Proposed Changes by The Finance Bill 2008

Proposed Changes by The Finance Bill 2008

DIRECT TAX

Changes in Rates

Individual	Women	Senior Citizen	Rate of Tax
0-150000	0-180000	0-225000	0%
150001-300000	180001-300000	225000-300000	10%
300001-500000	300001-500000	300001-500000	20%
Above 500000	Above 500000	Above 500000	30%

Surcharge: If the income exceeds above Rs. 100000/-, Surcharge at 10%.

Education Cess: 2%

Secondary and Higher Education Cess: 1%

No Change in rates of other type of assessees.

Rate of Short Term Capital Gain in respect of Securities is proposed to be increased from 10% to 15%.

2. Reverse Mortgage Scheme:

It is being clarified that at the time of taking loan, it will not amount to transfer, and hence will not be chargeable to tax as “Capital Gains”

3. Enlargement of the scope of saving instrument in section 80C

The following investments will also be eligible within the overall limit of Rs. 1.00 lac as deduction under section 80C

Five year time-deposit in an account under Post Office Time Deposit Rules 1981

Deposit in an account under the Senior Citizen Savings Scheme Rules 2004.

The above deposits will be with a lock in period of 5 years. If the amount is withdrawn before the end of 5 Years, the same will be taxable in the year of withdrawal.

4. Additional deduction for health Insurance premium paid for parents

There will be additional deduction to the extent of Rs. 15000/- in respect of premium paid for health insurance of parents.

5. Amendment in definition of ‘Charitable purpose’

“Charitable Purpose” will not include the following activity:

a. Any activity in the nature of trade, commerce or business or,

b. Any activity of rendering any service in relation to any trade, commerce or business.

This amendment has been made to overcome the various judicial decisions which have held the trade associations to be entitled for exemption being organisation for charitable purpose.

Amortisation of Preliminary Expenses:

Amortisation of Preliminary expenses will be allowed as deduction u/s 35D to all undertakings or units.

Dividend Distribution Tax

Holding companies, if they are not subsidiary of any other company, will not be liable to pay Dividend Distribution Tax in respect of Dividends received from their Subsidiaries.

Scope of section 194C

Association of persons and the Body of Individuals will be liable to make deduction of tax at source from payment made to contractors u/s 194C.

The provision for dispensing with the issue of TDS Certificate, further postponed to 1-04-2010.

No TDS on listed Debt Instruments

There will be no TDS on Interest on Securities payable to a resident, if the security is in dematerialized form and is listed on any recognized stock exchange.

Deduction for Scientific Research

The payment made to a company fulfilling the following conditions will be eligible for weighted deduction of 125% of the payments made for scientific research :

The company is registered in India.

The Company has as its main object the scientific research and development

The company is for the time being approved by the prescribed authority in the prescribed manner; and

The company fulfills such other conditions as may be prescribed.

Agricultural Income

The widening of the definition of “Agricultural Income” to include the income from nursery, if the basic operations on land and subsequent operations are carried out in continuation of the basic operations.

The following income of “Sikkimese” individual will be exempt :

Income from any source in the State of Sikkim; or

Income by way of dividend or interest on securities.

It will not be available to Sikkimese woman who marries a non-sikkimese individual.

Income of Coir Board has been made Exempt.

Tax Holiday to Hospitals

Five year tax holiday to Hospitals located any where in India except the following areas:

Greater Mumbai, Delhi, Kolkatta, Chennai, Hyderabad, Bangalore, Ahmedabad, Faridabad, Districts of Faridabad, Gurgaon, Ghaziabad, Gautam Buddha Nagar and Gandhinagar and the City of Secunderabad.

The other condition is that it should be 100 beded hospitals and construction should commence after 1-4-2008 and should start operation before 31-03-2013.

Tax Holiday to Hotels in World Heritage

Benefit of section 80ID providing tax holiday for 5 years to be extended to 2 star, 3 star and 4 star hotels to be set up in specified district having a World Heritage. The proposed districts are:

Agra, Jalgaon, Aurangabad, Kancheepuram, Puri, Bharatpur, Chhatarpur, Thnajavur, Bellary, South 24 Paraganas (excluding areas falling within the Kolkatta Urban Agglomeration on the basis of 2001 census), Chamoli, Raisen, Gaya, Bhopal, Panchmahal, Kamrup, Goalpara, Nagaon, North Goa, South Goa, Darjeeling and Nilgiri.

