Significant changes in Excise & Service Tax in Budget 2015

Central Excise:
1. Existing rate of 12% ad valorem will be @12.5% adv. from 01.03.2015 under the head CENVAT (Basic) duty. Levy of Primary Education Ccess and S&H Education Cess @ 2% and 1% respectively on the quantum of Cenvat (Basic) duty will be exempted from 01.03.2015. Other basic excise duty ad valorem with a few exceptions are not being changed.
Procedural changes

2. Daily Stock Account may be preserved in electronic from and every page of record shall be authenticated by means of a digital signature for which the Board may specify conditions, procedures etc., by Notification. [Rule 10 of Central Excise Rules, 2002 –sub-rule (4) & (5) inserted].

3. If goods are directly sent to a job worker, the invoice will show the name and address of the manufacturer- as buyer and the details of job worker as the consignee [Rule 11(2) – first proviso inserted. 2nd and 3rd proviso are related to registered dealer and importer respectively]. Such direct dispatch of inputs and capital goods to job worker without first bringing the articles to the manufacturer’s factory is allowed subject to certain conditions.

4. In case of failure to furnish any return/statement in prescribed Format [ER-1 to ER-4 & ER-7 to ER-8, as applicable to an assessee] within the specified time limit, an amount @ Rs. 100/= per day subject to a maximum of Rs. 20,000/= for the period of delay in submission of each such return/statement will be required to be paid.

5. The expression ‘export’ employed in Rule 18 providing rebate of duty paid on export goods is substituted which means taking goods out of India to a place outside India and includes shipment of goods as provision or stores for use on board a ship proceeding to a foreign port or supplied to a foreign going aircraft.

6. Existing Central excise registrants who have not submitted information regarding e-mail address and mobile number shall submit an amendment application provided in the website www. within three months from 01.03.2015. Similarly the existing registrants who have not submitted Business Transaction Numbers like BIN No, IEC No, State Sales tax/VAT No/CST No, CIN, Service Tax Registration No etc., which have been issued prior to the filing of Central Excise Registration application, shall file in the Form and for the numbers subsequently obtained for amendment in the same website and within the same time limit.

Cenvat Credit
7. Time limit for return of processed Cenvat credit availed capital goods has been extended from 180 days to 2 years of their being sent to job worker.

8. Conditions for allowing Cenvat credit in respect of “input service” will be changed from 04.2015 as follows:
(i) In case where the whole or part of the service tax is liable to be paid by the service recipient on full or partial reverse charge mechanism, credit is allowed after the tax is paid;
(ii) In case the value of input service and the service tax as indicated in the documents specified under Rule 4A of the Service Tax Rules, 1994 is not made within 3 months from the date of such documents but taken credit, an assessee shall pay the exact amount of credit availed except an amount equal to the credit of tax that is paid by the manufacturer/service provider being service receiver.
(iii) The restriction in taking credit of duties of excise paid on ‘inputs’ and ‘capital goods’ as also service tax paid on ‘input service’ within 6 months of the date of issue of specified documents has been extended to One (1) Year;

9. Refund of Cenvat credit of exported goods to a manufacturer has been made subject to condition that the export goods are to be taken out of India to a place outside India. [Rule 5 – clause (1A) inserted].

10. The barring/prohibitory conditions enumerated under Rule 6 have further been restricted by making inclusion of non-excisable goods cleared for a consideration from the factory. Even if such non-excisable goods have no commercial consideration i.e. sale value, such value shall be determined by using reasonable means consistent with the principles of valuation contained in the Act and the Rules made there under.

11. The conditions of allowing Cenvat credit of duty on input or capital goods purchased from a first and second stage registered dealer set forth in Rule 9(4), shall be equally applied in case of goods purchased from an ‘importer’.

12. Recovery of irregular Cenvat credit taken and penal provisions have been amended.

Service Tax
1. Levy of existing rate of service tax 12% is being increased to 14% from such date that will be appointed by the Centrat Govt. by Notification. Thus, the net effect in the rate will be from 12.36% (inclusive Cesses) to 14%, subsuming the Cesses. The Cesses will continue to be levied in service tax till the time the revised rate comes into effect.
In addition, a new levy termed as “Swachh Bharat Cess” shall be introduced as “Service Tax” @2% on the taxable value from a date to be notified by the Ministry. Thus the net effect in the rate will be 16% on the value of taxable services.

2. Any reimbursable expenditure or cost incurred by the service provider and charged, except in some circumstances and subject to conditions, that may be prescribed – would form part of value of taxable service.

3. Various penal provisions are amended and will be effected on enactment of the Finance Bill. Waiver of penalties in cases where assessee has been able to prove that there was reasonable clause in non-paid/short paid tax as provided under Section 80 of the Finance Act, 1994, shall be omitted.

4. In respect to services provided by way of supply of man power for any purpose or security services, liability for paying service tax is vested on the service recipient to the extent of 100% on and from 01.04.2015 instead of existing liability of 25% and 75% on the categorized service provider and recipient thereof, respectively.

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