BUDGET 2014‐2015 

 

 

 

PGT & ASSOCIATES CHARTERED ACCOUNTANTS 

 

A.G. TULSIAN & CO. COST ACCOUNTANTS

  

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Disclaimer:

This presentation summarizes the proposals based on the Finance Bill presented in the Parliament on the 10th July, 2014.

The proposals are subject to amendment as the Finance Bill is passed by the

parliament and receives Presidential assent.

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PREFACE/FORWARD: First budget by the newly formed NDA government with full majority was presented by Honorable Finance Minister Mr. Arun Jaitly with full commitment to “Minimum Government Maximum Governance” is truly reflected as expenditures has been reduced and more transparency is brought in the tax laws. New Avenues and More Opportunity (“NAMO”) for Modi government is clearly reflected in this Budget. “Aachhe Din Aanewale Hai” the promises given in election are looking to be time taking job and FM has set the target for 3-4 years. Immediately after taking charge, Govt. realized that it is not an easy job to put the country on the BULLET growth track and before kick start we should have to take bitter pills. Since beginning the Government is playing a football game while comparing development growth during earlier NDA government and UPA government, which has been clearly seen in the economic survey. Overall NDA government has appraised the UPA government and its decision taken for controlling inflation and growth in spite of various adverse external factors at Global front and continue with the various welfare schemes. New challenges for coming years are to control inflation and bringing back the growth rate in double digit in phase manner. Bad monsoon and adverse EURO conditions are big hurdles to achieve the desire targets. To overcome the problems and to speed the growth rate, PPA model and FDI investment has been encouraged. On the tax front no major changes has been made except assurance that adverse retrospective amendments will not be brought into the legislature and tax disputes will be reduced by clarifying various issues. By indirectly increasing the DDT, FM has tried to compensate the enhanced welfare expenditure and some relief given to small tax payers. By announcing many welfare schemes with small fund allocation, show the willingness of government to do many thing to achieve social economic objectives. By giving something to each state and each class of society he has tried to justify “Sabka Saath Sabka Vikas” in the coming years. Moreover, the budget is totally silent on issues like recalling of Black Money etc. However, FM has given the indication that various legislative changes are needed to be made to achieve the desire result and in this regards long pending Bills like GST, DTC etc are to be implemented as soon as possible but failed to fix the time limit for the same. In general, FM has just delivered UPA Budget with saffron color by continuing most of the earlier schemes and tried to satisfy the public by not imposing major extra tax burden. Date 11th July, 2014

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CONTENTS

SUBJECT PAGE NO.

AN OVERVIEW OF THE ECONOMY (ECONOMIC SURVEY 2013-14) 4-12

KEY ANNOUNCEMENTS AND ECONOMIC REFORMS 14-20

Tax Highlights 21-22

DIRECT TAX PROPOSALS 23-31

INDIRECT TAX PROPOSALS

- Custom 32-34

- Excise 35-37

- Service Tax 38-42

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AN OVERVIEW OF THE ECONOMY (ECONOMIC SURVEY 2013-14) Key Highlights:

During 2014-15, the Indian GDP will grow by more than 5% against the last two years growth rate of below 5%.

The manufacturing sector has an average growth of 0.2% per annum in 2012-13 and 2013-14.

Higher inflation rate mainly in food played a significant role to curb the growth in savings, investment, and consumption.

The reduction in fiscal and current account deficit to 4.5% and 1.7% respectively is due to reduction in expenditure rather than increase in revenue. The improvement in deficit has given the hope that the same will be further improved in 2014-15 on gradual basis.

During last four years growth of coal and petroleum production is very low, which

has impacted the whole economy.

The share of the agriculture and allied sectors in GDP has been consistently declining while that of industry and services is increasing.

More focus will be on investment in marketing infrastructure and distribution

channels. Amendment in APMC Act by the State governments to remove restrictive provisions to provide alternative trading options for farmers.

The adverse monsoon during 2014-15 and higher prices of oil due to the geo-

political situation in the Middle East are the biggest huddles in controlling inflation. Over and above government decision on fertilizer subsidy and minimum support prices (MSP) could also have an impact on food inflation.

Significant increase in the international trade from 21.8% in the year 2000-01 to

44.1% in the year 2013-14.

During April- May 2014, Exports has increased by 8.9% as compared to the corresponding period of 2013.

With continuous increase in social expenditure and support by government the

Indian growth in HDI is much higher than the many developed countries.

To achieve growth in investment, job and income, Government has decided the following three step approach or priorities :

- Reducing the inflation by monetary policy, fiscal consolidation, and food market

reforms. - Tax reform by bringing GST, DTC, and more predictable tax administration while

expenditure reforms by focusing on public goods, subsidy program and mechanisms for accountability.

- Legal and regulatory frameworks by repealing the old legacy laws and bring new laws in those places.

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Key Indicators:

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GDP Growth:

The slowdown in the GDP growth in last two years is mainly due to the external factor and recession in the whole world and only China has achieved the growth rate more than India during 2013-14.

After 1986-87 and 1987-88 this is the first time that Indian GDP has witnessed GDP growth of less than 5% in two consecutive years i.e. 2012-13 and 2013-14 and the average growth for the year 2012-13 and 2013-14 has been declined to 4.6% against the average growth of 8.3% during the period 2004-05 to 2011-12.

The economic slowdown is mainly due to weak Industrial growth i.e. 0.2% in last two years, while agriculture has performed well.

Rate of Growth of GDP at Factor Cost at constant rate (2004-05 Prices (%).

Inflation:

Inflation was the major concern during 2012-13 and 2013-14 and average wholesale price (WPI) has decline to 6% against 8.9% in 2011-12 which is still above the comfort level.

Food (WPI) inflation is averaged 12.2% annually in the five years ending 2013-14, which was significantly higher than non-food inflation.

Consumer price index (CPI) remained at around 9-10% due to higher food inflation in the last couple of years.

More focus will be on investment in marketing infrastructure and distribution channels of food articles. Amendment in APMC Act by the State governments to remove restrictive provisions to provide alternative trading options for farmers.

Non creation of national market for agricultural products, many agents in distribution channel of food articles and non creation of competitive conditions in the distribution of commodities are the main cause of higher food inflation.

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Fiscal Deficit:

Current Account Deficit for the year 2013-14 is 1.7% of GDP as against 4.7% in

2012-13.

Fiscal deficit has declined to 4.5% in 2013-14 from 5.7% in 2011-12 and 4.9% in 2012-13.

The reduction in fiscal deficit and current account deficit is due to reduction in expenditure rather than from increased revenue.

Monetary Reforms:

Controlling inflation and exchange rate was the main objectives of monetary policy during 2013-14 which increase the interest rate.

To ease the liquidity positions RBI has introduced many measures including

reduction in CRR.

Agriculture:

India is still dependent on monsoon and with good favorable monsoon in 2013-14, agriculture and allied sectors has grown at 4.7% against average 3% between 1999-2000 and 2012-13.

The share of the agriculture and allied sectors in GDP has been consistently declining while that of industry and services is increasing. The same is clear by the below mention table.

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International Trade:

Since 2000-2001 India’s international trade has been increased from 21.8% to 44.1% in 2013-14 and India’s shares of exports and imports increased from 0.7% and 0.8% respectively in 2000 to 1.7% and 2.5% respectively in 2013 in world trade.

Export has registered a growth of 4.1% during 2013-14 against the negative growth of 1.8% during 2012-13 and reached to US$ 312.6 billion (on customs basis).

Imports declined by 8.3% in 2013-14 as compared to 2012-13. There is 12.8%

decrease in import of non-oil products against increase in import by 0.7% of petroleum, oil, and lubricants (POL) in 2013-14.

Decline in import mainly in gold and silver and increase in export has helped to

reduce the trade deficit to US$ 137.5 billion in 2013-14 from US$ 190.3 billion during 2012-13.

Export of services is continuously showing an increasing trend and registered a growth of 4% in 2013-14 as against 2.4% in 2012-13 and playing a major role to reduce the current trade deficit.

Slowdown in portfolio investment and net outflow in ‘short-term credit’ result into

decrease in Capital inflow (net) from US$ 92.0 billion in 2012-13 to US$ 47.9 billion in 2013-14.

At the end of March 2014, Foreign exchange reserves were placed at US$ 304.2

billion as against US$ 292.0 billion at end of March 2013. The foreign exchange reserve further increased to US$ 314.9 billion on June 20, 2014.

Industry and Infrastructure:

Coal production growth has been declined substantially in last four years ended on

31.03.2014 to an average growth rate of 1.6% against the average growth of 7.1% during the four-year period 2006-07 to 2009-10.

Crude petroleum compound annual growth rate (CAGR) was 1.2% during 2004-05 to 2013-14.

Manufacturing sector has disappointed the Indian economy in last two years and has grown by merely 0.2% per annum. Slow down in manufacturing sector has been also followed by the construction sector in last two years. Output of capital and basic goods has declined continuously for third year in a row since 2011-12. While intermediate and non-durable consumer goods has registered higher growth rate in 2013- 14 as compare to 2012-13.

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Service Sector:

Slow economic growth and dead growth in manufacture sector also have great impact on Service Sector and witnessed the slow growth during last two years.

57% contribution of GDP comes from Service sector and show a rapid growth in the last few years against the 65.9% share in world GDP.

The Service sector contributes only 28.1% in employment as compare to 44% in

world employment.