Disallowance of Cash Expenditure

Cash payment in excess of Rs. 20000/- is disallowed as expenditure. It has been judicial understanding that it applies for each payment irrespective of number of payments in a day. Now, it is proposed to apply this limit to aggregate of payments made in a day. For example payment of Rs. 15000/-, 16000/- and Rs. 9000/- by cash to a person in a day was not hit by the provisions of section 40A(3). Now it is proposed to cover such payments.

Due date for filing of return

Date of filing return of income in case of companies and persons required to get their accounts audited is being proponed from 31^st October to 30^th September.

Adjustment in return of income

Provision is being made to authorize the adjustments in the income returned on account of any arithmetical error in the return or incorrect claim, if such claim is apparent from any information in the return. This is to be done without any human interface.

Penalty Proceedings

Retrospective amendment is being made to annul the decisions of the honble courts that for initiating the penalty proceedings, it is necessary to record the satisfaction by the Assessing officer.

Time limit for issue of notice for assessment

The time limit for service of notice u/s 143(2) is being changed providing that the notice shall be served before the expiry of the six months from the end of the financial year in which the return is filed. Presently, the time limit is one year from the end of the month in which return is filed.

Deemed service

Provision is also being made that if the assessee has appeared and taken part in the proceedings, he shall be precluded to claim that the notice was not served or was not served in time or was served in an improper manner.

Book Profit

Retrospective amendment is also being made to annul the decisions of courts to provide that for computation of book profits u/s 115JB, the amount of tax will include deferred tax and will be added back.

Amendment in section 148

Retrospective amendments are also being made in section 148 and 151 to annul the decisions. By amending section 148, it is being provided that the assessing officer may assess or reassess an income which is chargeable to tax and has escaped assessment and has not been subject matter of any appeal, reference or revision. By amending section 151, it is being clarified that JCIT, CIT or CCIT need not issue notice himself. They need to be only satisfied for issued of the notice.

Amendment in Section 201

Retrospective amendment is also proposed in section 201, to clarify the intention that a person will be deemed to be in default even in cases where there is failure to deduct tax.

Stay of Grant by ITAT

The ITAT cannot grant stay for a period beyond 365 days even if the delay is not attributable to the assessee.

Settlement Commission

Provision regarding immunity from Penalty and prosecution and providing a time limit for assessment relating to abatement of settlement proceedings is proposed. The salient features of the scheme for granting immunity from penalty are as under:-

The application for the immunity must be made by the assessee (person whose case has been abated under section 245HA) to the Commissioner of Income-tax.

If penalty was levied before or during the pendency of settlement proceedings, then the assessee can approach the commissioner for immunity at any time.

If no penalty was levied till the time of abatement of proceedings before Settlement Commission, then the assessee must make an application for immunity before the imposition of penalty by the Income tax authority.

Immunity can be granted by the Commissioner on his satisfaction.

The satisfaction is required to be that the assessee has cooperated in the proceedings after abatement and has made a full and true disclosure of his income and the manner in which such income has been derived.

Immunity can be subject to such conditions as the Commissioner may think to impose.

The immunity granted shall stand withdrawn, if such assessee fails to comply with any condition subject to which the immunity was granted.

The immunity granted may be withdrawn by the Commissioner, if he is satisfied that the assessee had, in the course of proceedings, after abatement, concealed any particulars from the Income-tax authority or had given false evidence.

Similarly the salient features of the scheme for granting immunity from prosecution are as under:-

The application for the immunity must be made by the assessee (person whose case has been abated under section 245HA) to the Commissioner of Income-tax before institution of the prosecution proceedings after abatement.

If prosecution proceedings were instituted before or during the pendency of settlement proceedings, then the assessee can approach the commissioner for immunity any time. However if the assessee has received any notice etc. from the Income tax authority for institution of prosecution, then he must apply to the commissioner for immunity, before actual institution of prosecution.

Immunity can be granted by the Commissioner on his satisfaction.

Where application for settlement under section 245C had been made before the 1st day of June, 2007, the Commissioner can also grant immunity from prosecution for any offence under this Act or under the Indian Penal Code or under any other Central Act.

