Highlights of Union Budget 2016-17

BUDGET SEMINAR ACAE jointly with DTPA –  MARCH 1, 2016

       CUSTOMS  DUTY

Heading

Existing

Proposed

Project Imports for cold storage, cold room (including for farm level pre-cooling) being extended for ‘cold chain including pre-cooling unit, pack houses, sorting and grading lines and ripening chamber’s also.

10%

5%

Refrigerated containers

10%

5%

Imitation Jewellery

10%

15%

Solar Lamp

12.5%

NIL

The duty free import allowance for bona fide gifts imported by post or air by courier service.

Rs. 100000

Rs.20000

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

2.5% / 10%

2.5%

Coal gas, water gas, producer gas and similar gases, other than petroleum gases and other gaseous hydrocarbons

10%

5%

CVD exemption on specified machinery required for construction of roads being withdrawn.

NIL

12.5%

Disposable sterilized dialyzer and micro barrier of artificial kidney being exempted from BCD, Excise duty / CVD and SAD

Applicable BCD, excise/CVD,SAD

Nil BCD NIL excise/ CVD nil SAD

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Highlights of Union Budget 2016-17

BUDGET SEMINAR ACAE jointly with DTPA –  MARCH 1, 2016

        Tax rate for Domestic Companies:

  • Where its total turnover or the gross receipt in the previous year 2014-15 does not exceed Rs. 5 crores – 29% of the total income shall be taxable.
  • And in all other cases, it will be 30% of the total income.

    Surcharge on domestic companies:

  • 7% whose taxable income exceeds Rs. 1 crore, but exceeds Rs. 10 crores p.a
  • 12% whose taxable income exceeds Rs. 10 crores p.a

    Surcharge on other than domestic companies:

  • 2% whose taxable income exceeds Rs.1 crore, but does not exceeds Rs. 10 crores p.a
  • 5% whose taxable income exceeds Rs.10 crores p.a

    Dividend Distribution Tax Increased:

    Additional tax at the rate of 15 per cent on dividends paid to its shareholders by the domestic company. [Section 115 – O]

Key Indirect Tax Proposals 

Krishi Kalyan Cess @ 0.5% on the value of taxable services proposed to be introduced w.e.f 1st day of June, 2016 to improve agriculture & other purpose relating to it.

Equalisation levy proposed to be charged @6% of the amount of consideration for any specified serviced received or receivable exceeding Rs. 1 lacs in the financial year by a non resident person not having permanent establishment in India from:

  1. A resident person carrying on business or profession; or
  2. A non- resident having a permanent establishment in India.
  • The Indirect Tax Dispute Resolution Scheme, 2016 proposed to come into force on 1st June, 2016 applicable to the declaration made up to 31st December, 2016:

A person may make a declaration to the designated authority on or before 31st Dec, 2016.

The designated authority shall acknowledge the same in such form as maybe prescribed.

The declaring shall pay tax due along with the interest & penalty equivalent to 25% of the penalty imposed in the impugned order within 15 days of the receipt of acknowledgement & intimate the designated authority within 7 days of making such payment giving details of payment made along with the proof. Within 15 days of the receipt of such proofs, the designated authority shall pass an order of discharge of dues.

  • No Service tax for houses built under 60 square meters.
  • Notification No. 14/2012 – ST, was amended by notification No. 1/2016 – ST so as to, inter alia, allow refund of service tax on services used beyond the factory etc. for the export. This amendment is being made effective from, 1st July 2012. This will come into effect from the date of enforcement of Finance Bill 2016.
  • Quarterly payment of services tax being extended to ‘one Person Company’ (OPC) and HUF also, with effect from 01.04.2016
  • Facility of payment of service tax being extended on receipt basis to ‘One Person Company’ (OPC) also, with effect from 01.04.2016
  • 13 cesses levied by other Ministries/Departments and administered by the Department of Revenue, where the revenue collection from each of them is less than Rs. 50 crore in a year being abolished.
  • CENVAT Credit Rules, 2004 being amended, to improve credit flow, reduce the compliance cost and litigation, particularly those relating to apportionment of credit between exempted and non-exempted final products/ services. Changes are also being made in the provisions relating to input services credit to outsourced manufacturers, under certain circumstances. Amendments will also enable manufactures with multiple manufacturing units to maintain a commom warehouse for inputs and distribute inputs with credits to the individual manufacturing units. This will come into effect from 01.04.2016
  • The monetary limit for launching prosecution being increased to Rs. 2 crore of services tax evasion and the power to arrest being restricted only to situations where the tax payer has collected the tax but no deposited in to the exchequer above a certain threshold of Rs. 2 crore. This will come into effect from date of enforcement of Finance Bill 2016.
  • Notification No. 27/2012 – C.E. (N.T.) being amended so as to provided that time limit for filling application for refund of Cenvat Credit, in case of export of services, is 1 year from the spevified date, with effect from 01.03.2016.
  • Period of limitation in respect of levy/payment/refund of service tax due to some error, is increased to 30 months from 18 months.