Country wise performance of service sector is as unde:

Social Sector:

Average Life of an Indian has been improved to 65.8 years in 2012 against global average of 70.1 years. With 1.5% average annual HDI growth India is better than many countries including China (1.42), Brazil (0.73), Egypt (0.92), and Bangladesh (1.46), though it is behind Pakistan (1.74).

India’s poverty ratio has declined from 37.2% in 2004-05 to 21.9% in 2011-12 and the number of poor has been declined from 407.1 million in 2004-05 to 269.3 million in 2011-12.

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Central Government Expenditure (Plan and non-Plan) on Social Services and Development as% of total expenditure is as under:

The trend in social services expenditure by Central government is as under:

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Human Development:

In spite of slow growth rate, India has not compromised with the human welfare.

India is going to be youngest country with an average population age of 29 years by 2020 against 37 years of China and USA.

New Job opportunities will be created and by 2016 the working population will be

increased to 64% against 58% in 2001 by creating about 63.5 million Jobs manly for young age group of 20-35 years.

India’s position in Human Development Index (HDI) is reflected in the below table:

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Calculation of Deficit and performance of various indicators:

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BUDGET HIGHLIGHTS AND ANNOUNCEMENT

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KEY ANNOUNCEMENTS AND ECONOMIC REFORMS:  Economic Updates:

• Fiscal Deficit & Inflation:

- Fiscal deficit of 4.1% of GDP for 2014-2015. - Fiscal Deficit targeted at 3.6% of GDP in 2015-2016 and 3% for 2016-17. - Sustained growth of 7-8 percent or above will be achieved within the next 3-4 years

along with macro-economic stabilization. - Improve tax to GDP ratio.

• Foreign Direct Investment (FDI):

- Promotion of FDI by Government in selected sectors. - Foreign investment in defense raised to 49% with full Indian management and

control through FIPB route. - FDI in insurance sector increased by 23% i.e. to be increased up to 49% with full

Indian management and control through FIPB route. - Retail selling of products including E- commerce platforms will be allowed to the

manufacturing units. - Requirement of the built up area reduced from to 20,000 square meters from

50,000 square meters and capital conditions for FDI reduced to USD 5 million from USD 10 million for development of smart cities.

• Rural Development:

- Shyama Prasad Mukherji Rurban Mission for integrated project based infrastructure in the rural areas.

- Under Ajeevika, the provision of bank loan for women SHGs at 4% to be extended to another 100 districts.

- Backward Region Grant Fund (BRGF) to be restructured to address intra-district inequalities.

- New projects or Expansion of existing and budget allocation for rural development are as follow:

Budget

Allocation (Rs. In Crore)

Project Name Project provided for

500 Deen Dayal Upadhyaya Gram Jyoti Yojana

Power supply to the rural areas.

14389 Pradhan Mantri Gram Sadak Yojna

Development of roads

100 Start Up Village Entrepreneurship Programme

Encouraging rural youth to take up local entrepreneurship programs

Increased to 8000

National Housing Bank Rural housing.

2142 Neeranchal Impetus to watershed development

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• Education:

- Jai Prakash Narayan National Centre for Excellence in Humanities in MP and 5 IIMs in the states of HP, Punjab, Bihar, Odisha and Rajasthan are to be set up.

- Allocation of budget in different projects are as follow:

Allocation of Budget (Rs. in

Crore)

Name of the Project Purpose

28635 Sarva Shiksha Abhiyan For School education 4966 Rashtriya Madhyamic Shiksha Abhiyan For School education 30 School Assessment Programme For School education 500 Pandit Madanmohan Malviya New

Teachers Training Programme To infuse new training tools and motivate teachers.

100 Communication Linked Interface for Cultivating Knowledge

For setting up virtual classrooms and online courses

500 5 IITs in Jammu, Chhattisgarh, Goa, AP and Kerala

For higher education

• Agriculture:

- To achieve growth of 4% in agriculture. - Second green revolution with focus on higher productivity including Protein

revolution will be the major area of focus. - Transformation plans will be taken to strengthen the ware housing sector and post

harvest lending to farmers. - Proposed to provide finance to 5 lakh joint farming groups of ‘Bhoomi Heen Kisan’

through NABARD. - Allocation of budget in different projects are as follow:

Allocation of

Budget (Rs. in Crore)

Name of the Project Purpose

100 Two more Agricultural Research Institute of excellence in Assam and Jharkhand

100 Agri-tech Infrastructure Fund ----- 200 Opening Agriculture Universities in Andhra Pradesh and Rajasthan and

Horticulture Universities in Telangana and Haryana. 100 ---- To provide a soil health card to each

farmer 100 National Adaption Fund To meet the unpredictable situations

occurred due to climate change. 500 Price Stabilization Fund To reduce the risk of price volatility

in agriculture produce. 5000 Warehouse Infrastructure Fund -----

Raised to 25000 Corpus of Rural Infrastructure Development Fund

-----

5000 Long Term Rural Credit Fund To provide refinance support to Co-operative and Regional Rural Bank.

50000 Short Term Co-operative Rural Credit

-----

200 NABARD’S Producers Development and Upliftment Corpus

For building 2000 producers organization over the next two years.

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• Financial Sector

Capital Market: The measures to be taken to energize the capital market are as follow:

- Introduction of uniform KYC norms and inter-usability of the KYC records across the entire financial sector.

- Introduce one single operating demat account. - Uniform tax treatment for pension fund and mutual fund linked retirement plan.

Banking:

- To infuse Rs. 240000 Crore as equity by 2018 in banks. - To increase capital of the banks by increasing shareholding of the people. - To launch a time bound programme as Financial Inclusion Mission on 15th August

this year with focus on the weaker sections of the society. - Permitting banks to raise long term funds for lending to infrastructure sector with

minimum regulatory pre-emption such as CRR, SLR and Priority Sector Lending. - Six new Debt Recovery Tribunals to be set up. - For venture capital in the MSME sector, a Rs. 10,000 crore fund to act as a catalyst

to attract private Capital by way of providing equity , quasi equity, soft loans and other risk capital for start-up companies with suitable tax incentives to participating private funds to be established.

Small Savings: - Kissan Vikas Patra (KVP) to be reintroduced. - NSC with insurance cover to provide additional benefits for the small saver. - Annual ceiling of PPF Investment scheme is enhanced from Rs. 1 lakh to Rs. 1.5

Lakhs.

• Defense and Internal Security Reforms in these sectors are as follow:

Sector Amount

Allocated (Rs. in Crore)

Project/ Developments And their Purpose

Defense Additional 1000 To meet the requirements of One Rank One Pension. Additional 5000 Capital outlay for defense.

1000 (Included in above)

For accelerating the development of the Railway system in the border areas.

100 For construction of a war memorial in the Princes Park, supplemented by a War Museum.

100 Technology Development Fund. Internal Security

3000 For modernization of state police forces. 2250 To strengthen & modernize border infrastructure. 990 For the socio economic development of the villages

along the borders. 150 Construction of Marine Police Station, Jetties and

purchase of boats etc. 50 Construction of National Police Memorial.

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• Housing: - Mission on Low Cost Affordable Housing anchored in the National Housing Bank to

be set up. - A sum of Rs. 4000 crores for NHB to increase the flow of cheaper credit for

affordable housing to the urban poor/EWS/LIG segment is provided. - Slum development to be included in the list of Corporate Social Responsibility (CSR)

activities to encourage the private sector to contribute more. • Senior Citizen and Differently Abled Person:

- Revival of ‘Varishtha Pension Bima Yojna’ from 15th August, 2014 to 14th August, 2015.

- Minimum pension of Rs. 1000 per month to all the subscriber members of EP Scheme.

- Increase in mandatory wage ceiling of subscription to Rs.15000 for PF. - To establish fifteen new Braille Presses and modernize ten existing Braille Presses

and to print currency notes with Braille like signs for visibly challenged persons. • Infrastructure

- An institution to provide support to mainstreaming PPPPs called 4PIndia to be set up with a corpus of Rs. 500 crores.

- Sector wise budget allocation , new policy and new projects and developments to be launched are as follows:

Sector Amount Allocated

(Rs. in crore)

Projects / New Developments

Shipping 11635 Outer Harbour Project in Tuticorin for Phase I. ----- “SEZs” in Kandla and JNPT

Inland Navigation

----- Project on Ganges “Jay Marg Vikas” between Allahabad and Haldia

New Airports ----- New airports in TierI and Tier II cities

Road Sector 37880 NHAI and State Roads which include Rs. 3000 crores for North East and Rs. 500 crore on expressways in parallel to the development of the Industrial Corridors.

----- NH Construction of 8500 Km in current financial year Energy 100 A new scheme “Ultra-Modern Super Critical Coal Based

Thermal Power Technology.” ---- Comprehensive measures for enhancing domestic coal

production ---- Adequate quantity of coal to power plants which are already

commissioned or would be commissioned by March 2015. New and Renewable Energy

500 Ultra Mega Solar Power Projects in Rajasthan, Gujarat, Tamil Nadu, Andhra Pradesh and Laddakh.

400 A scheme for solar power driven agricultural pump sets and water pumping stations.

100 Development of 1 MW Solar Parks on the banks of canals.

---- A Green Energy Corridor Project to be implemented to facilitate evacuation of renewable energy across the country.

Petroleum and Natural Gas

---- Acceleration of Production and exploitation of Coal Bed Methane reserves.

---- Usage of PNG to be rapidly scaled up in a Mission mode.