Immunity can be subject to such conditions as the Commissioner may think to impose.

The immunity granted shall stand withdrawn, if such assessee fails to comply with any condition subject to which the immunity was granted.

Fringe Benefit Tax

1. Payment through pre-paid electronic meal card will also be excluded from the hospitality expenditure.

2. The following expenditure will not be considered ‘employees’ welfare’ expenditure for the purpose of FBT:

a. Creche Facility for the children of employees

b. Sponsor a sportsman, being an employee; or

c. Organize sports event for employees.

d. Guest house expenditure will no longer be liable to FBT.

The valuation for the purpose of FBT of Festival Celebration will be 20% of such expenditure instead of 50%.

Securities Transaction Tax

The following changes are proposed in case of Future and option securities:

In case of sale of an option in securities, STT shall be levied @ .017% of the Option Premium and shall be paid by seller.

In case of sale of an option where option is exercised, STT shall be levied at the rate of .0125 % of settlement price and shall be paid by the purchaser.

In case of sale of future in securities, STT shall be levied @ .017% and shall be payable by the seller.

In case the transactions are done as business transactions, the same will be allowable as deduction instead of ‘rebate.

Banking Cash Transaction Tax

It is being withdrawn with effect from 1-04-2008.

Commodity Transaction Tax

This tax is proposed to be levied in respect of :

Option in goods; or

Option in commodity derivative

Any other commodity derivative.

The tax is proposed as under:

Sl. No.	Taxable Commodities Transaction	Rate	Payable By
1.	Sale of an option in goods or an option in commodity derivative	.017%	Seller
2.	Sale of an option in goods or an option in commodity derivative, where option is exercised	0.125% on the settlement price of the option	Purchaser
3.	Sale of any other Commodity Derivative	0.017 % of the price at which the commodity derivative is sold	Seller

CUSTOMS

Note: (a) “Customs Duty” means the customs duty levied under the Customs Act, 1962.

“CVD” means the Additional Duty of Customs levied under section 3 of the Customs Tariff Act, 1975. Changes come into effect immediately unless otherwise specified.

Major proposals about customs duties are the following:

A. PROJECT IMPORTS:

Customs duty on project imports attracting 7.5% has been reduced to 5%.

B. CHEMICALS & PETROCHEMICALS:

1) Customs duty on crude and unrefined sulphur has been reduced from 5% to 2%.

2) Customs duty on phosphoric acid has been unified at 5% irrespective of its use.

Customs duty exemption presently available on naphtha for manufacture of specified polymers has been withdrawn.

C. EXPORT PROMOTION

1) Customs duty on unworked or simply prepared corals has been reduced from 10% to 5%.

2) Customs duty on rough cubic zirconia has been reduced from 5% to Nil.

3) Customs duty on cubic zirconia (polished) has been reduced from 10% to 5%.

4) Customs duty on tuna bait has been reduced from 30% to Nil.

5) Customs duty on specified machinery for manufacture of sports goods has been reduced from 7.5% to

5%.

Customs duty on specified raw materials for manufacture of sports goods for export has been reduced from 10% to Nil, upto 3% of FOB value of exports in the preceding year.

D. DAIRY/POULTRY

1) Customs duty on bactofuges has been reduced from 7.5% to Nil.

2) Customs duty on feed additives/pre-mixes has been reduced from 30% to 20%.

E. INFORMATION TECHNOLOGY/ELECTRONIC INDUSTRY

Customs duty on specified convergence products has been reduced from 10% to 5%.

Customs duty on specified raw materials and inputs for use in IT/electronic hardware industry has been reduced from 10%/ 7.5% to Nil, on end-use basis.

Customs duty on specified parts of set-top boxes has been reduced from 7.5% to Nil on end-use basis.

F. DRUGS AND KITS:

Customs duty on six specified drugs/kits, and bulk drugs for their manufacture, has been reduced from 10% to 5% with Nil CVD by way of excise duty exemption. These drugs are used in the treatment of cancer/diabetes/asthma/Hepatitis B etc.

Customs duty on specified raw materials for manufacture of ELISA kits has been reduced from 10%/7.5% to 5%.

