TIOL-DDT 106 · the untouched capture
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<html> <head> <title>Untitled Document</title> <meta http-equiv="Content-Type" content="text/html; charset=iso-8859-1"> </head> <body bgcolor="#FFFFFF"> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font color="#0000CC" size="3">TIOL-DDT 106</font><br> 03 05 2005<br> Tuesday</b></font></p> <p align="center"><font color="#006633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Budget 2005 – almost an Act</b></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Budget 2005 almost sailed through to eventually become the Finance Act within the next 10 days. The highlights of the amendments from the original Bill presented on 28th February 2005. </b><br> <br> <font color="#006633"><b>Review by Chief Commissioner – Government rectifies the lapse pointed by DDT<br> </b></font><br> In <b>DDT 66</b> on 2-3-2005, we had pointed out an anomaly in the amendment to the Section 35A of Central Excise Act, 1944 by clause 78 of the Finance Bill. As per this, the Commissioner (Appeals) was required to send a copy of his order to the Chief Commissioner and not to the Executive Commissioner. But an appeal to the Tribunal against the orders of the Commissioner (Appeals) has to be filed within three months of the receipt of the order by the Commissioner. It was pointed out that as per the amendment, the Commissioner will never get a copy of the order and an impossible situation would prevail. We had hoped that this minor lapse will be corrected before the bill becomes the Act. We are happy to report that the Finance Minister has indeed made the correction in Sl.No.33 and 36 of his amendments to the Finance Bill. Now the Commissioner (Appeals) is required to make one more copy of his order and send it to the jurisdictional Commissioner. This applies to the Customs Act also.<br> <br> <font color="#006633"><b>Service Tax</b></font><br> <br> Farm Income Insurance Scheme exempted from Service Tax.<br> <br> As per Notification No.3/2000 SERVICE TAX dated 6-7-2000, the taxable service in relation to General Insurance provided under the National Agricultural Insurance Scheme (Rashtriya Bhima Yojana) or Seed Crop Insurance is exempted from payment of SERVICE TAX. Now Farm Income Insurance Scheme is also exempted. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=40&filename=notification/servicetax/2005/stnot05_13.htm"><b>Notification No.13/2005 SERVICE TAX dated 2-5-2005.</b></a><br> <br> <font color="#006633"><b>CENTRAL EXCISE</b></font><br> <br> <b>NIL DUTY </b><br> <br> 1. Cotton yarn other than sewing thread not put up for retail sale was exempted from whole of excise duty under Notification No.3/2005. Now, cotton yarn (other than sewing thread) put up for retails sale is also exempted from payment of Central Excise duty. <br> <br> 2. Machine made Carpets and textile floor coverings under Chapter 57 were exempted. Now an explanation is added to specify that manually operated implements used independently by hand are not Machines. <br> <br> 3. Some more items like Gudaku Tobacco, raw furskin, Umbrella cloth panels and drawing instruments added to the list of NIL duty goods. <br> <br> <b><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=29&filename=notification/excise/2005/etariff05_015.htm">Notfn No.15/2005 dated 2-5-2005.</a></b><br> <br> <b>EXEMPTIONS</b><br> <br> 1. Exemption to tyres, flabs and tubes for certain machinery withdrawn.<br> <br> 2. Molasses to attract Rs.750/- per M.T. instead of Rs.1,000/- originally proposed in the Finance Bill.<br> <br> 3. Mono Filament Long Line System for Tuna Fishing wholly exempted from Excise duty. This would make the applicable CVD <b>nil</b> when these goods are imported. Customs Duty for this item has been reduced to 5%<br> <br> 4. Duty on isolated Soya Protein reduced from 16% to 8%<br> <br> <b><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=29&filename=notification/excise/2005/etariff05_016.htm">Notification No.16/2005 dated 2-5-2005</a></b><br> <br> <b>TEXTILES</b><br> <br> Tyre Chord Fabric of high tenacity yarn of nylon to attract an optional Excise duty of 16% instead of 8% now. This is an optional system for textiles under Notification No.29 & 30/2004 dated 9-7-2004 under which most of the textile items are exempted. But the manufacturers can choose to avail CENVAT credit and pay duty @ 4% for cotton and 8% for other textiles. <br> <br> <b><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=29&filename=notification/excise/2005/etariff05_017.htm">Notfn No.17/2005 dated 2-5-05</a></b><br> <br> <b>DOMESTIC LPG</b><br> <br> LPG supplied to domestic consumers had been under exemption. Now this exemption is extended to Liquefied Propane and Butane mixture, Liquefied Propane and Liquefied Butane. All these are the different variants of what is commonly known as LPG. These have been exempted under Customs Duty also. Suitable Amendment has been made in the CENVAT credit Rules, 2004 to provide for proportionate reversal of credit when these exempted goods are cleared.<br> <br> <a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=29&filename=notification/excise/2005/etariff05_018.htm"><b>Notification No.18/2005 Central Excise dated 2-5-2005</b></a> and <b><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=30&filename=notification/excise/2005/exnt05_020.htm">Notification No.20/2005-NT dated 2-5-2005.