suppression of facts, willful mis-statement, etc.
so as to add a new class of warehouses for enabling
storage of specific goods under physical control of the b. Provide for deferred payment of customs duties
department, as control over the other types of for importers and exporters to certain class of
warehouses would be only record based. importers and exporters.
SECTION 2 SUB SECTION 45 - DEFINITIONS SECTION 53 – TRANSIT OF CERTAIN GOODS WITHOUT
 PAYMENT OF DUTY
BRIEF: Clause 114 of the finance bill seeks to amend
section 2, subsection 45. BRIEF: Clause 120 of the finance bill seeks amend
section 53 of the Customs Act.
OUR TAKE: Subsection (43) of Section 2 is being
amended so as to omit the word “warehousing station” OUR TAKE: Section 53 is is being amended so as to
from chapter heading of Chapter III “Appointment of enable the Board to frame regulations for llowing
Customs Ports, Airports, Warehousing Stations etc.” transit of certain goods and conveyance without
payment of duty.
SECTION 9 - POWER TO DECLARE PLACES TO BE
WAREHOUSING STATIONS SECTION 57 – APPOINTING OF PUBLIC WAREHOUSES
 SECTION 58 – LICENSING OF PRIVATE WAREHOUSES
BRIEF: Clause 115 of the finance bill seeks to omit
section 9. BRIEF: Clause 121, 122 of the finance bill seeks amend
section 57 & 58 of the Customs Act.
OUR TAKE: Section 9 is being amended so as to omit
section 9 “Power to declare places to be warehousing OUR TAKE: Sections 57 and 58 are being substituted to
station”. provide for licensing by the Principal Commissioner or
Commissioner, in place of Deputy/Assistant
SECTION 25 - POWER TO GRANT EXEMPTION FROM Commissioner, subject to such conditions as may be
DUTY prescribed

BRIEF: Clause 116 of the finance bill seeks to amend SECTION 58A - NEW CLASS OF WAREHOUSES
section 25.
BRIEF: Clause 122 of the finance bill seeks to insert new
OUR TAKE: Section 25 is being amended so as to omit section 58A
the requirement of publishing and offering for sale any
notification issued, by the Directorate of Publicity and OUR TAKE: New section 58A is being inserted to
Public Relations of CBEC. provide for a new class of warehouses which require

Page 18 of 21
continued physical control and will be licensed for OUR TAKE: Section 62 relating to physical control over
storing goods, as may be specified. warehoused goods is being omitted since the
conditions for licensing different categories of
SECTION 58B - CANCELLATION OF LICENCES warehouses and exercising control over the same are
being provided under sections 57, 58 and 58A.
BRIEF: Clause 122 of the finance bill seeks to insert new
section 58B. SECTION 63- PAYMENT OF RENT AND WAREHOUSE
CHARGES
OUR TAKE: New section 58B is being inserted so as to
regulate the process of cancellation of licences which is BRIEF: Clause 126 of the finance bill seeks to omit
a necessary concomitant of licensing. section 63.

SECTION 59 - WAREHOUSING BOND OUR TAKE: Section 63 relating to payment of rent and
warehouse charges is being omitted in view of the
BRIEF: Clause 123 of the finance bill seeks to amend privatization of services, and free market
section 59. determination of rates, including those by facilities in
the public sector.
OUR TAKE: The existing section 59 governing
warehousing bonds submitted by importers availing SECTION 64- PAYMENT OF RENT AND WAREHOUSE
duty deferred warehousing is being substituted so as to CHARGES
fix the bond amount at thrice the duty involved and to
furnish security as prescribed. BRIEF: Clause 127 of the finance bill seeks to amend
section 64.
SECTION 60- PERMISSION FOR DEPOSIT OF GOODS IN A
WAREHOUSE OUR TAKE: The existing section 64 relating to owner’s
rights to deal with warehoused goods is being
BRIEF: Clause 124 of the finance bill seeks to amend substituted so as to rationalize the facilities and rights
section 60. extended under the section.

OUR TAKE: The existing section 60 is being substituted SECTION 65- MANUFACTURE AND OTHER OPERATIONS
to define the date of removal of goods from a customs IN RELATION TO GOODS IN A WAREHOUSE
station and deposit thereof in a warehouse.
BRIEF: Clause 128 of the finance bill seeks to amend
SECTION 61- PERIOD FOR WHICH GOODS MAY REMAIN section 65.
WAREHOUSED
OUR TAKE: Section 65 is being amended to delete the
BRIEF: Clause 125 of the finance bill seeks to amend payment of fees to Customs for supervision of
section 61. manufacturing facilities under Bond; and empower
Principal Commissioner or Commissioner of Customs to
OUR TAKE: The existing section 61 is being substituted licence such facilities.
to extend the period of warehousing to all goods used
by Export Oriented Undertakings, Units under SECTION 68- CLEARANCE OF WAREHOUSED GOODS FOR
Electronic Hardware Technology Parks, Software HOME CONSUMPTION
Technology Parks, Ship Building Yards and other units
manufacturing under bond; empower Principal BRIEF: Clause 129 of the finance bill seeks to amend
Commissioners and Commissioners to extend the section 68.
warehousing period up to one year at a time.
OUR TAKE: Section 68 is being amended to omit rent
SECTION 62- CONTROL OVER WAREHOUSED GOODS and other charges on account of omission of section 63.