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• Culture and Tourism

The reforms in the above named sectors are as follow:

Sector Amount Allocated

(Rs. in Crore)

Project/ Developments And their Purpose

General 200 To build the statue of unity (National project). ---- Introduction of Facility of Electronic Travel Authorization (e-

Visa) at nine airports in India. 500 For developing 5 tourist circuits around specific themes. 100 For National Mission on Pilgrimage Rejuvenation and

Spiritual Augmentation Drive (PRASAD). 200 For National Heritage City Development and Augmentation

Yojana (HRIDAY). 100 For Archaeological sites preservation. ---- Development of Sarnath-Gaya-Varanasi Buddhist circuit to

attract tourists from all over the world. Water Resources and cleaning of Ganga

100 For Detailed Project Reports for linking of rivers. 2037 For Integrated Ganga Conservation Mission “NAMAMI

GANGE”. 100 For Ghat development and beautification at Kedarnath,

Haridwar, Kanpur, Varanasi, Allahabad, Patna and Delhi. ---- Setting up of NRI Fund for Ganga.

Science & Technology

---- Strengthening of at least five institutions as Technical Research Centres.

---- Development of Biotech clusters in Faridabad and Bengaluru.

---- Several major space missions planned for 14-15. Sports and Youth Affairs

200 For upgrading the indoor and outdoor sports stadiums in Jammu and Kashmir Valley to international standards.

100 For sports university in Manipur. ---- To start an annual event to promote Unique sports

traditions in the Himalayan region games. 100 For the training of sports women and men for forthcoming

Asian games. 100 Setting up of a “Young Leaders Programme”.

North Eastern States

100 For development of organic farming. 1000 For development of rail connectivity. ---- Launch of a new channel called ‘Arun Prabha’ to provide a

strong platform to rich cultural and linguistic identity of the North-East.

NCT of Delhi 200 For power reforms. 500 For Water reforms 50 To solve long term water supply issues.

Andaman and Nicobar Island and Puducherry

150 To tide over communication related problems of Island. 188 To Puducherry for meeting commitments for Disaster

preparedness.

500 To support displaced Kashmiri migrants. 100 To set up National Centre for Himalayan Studies in

Uttarakhand.

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• Others:

Sector Sectoral Reforms PSU Capital Expenditure

Investment of Rs. 247941 Crore by PSUs through capital investment in current financial year.

Smart Cities Allocation of Rs. 7060 crore for development of ‘One hundred smart cities’. Irrigation Allocation of Rs. 1000 Crore for assured irrigation in ‘Pradhan Mantri Krishi

Sinchayee Yojana’ Scheduled caste and Scheduled Tribe

Allocation of Rs. 50548 Crore under SC Plan and Rs. 32387 Crore under TSP. Initial allocation of Rs. 100 Crore for ‘Van Bandhu Kalyan Yojna’ for the welfare of tribals.

Women and Child Development

Allocation of Rs. 50 Crore in scheme of ‘Safety for Women on Public Road Transport’, Rs. 150 Crore in a scheme to increase safety for women in larger cities and Rs. 100 Crore in ‘Beti Bachao, Beti Padhao Yojna’.

Drinking water and Sanitation

Water purification plants to be established in next 3 years to provide safe drinking water to people affected with arsenic, fluoride etc. “Swachh Bharat Abhiyan” to cover every household with sanitation facility by the year 2019.

Health & Family Welfare

Free Drug Service and Free Diagnosis Service to achieve “Health for all”. Two National Institutes of Ageing at AIIMS, New Delhi and Madras Medical College, Chennai, 12 new government medical colleges, 15 Model Rural Health Research Centers are to be set up. A national programme in Mission Mode to halt the deteriorating malnutrition situation in India to be put in place within six months.

Information Technology

Pan India programme “Digital India” to with an outlay of Rs. 500 crore to be launched. Allocation Rs. 100 crore for Programme for promoting “Good Governance” to be launched.

Information and Broadcasting

Allocation of Rs. 100 Crore for 600 new and existing Community Radio Station. Allocation of Rs. 100 Crore for Kisan TV to provide information to farmers, new farming techniques, organic farming etc.

Urban Development

Vision of the Government is that 500 urban habitations to be provided support for renewal of infrastructure and services in next 10 years through PPPs Present corpus of Pooled Municipal Debt Obligation Facility facility to be enlarged to Rs. 50,000 Crore from Rs. 5000 crore. Rs. 100 crore provided for Metro Projects in Lucknow and Ahemdabad.

Minorities Launching of ‘Upgradation of Traditional Skill in Arts, Resources and Goods’ programme for upgradation of skills of minorities. Additional allocation of Rs. 100 Crore for Modernization of Madrasas.

Food Security

Restructuring FCI, reducing transportation and distribution losses will be taken on priority. Wheat and rice at reasonable prices to weaker sections. Open market sales to keep prices under control when required.

Industry Central Government Departments and Ministries to integrate their services with the e-Biz by 31st December this year. For setting up National Industrial Corridor Authority Rs. 100 crore will be provided. Master planning of 3 new smart cities in the Chennai – Bengaluru Industrial Corridor region, Amritsar Kolkata Industrial master planning and perspective plan for the Bengaluru Mumbai Economic Corridor and Vizag Chennai Corridor are to be completed.

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Apprenticeship Act to be amended to make it responsive to industry and youth. Export Promotion Mission to be established to bring all the stakeholders under one roof.

Micro Small and Medium Enterprise Sector

Skill India to be launched to expertise the youth on employability and entrepreneur skills. To examine the financial architecture of MSME Sector and to remove bottlenecks, a committee will be set up which will give material suggestions in three months. Fund of funds with corpus of Rs. 10000 crore will be set up to provide financial assistance to encourage new startups by youth. Technology Centre Network with fund of Rs. 200 crore will be established. Definition of MSME to be reviewed to provide for a higher capital ceiling. District Level Incubation and Accelerator Programme will be taken up nationwide for incubation of new ideas and support for accelerating entrepreneurship. For easy exit for SMEs entrepreneur, friendly legal bankruptcy framework will be developed.

Textiles To develop handloom products and rich tradition of handlooms of Varanasi, Trade Facilitation Center and a Craft Museum will be set up for which Rs. 50 crore will be provided. Sum of Rs. 500 crore for developing a Textile mega-cluster at Varanasi and six more at Bareilly, Lucknow, Surat, Kutch, Bhagalpur and Mysore. Rs. 20 crore to set up a Hastkala Academy for the preservation, revival, and documentation of the handloom/handicraft sector in PPP mode in Delhi. Rs 50 crore is provided to start a Pashmina Promotion Programme (P-3) and development of other crafts of Jammu & Kashmir.

Budget Estimates 2014-15 - Gross Tax receipts are estimated at Rs. 13,64,524 crore with net tax revenue

estimated at Rs. 9,77,258 crore. - Total expenditure proposed for the year 2014-15 is Rs. 17,94,892 crore with

increase of 26.9% in total Plan allocation of Rs. 5,75,000 crore as compared to BE 2013-14 and Non-plan expenditure is estimated at Rs. 12,19,892 Crore.

- Fiscal Deficit is estimated at 4.1% of GDP and Revenue Deficit is estimated at 2.9% of GDP 2012-13.

- New Statement to separately show plan allocation made for North Eastern Region. Allocation of Rs. 53,706 crore has been made for North East Regions.

- Overall allocation for women in the budget is Rs. 98,030 crore and for children, Rs. 81,075 crore.

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Tax Highlights:

• Direct Taxes:

- Basic exemption limit has been raised from Rs. 2.00 to 2.50 Lakh. - No change in the rate of surcharge and education cess for any class of assessee. - Deduction under 80C increased from Rs 1 lakh to Rs 1.5 lakh to encourage

savings. - Deduction limit of housing loan interest increased upto Rs. 2 Lakh from Rs. 1.5

Lakh. - Investment Allowance at the rate of 15% to manufacturing companies investing

more than Rs. 25 crore in any year in plant and machinery. - Expenditure incurred on activities relating to CSR as per Companies Act, 2013

will not be allowable expenditure. - Favorable tax regime for Infrastructure Investment Trusts and Real Estate

Investment Trusts which will be set up in accordance with regulations of SEBI. - Deduction under section 35AD extended to two new sectors, namely, slurry

pipelines for the transportation of iron ore, and semi-conductor wafer fabrication manufacturing units.

- Disallowance of expenditure for non – deduction of TDS reduced to the extent of 30% of expenses instead of 100%

- Money received as advance for transfer of capital assets will be taxable U/s. 56 if such sum forfeited or negotiations do not result in transfer of capital asset and such advance shall not be deducted from the cost in computing cost of acquisition.

- Under section 80IA,10 year tax holiday extended to the undertakings which begin generation, distribution and transmission of power by 31.03.2017

- Transfer pricing regulation has been modified - Income and dividend distribution tax to be levied on gross amount instead of

amount paid net of taxes. - Government to review the DTC in its present shape and will be implemented by

the end of 2014-15. - 60 more Ayakar Seva Kendras to be opened during the current financial year.

• Indirect Taxes:

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

- No change in general rate of excise, custom and service tax. - No exemption limits has been increased in excise and service tax.

Customs:

- BCD reduced on certain items to boost domestic manufacture and to encourage

new investment and capacity addition in the chemicals and petrochemicals sector.

- 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. - Free baggage allowance increased from Rs.35,000 to Rs. 45,000.