</a></b></font></p> <p align="justify"><font color="#003333" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>CUSTOMS</b></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Liquefied Propane</b> and Butane mixture, Liquefied Propane and Liquefied Butane for domestic supply, fully exempted and Mono Filament Long Line System for Tuna Fishing to attract 5% Customs duty. <br> <br> <b><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=23&filename=notification/custom/2005/ctariff05_037.htm">Notification No. 37/2005 – Cus dated 2.5.2005.</a></b><br> <br> <b>Additional Duty on computers:-</b> CPUs imported separately will attract a duty of 7% and computers with monitor, mouse and keyboard imported together as a set will attract 7% duty.<br> <br> <a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=23&filename=notification/custom/2005/ctariff05_038.htm"><b>Notification No. 38/2005 – Cus dated 2.5.2005.</b></a><br> <br> <b>Parts of mobile handsets:</b> Parts/components/accessories imported for manufacture of mobile handsets including cellular phones, has been exempted from the 4% CVD. This exemption will be available up to 30.4.2007. These are already exempted from the basic customs duty by notification No. 21/2005 dated 1.3.2005.<br> <br> <a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=23&filename=notification/custom/2005/ctariff05_039.htm"><b>Notification No. 39/2005 – Cus dated 2.5.2005.</b></a><br> <br> <b>33% safeguard duty imposed on tapioca starch</b><br> <br> Safeguard duty has been imposed on import of Tapioca starch at the following rates:-<br> <br> (a) 33% ad valorem, when imported from the 2nd day of May, 2005 to 1st day of May, 2006 (both days inclusive);<br> <br> (b) 23% ad valorem, when imported from the 2nd day of May, 2006 to 1st day of May, 2007 (both days inclusive); and<br> <br> (c) 13% ad valorem, when imported from the 2nd day of May, 2007 to 1st day of May, 2008 (both days inclusive).<br> <br> This will not apply to imports of Tapioca Starch from countries notified as developing countries other than Thailand and Vietnam.<br> <br> <b><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=23&filename=notification/custom/2005/ctariff05_040.htm">Notification No. 40/2005 – Cus dated 2.5.2005</a></b><br> <br> <font color="#006633"><b>Income Tax</b></font><br> <br> • Women and senior citizens to benefit from higher IT exemption limit.<br> • No tax for cash withdrawal from savings accounts.<br> • Advertising out of Fringe benefits tax.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font color="#006633">Drawback rates announced</font></b><br> <br> While the Finance Bill was hot in the Lok Sabha, the Government calmly announced the new drawback rates effective from 5th May. A significant feature of the new Drawback Schedule is that barring a few exceptions the rates on all export products have been expressed in ad valorem terms in lieu of earlier specific rates, i.e. Metric Tonne /kg etc. Though the weight based drawback is reported to be less vulnerable to abuse, the ad valorem rates have the dual virtue of first being fair to the exporters and secondly, serve the policy objective of encouraging the export of value added items. Therefore, as a conscious policy decision, it has been decided to express drawback rates in ad valorem terms. <br> <br> <b><a href="http://www.taxindiaonline.com/RC2/pdfnoti/pdfcustom/pdf2005/pdf_dback2005/cnt05_035.pdf">Notification No. 36 /2005- CUSTOMS (N.T.)</a></b> and <b><a href="http://www.taxindiaonline.com/RC2/pdfnoti/pdfcustom/pdf2005/pdf_dback2005/cuscir05_022.pdf">Circular No.22/2005-Cus. dated 2.5.2005.<br> </a></b><br> <font color="#006633"><b>ITC – FM defends lapsing of ordinance</b></font><br> <br> The ITC ordinance continues to haunt the Government. The Finance Minister stoutly defended the ordinance lapsing. He said that two reputed leaders of the NDA had asked him to withdraw the ordinance. He also mentioned that his predecessors did not decide on the matter despite the court asking the two sides to sort out the issue and the <b>Central Board of Excise and Customs maintaining that the government had a strong case.</b> Yes, the Government always has a strong case, because it can change the law after losing the case! <br> <br> <font color="#006633"><b>VAT on defence canteens and Lord Balajee?</b></font><br> <br> <b>DDT 91</b> dated 08.04.2005 had pointed out that the defence canteens were on the verge of closure because of VAT. Now the FM wants the states to exempt these canteens from VAT. He has asked all the political parties to persuade the state governments to grant this exemption. While defence is a priority, unfortunately God is forgotten. DDT had pointed that Lord Balajee will be made to pay VAT on the sale of human hair so devotionally offered by pilgrims to the Lord. There seems to be no exemption in sight for this. On a personal note, I recently contributed to this VAT in Tirupathi while a senior netizen held in high esteem by DDT wrote to us that he cannot really contribute much as there is hardly any hair left with him to offer to the Lord. Please see our Breaking News for more stories on the Finance Bill.<br> <br> <font color="#FF6666"><b>Until Tomorrow with more DDT<br> <br> Have a Nice Day. <br> <br> Mail your comments to</b></font> <b>vijaywrite@taxindiaonline.com </b></font></p> <p align="justify"></p> </body> </html>