TIOL-DDT 855 · the untouched capture
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399" size="3">TIOL-DDT 855 </font></strong><br>
<strong>30.4.2008 <br>
Wednesday </strong></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>FM
makes valiant attempt to control soaring prices and inflation – many
tax sops announced in amendment to the Finance Bill 2008 </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In an attempt aimed at reining the prices which in recent past are looking only towards north, the North Block yesterday rolled out many proposals by way of reducing the import duties and imposing export duties to discourage the exports. The amendments are: </font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Import duty concessions: </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Basic customs duty on pig iron and mild steel products viz. sponge iron, granules and powders; ingots, billets, semi-finished products, hot rolled coils, cold rolled coils, coated coils/sheets, bars and rods, angle shapes and sections and wires has been reduced from 5% to Nil. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">TMT bars are fully exempted from CVD which is currently 14%. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Basic Customs duty on the critical inputs for manufacture of steel, i.e. metallurgical coke, ferro alloys and zinc has been reduced from 5% to Nil. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Basic customs duty on skimmed milk powder has been reduced from 15% to 5% for a Tariff Rate Quota of 10000 metric tonnes per annum. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Customs duty has been reduced on butter oil, which is used for reconstituting liquid milk, from 40% to 30%. </font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Export
duty imposed: </strong></font>,</p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Export duty is proposed to be imposed on steel items at the following rates: </font></p>
<ul>
<li><font size="2" face="Verdana, Arial, Helvetica, sans-serif" align="justify">15% on specified primary forms and semi-finished products, and hot rolled coils/sheet. </font></li>
<li><font size="2" face="Verdana, Arial, Helvetica, sans-serif" align="justify">10% on specified rolled products including cold-rolled coils/sheets and pipes and tubes. </font></li>
<li><font size="2" face="Verdana, Arial, Helvetica, sans-serif" align="justify">5% on galvanized steel in coil/sheet form. </font></li>
</ul>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">A uniform statutory rate of 20% is incorporated in the Export Schedule and the aforesaid rates would operate through notifications to be issued later. This comes into effect after the enactiment of the finance bill, as stated by FM in the House. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">An
export duty of Rs 8,000/- is proposed to be imposed on export of basmati
rice. A commensurate reduction in the Minimum Export Price is proposed at
US$ 1,000 per tonne from the current MEP of USD 1200. </font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Other changes: </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Cut and polished colored gemstones and rough synthetic gemstones that currently attract 5% duty are fully exempted from the basic customs duty. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Basic customs duty on newsprint is reduced from 5% to 3%. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">With effect from 1 st May 2008, basic customs duty on Tapioca Starch is increased from 30% to 50% coinciding with the expiry of the safeguard duty. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It is proposed that the EOUs would be liable to pay anti-dumping duty on imported inputs either sold directly or contained in finished products that are sold in the domestic market. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><a href="http://taxindiaonline.com/RC2/union_budget/ub2008-09/bud2008_09.htm">Please
see Finance Bill</a> + <a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=23&filename=notification/custom/2008/ctariff08_056.htm">Customs Tariff Notification 56/2008-Cus., Dated: April 29, 2008 </a></strong></font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Central Excise: </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Packaged cement with a price above Rs.250 per bag (of 50 kg.) is currently chargeable to a specific rate of duty of Rs.600 per metric tonne (PMT). It is proposed to levy duty at ad valorem rate of 12% of the retail sale price for the cement in this price bracket. Accordingly statutory rate is being enhanced to Rs 900 PMT. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Exemption from excise duty on electric cars is extended to all electrical vehicles including two-wheelers and three-wheelers. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Replaceable kits for water filters functioning without electricity and pressurised tap water are fully exempted from excise duty. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Excise duty/CVD exemption has been restored on projectile type of shuttle less looms. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><a href="http://taxindiaonline.com/RC2/union_budget/ub2008-09/bud2008_09.htm">Please
see Finance Bill</a> + <a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=30&filename=notification/excise/2008/etariff08_25.htm">Central Excise Tariff Notification 25/2008-CX., Dated: April 29, 2008 </a></strong></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Anti-dumping duty continued on Hydrofluoric Acid from People's Republic of China – Another resurrection. </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Anti-Dumping duty imposed vide Notification 10/2003-CUSTOMS, dated the 15 th January, 2003 and extended vide Notification 45/2007 Cus dated 26 th March 2007 was effective upto and including 27 th March 2008. Now, based on the Designated Authority's final findings dated 25 th March , 2008, the Anti-Dumping duty has been extended for another five years. But what about the period from 28 th March 2008 to 28 th April ( the date of present notification)? No dumping? </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=23&filename=notification/custom/2008/ctariff08_054.htm" target="_blank"><strong>NOTIFICATION NO 54 /2008-Cus., Dated: April 28, 2008 </strong></a></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Similarly, Anti-dumping duty on Pentaerythritol from Chinese Taipei and Japan which expired on 26 th March 2008 has been extended to another five years. </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=23&filename=notification/custom/2008/ctariff08_055.htm" target="_blank"><strong>NOTIFICATION NO 55 /2008-Cus., Dated: April 28, 