TIOL-DDT 564 · the untouched capture
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<p><font face="Verdana, Arial, Helvetica, sans-serif"><b><font color="#663399" size="3">TIOL-DDT 564 </font></b><font size="2"><b><br>
05.03.2007 <br>
Monday </b></font></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Missing in the budget </b></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Two Notifications which were part of the budget played a trick on the budget publishers and went missing from the budget files. The alert CBEC of course made them available by Saturday. </b></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Tariff Value for Pan Masala- 56% of RSP </b></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The
first of the missing notifications was the Tariff value one for pan masala.
As per Notification No. 3/2006 CENT, the Tariff Value for Pan masala, in
retail packages if retail sale price is printed on the retail pack is 50%
of the printed retail sale price. Now this notification is amended to make
the tariff value </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. 56% of the RSP for goods falling under tariff item 2106 90 20 and </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. 50% for goods fall under heading 2403. </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=30&filename=notification/excise/2007/exnt07_15.htm">NOTIFICATION. No.15/2007-Central Excise (N.T.) dated the 1 st March, 2007. </a></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Education Cess exemption for aircrafts </b></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">And the other missing one was this. Aircrafts and their parts are exempted from education cess. The peak rate of duty for cotton and woven fabrics reduced from 12.5% to 10%. However there is no change in the specific rates of duty these products attract. </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=23&filename=notification/custom/2007/ctariff07_035.htm">Notification. No 35/2007-Customs dated the 1 st March, 2007. </a></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>100% disallowance of expenditure in excess of Rs.20,000 made in Cash. </b></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">KSMK MURTY, a practicing CA from Visakhapatnam draws our attention to an important amendment to the Income Tax Act proposed in the Union Budget 2007. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Under the head income from business and profession, the FM has proposed 100% disallowance of expenditure made in cash (amendment to sec 40A(3)) as against the existing 20% disallowance. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> This is a harsh provision as even genuine expenditure, if it does not fall under few exceptions provided, will get disallowed. This provision is introduced to discourage dishonest taxpayers from boosting up their expenditure to reduce taxable profits. As the disallowance is increased to 100%, exceptions could have been given for genuine expenditure where the assessee makes purchases from registered dealers and had to pay cash. Now the businessman has to be more cautious in spending as he has to issue only account payee cheques or bank drafts for all expenditure above Rs.20, 000. The limit of Rs.20,000 is very small and could have been increased to at least Rs.50,000. This provision should reduce the habit of handling cash by small and medium businessmen. </font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Good Times ahead for Street corner groceries. </b></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The friendly neighbourhood grocery shop who provides your monthly provisions and gossip and on credit was almost becoming extinct in our cities and even small towns what with malls and hypermarkets gobbling up all the market with their attractive packaging and prices. <b>Reliance Fresh </b> vegetable shops have virtually driven out the push cart vendor out of the road!. Now of course there is good news for all these small vendors. The hyper markets and malls will no more be all that cheap. They have hired out super buildings at fancy rents and in a couple of months their rents are to be going up by 12.36% with the Service Tax on rented property. With such huge hike in rents, they are sure to increase their prices and the push cart vegetable vendor with no rents and overheads can perhaps teach a little economics to Reliance Fresh! PC is accused to have done nothing fore the <i>aam admi </i>. People don't read his budget properly. Isn't this an <i>aam admi </i> measure? </font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>A knotty Service Tax Notification </b></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Here is a very interesting Service Tax notification in Budget 2007. -<a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=40&filename=notification/servicetax/2007/stnot07_012.htm"> NOTIFICATION NO. 12/2007-Service Tax ,Dated: March 1,2007 </a></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In exercise of the powers conferred by sub-section (1) of section 93 of the Finance Act, 1994 (32 of 1994), the Central Government, on being satisfied that it is necessary in the public interest so to do, hereby exempts <b>the taxable services</b>, provided or to be provided, under an agreement, <b>by any person </b> to <b>other person who has the right to authorise </b> any <b>person to exhibit cinematograph film</b>, from the whole of the service tax leviable thereon under section 66 of the said Finance Act, subject to the following conditions, namely:- </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(i) that the service provided or to be provided is in relation to the delivery of the content of the cinematograph film; and </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(ii) that the content of such film, being in digitized form, after its encryption, is transmitted directly to a cinema theatre for exhibition through the use of satellite, microwave or terrestrial communication line and not by any physical means including CD and DVD. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now there are three persons here. Let's meet them. Let's say they are <b>A </b>, <b>B </b>and <b>C </b></font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. <b>A </b>provides service to <b>B </b></font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. <b>B </b>has the right to authorise any person to exhibit a film. So he must be a producer, distributor or one who had purchased the rights of the film from the producers. </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. <b>C </b>is the film exhibitor. </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now the notification exempts any service provided by A to B. Yes it is any taxable service. But is it? No, the notification has two conditions. </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. The service has to be in relation to delivery of the content of the cinematograph film and </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. that the content of the in digitized form, after its encryption, is transmitted directly to a cinema theatre for exhibition through the use of satellite, microwave or terrestrial communication line and not by any physical means including CD and DVD. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">So in effect, the notification is for service related to delivery of the content of a film that is to be telecast direct to a cinema theatre. Incidentally a new service "development and supply of content" is a proposed new service. But this exemption does not really apply to that service, which is yet to come, whereas this is an exemption from an existing service. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">But do we have the technology of a producer directly telecasting his film to the theatre through the satellite? This may be best way to arrest piracy, but what is the exemption even before the technology is launched in a big way? Has some big corporate giant who is entering this field just walked off with a big exemption? </font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Laloo as FM? </b></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">A Netizen, obviously a Revenue employee wrote to us, </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">On reading the budget speech of the Railway Minister, employees in the tax administration have started feeling that if Shri. Lalloo Prasad Yadav becomes the Minister of Finance, then at least the staff of the Department would be complimented in the Budget speech. </font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Officer
should not have acted as if he was a bloodhound but as a watchdog of revenue;
It is unfortunate that in large number of cases, orders totally bereft
of rationality are being passed. They do not in any manner serve public
interest, much less the interest of revenue - Supreme Court </b></font></p>
<p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=5116">See our Breaking News for the story.</a> </b></font></p>
<p><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Until tomorrow with more DDT </font></p>
<p><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Have a nice day. </font></p>
<p><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">vijaywrite@taxindiaonline.com </a></font></p>
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