Fuel cost to be included for availing abatement on services by renting of motor cab from 01.04.2016.

Highlights of Union Budget 2016-17

BUDGET SEMINAR ACAE jointly with DTPA –  MARCH 1, 2016

Penalty rates to be 50% of tax case of underreporting of income and 200% of tax where there is misreporting of facts.

Time Limit of one year for disposing petitions of the tax payers seeking waiver of interest and penalty.

Mandatory for the assessing officer to grant stay of demand once the assesse pays 15% of the disputed demand, while the appeal is pending before Commissioner of income-tax (Appeals).

Surcharge to be raised from 12% to 15% on persons, other than companies, firms and cooperative societies having income above 1crore.

New manufacturing companies (set up after 1, 2016 ) to be taxed at 25% plus surcharge and cess.

From FY 17, small companies with exceeding Rs. 5 crore to be taxed at 29% plus surcharge and cess.

Major Amendments in Income Tax

Section Particulars Existing / Changes Effective Date
Sec 2 Amendment of section 2. (23c) “hearing includes communication of data documents through electronic mode. 1st June, 2016
Sec 6 Clause (3) Insertion of new Explanation

Substitution of Clause three – More clarity on place of effective management

A company is said to be resident in India in any previous year, if –
(i)It is an Indian company; or
(ii)Its place of effective management, in that year, is in India.Explanation. – For the purpose of this clause “place of effective management” means a place where key management and commercial decisions that are necessary for the conduct of the business of an entity as a whole, are in substance made.
1st April, 2017

Highlights of Union Budget 2016-17

BUDGET SEMINAR ACAE jointly with DTPA –  MARCH 1, 2016

  • Persumptive Taxation with profit presumption @50% introduced for professionals with receipts up to Rs. 50 Lacs p.a.
  • Limited period compliance window for undisclosed income from 1st June, 2016 to 30th Sept, 2016. Tax payable is 30% + 7.5% Surcharge + 7.5% Penalty. Total tax computed at 45%. Immunity assured from scrutiny and prosecution.
  • E-assessment of scrutiny cases, making life easier for the tax payer.
  • The Government re-affirmed its plans to implement General Anti Avoidance Rule (GAAR) from April 1, 2017, a major negative for Flls & the stock market. Further POEM (place of effective management ) is deferred by 1 year.
  • 1% Tax Collected at Source (TCS) on any in – cash purchase of goods (other than bullion and jewellery ) & services over Rs. 2 lacs.
  • 1% TCS on purchase of luxury car amounting to Rs 10 lac or more.
  • 6% withholding tax (equalization levy ) on B2B transactions by e-commerce companies to holding companies abroad.
  • Securities Transaction Tax (STT) in case of “Options” is proposed to be increased from .017% to .05%.
  • Phasing out deduvtion under Invome Tax:
  • Accelerated depreciation wherever provided in IT ACT will be limited to maximum 40% from 1.4.2017
  • Benefit of deductions for Research would be limited to 150% from 1.4.2017 and 100% from 1.4.2020
  • Benefit of section 10AA to new SEZ units will be available to those units which commence activity before 31.3.2020.
  • The weighted deduction under section 35CCD for skill development will continue up to 1.4.2020
  • Non-banking financial companies shall be eligible for deduction to the extent of 5%of its income in respect of provision for bad and doubtful.
  • One-time scheme of Dispute Resolution for ongoing cases under retrospective amendment.