METALS:

1) Customs duty on iron or steel melting scrap has been reduced from 5% to Nil.

2) Customs duty on aluminium scrap has been reduced from 5% to Nil.

NCCD: National Calamity Contingent duty of 1% currently leviable on Polyester filament yarn has been withdrawn.

Other relief measures:

1) Customs duty on specified raw materials for tyre industry has been reduced from 10% to 5%.

2) Customs duty on helicopter simulators has been reduced from 10% to Nil.

TOBACCO PRODUCTS:

Customs duty on cigars, cheroots and cigarillos has been increased from 30% to 60%.

4% ADDITIONAL DUTY OF CUSTOMS:

Exemption from additional duty of customs of 4% levied under section 3(5) of Customs Tariff Act, 1975 has been withdrawn from power generation projects (other than mega power projects), transmission, sub-transmission and distribution projects, and goods for high voltage transmission projects.

EXPORT DUTY:

Export duty rate on chromium ores and concentrates, all sorts, has been increased from Rs.2000 PMT to Rs.3000 PMT.

M. Miscellaneous:

1) The period for re-export of leased equipment and machinery, imported for temporary use in contracts, has been increased from 12 months to 18 months. The slab rates of duty applicable on such imports have now been provided on a quarterly basis, as against half-yearly basis provided earlier. The rates have also been aligned with the rates of drawback admissible under section 74(2) of the Customs Act, 1962, depending on the period of retention of the goods in India. No drawback, however, will be admissible when such leased goods are re-exported.

2) The rates of drawback, in respect of goods which have been used after importation, have been aligned with the rates prescribed for duty payable on leased equipment and machinery, imported for temporary use in contracts, depending on the period of retention in India. The maximum period of retention of such goods, for admissibility of drawback, has been reduced from 36 months to 18 months.

3) Concessional customs duty of 5% provided on polymer long rod insulators has been restricted to polymer long rod insulators of 765 KV rating only.

4) Customs duty and CVD on 0.177 calibre airguns have been exempted. Consequently, 4% additional duty of customs shall also be exempted on these airguns.

5) Tariff rate of Rs.2000 per 1000 kWh has been prescribed on ‘electrical energy’. However, the effective rate will continue to be Nil.

CENTRAL EXCISE

Note: Changes come into effect immediately unless Otherwise specified.

Major proposals about central excise duty are the following:

A. GENERAL CENVAT RATE:

General rate of excise duty (CENVAT) has been reduced from 16% to 14%. The other ad valorem rates of 24%, 12% and 8% remain unchanged.

B. SECTOR SPECIFIC RELIEF MEASURES:

I. Drugs and Pharmaceuticals:

(a) Excise duty has been reduced from 16% to 8% on all drugs (formulations).

(b) Excise duty has been reduced from 16% to 8% on:

(i) instant sterile dressing pads, burn therapy pads, corn removers etc.

(ii) sterile surgical catgut, sterile absorbable surgical and sterile tissue adhesive for wounds closure etc.

(iii) first aid boxes and kits, blood grouping reagents etc.

(c) Excise duty has been fully exempted on Anti-AIDS drug ATAZANAVIR, and bulk drugs for its manufacture.

II. Auto Sector:

Excise duty has been reduced on:

(a) Small cars from 16% to 12%.

(b) Hybrid cars from 24% to 14%.

(c) Electric cars from 8% to nil.

(d) Specified parts of electric cars from 16% to nil on end-use basis.

(e) Buses and other vehicle for transport of more than 13 persons from 16% to 12%, and on the chassis of such vehicles from ‘16% +Rs.10,000/-’ to ‘12% +Rs.10,000/-‘.

(f) Two-wheelers and passenger three-wheelers (upto 7 persons) from 16% to 12%.

III. Food Processing Sector:

(i) Excise duty has been fully exempted on:

(a) Packaged tender Coconut water

(b) Paws, mudi (puffed rice) and the like

(c) Milk containing edible nuts

(d) Tea/ coffee pre-mixes

(ii) Excise duty has been fully exempted on specified refrigeration equipment for the installation of a cold storage, cold room or refrigerated vehicle, on end-use basis.