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- 4% SAD exemption to wind generators, inputs of solar industry and to certain telecom parts used in computers.

- Indian Customs Single Window Project to facilitate trade, to be implemented. - To facilitate cargo clearance 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.

Excise:

- 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. - 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. - Increase in excise duty on cigarettes, pan masala, gutkha and other tobacco

products. - Levy of an additional duty of excise at 5 percent on aerated waters containing

added sugar. - Clean Energy Cess increased from Re. 50 per tonne to Re. 1 00 per tonne. - Excisable goods sold at a price below manufacturing cost and profit to be

assessed on the basis of ‘transaction value’ for excise duty, if no additional consideration flows directly or indirectly to the seller.

- Timeline of six months prescribed for availment of cenvat credit on inputs and input services from date of invoice/ challan/specified documents

- Transfer of credit by large taxpayer from one unit to another not allowed. - Mandatory pre-deposit to the extent of 7.5% of the amount involved (at first

appeals level) and 10% (at second stage level) subject to INR100 million in case of appeal.

Service Tax:

- Sale of space or time for advertisements in broadcast media and service provided by radio-taxis, services by air-conditioned contract carriages and technical testing of newly developed drugs on human participants brought under service tax.

- Service tax on transport of goods through coastal vessels reduced. - Services provided by Indian tour operators to foreign tourists in relation to a

tour wholly conducted outside India taken out of tax net. - Services provided by common biomedical waste treatment facilities exempted. - Service tax exempted on loading, unloading, storage, warehousing and

transportation of cotton, whether ginned or bailed. - Services provided by the ESIC for the period prior to 1st July 2012 exempted. - Exemption to life micro insurance schemes for the poor, approved by IRDA,

where sum assured does not exceed Rupees fifty thousand. - Cenvat credit for services of rent-a-cab and tour operators to be allowed. - Advance Ruling for indirect taxes has expanded to cover Pvt Ltd Companies. - Scope of Settlement Commission expanded for quick dispute resolution. - Mandatory pre-deposit to the extent of 7.5% of the amount involved (at first

appeals level) and 10% (at second stage level) subject to INR100 million in case of appeal.

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DIRECT TAX PROPOSALS: Applicability: The proposals of The Finance Bill, 2014 will be applicable from the Assessment Year 2015-16 unless and otherwise stated. Personal Taxation:

Basic exemption limit has been raised from Rs. 2.00 lakh to Rs. 2.50 lakhs. Hence

fourth the new tax slabs would be as under: (Rs. In Lakhs)

Assessee Tax Rate 0% Tax Rate 10%

Tax Rate 20%

Tax Rate 30%

Old Slab

New Slab

Old Slab New Slab

Old Slab

New Slab

Old Slab

New Slab

Individuals < 60 Years, HUFs

0- 2.00 0-2.50 2.00-5.00 2.50-5.00

5.00-10.00 >10.0 Senior Citizens (> 60 Years)

0-2.50 0-3.00 2.50-5.00 3.00-5.00

Very Senior Citizen >80 Years

0-5.00 0-5.00 ---- ----

There is no change in education cess, Higher education cess and surcharge.

The rebate up to Rs. 2000/- from Income tax payable under section 87A for

individuals having income below of Rs. 5 Lakhs is continued. Deduction for interest payable on housing loan for self occupied house property has

been increased from Rs. 1.50 lakhs to 2.00 lakhs.[Section 24(b)] The investment limit u/s 80C has been increased from Rs. 1 lakh to Rs. 1.50 Lakh.

The eligible investments include life insurance premia, provident fund, PPF, Principal repayment of Housing Loan, School Fees etc.

Section 80CCD provides deduction if the amount has been invested by any individual in Central Government pension schemes up to the amount provided in the section. By amending the section the deduction has been restricted to maximum limit of Rs. 1.00 lakh only. Section 80CCE restricts the deduction to Rs. 1.00 lakhs if invested under the section 80C, 80CCC and 80 CCD. Since the limit specified in section 80C has been increased the limits specified under section 80CCE has been increased to Rs. 1.50 lakhs.

Section 10(10D) specified that amount received under life insurance policy is

exempt subject to fulfillment of conditions specified under the said section and therefore, any amount received against life insurance policy which does not fulfill the conditions specified under section 10(10D) are taxable. Since, the income is taxable it is proposed to insert the new section 194D and TDS at the rate of 2% has to be deducted by the Insurance company on such amount paid. The provision will not be applicable if the sum paid in a financial year to an assessee is less than Rs.1 lakh. This amendment will take effect from 1.10.2014.

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Corporate Taxation:

There is no change in the Income Tax Rate of Domestic as well as Foreign Companies.

All domestic companies which declare and distributed or paid by way of dividends to

its shareholders shall pay the dividend distribution tax at the rate of 15% under section 115O. Earlier the same is paid on the flat basis i.e. on amount declared/distributed with this amendment now the declared/distribution amount is to be increased by the dividend distribution tax. This amendment has increase the tax burden from 15% to 17.65% (Excluding cess and surcharge) on the dividend distributed. These amendments will take effect from 1st October, 2014.

Mutual funds are also liable to pay the distribution tax on the income distributed to unit holder at the rate specified under the section 115R. Earlier the tax is payable on the income distributed to unit holder now with the propose changes the tax is to be calculated on the aggregate amount i.e. by increasing the distributed income by tax. Therefore, it is a proportionate increase in the tax burden. These amendments will take effect from 1st October, 2014.

Business Income: As per the provision of section 135 of the Companies Act 2013, companies having

net worth of Rs.500 crore or more, or turnover of Rs.1000 crore or more, or net profit of Rs.5 crore or more during any financial year are required to spend certain percentage of their profit on activities relating to Corporate Social Responsibility (CSR).

As per section 37 of the Income Tax Act expenditure incurred wholly and exclusively for the purposes of the business are only allowed as a deduction for computing taxable business income. Since CSR expenditure are not for the wholly and exclusively for the business purpose it will not be allowed as deduction. Moreover, if such expenditure will satisfy the conditions u/s 30 to 36, then the deduction will be available.

If certain payments such as interest, royalty and fee for technical services are made

to non-resident without deduction of TDS or after deduction not deposit in time, will not be allowed as deduction , which is harsh in nature. To avoid such un-justice, the time period for depositing TDS for claiming expenses has been extended up to the due date of return. (Sec. 40(a)(i).

Under section 40(a)(ia) whole of the expenditure will be disallowed for non

deduction or non-payment of tax deducted at source (TDS) from certain payments made to residents. Such a disallowance is un-justice, when the assessee has paid the full amount and merely by non deduction of small amount, one has to pay the tax on full amount. To avoid such un-justice, the disallowance is restricted to 30% of the amount of expenditure claimed.

Further, in order to improve the TDS compliance the provision of section 40(a)(ia) has been extend to all expenditure on which TDS is deductible. Accordingly salaries, director fees etc has also been covered under the disallowance if TDS has not been deducted or after deduction has not been deposited.

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Trading in commodity derivatives carried out in a recognized association and chargeable to commodities transaction tax under Chapter VII of the Finance Act, 2013 shall not be considered to be a speculative transaction. [sec 43(5)(e)].

This amendment will take effect retrospectively from 1st April, 2014 and will accordingly apply, in relation to the assessment year 2014-15 and subsequent assessment years.

The presumptive income of an assessee who is engaged in the business of plying,

hiring or leasing goods carriages and not owning more than ten goods carriages under section 44AE has been increased to Rs. 7500/- per month per vehicle.

Section 73 provides the restriction on set-off and carry forward of losses of speculative business and will be set-off against the profit of speculative business only. Explanation to the section provides definition of “Speculative Business”.

Earlier, companies carry on the business of shares are treated as Speculative Business and therefore, loss is not allowed to be set-off against any other business income. By amending the explanation, now the companies whose principal business is trading in shares will be excluded and now eligible for the set-off and carry forward of losses as normal business loss.

Tax Incentives: 100% deduction u/s 35AD on capital expenditure incurred wholly and exclusively,

for the purposes of the “specified business” during the previous year in which such expenditure is incurred will not be available to units in Special Economic Zones, which are claiming deduction under section 10AA.

Two new business activities have been specified for the benefit of section 35AD.

They are:

- laying and operating a slurry pipeline for the transportation of iron ore; - Setting up and operating a semi-conductor wafer fabrication manufacturing

unit.

The deduction of the above will be available subject to conditions specified and if the business operation commenced on or after 01.04.2014.

Earlier no time limit for the use of assets acquired under section 35AD has been

prescribed. With the insertion of clause 7A, now the assets constructed or acquired have to be used at least for eight years for the specified business. In case where the above assets has not been used as described in clause 7A, then the benefit so claimed would be treated as assessee income in the year of default. However the assessee is eligible to claim the depreciation which would otherwise be available in the ordinary course of business as per section 32. ( Section 35AD(7B)) Moreover, clause 7B will not be applicable to sick industrial company.

Investment limit under section 32AC has been reduced to Rs. 25 crores from the

present limit of Rs. 100 crores wef 01.04.2014. With this reduction medium scale manufacturing entities would now enjoy the benefit of 15% Investment Allowance.The time limit for the investment has been increased from 31.03.2015 to 31.03.2017.

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Section 80IA(4)(iv) provided the deduction of profits arising from the generation and

distribution power under the prescribed condition. Such benefit is available only if the investments were made up to 31.03.2014. To boost the investment in the power sector, the time limit has been increased to 31.03.2017.

