TIOL-DDT 2055 · the untouched capture
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<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN" "http://www.w3.org/TR/html4/loose.dtd"> <html> <head> <title>Untitled Document</title> <meta http-equiv="Content-Type" content="text/html; charset=iso-8859-1"> </head> <body> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=17063"><img src="http://www.taxindiaonline.com/RC2/image/stories/limca_book2013.jpg" alt="DDT in Limca Book of Records" width="175" height="120" hspace="5" border="0" align="right"></a></font></strong></font></strong></font></strong></font></strong></font><font color="#663399" size="3">TIOL-DDT 2055</font><br> </strong></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>28.02.2013 <br> Thursday </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong> </strong></font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>The Budget Speech </strong></font></p> <p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>AND</strong> now I turn to my tax proposals </font></p> <p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Direct Taxes first. </font></p> <p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">I propose to exempt personal income up to Rs. 5 Lakhs totally from Income Tax, that is those who have income up to Rs. Five lakhs per annum will not have to pay any Income Tax at all. </font></p> <p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Income above five lakhs and up to Rs20 lakhs will be charged at a flat rate of 10% with no surcharge, no exemptions, no cess and of course no stress. </font></p> <p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Income above Rs. 20 lakhs and up to Rs. 50 lakhs will be charged at 20%. </font></p> <p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">For income above Rs. 50 lakhs, the tax rate will be 25%. </font></p> <p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">All exemptions except a few will be withdrawn. </font></p> <p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Wealth Tax: </strong>I propose to abolish wealth tax </font></p> <p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>India Education and health fund: </strong>I propose to start this fund initially with donations from Indians in India and abroad who have benefited from education in India. I would request all NRIs to donate liberally to this fund. I propose to work out a scheme whereby Indian students going abroad, on securing jobs abroad will be compulsorily required to pay an annual tax of 2000 dollars which will be in the form of a donation to this fund. All donations from Residents to this fund will be totally exempted. The fund will be managed by a committee of eminent persons and will be used for promotion of education and health. As already mentioned, the 3% Education Cess on Taxes is being withdrawn. </font></p> <p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Corporate Tax: </strong>I propose a uniform tax rate of fifteen percent and abolish all surcharges and cesses. </font></p> <p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Indirect Taxes: </strong></font></p> <p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Customs </strong>: I propose to maintain a uniform rate of 5% Customs duty on all items of permitted imports. On a few selected items, I propose to impose a duty of 15%. There will be no additional duties or cesses, except of course CVD to protect the local industry. </font></p> <p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Central Excise: </strong>I propose to reduce the CENVAT rate to 8% on all goods except tobacco products, for which the tax would be 50% of the MRP. There will be no exemption except for captive consumption, SSI exemption up to Rs. 2 Crores and exports. </font></p> <p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Service Tax: </strong>I propose to reduce the Service Tax rate to 8%. Turnover up to Rs. Twenty lakhs in a year will be exempted. </font></p> <p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CENVAT Credit Scheme </strong>: I propose to bring in major changes in the CENVAT Credit Scheme. All services and goods purchased by a service provider or manufacturer will be eligible for CENVAT Credit. I propose to computerize the entire CENVAT Credit stream. As soon as the excise duty or Service Tax is paid by the supplier of inputs or input services, the CENVAT Credit will be electronically credited into the account of the recipient. </font></p> <p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Appeal </strong>: I propose to abolish the post of Commissioner (Appeals) both in the CBEC and CBDT. There will be an independent Appellate Authority under the control and supervision of the CESTAT/ITAT. There will be no requirement of pre-deposit for appeals till the stage of Tribunal, so that Tribunal need not waste all their time on hearing Stay petitions. </font></p> <p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Immunity Scheme: </strong>In all pending cases as on 28.2.2013 in income tax, customs, Central Excise and Service Tax with the departmental authorities or appellate tribunals, or courts, the case will be deemed to be settled if the assessee pays 20% of the demanded duty, tax, cess and there will be no penalty or interest. An assessee can also voluntarily declare any tax or duty, not paid in the last ten years and pay 20% of such escaped duty or tax and get immunity from all proceedings including prosecution. Details of the scheme are being worked out and will be announced in a few days. </font></p> <p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">I hope all the tax payers in the country will cooperate with me and ensure that the lowered taxes are paid truthfully and ………….. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Oh! My God! I wake up with a start - that was a stupid dream. I wanted to be fresh for the budget and allowed myself the luxury of an early sleep and this was the speech I heard in my dream. It's only a dream, I sadly realise. But I have a <strong>DDT </strong> to do before the day starts. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It's the Budget Day - let's have nothing but the budget but before you listen to the Budget Speech, if you have time, just have a look at this. </font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Service Tax under Partial Reverse Charge - Can it be paid from CENVAT Account? </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> special feature of 2012 Budget was introduction of partial reverse charge in Service Tax. The liability in respect of some specified services like manpower supply, rent-a-cab, works contract service etc., has been shifted partially to the service recipients depending on the status of the service providers (Individuals, Firms, AOPsetc). But, can the liability under partial reverse charge be discharged from CENVAT account by the recipients of these services? When I asked this question, my editorial colleague immediately said No. I asked him to show if there is any specific provision in this regard. We started with “Education Guide” and have gone through the entire text of Guidance Note 10 (Partial Reverse Charge), but there is no guidance note on this important issue. Then we tried to check CENVAT Credit Rules, 2004. The definition of “output service” given under Rule 2(p) reads as under: </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(p) "output service" means any service provided by a provider of service located in the taxable territory but shall not include a service,- </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(1) specified in section 66D of the Finance Act; or </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(2) where the <strong>whole of service tax </strong> is liable to be paid by the recipient of service; </font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Under partial reverse charge, since whole of service tax is not paid by the service recipient, the exclusion under (p)(2) is not applicable. So, this bar is not applicable to partial reverse charge. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Then we moved on to Rule 3(4) where an explanation has been inserted vide Notification No 28/2012- CX., (N.T.), Dated : June 20, 2012 as under: </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">"Explanation. - CENVAT credit cannot be used for payment of service tax in respect of <strong>services </strong>where the person liable to pay tax is the service recipient" </font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">But, again in respect of partial reverse charge, the person liable to pay service tax is not service recipient <strong>alone </strong>. The service provider is also person liable to pay tax in respect of the specified services. So, it is doubtful whether this explanation puts a bar on utilization of CENVAT Credit for payment of service tax under partial reverse charge. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">And then, vide Notification No 18/2012 CE(NT) dated 17.03.2012, in Rule 9[prescribing documents for taking CENVAT credit], sub-clause (e) has been substituted as under: </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">"(e) a challan evidencing payment of service tax, by the service recipient as the person liable to pay service tax; or". </font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">From this also, it cannot be concluded that the service tax cannot be paid from CENVAT credit. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">So, finally, though many assessees and officers strongly believe that CENVAT Credit cannot be utilized for payment of service tax under partial reverse charge, the provisions are not very clear on this. May be it is time to revisit the entire scheme and provide proper clarification and carry out necessary amendments to reflect the intention of the Rule makers. There is no better time than Budget to do this. </font></p> <p align="justify"> </p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Happy Budget </strong></font></p> <p align="center"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><img src="http://www.taxindiaonline.com/RC2/image/stories/HAPPY_BUDGET_DAY.jpg" alt="" width="400" height="451" hspace="5" border="0" align="center"></strong></font></p> <p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Until Tomorrowwith more <strong>DDT </strong></font></p> <p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Have a Nice Day </strong></font></p> <p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Mail your comments to </font> <font size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="mailto:vijaywrite@taxindiaonline.com"><strong>vijaywrite@taxindiaonline.com </strong></a></font></p> </body> </html>