(iii) Excise duty has been reduced from 16% to 8% on

(a) Muesli, corn flakes & similar breakfast cereals

(b) Sharbats

(c) Packaging material viz.:

 Open Top Sanitary (OTS) cans

 Aseptic packaging paper

 Aseptic bags

IV. Information Technology & Communication sector

(a) Excise duty has been fully exempted on Wireless data modem cards. Consequently, CVD shall also be exempted on imported cards. 4% additional duty of customs will, however, be applicable.

(b) Excise duty has been reduced from 16% to 8% on specified convergence products.

(c) Excise duty has been increased from 8% to 12% on packaged software.

V. Paper and Paper products

1) Excise duty on writing paper, printing paper and packing paper has been reduced from 12% to 8%.

2) Excise duty has been fully exempted on paper and paper products, manufactured from non- conventional raw materials, upto clearance of 3500 metric tonne in a year from a unit.

3) Excise duty on paper and paper products, manufactured from non-conventional raw materials, beyond clearance of 3500 metric tonne per year from a unit (not having an attached bamboo/wood pulp plant) has been reduced from 12% to 8%.

C. OTHER CONCESSIONS:

(a) Excise duty has been fully exempted on:

(i) Composting machines

(ii) Menthol/ Menthol Flakes

(b) Excise duty has been reduced from 16% to 8% on:

(i) Water filtration and purification devices

(ii) Veneers & Flush doors

(iii) Heat resistant rubber tension tape

(iv) Inks for marker pens, highlighters etc.

(c) Excise duty on pan masala, not containing tobacco, with betel nut content not more than 15%, has been

reduced from 16% to 8%. It has also been exempted from National Calamity Contingent Duty.

D. CEMENT:

(a) Excise duty has been revised on Bulk cement from “Rs.400 per tonne” to “ 14% or Rs. 400 per tonne, whichever is higher”

Excise duty has been increased on Cement clinkers from Rs.350 per tonne to Rs. 450 per tonne.

E. Cigarettes

At present, cigarettes attract duty at varying rates depending upon whether they are filter or non-filter and their length. Excise duty rates on non-filter cigarettes have been enhanced to bring them at par with filter cigarettes of corresponding length. The revised rates of excise duty (basic + NCCD + health cess) on non-filter cigarettes are as under:

S. No. Description From To

(Rs per 1000)

Non-filter cigarettes

1. Not exceeding 60 mm in length 168 819

2. Exceeding 60 mm but not exceeding 70 mm in length 546 1323

F. Petroleum

The duty rates on MS/HSD sold without a brand name have been converted from ‘ad valorem + specific rate’ to pure ‘specific rate’ as under:

S. No. Description From To

1. Motor Spirit 6% + Rs.13 per litre Rs.14.35 per litre

2. HSD 6% + Rs.3.25 per litre Rs. 4.60 per litre

The duty rates on branded fuels would continue to attract the present ad valorem cum specific rates i.e. as under:

a) Motor Spirit : 6%+ Rs.13 per litre

b) HSD : 6%+ Rs. 3.25 per litre

G. NCCD:

1) National Calamity Contingent duty (NCCD) at the rate of 1% has been imposed on mobile phones. On imported mobile phones, this duty shall be levied as additional duty of Customs under section 3(1) of the Customs Tariff Act, 1975.

2) National Calamity Contingent duty of 1% currently leviable on Polyester filament yarn has been withdrawn.

H. Miscellaneous:

1) General SSI exemption has been extended on HDPE/ PP tapes consumed captively in the manufacture of sacks/ bags. The change will come into effect from 1st April, 2008.

2) The rate of duty applicable to clearances of goods to domestic tariff area from export oriented units, software technology parks, electronic hardware technology parks etc. has been revised from ‘25% of the basic customs duty + excise duty payable on like goods’ to ‘50% of the basic customs duty + excise duty payable on like goods’.

I. AMENDMENTS IN CUSTOMS ACT AND CENTRAL EXCISE ACT:

(To come into effect on enactment of Finance Bill, unless otherwise specified)

Section 2 of the Central Excise Act,1944 is being amended to insert an explanation in clause(d) to provide that “goods” include any article, material or substance which is capable of being brought and sold for a consideration and such goods shall be deemed to be marketable.

Section 3A is being inserted in the Central Excise Act, 1944 empowering the Central Government to charge excise duty on the basis of capacity of production in respect of notified goods, and to notify the procedure for the same.