2008 </strong></a></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Every request for exemption has the support of one or more Members of Parliament - FM </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Yesterday, in his speech, the FM revealed a secret which he thinks is not a secret – Every request for exemption has the support of one or more Members of the Parliament. He said “My endeavour has been to increase the effective rate of corporate tax paid by corporations, but my efforts are stalled because of demands for continuing exemptions or introducing new exemptions. I think I would not be revealing any secret if I say that every request for exemption has the support of one or more Members of this House, irrespective of political affiliations. In my view, the way forward is not to increase tax rates but to remove the exemptions. In the last four years, I have succeeded to some extent in removing exemptions or imposing sunset clauses, but I cannot say that I am fully satisfied. Work on this regard would have to continue. Eventually, we would have to move towards a system of taxation where the exemptions are few, each exemption is reviewed periodically and each exemption comes to an end after a reasonable period of time. I am confident that the new Income Tax Code that will be placed in the public domain for discussion will reflect my philosophy in this regard and I hope that, in due course, the new Income Tax Code will, after deliberations, become law. </font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Some
other highlights of the FM Speech</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The tax : GDP ratio had indeed increased from 9.2 per cent in 2003-04 to 12.5 per cent at the end of 2007-08. The base of tax payers has also increased: the number of assessees has increased from 3 ,01,78,000 in 2003-04 to 3,25,00,000 in 2007-08. Compliance has also increased, as will be evident from the rate of growth of gross tax revenues. In the four years of the UPA Government, gross tax revenues have increased by 19.9 per cent, 20.1 per cent, 29.3 per cent and 25 per cent (provisional) over the previous year. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The tax administration had indeed become more efficient. The cost of tax collection on the direct taxes side is 60 paise per Rs.100 and on indirect taxes side, 65 paise per Rs.100. As has been acknowledged by many Honourable Members, the cost of collection is perhaps among the lowest in the world. <strong><font color="#FF6633">(Is that the reasons why the revenue officers are tempted to look around for other revenues?)</font> </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><a href="http://taxindiaonline.com/RC2/union_budget/ub2008-09/fm_speech_fb_amendment.htm">Please see full text of the FM Speech </a></strong></font></p>
<p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><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="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><img src="http://www.taxindiaonline.com/RC2/image/stories/ddt_31.gif" alt="Legal Corner Icon" width="191" height="160" hspace="5" border="0" align="left" /></b></font></strong></font></strong></font></strong></font></font><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Jurispruden<font color="#FF6633" size="5"> tiol </font> – Tomorrow 's cases </strong></font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>NDPS </strong></font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Only because at later stage, a period of limitation was prescribed for initiation of proceedings for forfeiture of properties, the same, by itself would not be sufficient to attract wrath of Article 14 of Constitution of India – Confiscation of Memon's properties upheld: SC </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The statute deals with an economic aspect of the matter. The purported object for which such a statute has been enacted must be noticed in interpreting the provisions thereof. The nexus of huge amount of money generated by drug trafficking and the purpose for which they are spent is well known. Harsh laws, not only for punishing the drug traffickers but also for preventive detention, if the conditions therefor are satisfied, were made. Necessity was felt for introduction of strict measures so that money earned from the drug trafficking by the persons concerned may not continue to be invested, inter alia , by purchasing moveable or immoveable properties not only in his own name but also in the names of his near relatives.” </font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Income Tax </strong></font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Payments for rentals for hosting of websites on servers are not in nature of interest or royalties or fee for technical services or other sum chargeable to tax in India; loans to employees written off – not business expenditure: ITAT </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#FF6633">Payment made to foreign company for website – rent, royalty or fee?</font> </strong> The assessee had paid Rs 3 ,26,386 /- to four non resident companies for launching of different websites on their servers located in USA . No tax was deducted while making the remittance on the ground that the amount was not chargeable to tax in India . The assessee claimed deduction in respect of the said amount as revenue expenditure. The assessing officer disallowed the amount u/s 40(a )( i ) on the ground that the assessee did not deduct any tax at source at the time of remittance to non resident </font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Central Excise </strong></font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Refund filed in terms of rule 5 of Cenvat Credit Rules on quarterly basis – Percentage of export clearances not an impediment for claiming refund – Revenue appeal rejected by Tribunal </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In the present case, the Revenue was not satisfied with the order of the lower appellate authority allowing the refund of accumulated credit earned on exported goods. They went in appeal before the Tribunal arguing that “ since in the present case, the export clearance were not to the tune of 70% but only to the extent of 50% ”, cash refund could not have been allowed on a monthly basis. </font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>See our columns tomorrow for the judgements </strong></font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Until tomorrow with more DDT </font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Have a nice time. </font></p>
<p align="justify"><font color="#FF6633" 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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