Impact of Swach Bharat Cess on Service Tax

Notification no. 22/2015-ST has been issued whereby exemption has been granted in excess of SBC calculated at the rate of 0.5 percent of the value of taxable services. Effectively, rate of cess would be 0.5% and new rate of service tax would be 14.5% . "This will translate into a tax of 50 paisa only on every one hundred rupees worth of taxable services.

Effective Rate of Service Tax  & Date

-   Effective rate of service tax post introduction of SBC would be 14.5%

-   Notification Comes in effect from 15^th Nov 2015

Services Rate for abatement in GTA

-   The effective rate of tax on all abatement services would be 14.5% * effective rate under Notification 26/2012-ST. For GTA, it would be 14.5%*30%= 4.35%

Service tax Rate for Works Contract

-   Effective rate of tax in case of original works 5.8% (14.5%*40%)

-   Other than original works 10.15% (14.5%*70%)

SBC impact on Service tax paid Under Reverse Charge

-   SBC would be applicable on all taxable services. Hence, you need to pay SBC along with service tax on the services availed by you.

To Be Mentioned On Invoice

-   SBC would be levied, charged, collected and paid to government independent of service tax. This needs to be charged separately on the invoice.

Rate of tax where services are provided before and after imposition of SBC

The impact of introduction of SBC on different situations is summarized below. (assuming that applicable rate is determined as per Rule 4 of Point of Taxation Rules, 2011)

S.No.	Service Provided	Invoice Issued	Payment Received	Rate of ST
1	Before Imposition of SBC	After Imposition of SBC	After Imposition of SBC	14.5%
2	Before Imposition of SBC	Before Imposition of SBC	After Imposition of SBC	14%
3	Before Imposition of SBC	After Imposition of SBC	Before Imposition of SBC	14%
4	After Imposition of SBC	Before Imposition of SBC	After Imposition of SBC	14.5%
5	After Imposition of SBC	Before Imposition of SBC	Before Imposition of SBC	14%
6	After Imposition of SBC	After Imposition of SBC	Before Imposition of SBC	14.5%

Cenvat Credit

-   There is no amendment in the Cenvat Credit Rules, 2004 regarding availment and utilisation of SBC. In the absence of the same, credit would not be admissible. Amendment in CCR 2004 is required.

EPC (Export Promotion of Capital Goods)

EPCG SCHEME 

DUTY FREE IMPORT OF CAPITAL GOODS Pune

Introduction

EPCG is a term used in India under exports and imports. EPCG means, Export Promotion Capital Goods. EPCG is one of the schemes provided by government of India to importers and exporters to promote exports. In simple and easy language, EPCG is a scheme related to machinery, machinery parts and similar goods.

Benefit of Scheme –

Under Export Promotion Capital Goods (EPCG) scheme, a license holder can import capital goods such as plant, machinery, equipment, components and spare parts of the machinery at zero rate of customs duty. General import duty is approx. 25 % to 27 % however in case of EPCG license holder not required pay duty.

Who Can Apply?

A manufacturer exporter can apply under scheme.

Obligation Under Scheme –

The duty free import by an exporter has to be paid back in the form of an export obligation equivalent to 6 times of duty saved on capital goods imported under EPCG scheme, to be fulfilled in 6 years reckoned from Authorization issue-date. This means that if an exporter imports a tool making machine and saves an import duty of Rs. 100, he will have make the tools and export tools worth minimum Rs. 600 within 6 years.

Salient Features

Ø  Authorization holders will have export obligation of 6 times the duty saved amount. The export obligation has to be completed in a period of 6 years.

Ø  The period for import under the Scheme would be 18 months.

Ø  Export obligation discharge by export of alternate products as well as accounting of exports of group companies will not be allowed.

Ø  On non full fill meant of  export obligation license holder required to pay the import duty amount
along with interest.

Ø  For default in fulfilling the export  under the EPCG scheme, license holder  have to pay the duty saved proportionate to the unfulfilled export obligation plus interest rate applicable from the date of clearance of the goods.

Procedure for Obtaining EPCG License

Ø  Certain list documents required

Ø  Making a brief application to be made in ANF

Ø  Payment of Applicable Government fees

Ø  Putting up file to Director General of Foreign Trade

Ø  Obtaining License under EPCG

By CA Amit Bhutada

Cell – 80555 66789

 Excise Registration in Pune 

Who is Required to Take Registration ?
In accordance with Rule 9 of the said Rules and Notifications issued under rules 18 and 19 of the said Rules, as the case may be, the following category of persons are required to register with jurisdictional Central Excise Officer in the Range office having jurisdiction over his place of business/factory:

1. Every manufacturer of excisable goods (including Central/State Government undertakings or undertakings owned or controlled by autonomous corporations) on which excise duty is leviable .
2. Persons who desire to issue CENVATABLE invoices under the provisions of the CENVAT Credit Rules, 2001.
3. Persons holding private warehouses.
4. Persons who obtain excisable goods for availing end-use based exemption notification.
5. Exporters manufacturing or processing export goods by using duty paid inputs and intending to claim rebate of such duty or by using inputs received without payment of duty and exporting the finished export goods.

Penalty for non obtaining Excise Registration ?

In case a manufacturer or producer liable to pay Central Excise does not obtain Central Excise Registration, a  penalty of upto Rs.10,000 and/or imprisonment of upto 7 years can be imposed. Therefore, it is important for  Entrepreneurs involved in manufacturing or production to know about their Central Excise liability and maintain  compliance.

Documents Required for Excise Registration - 

1 Company's PAN Card

2 MOA & AOA

3 Incorporation Certificate

4 Lay out of Factory

5 Address proof of factory

6 VAT, Service tax , CST , IEC copy ( if any)

7 Amount of Investment

8 List of Inputs ( with Tariff code )

9 List of finished goods ( with Tariff code )

10 Details of Directors ( PAN & Address proof )

11 Bank Details ( Name , A/c No.)

12 Cancelled Cheque

Period Required to obtain Registration Number 

2-3 working days time required to get excise registration number after clearance of documents.

Contact Us for Excise Registration , Compliance in PUNE

CA Amit Bhutada

Cell - 80555 66789

email- amitbhutada@outlook.com

LBT Maharashtra Turnover Clerification

I would like to bring your attention to the Maharashtra State Government notification dated 1 August 2015 that dealers with turnover of not less than INR 50 Crores shall only be liable for registration.

Lots of questions were raised for Whether turnover within the Municipal corporation area is to be considered or turnover in relation to the business of the dealer within the entire State of Maharashtra.

View of the Law and Judicial Department (LJD) of the Maharashtra State Government was sought. They have thus clarified that the turnover of the dealer within the corporation area is required to be considered and not the turnover for the entire State of Maharashtra. 

In this regard, the Government has clarified that the turnover of the dealer within the Municipal corporation area is required to be considered as per Notification No. LBT. 2015 / C.R. 42 / UD-32 dated 15 September 2015 and not the turnover for the entire State of Maharashtra.