The 122nd CAB initiated the process of introducing Goods and Services Tax

THE Winter Session of Parliament, 2014, witnessed the introduction of the 122nd Constitutional Amendment Bill (CAB). The 122nd CAB initiated the process of introducing Goods and Services Tax, the single biggest indirect taxation reform in India post Independence.

The Union Budget 2015-16 has raised the expectations of the industry on account of various reasons, including being optimistic with the ‘Make in India’ campaign. In the upcoming budget, we hope to see appropriate steps being taken to provide much needed clarity in the following identified areas:

A. Goods and Services Tax (GST)

– Introduce the draft GST legislative framework, including the ‘Place of Supply Rules’, in the public domain for debate and discussion

– Announce the roadmap for implementation of GST

– Provide clarity on the date of implementation of GST

– Declare details of the compensation package promised to State governments

B. Service Tax

– Restore the definition of ‘intermediary services’ as it existed before 1 October 2014, or make the ‘Place of Provision’ of such services recipient based

– Bring greater clarity on the taxability of Intellectual Property Rights to avoid double taxation

– Permit filing of multiple revised returns

– Grant a refund of unutilised CENVAT credit at the time of closure of a business

– Provide clarity on the treatment of CENVAT credit for Deemed Exports

– Provide relaxation of payment of service tax in the event of bad debts or allow self-adjustments for future liability

– Provide clarity on the applicability of service tax on ‘sharing of expenses’ between associated companies where reimbursements are made on an actual basis

– Bring uniformity in the percentage at which a service provider or service recipient is liable to pay taxes under the Partial Reverse Charge Mechanism for a consistent and simpler tax regime

– Extend the threshold exemption to assessees paying service tax under the Reverse Charge Mechanism including the Partial Reverse Charge Mechanism

– Reduce the rate of interest on delayed payment of service tax from the present 24/30% per annum to 18% per annum, if the delay in payment is beyond six months/one year respectively

C. Excise Duty

– Revise the current SSI exemption to INR 30 million

– Remove inverted duty structures for Active Pharmaceutical Ingredients

– Increase the abatement on the levy of excise duty on pharmaceuticals products

– Provide concessional excise duty on capital goods, consumer durables and products in the automotive sector

– Streamline excise returns and remove redundant excise returns

D. CENVAT Credit

– Make CENVAT credit seamlessly available by restoring former definitions relating to inputs, input services and capital goods as prevailing before 1 April 2011

– Eliminate or extend the time limit of six months for availing CENVAT credit

– Reinstate the facility of transferability of CENVAT credit by one unit of a Large Taxpayer Unit to another

– Provide clarity on the eligibility to avail full CENVAT credit paid on capital goods in the year of receipt of capital goods

– Prescribe a time limit for processing refund claims filed and provide for automatic payment of interest for delayed refunds

E. Customs Duty

– Remove customs duty on all life saving drugs

– Remove customs duty on capital goods required for R&D services in the pharmaceutical sector

– Introduce legal provisions relating to the Special Valuation Branch (SVB) procedures and prescribe a time limit for the same

– Continue reforms of inverted duty structures wherein the rate of customs duty on imported raw materials is more than the imported final product

– Reduce the rate of Special Additional Duty (SAD) from 4% to the rate of Central Sales Tax (CST) i.e. 2% and grant up front exemption from SAD on goods imported for resale

– Reduce customs duty on gold

– Reduce import duty on iron ore till the domestic production of iron ore and its demand-supply gap is bridged

– Increase the demurrage period available to importers for storage of goods in the premises of the custodian from three days to five days

– Increase the interest-free warehousing period for goods imported

F. Litigation

– Reduce the backlog of litigation by introducing Tribunal benches and filling vacancies in the Tribunal

– Withdraw the provision of a mandatory pre-deposit on filing an appeal before the Commissioner (Appeals) and Tribunal and introduce a merit based pre-deposit provision

– Make Advance Ruling available even to ongoing activities which are not under litigation

G. Central Sales Tax

Reduce CST to 1% to phase it out at the time of GST

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