Capital Gain:

The definition of capital assets under section 2(14) has been changed and included

“any securities held by a Foreign Institutional Investor which has invested in such securities in accordance with the regulations made under the Securities and Exchange Board of India Act, 1992.”

With this change now Foreign Institution Investors who are holding securities are also eligible for benefit of long term capital gain exemption or concessional rate of tax on short term capital gain. This will boost the foreign investment in India.

By amending 2(42A), the holding period of unlisted securities and units of mutual

fund (other than units of equity oriented funds) has been increased to 36 months from the existing 12 months for the purpose of long term capital gain.

Section 45(5)(b) dealing with capital gains arising from transfer by way of

compulsory acquisition where the compensation is enhanced or further enhanced by the court, Tribunal or any other authority it shall be deemed to be the income chargeable of the previous year in which such amount is received by the assessee.

In case of interim order many time assessee received the amount which become taxable. Being pending matter, the amount received is provisional and therefore by amending the provision relief has been given to assessee and now the amount will be taxable only in the year of final order received.

Transactions which are covered under section 47 are not considered as transfer for

charging of capital gain. The amendment to section 47 purposed that transfer of Government Security made outside India through an intermediary dealing in settlement of securities, by a non-resident to another non-resident will not be taxable.

Section 54EC provide for the exemption from Capital Gain Tax where it arises from transfer of a long-term capital asset if the same will be invested in long term specified assets within a period of six months. The said investment however shall not exceed fifty lakh rupees during any financial year. Therefore, in the present position assessee can avail the benefit upto Rs. 1.00 crore if the assets has been sold after September by invested Rs. 50 lakhs in two years. After the proposed insertion of proviso, such tax planning will not be available as the investment made by an assessee in the long-term specified asset, out of capital gains arising from transfer of one or more original asset, during the financial year in which the original asset or assets are transferred and in the subsequent financial year does not exceed Rs. 50 lakhs .

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Section 54 and 54F grants the exemption from long term capital gain arising out of the transfer of buildings or lands appurtenant thereto, and being a residential house or any other long term capital assets, if assessee, purchase or construct the residential house within the specified time limits. Under the present situation, assessee can purchase or construct any number of residential houses anywhere in world. With the proposed amendment assessee can now purchase only one resident house and that too in India.

Earlier section 51 provides that any advance retained or received shall be reduced from the cost of acquisition of the asset or the written down value or the fair market value of the asset. By amending the section 2(24) and 56(2)(ix), Advance received for transfer of a capital assets is taxable under section 56(2)(ix) if the same has been forfeited and the negotiations do not result in transfer of such capital asset. To give effect of the same, proviso to section 51 has been inserted so that such amount shall not be deducted from the cost for which the asset was acquired or the written down value or the fair market value, as the case may be in computing the cost of acquisition.

Section 112 provides for the concessional rate of tax i.e. @10% on long term capital

gain being listed securities or unit or zero coupon bond before allowing for indexation adjustment. The benefit of concessional rate of tax has now been withdrawn from sale of units and now the same will be taxable at the rate of 20%.

MINIMUM ALTERNATE TAX/ALTERNATE MINIMUM TAX (MAT/AMT)

Section 115JC prescribed the various adjustments which are to be made in the total

income of the person other than the company for the purpose of payment of MAT. No adjustment is to be made for deduction available under section 35AD for the capital investment made in specified business. Now with the amendment, the total income shall be increased by the deduction claimed under section 35AD after allowing depreciation under section 32.

Section 115JEE provides that rules of MAT/AMT will be applicable if a person has claimed the benefits under chapter VI or section 10AA. With the amendment in section now the MAT/AMT will also be applicable to person who has claimed the deduction under section 35AD. Since there was no clarity on the Tax Credit for MAT/AMT under the section by inserting the sub section it has been made clear that the credit will be available under section 115JD.

TDS and TCS Provisions:

TDS return has to be filled quarterly by the deductor and is allowed to file correction

statement for rectification/updating of the information furnished in the original TDS statement. However, there does not exist any express provision in the Act for enabling a deductor to file correction statement. Now the specific provision has been inserted in section 200 to allow the deductor to file correction statements and section 200A for enabling processing of correction statement filed. These amendments will take effect from 1st October, 2014.

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Section 201 gives power to pass an order if assessee does not deducted or does not

pay or after deduction fails to pay the whole or part of TDS amount and the time limit for passing such order is two years from the end of the financial year in which the TDS statement has been filed. There are chances that during the various assessment proceedings such default will be noticed by the authority. Therefore, to extend the time limit for passing such order the time limit has been extended to 7 years from the date of furnishing the TDS return. These amendments will take effect from 1st October, 2014.

International Taxation:

There is a provision of Advance Pricing Agreement under Section 92CC for determining the Arm’s Length Price (ALP) or specifying the manner in which ALP is to be determined in relation to an international transaction which is to be entered into by the person and the agreement entered into is valid for a period, not exceeding 5 previous years, as may be mentioned in the agreement. Right now there is no provision for determining the ALP by referring the past year transaction entered into by a person. Therefore, it is proposed to amend the section to refer an international transaction entered into by a person during any period not exceeding four previous years preceding the first of the previous years for which the advance pricing agreement for determining the arm’s length price. This amendment will take effect from 1st October, 2014.

Section 194LC provide for lower TDS of 5% on interest paid to non-residents on

monies borrowed in foreign currency or on long-term infrastructure bonds. In order to encourage the low cost long-term foreign borrowings it is proposed to extend the benefit of this concessional rate of TDS to borrowings by way of issue of any long-term bond and to time limit is further extended by two years. The concessional rate of TDS will now be available in respect of borrowings or bonds issued made before 1st day of July, 2017. These amendments will take effect from 1st October, 2014.

Search and Seizer:

Section 133A gives power to Income-tax authority to enter any premises in which business or profession is carried out for the purposes of survey and such authority may impound and retain in his custody any books of account or documents inspected by him during the course of survey for a period not exceeding ten days (exclusive of holidays) without obtaining the approval of the Chief Commissioner or Director General. The time limit of 10 days has now been increased to 15 days. These amendments will take effect from 1st October, 2014.

Search under section 133A will now be carried out for the purpose of verifying that tax has been deducted or collected at source in accordance with the provisions of Chapter XVII-B or Chapter XVII-BB, as the case may be.These amendments will take effect from 1st October, 2014.

New section 133C gives the power to Income Tax Authority to issue a notice to any

person to furnish information or documents, verified in the manner specified therein which may be useful for, or relevant to, any enquiry or proceeding under this Act. This amendment will take effect from 1st October, 2014.

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Business Trust: The SEBI had proposed two new categories of investment vehicles i.e. the Real

Estate Investment Trust (REIT) & Infrastructure Investment Trust (Invit) to encourage the PPP model. To give effect of the same in Income Tax Act, a new concept of “Business Trust” has been introduced in this budget and to boost the investment in these funds many relaxations in taxation has been proposed in the current budget.

1. By introducing the new chapter XII-FA, the new concept of business trust has

been introduced under section 2(13A) for Infrastructure Investment and Real Estate Investments with the object that the units of which will be listed in the stock exchanges.

2. The interest received or receivable by the business trust from SPV will be

exempt under section 10(23FC).

“Special Purpose Vehicle (SPV)” means an Indian company in which the business trust holds controlling interest and any specific percentage of shareholding or interest, as may be required by the regulations under which such trust is granted registration.

3. Any income received by the unit holder by way of distributed income from

business trust will be exempted under section 10(23FD). 4. Long Term Capital Gain arising from the sale of units of Business Trust is

exempted under section 10(38). 5. If the share of SPV has been transferred to a business trust for units in

exchange of units then the profit will be exempted under section 47 and not chargeable to capital gain.

6. Short term capital gain tax arising out of the sale of units of Business Trust is

eligible for concessional rate of tax i.e. @15%. (Section 111A). 7. Since the income received from the Business Trust is exempted in the hands of

the unit holder, it is proposed to amend the section 115A and therefore, SPV distributing dividend to Business Trust will be made liable for dividend distribution tax on such income distribution.

8. TDS at the rate of 5% and 10% is to be deducted if the interest is distributed to

non-resident and resident respectively. 9. The total income of a business trust shall be charged to tax at 30%. 10. The Business Trust is required to furnish the return of income. The necessary

forms and other reporting requirements will be prescribed to implement the above scheme, which has to be complied with by the trust.

This amendment will take effect from 1st October, 2014.

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Charitable Trusts:

Earlier depreciation on fixed assets of the charitable trust is treated as application of income and deduction was allowed under Section 11 which is nothing but the duplication of application i.e. first when the asset was purchased and second by way of depreciation.

With the insertion of clause 6 to section 11, now the depreciation will not be allowed as application of income if assets, is already considered as application of income in any of the year.

University, hospital, charitable organization, etc are liable for 30% tax under section

115BBC, if they receive the anonymous donations exceeding 5% of the total donations received by the then or one lakh rupees, whichever is higher.

To avoid the confusion and make the clarity on the calculation of income and tax the clause has been inserted so that the income-tax @ 30% shall be payable only on the excess amount of anonymous donations received i.e. 5% of aggregate of donation received or Rs. 1.00 lakhs, whichever is higher and the total income for the calculation of tax at the normal rate is to be reduced by such excess amount of anonymous donations received on which 30% tax has been calculated.

