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CVD exemption on specified machinery required for construction of roads being withdrawn.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

  • Abatement rate in respect of construction of residential complex, building is rationalized at 70% w.e.f 01.04.2016.
  • Clean Energy Cess on coal increased from Rs. 200 per tonne to Rs. 400 per tonne
  • Cess on crude reduced from 4500/MT to 20% ad valorem. Positive for companies like ONGC.
  • Proposed to exempt parts of dialysis equipment from basic customs duty.
  • Basic custom & excise duty on refrigerated containers reduced to 5%.
  • Higher excise duty on readymade garments priced at Rs. 1,000 or more.
  • Proposed to raise duty on most tobacco product by 10-15%.
  • Infrastructure cess levied on motor vehicles ranging from 1% to 4%
  • Number of returns for central excise assassee, above a certain threshold, is being reduced, from 27 to 13, one annual and 12 monthly returns. The annual return will also have to be filed by service tax assesses, above a certain threshold, taking total number of returns to three in a year for them. This will come into effect from 01.04.2016. The facility for revision of return, hitherto available to a services tax assessee only, being extended to manufacturers also.

CHANGES IN TAX TARES IN MAJOR CASES

SERVICE TAX

Heading

Existing

Proposed

Services provided by National Centre for Cold Chain Development of Agriculture, Cooperation and Farmer’s welfare, Government of India, by way of knowledge dissemination with effect from 01.04.2016

14%

NIL

Exemption on services provided by, -( i ) a senior advocate to an advocate or partnership firm of advocates providing legal Service; and (ii) a person represented on an arbitral tribunal to an arbitral tribunal, being withdrawn and service tax being levied under forward charge, with effect from 01.04.2016

NIL

14%

Services of transport of passengers, by ropeway, cable car or aerial tramway being withdrawn, with effect from 01.04.2016 NIL 14%
Negative List entry that covers ‘service of transportation of passengers, with or without accompanied belongings, by a stage carriage’ being omitted and tax proposed to be levied on service of transportation of passengers by air conditioned stage carriage, at the abatement of 60% without input tax credit, with effect from 01.04.2016 NIL 5.6%
Abatement on shifting of used household goods by a Goods Transport Agency is being rationalized at the rate of 60% without input tax credit, with effect from 01.04.2016 4.2% 5.6%
Service Tax on service of life insurance business provided by way of annuity under National Pension System regulated by Pension Fund Regulatory and Development Authority (PFEDA) w.e.f 01.04.16 3.5% NIL
Service tax provided by Employee’ Provident Fund Organization (EPFO) to employees, with effect from 01.04.2016 14% NIL
Composition rate of service tax on single premium annuity (Insurance) policies with effect from 01.04.2016 3.5%
Service tax on services provided by insurance Regulatory and Development Authority of India (IRDA) w.e.f 01.04.2016 14% NIL
Service tax on the services provided by way of skill / vocational training by training partners under Deen Dayal Upadhyay Grameen Kaushalya Yojana w.e.f 01.04.2016. 14% NIL
Service tax of assessing bodies empanelled centrally by Directorate General of Training, Ministry of Skill Development & Entrepreneurship w.e.f 01.04.2016. 14% NIL
Interest rates on delayed payment of duty/tax across all indirect taxes being rationalized at 15%, except in case of service tax collected but not deposited to the exchequer, in which case the rate of interest will be 24% from the date on which the service tax payment became due.
For assesses with taxable value during preceding year / years covered by the notice is less than Rs. 60 Lakh, the rate of interest on delayed payment of service tax will be 12%. This will come into effect from date of enforcement of Finance Bill, 2016.
Custom 18% Excise 18% Service tax 18% 24 % 30% Customs Excise Service tax 15%. 24% in case of tax collected but not deposited
Exemption from service tax being extended to services provided by way of construction, maintenance etc. of canal, dam or other irrigation works provided to bodies set up by Government, during the period from the 1st July, 2012 to 29 th January, 2014 5.6% of total amount NIL

Highlights of Union Budget 2016-17

BUDGET SEMINAR ACAE jointly with DTPA –  MARCH 1, 2016

Key Direct Tax Proposals

  • People with income less than Rs. 5 lakh to get rebate of Rs 5,000, up from Rs 2,000 last year.
  • Deduction for those who pay rent and do not have a house of their own and also do not get HRA from employers up from Rs. 24,000 to Rs. 60,000 p.a.
  • Disallowance will be limited to 1% of the actual expenditure claimed under rule 8D of Section 14A of income tax Act.
  • Tax on retirees: At present, social security schemes run by retirement fund body EPFO are tax free EEE ( exempt – exempt – exempt) scheme. That means deposits, accrual of interest and withdrawals are tax free under the scheme in order to bring greater parity in tac treatment of different types of pension plans, it is proposed that the contributions made on or after April 1, 2016 by an employee participating in a recognized provident fund and superannuation on withdrawal shall be exempt from tax. It is proposed to provide that any payment in commutation of an annuity purchased out of contrinution made on or after April 1, 2016, which exceeds 40% of the annuity, Shall be chargeable to tax.
  • For first home buyers, additional exemption of interested on housing loan of Rs. 50,000. Qualifying Criteria is that the loan value should be max Rs. 35 Lakh on cost of house not exceeding Rs. 50 lakh.
  • Tax-free superannuation limit increased to Rs 1.5 lacs.
  • Dividend income of individuals and HUF exceeding Rs 10 lac p.a will now be taxable @10%
  • Tax holiday for eligible starts – ups set up after April 1, 2016 for three consecutive years out of the first five years of setting up the company.
  • Long Term Capital gain period for unlisted companied reduced from 3 to 2 years in respect of sale of shares.
  • Presumptive Taxation limit enhanced to Rs. 2 crores. Thus small & medium business can opt for 8% presumed income & will not have to maintain accounts or get them audited up to turnover of Rs. 2 Cr.