BRIEF: Clause 126 of the finance bill seeks to omit


section 62. SECTION 69- CLEARANCE OF WAREHOUSED GOODS FOR
EXPORTATION

Page 19 of 21
BRIEF: Clause 130 of the finance bill seeks to amend
section 69.
CUSTOMS TARIFF ACT
OUR TAKE: Section 69 is being amended to omit rent
and other charges on account of omission of section 63.  Clause 137 of the finance bill seeks to omit Section 8C
[Power of Central Government to impose transitional
product specific safeguard duty on imports from People’s
SECTION 71 - GOODS NOT TO BE TAKEN OUT OF Republic of China.
WAREHOUSE EXCEPT AS PROVIDED BY THIS ACT
 Clause 138 (ii), of the finance bill seeks editorial changes in
BRIEF: Clause 131 of the finance bill seeks to amend the Harmonized System of Nomenclature (HSN) in certain
section 71. chapters are being incorporated in the First Schedules, to be
effective from 01.01.2017.
OUR TAKE: Section 71 is being amended so as to
substitute the word “exportation” with the word • Clause 138 (I), of the finance bill seeks to
“export” to align with definition contained in sub 1. amend supplementary notes (e) and (f) of Chapter 27 so
section (18) of section 2. as to change the reference:
a. from IS: 1460:2000 to IS: 1460:2005 for high speed
diesel (HSD)
SECTION 72 - GOODS IMPROPERLY REMOVED FROM b. from IS:1460 to IS: 15770:2008 for light diesel oil
WAREHOUSE, ETC. (LDO);
2. Substitute Tariff line 5801 39 10 with description “Warp
BRIEF: Clause 132 of the finance bill seeks to amend pile fabrics, uncut” in place of tariff line 5801 37 11 *with
section 72. description Warp pile fabrics ‘epingle’ uncut velvet+ and
5801 37 19 *with description Warp pile fabrics ‘epingle’
OUR TAKE: Section 72 is being amended to delete uncut other];
clause (c) regarding improper removal of samples 3. Prescribe separate tariff lines for laboratory created or
laboratory grown or manmade or cultured or synthetic
diamonds;
SECTION 73 - CANCELLATION AND RETURN OF 4. Delete Tariff line 8525 50 50, relating to Wireless
WAREHOUSING BOND microphone.

BRIEF: Clause 133 of the finance bill seeks to amend RULES AND REGULATIONS UNDER THE CUSTOMS ACT
section 73.
 Interest rate on delayed payment of Customs duty under
OUR TAKE: Section 73 is being amended to provide for Section 28AA has been reduced to 15% from the current
cancellation bond in case of transfer of ownership of 18%.
the goods, and is thus aligned with sub-section (5) of
section 59.  The existing Baggage Rules, 1998 are being substituted with
the Baggage Rules, 2016, so as to simplify and rationalize
SECTION 73A – CUSTODY OF WAREHOUSED GOODS multiple slabs of duty free allowance for various categories
of passengers. The new Rules are effective from 01.04.2016.
BRIEF: Clause 134 of the finance bill seeks to new
section 73A.  The existing Customs (Import of Goods at Concessional Rate
of Duty for Manufacture of Excisable Goods) Rules, 1996 are
OUR TAKE: New section 73A is being inserted so as to being substituted with the Customs (Import of Goods at
provide for custody of warehoused goods and Concessional Rate of Duty for Manufacture of Excisable
responsibilities including the liabilities of warehouse Goods) Rules, 2016.The new Rules will be effective from
keepers. 01.04.2016.

 The Customs Baggage Declaration Regulations, 2013 is being


amended so as to prescribe filing of Customs declaration

Page 20 of 21
only for those passengers who carry dutiable or prohibited goods

We may be contacted at the following offices:


CORPORATE OFFICE GURGAON INTERNATIONAL BRANCH
73, National Park 605, Suncity Business Tower 303,5th Avenue Suite 1007,
Lajpat Nagar IV, Golf Course Road, Sector-54, New York, NY 10016, U.S.A
New Delhi - 110024 Gurgaon,
INDIA Haryana - 122002
P: +91-11-41729056-57, P: +91-124-4245110/116/117 +91-
41729656/57 124-4245111

MUMBAI NOIDA ASSAM


Sitai Vihar, C-100,Sector-2, House No. 76,
Plot No 67A, Sector New 50 Noida- 201301 Near Godrej Interio,
4th Floor, B- Wing Uttar Pradesh Forest Gate, P.O. Narangi,
Navi Mumbai – 400706 M: +91- 9811481093 Guwahati – 781026
Mumbai P: +91-0361-2552302
M: +91- 9022131399 M: +91-9864857565

For enquiries related to:

Service Contact Person Service Contact Person


DVAT: faiz@ascgroup.in Service Tax: nitin@ascgroup.in
HVAT: deepak@ascgroup.in Transfer Pricing & PE: shailendra@ascgroup.in
TDS: Vikash@ascgroup.in Legal Metrology: Mayank.singhal@ascgroup.in
Excise: deepak@ascgroup.in Company Law: legal@ascgroup.in
UPVAT: jaswant@ascgroup.in PR/Media socialmedia@ascgroup.in
Income Tax: shailendra@ascgroup.in
Maharashtra VAT: niten@ascgroup.in

Disclaimer:
This e-bulletin is for private circulation only. Views expressed herein are of the editorial team. ASC or any of
its employees do not accept any liability whatsoever direct or indirect that may arise from the use of the
information contained herein. No matter contained herein may be reproduced without prior consent of ASC.
While this e-bulletin has been prepared on the basis of published/other publicly available information
considered reliable, we do not accept any liability for the accuracy of its contents.

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