No exemption will be available to any trust or institution under section 10 [other than that relating to exemption of agricultural income and income exempt under section 10(23C)], which are availing the exemption under section 11.

Other entities which are claiming the exemption under section 10(23C) will would not be entitled to claim any benefit of exemption under other provisions of section 10 (except the exemption in respect of agricultural income).

Section 12AA gives power to cancel the registration of trust or institution if certain conditions under section are not satisfied The powers of IT authorities has been enlarged to cancel the registration in following circumstances as well:

- If income are not used for the benefit of general public; - If trust is for benefit of any particular religious community or caste (in case - it is established after commencement of the Act); - If any income or property of the trust is applied for benefit of specified

persons like author of trust, trustees etc.; or - If funds are invested in prohibited modes,

Exemption under section 11 and 12 are only available only after the registration of

the trust under section 12AA (Section 12A). In order to remove hardship, it is proposed to amend section 12 A of the Act to provide that in case where a trust or institution has been granted registration under section 12AA of the Act, the benefit of sections 11 and 12 shall be available in respect of any income derived from property held under trust in any assessment proceeding for an earlier assessment year if the objects and activities of such trust or institution in the relevant earlier assessment year are the same as those on the basis of which such registration has been granted.

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Other Provisions:

The income of a Mutual Fund [Section 10(23D)], Securitization trust [Section

10(23DA)] and venture capital company (VCC) or venture capital fund (VCF) [Section 10(23FB)] are exempted and hence are not required to file their return of income under section 139 and only require to file the statement giving the prescribed details.

Now all these assessee have to furnish the return of income u/s 139 (4C) if the total income without giving effect to the provisions of section 10, exceeds the maximum amount which is not chargeable to income-tax. The requirement of filing of statements before an income-tax authority for Mutual Funds and securitisation trusts is proposed to be dispensed with by omitting sub-section (3A) of section 115R and sub-section (3) of section 115TA.

Section 142A, gives power to the AO to appoint valuation officer(VO) to make an

estimate of the value of any investment, any bullion, jewellery or fair market value of any property for making an assessment or reassessment but does not provide for the rejection of books and time limit for furnishing the report by the VO.

The whole section has been substituted so as to provide AO more powers to take the assistance of VO to estimate the value, including fair market value, of any asset, property or investment, without satisfying himself about the correctness or completeness of the accounts of the assessee. The VO have all the powers of section 38A of the Wealth-tax Act, 1957.

Since the time will be involved in the valuation report the said time from the date of reference made to VO to and report received from VO will be excluded the time limit provided under the section 153 and 153B aforesaid section for completion of assessment or reassessment.

These amendments will take effect from 1st October, 2014.

Section 145 prescribed the method of accounting for computation of income under

the heads “Profits and gains of business or profession” and “Income from other sources” i.e. cash or mercantile.

Accounting Standard Committee recommended that the AS notified under the Act should be made applicable only to the computation of taxable income and a taxpayer should not be required to maintain books of account on the basis of AS notified under the Act.

In order to implement the recommendation of the committee the relevant changes has been made and the word “Accounting Standard” has been substituted to “Income Computation and Disclosure Standards”.

It is further proposed that if the income has not been computed in accordance with these standards then the AO will make the assessment in the manner specified in section 144.

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INDIRECT TAX PROPOSALS:

Applicability:

The proposals of The Finance Bill 2014 will be applicable with on the date of its

enactment unless otherwise specified.

Custom:

There is no change in the peak rate of custom duty of 10%.

Levy of safeguard duty on inputs imported by EOU and cleared into DTA. (Section 8B of Custom Tariff Act, 1975). This change will come into effect immediately.

In order to treat NDEC customer at par with the domestic customer for the supply

of LPG, Full exemption from custom duty has been provided to Indian Oil Corporation, Bharat petroleum Corporation Ltd. or Hindustan Petroleum Corporation Ltd. for the import of Liquefied Propane and Butane mixture, Liquefied Propane, Liquefied Butane and Liquefied Petroleum Gases.

This change has been done retrospectively w.e.f. 08.02.2013.

Duty free allowance under the baggage rules increased from Rs. 35000 to Rs. 45000 for adult passengers of Indian origin.

Duty Free allowance of Cigarettes is reduced from 200 to 100, Cigars 50 to 25 and

of tobacco from 250 gms to 125 gms.

In case of imports through land route, section 46(3) has been amended to allow the filling of a bill of Entry prior to the filling of Import Report.

A mandatory fixed pre-deposit of 7.5% of the duty demanded or penalty imposed or both for filling appeal with the Commissioner( Appeals) or the tribunal at the first stage and 10% of the duty demanded or penalty imposed or both for filling second stage appeal before the Tribunal. However a maximum cap on such deposit has been kept at Rs. 10 crores. (Section 129E)

Tribunal can now refuse to admit the appeal from the existing Rs. 50000 to Rs.

200000 Lacs. (Section 129A(1))

The customs duties on mineral oils including petroleum & natural gas extracted or produced in the continental shelf of India or the exclusive economic zone of India shall not be recovered for the period prior to 7th February, 2002.(Section 25)

Section 129D amended to insert a proviso in sub-section (3) to vest the Board with

powers to condone delay for a period up to 30 days for review by the Committee of Chief Commissioners of the orders in original passed by the Commissioner of Customs.

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Industry Specific Changes: GEMS & JEWELLERY

(a) The variation level and the parameter of measurement in respect of re-import of cut and polished diamonds after certification from a foreign laboratory are being increased as a trade facilitation measure.

(b) Full exemption from Basic Customs Duty is being granted to pre-forms of precious and semi – precious stones.

(c) To prevent misuse and avoid assessment disputes, BCD on semi- processed half cut or broken diamonds, cut and polished diamonds and colored gemstones rationalized at 2.5%

ELECTRONICS/HARDWARE

a) Imposition of BCD on certain items falling outside the purview of IT Agreement, exemption from Special Additional Duty (SAD) on inputs/ components for PC manufacturing, imposition of education cess on imported electronic products for parity etc.

b) Color television picture tubes for use in manufacture of cathode ray televisions exempted from BCD to make cathode ray TVs cheaper and more affordable to weaker sections.

c) To encourage production of LCD and LED TVs below 19 inches in India, BCD on LCD and LED TV panels of televisions below 19 inches reduced from 10% to Nil.

d) Basic Custom Duty is being reduced from 7.5% to NIL on E-Book readers.

TEXTILES: a) The duty free entitlement for import of trimmings & embellishments used by

the readymade textile garment sector for manufacture of garments for export is being increased from 3% to 5%.

b) Non-fusible embroidery motifs or prints are exempted from imported duty for manufacture of garments for export.

c) The list of specified goods required by handicraft manufacturer-exporters is being expanded.

d) Fusible embroidery motifs or prints, anti-theft devices, pin bullets for packing, plastic tag bullets, metal tabs, bows,ring and slider hand rings are being included in the list of items eligible to be imported duty free for manufacture of handloom made ups or cotton made ups or manmade made ups for export.

e) Specified goods imported for use in the manufacture of textile garments for export are fully exempt from BCD and CVD subject to the condition

f) Basic Customs Duty on raw materials for manufacture of spandex yarn viz. Polytetramethylene ether glycol (PT MEG) and Diphenylmethane 4, 4 di-isocyanate (MDI) is being reduced from 5% to Nil.

METALS: a) BCD has been reduced on the following products:

- Ships imported for breaking up from 5% to 2.5%. - Coal tar pitch from 10% to 5%. - Battery waste and battery scrap from 10% to 5%. - Steel grade limestone and steel grade dolomite from 5% to 2.5%.

b) BCD has been increased on the following products: - Stainless steel flat products from 5% to 7.5%.

c) Export duty on bauxite is being increased from 10% to 20%.

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RENEWABLEENERGY:

a) BCD has been reduced on the following products: - forged steel rings used in the manufacture of bearings of wind operated

electricity generators from 10% to 5%. - machinery, equipments, etc. required for setting up of solar energy

production projects to 5%. - machinery, equipments, etc. required for setting up of compressed biogas

plant (Bio-CNG) to 5%.

b) Full exemption from SAD has been provided to following products: - on parts and components required for the manufacture of wind operated

electricity generators.

c) Full exemption from SAD has been provided to following products: - specified raw materials used in the manufacture of solar backsheet and EVA

sheet. - flat copper wire used in the manufacture of PV ribbons (tinned copper

interconnect) for solar PV cells/modules.

CAPITAL GOODS/INFRASTRUCTURE: a) Duty free Road construction machinery imported can be sold within 5 years of

importation subject to payment of customs duty on depreciated value. b) State Governments concerned are being notified as sponsoring authority for

Metro Rail Projects. c) Plants & Equipment imported prior to 2008 can be transferred / sold / re-

exported from the project site, which are used in projects financed by the UN or an international organization

d) No need for certification by Ministry of Road Transport (or NHAI) for availing of customs duty exemption on specified goods required for construction of roads.

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CENTRAL EXCISE: Effective rate of excise duty remains the same at 12 % with some exceptions where

eitherconcessions/ exemptions given or rates have increased.

The Clean Energy cess is being increased from Rs. 50 per tonne to Rs. 100 per tonne.

