Indirect Tax Proposals in Budget 2014

INDIRECT TAXES PROPOSALS:

• To boost domestic manufacture and to address the issue of inverted duties, basic customs duty (BCD) reduced on certain items.

• To encourage new investment and capacity addition in the chemicals and petrochemicals sector, basic customs duty reduced on certain items.

• Steps taken to boost domestic production of electronic items and reduce our dependence on imports. These include imposition of basic customs duty on certain items falling outside the purview of IT Agreement, exemption from SAD on inputs/ components for PC manufacturing, imposition of education cess on imported electronic products for parity etc.

• Colour picture tubes exempted from basic customs duty to make cathode ray TVs cheaper and more affordable to weaker sections.

• To encourage production of LCD and LED TVs below 19 inches in India, basic customs duty on LCD and LED TV panels of below 19 inches reduced from 10 percent to Nil.

• To give an impetus to the stainless steel industry, increase in basic customs duty on imported flat-rolled products of stainless steel from 5 percent to 7.5 percent.

• Concessional basic customs duty of 5 percent extended to machinery and equipment required for setting up of a project for solar energy production.

• Specified inputs for use in the manufacture of EVA sheets and back sheets and flat copper wire for the manufacture of PV ribbons exempted from basic customs duty.

• Reduction in basic customs duty from 10 percent to 5 percent on forged steel rings used in the manufacture of bearings of wind operated electricity generators. Exemption from SAD of 4 percent on parts and raw materials required for the manufacture of wind operated generators.

• Concessional basic customs duty of 5 percent on machinery and equipment required for setting up of compressed biogas plants (Bio-CNG).

• Anthracite coal, bituminous coal, coking coal, steam coal and other coal to attract 2.5 per cent basic customs duty and 2 per cent CVD to eliminate all assessment disputes and transaction costs associated with testing of various parameters of coal.

• Basic customs duty on metallurgical coke increased from Nil to 2.5 percent in line with the duty on coking coal.

• Duty on ship breaking scrap and melting scrap of iron or steel rationalized by reducing the basic customs duty on ships imported for breaking up from 5 percent to 2.5 percent.

• To prevent mis-use and avoid assessment disputes, basic customs duty on semiprocessed, half cut or broken diamonds, cut and polished diamonds and coloured gemstones rationalized at 2.5 percent.

• To encourage exports, pre-forms of precious and semi-precious stones exempted from basic customs duty.

• Duty free entitlement for import of trimmings, embellishments and other specified items increased from 3 percent to 5 percent of the value of their export, for readymade garments.

• Export duty on bauxite increased from 10 percent to 20 percent.

• For passenger facilitation, free baggage allowance increased from `.35,000 to `.45,000.

• To incentivize expansion of processing capacity, reduction in excise duty on specified food processing and packaging machinery from 10 percent to 6 percent.

• Reduction in the excise duty from 12 percent to 6 percent on footwear of retail price exceeding `500 per pair but not exceeding ` 1,000 per pair.

• Withdraw concessional excise duty (2 percent without Cenvat benefit and 6 percent with Cenvat benefit) on smart cards and a uniform excise duty at 12 percent.

• To develop renewable energy, various items exempted from excise duty.

• Exemption to PSF and PFY manufactured from plastic waste and scrap including PET bottles from excise duty with effect from 29th June, 2010 to 7th May, 2012.

• Prospective levy of a nominal duty of 2 percent without Cenvat benefit and 6 percent with Cenvat benefit on such PSF and PFY.

• Concessional excise duty of 2 percent without Cenvat benefit and 6 percent with Cenvat benefit on sports gloves.

• Specific rates of excise duty increased on cigrettes in the range of 11 per cent to 72 per cent.

• Excise duty increased from 12 percent to 16 percent on pan masala, from 50 percent to 55 percent on unmanufactured tobacco and from 60 percent to 70 percent on gutkha and chewing tobacco.

• Levy of an additional duty of excise at 5 percent on aerated waters containing added sugar.

• To finance Clean Environment initiatives, Clean Energy Cess increased from `.50 per tonne to `.100 per tonne.

SERVICE TAX:

• To broaden the tax base in Service Tax, sale of space or time for advertisements in broadcast media, extended to cover such sales on other segments like online and mobile advertising. Sale of space for advertisements in print media however would remain excluded from service tax. Service provided by radio-taxis brought under service tax.

• Services by air-conditioned contract carriages and technical testing of newly developed drugs on human participants brought under service tax.

• Provision of services rules to be amended and tax incidence to be reduced on transport of goods through coastal vessels to promote Indian Shipping industry.

• Services provided by Indian tour operators to foreign tourists in relation to a tour wholly conducted outside India to be taken out of the tax net and Cenvat credit for services of rent-a-cab and tour operators to be allowed to promote tourism.

• Service tax exempted on loading, unloading, storage, warehousing and transportation of cotton, whether ginned or baled.

• Services provided by the Employees’ State Insurance Corporation for the period prior to 1st July 2012 exempted, from service tax.

• Exemption available for specified micro insurance schemes expanded to cover all life micro-insurance schemes where the sum assured does not exceed `.50, 000 per life insured.

• For safe disposal of medical and clinical wastes, services provided by common biomedical waste treatment facilities exempted.

• Tax proposals on the indirect taxes side are estimated to yield `.7525 crore.

• 24X7 customs clearance facility extended to 13 more airports in respect of all export goods and to 14 more sea ports in respect of specified import and export goods to facilitate cargo clearance.

• ‘Indian Customs Single Window Project’ to facilitate trade, to be implemented.

• The scheme of Advance Ruling in indirect taxes to be expanded to cover resident private limited companies. The scope of Settlement Commission to be enlarged to facilitate quick dispute resolution.

• Customs and Central Excise Acts to be amended to expedite the process of disposal of appeals.