Section 11B of the Central Excise Act, 1944 is being amended to provide for the refund of interest paid on any duty of excise.

Section 11D the Central Excise Act, 1944 is being amended to enable the Central Government to recover any amount collected by any person as representing duty of excise in excess of the duty assessed or determined and paid on any excisable goods or any amount collected by any person as representing duty of excise on any excisable goods, which are wholly exempt or are chargeable to Nil rate of duty.

Section 11DD of the Central Excise Act, 1944 is being amended to provide for recovery of interest on amounts collected under section 11D.

Section 35B of the Central Excise Act, 1944 is being amended to provide for referring the matter to the jurisdictional Chief Commissioner where the Committee of Commissioners of Central Excise differs in its opinion on the legality and propriety of the order passed in an appeal by the Commissioner (Appeals).

Section 35E of the Central Excise Act, 1944 is being amended to provide for referring the matter to the Board where the Committee of Chief Commissioners of Central Excise differs in its opinion on the order passed by the Commissioner of Central Excise as adjudicating officer. Section 35E is also being amended to provide that order passed under section 35E of the Act shall be made within a period of three months from the date of communication of the decision or order of the adjudicating authority.

Section 35FF is being inserted in the Central Excise Act, 1944 to provide for payment of interest on pre-deposit made by an appellant who succeeds in appeal, if the amount of pre-deposit is not refunded within three months from the date of communication of the order of the appellate authority to the adjudicating authority.

Note 16 of Chapter 39 to the Central Excise Tariff Act, 1985 is being amended to specify that the process of lamination or of lacquering shall also amount to manufacture in addition to the process of metallization.

Notes of certain Chapters in the Central Excise Tariff Act, 1985 are being amended to align the definition of processes amounting to manufacture with the definition of manufacture in section 2 f(iii) of the Central Excise Act, 1944.

Section 28B of the Customs Tariff Act, 1962 is being amended to insert a new sub-section to enable the Central Government to recover any amount collected by any person as representing duty of customs in excess of the duty assessed or determined or paid on any goods or any amount collected by any person as representing duty of customs on any goods, which are wholly exempt or are chargeable to Nil rate of duty.

Section 108 of the Customs Act, 1962 is being amended to give all customs officers powers to issue summons.

Section 117 of the Customs Act, 1962 is being amended to increase the maximum amount of penalty from the existing ten thousand rupees to one lakh rupees.

Section 129A of the Customs Act, 1962 is being amended to provide for referring the matter to the jurisdictional Chief Commissioner of Customs where the Committee of Commissioners of Customs differs in its opinion on the legality and propriety of an order passed in an appeal by the Commissioner (Appeals).

Section 129D of the Customs Act, 1962 is being amended to provide for referring the matter to the Board where the Committee of Chief Commissioners of Customs differs in its opinion on the order passed by the Commissioner of Customs as adjudicating officer. Section 129D is also being amended to provide that the order passed under section 129D of the Act shall be made within a period of three months from the date of communication of the decision or order of the adjudicating authority.

Section 129EE is being inserted in the Customs Act, 1962 to provide for payment of interest on pre-deposit made by an appellant who succeeds in appeal if the amount of pre-deposit is not refunded within three months from the date of communication of the order of the appellate authority to the adjudicating authority.

Section 141 of the Customs Act, 1962 is being amended to regulate the manner in which the imported or export goods may be received, stored, delivered, dispatched or otherwise handled in a customs area by any person and to specify by regulations the responsibilities of person engaged in the aforesaid activities.

Section 158 of the Customs Act, 1962 is being amended to increase the maximum amount of penalty from five hundred rupees to fifty thousand rupees for contravention of any of the rules, and from two hundred rupees to fifty thousand rupees for contravention of regulations.

J. AMENDMENT IN RULES:

Rule 18 of the Central Excise (No.2) Rules, 2001 is being amended to allow with retrospective effect, rebate of duty paid on excisable goods cleared from the factory for exports.

Rule 12 of the Central Excise Rules, 1944 is being amended to allow with retrospective effect, rebate of duty paid on excisable goods cleared from the factory for exports.

Rule 18 of the Central Excise Rules, 2002 is being amended to allow with retrospective effect, rebate of duty paid on excisable goods cleared from the factory for exports.

The CENVAT Credit Rules, 2004 are being amended to bring in the following changes:

(a) Sub-rule (4) of Rule 3 is being amended to provide that in case of National Calamity Contingent duty (NCCD) payable on mobile phones, credit of any duty of excise other than NCCD will not be utilized for payment of the said NCCD. This change shall come into effect from 1st March, 2008.

(b) Rule 6 is being amended to provide following options to a manufacturer, using common inputs or input services for manufacture of dutiable as well as exempted goods and opting not to maintain separate accounts. Such manufacturers can,-

(i) either reverse the credit attributable (to be worked out in a manner prescribed in the rule) to the inputs and input services used in the manufacture of exempted goods; or

(ii) pay 10% amount of the value (to be determined in accordance with the provision of section 4/4A of the Central Excise Act, 1944) of the exempted goods.

This change shall come into effect from 1st April, 2008.

(c) A new rule 15A is being inserted to provide for general penalty upto Rs.5000/- in case of contravention of any of the provisions of the CENVAT Rules, 2004, for which no specific penal provision exists.

This change shall come into effect from 1st March, 2008.

The Central Excise (Determination of Retail Sale Price of Excisable Goods) Rules, 2008 are being issued under section 4A(4) of the Central Excise Act, 1944 to provide the manner of determination of retail sale price, where the same is not declared on the packages or tampered or altered or obliterated.

This change shall come into effect from 1st March, 2008.

K. 4% ADDITIONAL DUTY OF CUSTOMS:

L. EXPORT DUTY:

Export duty rate on chromium ores and concentrates, all sorts, has been increased from Rs.2000 PMT to Rs.3000 PMT.

M. Miscellaneous:

3) Concessional customs duty of 5% provided on polymer long rod insulators has been restricted to polymer long rod insulators of 765 KV rating only.

4) Customs duty and CVD on 0.177 calibre airguns have been exempted. Consequently, 4% additional duty of customs shall also be exempted on these airguns.

5) Tariff rate of Rs.2000 per 1000 kWh has been prescribed on ‘electrical energy’. However, the effective rate will continue to be Nil.

Service Tax

The following new services has been added:

Services provided in relation to information technology software for use in the course or furtherance of business or commerce.
Services provided in relation to Management of investment, under unit linked insurance business, commonly known as Unit Linked Insurance Plan (ULIP) scheme.
Services provided by recognized stock exchange, or recognized or registered association i.e. commodity exchanges in relation to securities or sale or purchase of any goods or forward contracts.
Services provided in relation to processing and clearing houses in relation to clearing and settlement of transactions in securities, goods or forward contracts.
Services provided in relation to supply of tangible goods, without transferring right of possession and effective control of the tangible goods.
Services provided in relation to internet telecommunication.

Scope of following existing services has been further extended:

Banking and financial services to include purchase and sale of foreign currency including money changing by authorized money dealer or money changer.
Foreign Exchange Broker Services provided by individual will also include the purchase and sale of foreign currency including money changing by authorized money dealer or money changer.
Cargo Handling services will include packing together with transportation of cargo or goods, with or without one or more other services like loading, unloading, unpacking.
Technical testing and analysis service will also include testing or analysis of information technology software.
Technical inspection and certification service to include inspection, examination and certification of information technology software.
Tour operator service to include services provided in relation to a journey from one place to another in a contract carriage vehicle. Use of such service by an educational body, other than commercial training or coaching center, imparting skill or knowledge or lessons on any subject or field shall be excluded.

The words ‘client’ or ‘customer’ occurring in 39 services is to be replaced any person which will enlarge the scope and remove the uncertainty as to who is client or customer.
It has been clarified that the services provided in the discipline of both computer hardware engineering and computer software engineering will be classifiable under consulting engineer service.
Threshold exemption limit is being increased from Rs. 8.00 lacs to Rs. 10.00 lacs.
A scheme for resolution of dispute relating to service tax arrears pending as on 1.3.2008 and involving amount not exceeding Rs. 25000/- is being introduced. The scheme will remain valid during the period of 1^st July 2008 to 30^th September 2008.

Proposed Changes by The Finance Bill 2008

Monday, May 5, 2008

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