Incraese in Excise Duty on following products:

- AED of 5 per cent on water,including aerated and mineral waters containing added. - Cigarettes is being increased by 72% for cigarettes of length not exceeding 65 mm

and by 11% to 21% for cigarettes of other lengths. - Cigars, cheroots and cigarillos. - Pan masala 12% to 16%, - Unmanufactured tobacco from 50% to 55% - Jarda scented tobacco, gutkha and chewing tobacco from 60% to 70%. - 2% ED (without CENVAT) or 6% ED (with CENVAT) is being imposed on Polyester

Staple Fiber and Polyester Filament Yarn manufactured from plastic waste or scrap or plastic waste including waste polyethylene terephthalate (PET) bottles w.e.f. 11th July, 2014.

- winding wires of copper from 10% to 12%. - recorded smart cards from 2% without CENVAT and 6% with CENVAT to a uniform

rate of 12%

Decrease in Excise Duty on following products: - Branded Petrol is being reduced from Rs. 7.50 per litre to Rs. 2.35 per litre. - Concessional excise duty of 2% without CENVAT credit and 6% with CENVAT credit

is being extended to gloves specially designed for use in sports. - Optional excise duty of 2% (without CENVAT) / 6% (with CENVAT) on writing and

printing paper for printing of educational textbooks is being withdrawn and instead a uniform excise duty of 6% with CENVAT.

- footwear of retail price exceeding Rs. 500 per pair but not exceeding Rs. 1,000 per pair from 12% to 6% on. Footwear of retail price upto Rs. 500 per pair will continue to remain exempted.

- ED on forged steel rings used in the manufacture of bearings of wind operated electricity generators reduced from 12% to Nil

- machinery for the preparation of meat, poultry, fruits, nuts or vegetables, and on presses, crushers and similar machinery used in the manufacture of wine, cider, fruit juices or similar beverages and on packaging machinery from 10% to 6%.

- hand operated sewing machine (2% without CENVAT / 6% with CENVAT) is being rationalized by levying concessional excise duty on sewing machines other than those operated with electric motors (whether in-built or attachable to the body).

- Metal Core PCB and LED driver for use in the manufacture of LED lights and fixtures and LED lamps from 12% / 10% to 6%.

- RO membrane element used in household type filters is being reduced from 12% / 10% to 6%

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Full Exemption in Excise Duty on following products: - Liquefied Propane and Butane mixture, Liquefied Propane, Liquefied Butane and

Liquefied Petroleum Gases (LPG) for supply to Non-Domestic Exempted Category (NDEC) customers by the Indian Oil Corporation Limited, Hindustan Petroleum Corporation Limited or Bharat Petroleum Corporation Limited retrospectively w.e.f. 08.02.2013.

- specified raw materials used in the manufacture of backsheet and EVA sheet for manufacture of solar photovoltaic cells or modules

- DDT manufactured by Hindustan Insecticides Limited for supply to the National Vector Borne Diseases Control Programme (NVBDCP) of the Ministry of Health & Family Welfare.

- plastic materials reprocessed out of the scrap or waste and cleared into the DTA by an EOU. This would bring EOU at par with domestic and SEZ Units

- backsheet and EVA sheet used in the manufacture of solar photovoltaic cells or modules

- security threads and security fibre supplied to Security Paper Mill, Hoshangabad and Bank Note Paper Mill India Private Limited (BNPMIPL), Mysore

- Polyester Staple Fiber (PSF) and Polyester Filament Yarn (PFY) manufactured from plastic waste or scrap or plastic waste including waste polyethylene terephthalate (PET) bottles (which is already exempt w.e.f. 08.05.2012) is being exempted retrospectively w.e.f. 29.06.2010 to 07.05.2012

- solar tempered glass used in the manufacture of solar photovoltaic cells or modules, solar power generating equipment or systems and flat plate solar collectors.

- Un-branded articles of precious metals retrospectively for the period 01.03.2011 to 16.03.2012.

- flat copper wire used in the manufacture of PV ribbons (tinned copper interconnect) for use in the manufacture of solar cells or modules

- machinery, equipments, etc. required for initial setting up of solar energy production projects.

- machinery, equipments, etc. required for initial setting up of compressed biogas plant (Bio-CNG)

- parts consumed within the factory of production for the manufacture of non-conventional energy devices, and when such use in elsewhere than in the factory of production, the exemption is being allowed subject to actual user condition.

- parts of tractors removed from one or more factories of a tractor manufacturer to another factory of the same manufacturer for manufacture of tractors.

- reverse osmosis (RO) membrane element for water filtration or purification equipment (other than household type filter).

- specified HIV/AIDS drugs and diagnostic kits supplied under National AIDS Control Programme (NACP) funded by the Global Fund to Fight AIDS, TB and Malaria (GFATM).

- goods supplied to National Technical Research Organisation (NTRO). - Intermediate goods manufactured and consumed captively for further manufacture

of matches.

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Other Miscellaneous Provisions:

Director (Electrical) is being authorized to issue the requisite certificate to enable Delhi Metro Rail Corporation to avail of Nil excise duty benefit in respect of their Phase-1 and Phase-2 projects instead of Director (Rolling Stock, Electrical & Signalling) at present

Plants & Equipment supplied prior to 2008 for use in projects financed by the UN or an international organization, which hitherto could not be transferred / sold out of the project site, are now being allowed to be transferred / sold from the project site subject to the conditions specified therein.

Education cess and secondary & higher education cess (customs component) is being exempted on goods cleared by an EOU into the DTA

Rule 8 of the Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008 is being amended with retrospective effect from 13.04.2010 to provide that where a manufacturer manufactures pouches of different RSPs on a single machine in a month, the duty liability for that month would be the duty applicable to the highest of the RSP so manufactured. This will align the Pan Masala Packing Machines (Capacity Determination and Collection of Duty) Rules, 2008 with the Chewing Tobacco and Unmanufactured Tobacco Packing Machines (Capacity Determination and Collection of Duty) Rules, 2010 with regard to manufacture of pouches of different RSPs on a single machine under the compounded levy scheme.

Amendments in the CENVAT Credit Rules, 2004:

Rule 12A is being amended so as to disallow transfer of credit by a large taxpayer from one unit to another.

A new sub-rule (qa) is being inserted in Rule 2 to introduce the definition of “place of removal‟.

Rule 4(1) (for input credit) and Rule 4(7) (for input service credit) are being amended in order to fix a time limit of six months for availment of the CENVAT Credit.

Amendments in the Central Excise Rules, 2002: E-payment is being made mandatory for all assessees subject to certain

exceptions. Sub-rule (3A) of rule 8 is being substituted to provide that in case of default in

payment of duty, the assessee shall on his own pay a penalty of 1% per month on the amount of duty not paid for each month or part thereof.

Amendments in the Central Excise Valuation Rules, 2004:

The Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 is being amended so as to provide that in cases where excisable goods are sold at a price below the manufacturing cost and profit and there is no additional consideration flowing from the buyer to the assessee directly or from a third person on behalf of the buyer, value for the assessment of duty shall be deemed to be the transaction value.

Authority for Advance Rulings The Scheme of Advance Ruling is being extended to Resident Private Limited Companies.

Unit Quantity Codes The Schedules to the Customs and Central Excise Tariffs are being amended in

respect of selected goods to match the Unit Quantity Codes prescribed therein with the ones that are actually used in trade and commerce. This would facilitate trade and improve data quality and compliance.

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Service Tax:

The main focus in service tax at the present juncture is to widen the tax base and

enhance compliance.

Effective service tax rate remains unchanged at 12% (without cess).

Review of the Negative List of services: Service tax leviable on sale of space or time for advertisements in broadcast

media [section 66D (g) read with section 66B], namely radio or television, has been extended to cover such sales on other segments like online and mobile advertising.

Sale of space for advertisements in print media i.e. books and newspapers, however, would continue to be in the negative list and hence remain excluded from service tax.

Services provided by radio taxis or radio cabs, whether or not air-conditioned brought under the ambit of Service tax. [Section 66D (o)(vi)]. The abatement presently available to rent-a-cab service would also be made available to radio taxi service, to bring them on par.

Service tax exemptions being withdrawn:

The scope of exemption is being reduced by withdrawing the exemption in respect of air-conditioned contract carriages like buses. As a result, any service provided for transport of passenger by air-conditioned contract carriage will attract service tax. Service tax will be charged at an abated value of 40% of the amount charged from service receiver; therefore, effective tax will be 4.944%. Services by non-air conditioned contract carriages for purposes other than tourism, conducted tour, charter or hire continue to be exempted. The above provision will be applicable with immediate effect.

Exemptions extended on technical testing or analysis services of newly developed drugs, including vaccines and herbal remedies on human participants is being withdrawn. This would be taxable with immediate effect.

Rationalization of Exemptions:

Presently, all services provided by educational institutions to their students, faculty and staff are exempted being routed through the concept of „auxiliary educational services‟ [section 66 D (l) of the Finance Act, 1994]; this will continue. However, it is proposed to omit the concept of „auxiliary educational services‟ and specify in the notification, the services which will be exempt when received by the eligible educational institutions Accordingly, in respect of services received by an eligible educational institution, transportation of students, faculty and staff, catering service including any mid-day meals scheme sponsored by the Government, security or cleaning or housekeeping services in such educational institutions, and services relating to admission to such institution or conduct of examination, are being exempted from service tax. In view of this rationalization, exemption extended so far in respect of renting of immovable property service received by educational institutions, stands withdrawn. with immediate effect.

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Exemption in respect of services provided to Government or local authority or governmental authority, will be limited to services by way of water supply, public health, sanitation conservancy, solid waste management or slum improvement and up-gradation. Hence exemption to other services such as consultancy, designing, etc., not directly connected with these specified services stands withdrawn.

Exemption in relation to services by a hotel, guest house etc. on a declared tariff of less than INR 1000 per day will apply irrespective of whether the place is commercial or non-commercial in nature. Renting of vacant land or buildings for hotels would continue to be taxable irrespective of the hotel’s declared tariff.

In works contract valuation provisions i.e.Rule 2A of the Service Tax (Determination of Value) Rules, 2006, category „B‟ and „C‟ of works contracts are proposed to be merged into one single category.with percentage of service portion as 70% effective from 1 October 2014. Now, there will be two slabs for computing taxable value (40% and 70%) instead of the existing three slabs (40%, 60% and 70%).

Taxable portion in respect of transport of goods by vessel to be reduced from 50% to 40%. Effective service tax will decrease from the present 6.18% to 4.944%. This will come into force from 1st October 2014.

New exemptions:

All life micro-insurance schemes approved by the Insurance Regulatory Development Authority (IRDA), where sum assured does not exceed Fifty Thousand Rupees are being exempted from service tax.

Transport of organic manure by vessel, rail or road (by GTA) is being exempted. Therefore, organic manure will be on par with fertilizer which is already exempted.

Services by way of loading, unloading, packing, storage or warehousing, transport by vessel, rail or road (GTA), of cotton, ginned or baled, is being exempted.

Services provided by Common Bio-medical Waste Treatment Facility operators by way of treatment, disposal of bio medical waste or processes incidental to such treatment or disposal are being exempted.

Specialized financial services received by RBI from outside India, in the course of management of foreign exchange reserves, e.g. external asset management, custodial services, securities lending services, are being exempted.

Services provided by the Indian tour operators to foreign tourists in relation to tours wholly conducted outside India are being exempted

Retrospective Exemption Service provided by Employees‟ State Insurance Corporation (ESIC) during the

period prior to 1.7.2012 is proposed to be exempted from service tax. It may be noted that any service provided by ESIC to persons governed under the Employees‟ Insurance Act, 1948 is already exempt for the period commencing from 1.7.2012.

E-payment: E-payment of service tax is being made mandatory with effect from the 1st Oct

2014. Relaxation from e-payment may be allowed by the Deputy Commissioner/Asst. Commissioner on case to case basis

Advance Ruling: The resident private limited company is being included as a class of persons

eligible to make an application for Advance Ruling in service tax. This change will come into effect immediately.

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Measures for compliance enhancement

Simple interest rates per annum payable under section 75, to vary on the basis of extent of delay in payment of service tax. This will come into force on 1st October 2014.

Extent of delay Simple interest rate per annum Up to six months 18% More than six months & upto one year

18% for first six months, and 24% for the period of delay beyond six months

More than one year

18% for first six months, 24% for second six months, and 30% for the period of delay beyond one year

Amendments in Chapter V of the Finance Act, 1994:

Central Excise provisions made applicable to service tax: Section 83 is being amended to prescribe that the provisions of following sections of the Central Excise Act shall apply mutatis mutandis, to service tax. (i) Section 5A(2):This section prescribes that any explanation inserted in a

notification or special order at any time within one year of issue of notification or order, for clarifying the scope or applicability thereof, shall have effect from the date of issue of such notification or order.

(ii) Section 15 A: This new section is being inserted in the Central Excise Act to stipulate that third party sources shall furnish periodic information, as specified, in the manner as may be prescribed.

(iii) Section 15B: This new section is being inserted in the Central Excise Act to prescribe that failure to provide information under section 15A of the Act would attract penalty as specified.

(iv) Section 35F: Section 35F of the Central Excise Act has already been made applicable to Service Tax. This section is being substituted with a new section to prescribe a mandatory fixed pre-deposit of 7.5% of the duty demanded or penalty imposed or both for filing of appeal before the Commissioner(Appeal) or the Tribunal at the first stage, and 10% of the duty demanded or penalty imposed or both for filing second stage appeal before the Tribunal. The amount of pre-deposit payable would be subject to a ceiling of Rs.10 Crore. All pending appeals/stay application would be governed by the statutory provisions prevailing at the time of filing such stay applications/appeals. This new provisions would, mutatis mutandis, apply to Service Tax.

Section 82(1) to be amended, along the lines of Section 12F(1) of the

CentralExcise Act, so that the Joint Commissioner or Additional Commissioner or anyother officer notified by the Board can authorize any Central Excise Officer to search and seize.

In section 67A, for determination of rate of exchange, rules to be prescribed. Section 73 to be amended to prescribe time limit for completion of

adjudications; time limit to be followed, as far as possible In section 87, power to recover dues of a predecessor from the assets of a

successor purchased from the predecessor, is to be provided, as it is available in section 11 of the Central Excise Act.

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Sub-section (6A) of section 86 is being amended to omit the words “for grant of stay or”.

Section 94 to be amended to obtain rule making power (a) to impose upon assessees, inter alia, the duty of furnishing information, keeping records and making returns and specify the manner in which they shall be verified;(b) for withdrawal of facilities or imposition of restrictions (including restrictions on utilization of CENVAT credit) on a service provider or exporter, to check evasion of duty or misuse of CENVAT credit; and (c) to issue instructions in supplemental or incidental matters.

Section 80 is being amended to exclude the reference of first proviso to section 78. This amendment, in effect, removes the power to waive the 50% penalty imposable in cases where service tax has not been levied, not paid or short levied or short paid on account of suppression of facts or willful misstatement but details of transactions are available in the specified record.

Service Tax Rules [changes to have immediate effect]

Service provided by a Director to a body corporate to be brought under the reverse charge mechanism; service receiver, who is a body corporate will be the person liable to pay service tax.

Services provided by Recovery Agents to Banks, Financial Institutions and NBFC to be brought under the reverse charge mechanism; service receiver will be the person liable to pay service tax.

Cenvat Credit:

A manufacturer or a service provider shall take credit on inputs and input services within a period of six months from the date of issue of invoice, bill or challan w.e.f. 1st September,2014 .

In case of service tax paid under full reverse charge, the condition of payment of invoice value to the service provider for availing credit of input services is being withdrawn. However, there is no change in respect of partial reverse charge.

Re-credit of CENVAT credit reversed on account of non-receipt of export proceeds within the specified period or extended period, to be allowed, if export proceeds are received within one year from the period so specified or extended period. This can be done on the basis of documents evidencing receipt of export proceeds.

Rent-a-cab operator and tour operator: service tax paid by sub-contractor in the same line of business would be allowed as eligible credit to the main service provider to avoid double taxation, subject to certain conditions [with effect from 1st October 2014]

GTA service: service receiver may avail abatement, without having to obtain non-availment of Cenvat Credit certificate from service provider [change to have immediate effect].

Place of Provision of Services Rules: [changes to take effect from 1st

October, 2014]. Provision for prescribing conditions for determination of place of provision of

repair service carried out on temporarily imported goods is being omitted. The definition of intermediary is being amended to include the intermediary of

goods in its scope. Accordingly, with effect from 1.10.2014, an intermediary of goods, such as a commission agent or consignment agent shall be covered under rule 9(c) of the Place of Supply of Services Rules.

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Service consisting of hiring of Vessels (excluding yachts) and Aircraft is being excluded from rule 9(d). Accordingly, hiring of vessels, or aircraft, irrespective of whether short term or long term, will be covered by the general rule, that is, the place of location of the service receiver. Hiring of yachts would however continue to be covered by rule 9 (d).

Simplification of Partial Reverse Charge mechanism: In renting of motor vehicle, where the service provider does not take abatement

the portion of service tax payable by the service provider and service receiver will be modified as 50% each. This change will come into effect from 1st of October 2014.

Point of Taxation Rules: The first Proviso to rule 7 of the Point of Taxation Rules (POTR) is being

amended to provide that point of taxation in respect of reverse charge will be the payment date or the first day that occurs immediately after a period of three months from the date of invoice, whichever is earlier. This amendment will apply only to invoices issued after 1st October, 2014.

Input Service Distributor:

Rule 7 of the CENVAT Credit Rules, 2004, provides for the manner of distribution of common input service credit by the Input Service Distributor. This was amended to provide for distribution of common input service credit among all units in their turnover ratio of the relevant period. The amended rule 7 allows distribution of input service credit to all units (which are operational in the current year) in the ratio of their turnover of the previous year/previous quarter as the case may be.

SEZ – procedural simplification: [changes to have immediate effect] It is being provided that the Central Excise Officer would issue authorization in

Form A-2, within fifteen working days from the date of receipt of Form A-1. Authorization will have validity from the date on which Form A-1 is verified by

the Specified Officer of SEZ. However, if Form A-1 is furnished after a period of 15 days from the date of its verification by the Specified Officer, the authorization shall have validity from the date of furnishing of Form A-1 to the Central Excise Officer.

SEZ Units or the Developer will, pending issuance of Form A-2, be entitled to avail upfront exemption on the basis of Form A-1. However, in such a case, the SEZ Unit/Developer would be required to furnish a copy of authorization issued by the Central Excise Officer within 3 months from the date of receipt of specified services. If a copy of authorization is not provided within the said period of three months, the service provider shall pay service tax on the service so provided availing the exemption.

As regards services covered under full reverse charge, it is being mentioned specifically in Form that there would be no requirement of furnishing service tax registration number of service provider.

It is being provided that a service shall be treated as exclusively used for SEZ operations if the recipient of service is SEZ unit or developer.

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Notes: