Thursday, July 24, 2014

Free E Book On Service Tax by CA Pritam Mahure Updated 15.07.2014


About the book - This book is a compilation of key Service Tax Legal provisions (Updated up to 15.07.2014).Wherever possible, relevant amendments have been shown in red colour/ track change. Also, Central Excise provisions which are applicable (vide sec. 83 of FA‘ 1994) to ST legislation are highlighted in green colour.

Free E book on Service Tax :Includes

  • Service Tax Act, 
  • Service Tax Rules ,
  • Place of provision rules,
  • ST Voluntary Compliance Encouragement Scheme, 2013,
  • Point of taxation rules ,
  • Cenvat Credit rules ,
  • Service Tax Voluntary Compliance Encouragement Rules, 2013,
  • All Notifications from applicable from 01.07.2012
  • All Circular ,Orders after implementation of Service Tax Negative List regime wef 01.07.2012 up to 15.07.2014.
  • Brief of all procedures under service tax like registration ,Payment, service tax return ,Due dates , Forms etc has also been given.
  • Charts of abatement ,Reverse charge
  • And many more details about service Tax 

Wednesday, July 23, 2014

INSTRUCTIONS TO FILE WEALTH TAX RETURN FORM (BB)


This form(BB) is to be filled up by all wealth-tax assessees [individual, Hindu Undivided Family (HUF) or company]. This form is applicable for assessment years 2014-15 and subsequent years. 

These notes are meant to help you in filling up this return form. They are not a substitute for law. Notes are given only in respect of items that need some explaining.

Due date to file wealth tax return is same as of Income Tax return 


GENERAL
  • Every individual or HUF or company, whose net wealth exceeds the maximum amount which is not chargeable to wealth tax is obligated to furnish his return of net wealth.
  • This is an annexure-less return and shall not be accompanied by a statement showing the computation of the tax payable on the basis of the return, or proof of the tax and interest paid, or any document or copy of any account or form of report of valuation by registered valuer required to be attached with the return of net wealth under any provisions of the Wealth-tax Act, 1957. In case return is filed in paper form, all such documents enclosed with the return will be detached and returned to the person filing the return.
  • This return shall be furnished electronically under digital signature. However, for assessment year 2014-15, an individual or a Hindu Undivided Family to whom the provisions of section 44AB of the Income-tax Act, 1961 are not applicable may furnish this return in paper form. From the assessment year 2015-16 and subsequent assessment years, this return form shall be furnished by all assessees electronically under digital signature. 
  • All Parts and Columns must be filled in the manner provided here under. If any Part or column does not apply, please mention NA (Not Applicable) and do not put any mark or symbol. 
  • In case of return filed in paper form, if space provided under any item of the Return Form is found insufficient, then give the computation in respect of such item on separate sheet(s) using the columns indicated for the purpose under the said item in the Return Form and attach that to the Return. The sum totals of such computation done should be indicated in the columns provided under the relevant item in the Return Form. Similarly, any other information asked for in this Form, which cannot be completely furnished on account of paucity of space, may be furnished on a separate sheet. 
  • Sections referred in these instructions are the sections of the Wealth-tax Act, 1957 and references to rules are references to the rules of the Wealth-tax Rules, 1957.
BRIEF SCHEME OF THE LAW

Computation of net wealth

  1. Value of an asset, for an assessment year is to be declared as on the valuation date. Valuation date in relation to an assessment year under the Wealth-tax Act, 1957 means the last day of the previous year as defined in section 3 of the Income-tax Act, 1961. Thus, for the Assessment Year 2014-15, the valuation date will be 31.3.2014.
  2. Value of an asset, other than cash, is to be determined on the basis of the rules in Schedule III to the Wealth-tax Act, 1957.
  3. In the computation of net wealth including net wealth of other persons includible in assessee’s net wealth on the valuation date, the assessee is to furnish in the given columns details of all immovable and movable property held by him and held by any other person which are includible in his/her net wealth of the valuation date.
  4. Details of immovable properties mentioned in section 2(ea) of the Wealth-tax Act, 1957 held by the assessee or by any other person includible in his/her net wealth on the valuation date are:-
    • (i) Any building or land appurtenant thereto (hereinafter referred to as “house”) whether used for residential or commercial purposes or for the purpose of maintaining a guest house or otherwise including a farm house situated within twenty-five kilometers from local limits of any municipality (whether known as Municipality, Corporation or by any other name) or a Cantonment board, but does not include –
      • a house meant exclusively for residential purposes and which is allotted by a company to an employee or an officer or a director who is in whole-time employment, having a gross annual salary of less than ten lakh rupees
      • any house for residential or commercial purposes which forms part of stock-in-trade;
      • Any house which the assessee may occupy for the purposes of any business or profession carried on by him.
      • any residential property that has been let out for a minimum period of the three hundred days in the previous year;
      • Any property in the nature of commercial establishments or complexes; 
      • “Urban land” means land situate—
        • (i) in any area which is comprised within the jurisdiction of a municipality (whether known as a municipality, municipal corporation, notified area committee, town area committee, town committee, or by any other name) or a cantonment board and which has a population of not less than ten thousand; or
        • (ii) in any area within the distance, measured aerially,—
          • (I) not being more than two kilometers, from the local limits of any municipality or cantonment board referred to in sub-clause (i) and which has a population of more than ten thousand but not exceeding one lakh; or
          • (II) not being more than six kilometers, from the local limits of any municipality or cantonment board referred to in sub-clause (i) and which has a population of more than one lakh but not exceeding ten lakh; or
          • (III) not being more than eight kilometers, from the local limits of any municipality or cantonment board referred to in sub-clause (i) and which has a population of more than ten lakh,
      • The definition of urban land excludes the following:
        • (A) Land classified as agricultural land in the records of the Government and used for agricultural purposes;
        • (B) Land on which construction of a building is not permissible on account of any law or the time being in force;
        • (C) Land occupied by any building which has been constructed with the approval of the appropriate Authority.
        • (D) Unused land held by the assessee for industrial purposes for a period of two years from the date of its acquisition by him; 
        • (E) Any land held by the assessee as stock-in-trade for a period of ten years from the date of its acquisition by him; and
  5. Details of assets belonging to any other person but includible in net wealth of the assessee:
    • (i) Assets transferred to certain relatives or to other persons for the benefit of those relatives or  assets transferred under revocable transfer. [Section 4(1)(a)(i), 4(1)(a)(iii), 4(1)(a)(v), 4(1)(a)(vi)]. 
    • (ii) Assets held by a minor child not being a married daughter of such individual except assets acquired by the minor child from his income referred to in the proviso to subsection (IA) of section 64 of the Income-tax Act, and held on the valuation date. Where the marriage subsists, these assets are includible in the hands of the parent, whose net wealth is greater, and where the marriage does not subsist, in the net wealth of the parent maintaining the minor child. (ii) “Assets held by a physically or mentally handicapped minor child as specified in section 80U of the Income-tax Act, will not be clubbed with the net wealth of the parent.”
    • (iii) Interest of a minor child admitted to the benefits of partnership in the assets of a firm. [Section 4(1)(b)]
    • (iv) Individual property of assessee converted into the property of Hindu Undivided Family after 31.12.1969. [Section 4(1A)].
    • (v) Moneys gifted by means of book entries [Section 4(5A)].
  6. Clause (m) of section (2) of the Wealth-tax Act provides that only debts which have been incurred in relation to the assets assessable to wealth-tax will be allowed to be deducted in computing the net wealth.
  7. Under the provisions of section 6, in the case of an individual who is not a citizen of India or of an individual or Hindu Undivided Family not resident in India or resident but not ordinarily resident in India, or of a company not resident in India during the year ending on the valuation date, the value of assets located outside India is not to be included in the net wealth.
  8. All sheets must be signed by the assessee. 

PAGE WISE SCHEME OF THIS FORM
SHEET - 1

  1.  Part A-GEN (Personal Information, Filing Status):
    • It is compulsory to quote PAN.
    • Use block letters only throughout to fill in this form.
    • Please tick  appropriate box.
    • State the section under which the return is filed. In case of revised return, please furnish Receipt No. and date of filing.
  2. Part B-NW (Computation of net wealth): Against items 1 to 5, transfer the appropriate figures from the appropriate items of applicable schedules, as indicated.
  3. Part B-TNW (Computation of tax liability on net wealth): Mention amount payable against item 5 and refundable amount against item 6. As the refund, if any, shall be directly deposited into the bank account of the assessee, it is mandatory to furnish the requested details of bank account against item 7.

SHEET - 2

  1. Part B-TP (Details of Tax and Interest paid): Furnish the correct BSR Code of the bank branch, date of deposit (in the DD/MM/YYYY format) and Challan Serial Number as mentioned in challan.
  2. VERIFICATION: Read the instructions below the verification carefully before signing it. Fill all the relevant columns in the verification. Give the place and date as indicated.
  3. Schedule IP (Immovable Property):
    • Furnish the details of all immovable properties, mentioned in section 2(ea)(i) or section 2(ea)(v), held by the assessee whether located in or outside India. Value of immovable property should be declared as per the relevant rules of Schedule III to the Wealth-tax Act, 1957.
    • In Sl. No.1, 2 and 3, furnish complete description, address including of all immovable properties. 
    • In Sl. No.4, indicate the value of the immovable property as calculated on the basis of provisions of the relevant rules of Schedule III to the Wealth-tax Act, 1957. 
    •  In Sl. No.5, indicate the amount of debts owed, if any, separately in relation to each of the immovable property. 
    • In Sl. No.7, 8 and 9, in case of valuation by registered valuer, furnish the name of registered valuer, registration number of the valuer and the date of report of the valuer. 
    • Schedule MP [Movable Property (other than jewellery, etc.)]: Furnish the value as per the relevant rules of the Schedule III to the Wealth-tax Act, 1957 and debt owed in relation to motor cars, referred to in section 2(ea)(ii), yacht, etc. referred to in section 2(ea)(iv) and cash in hand referred to in section 2 (ea)(vi).

SHEET - 3

  1. Schedule JE (Jewellery, etc.):
    • Furnish the details of all items of jewellery, bullion, etc. referred to in section 2(ea)(iii) in this schedule.
    • In Sl.No.1 to 5, furnish the complete description, weight, etc. of precious metal and precious or semi precious stone.
    • In Sl.No.6 to 8, furnish the value of jewellery as per as per the relevant rules of the Schedule III to the Wealth-tax Act, 1957.
    • As per rule 18(2) of the Schedule III to the Wealth-tax Act, 1957 the return of net wealth is required to be supported by a statement in the prescribed form, if the value of the jewellery on the valuation date does not exceed Rs. 5 lakhs or the report of the registered valuer in the prescribed form, if the value of the jewellery on the valuation date exceeds Rs. 5 lakh.
    • The statement or the valuation report as mentioned in Rule 18(2) of Schedule III to the  Wealth tax Act, 1957 is not required to be furnished along with the return but the details of valuation report i.e. the name of registered valuer, registration no. of the valuer and the date of report are required to be filled in Sl.No. 9 to 11.
  2.  Schedule INW (Includible net wealth of other person): Mention the name of the person, relationship, PAN, value, etc. in respect of assets belonging to any other person but includible in the net wealth of the assessee.
  3. Schedule IFA [Interest held in the assets of a firm or association of persons (AOP) as a partner or member thereof]:
    1. Furnish following details in respect of interest held as partner in a firm or as a member of an AOP:-
      • (i) Name and address of each firm in which interest is held as a partner.
      • (ii) Name and address of each firm(s)/AOP(s) in which interest is held as a member.
      • (iii) PAN of Firm(s)/AOP(s)
      • (iv) Name of other partners/Members
      • (v) Assessee’s Profit Sharing Ratio in percentage.
      • (vi) The value of the interest in the firm or AOP is to be determined as per relevant rule of Schedule III to the Wealth-tax Act, 1957. 
      • (vii)Debt owed, if any, in relation to meet interest is to be shown separately for each firm(s)/AOP(s).
    2. The value of the interest of a minor child in the assets of a firm in which he is admitted to the benefit of partnership in such a firm is to be included in the assessee’s net wealth under the provisions of the proviso to section 4(1)(b), should also be indicated at (i) above.
  4. Schedule ACE [Assets referred to in section 2(ea) which are claimed as exempt under section 5]: Furnish the details of assets exempt under section 5 of the Wealth-tax Act, 1957. These are as  under:-
    • (a) Any property held by the assessee under trust or other legal obligation for any public purpose of a charitable or religious nature in India. 
    • (b) The interest of the assessee in the coparcenary property of any HUF of which the assessee  is a member, since the asset is already liable to tax in the hands of the HUF. 
    • (c) Any one building which was in the occupation of a Ruler, which before the commencement of the Constitution (Twenty-sixth) Amendment was declared as his official residence. 
    • (d) Jewellery in the possession of a Ruler, not being his personal property, and recognised by the government as his heirloom or which the Board had recognised as his heirloom at the time of his first assessment to wealth-tax.
    • (e) Moneys and value of assets, or the value of assets acquired by a person of India origin or citizen of India who was residing outside India if he returns to India with the intention of permanently residing in India. The exemption is provided for a period of seven successive assessment years commencing with the assessment year next following his return to India. 
    • (f) In case of individual or HUF, one house or part of a house or a plot of land comprising an area of five hundred square meters or less. 
SHEET - 4

  1. Schedule OPR (Other properties):
    1. This schedule is to be filled only by an individual or a HUF. A company is not required to fill this schedule. 
    2. In this schedule, furnish the complete details of all immovable and movable property held by the assessee, as on the valuation date, other than the following: 
      • a. assets which are liable for Wealth tax Act, 1957, the details of which are already required to be furnished in other schedules of this return form.
      • b. assets claimed as exempt under section 5, the details of which are required to be furnished in Schedule ACE;
      • c. assets located outside India and are excluded under section 6 based on the citizenship or residential status of the assessee; or
      • d. assets being part of business or profession which is subject to audit under section 44AB of the Income-tax Act, 1961.

Prohibition on Acceptance of Deposit by Private Limited


DEPOSITS FOR PRIVATE COMPANIES

From the commencement of Companies Act, 2013, Provisions regarding Prohibition on Acceptance of Deposit shall apply to Private Limited companies also along with Public Limited Company.

Companies need more and more funds for expanding their business activities due to Competitive business environment, which led them to borrow funds from banks and financial institutions. However sourcing of funds puts the Company under management & control of those financial institutions and a part from Capital and Free reserves, main source of fund is Unsecured Loans from Directors, Shareholders, their relatives and other contacts. The alternative sources of finance available for the Companies are equity and preference shares, debentures and other debt securities etc., this has induced companies to call for deposits from the public. Such deposits are unsecured debts and neither management control nor the formalities of charge on assets are putting any hindrances for availing of such amount.

First of all, these provisions / Prohibitions does not apply to a banking Company, a non – banking financial Company as well as any other class of Company as specified by the Central government.
Deposits (Section 73-76)

Definition of deposits has been changed drastically and the following amounts have been included in the definition of deposits in respect to acceptance of Deposit Rules:-

  1. Loan from directors if he has not given loan out of his own funds (Borrowed Fund)
  2. Loan from relatives of directors.
  3. Loan from members.
  4. Share application money pending allotment for more than 60 days.
  5. Any amount received in the course of or for the purpose of the business, as advance and is outstanding or 365 days.
  6. Secured debentures and compulsorily convertible debentures convertible within five years from the date of issue.
Now a Private Company cannot accept deposits from relatives of Directors or Shareholders as was allowed under Companies Act, 1956 unless Section 73 of the Companies Act, 2013 and Companies (Acceptance of Deposit) Rules, 2014 are complied with. Further share application money pending allotment for more than 60 days shall also be treated as deposits, if not refunded with 15 days.

As per Section 74(1)(a) and Companies (Acceptance of Deposit) Rules, 2014 every company who has accepted deposit before commencement of Companies Act, 2013 has to file a return in Form DPT-4 within 3 months from commencement of Companies Act, 2013 (i.e. upto 30th June,31st August , 2014) and further it has to be repaid within 1 year from commencement of this Act.(i.e. by 31st March, 2015) 

Process of filling of Form DPT-4: 

  • Form DPT4 is an attachment Form as it is given in attachment category under download forms.
  • It will be attached with Form GNL 2 along with auditor certificate (Form for submission of documents with the Registrar).
  • Auditors report in Old format under Companies Act, 1956 will also be attached with this form.(Format is given below.)
Attachments to Form DPT-4 includes: 

1. Auditor’s certificate; 

2. List of depositors indicating name, address, amount deposited, repaid during the year and outstanding, interest due, paid and payable as at the close of the Financial Year and separately indicating deposits not yet matured, matured, claimed and paid and matured, claimed but not paid and matured but not claimed for payment. List of deposits matured, cheques issued but not yet cleared to be shown separately. The details required to be annexed is very much identical to the details required under to be given under Return of deposits.

Now, a Private Company may accept deposits from its members subject to fulfillment of the following conditions:

  • Passing of resolution in a general meeting. 
  • Issue of circular to members showing the financial position of the Company, the credit rating obtained the total number of depositors and the amount due towards deposits in respect of any previous deposits accepted by the Company etc.
  • Circular in Form DPT-1 
  • Deposit Trust Deed in Form DPT – 2 (to be executed seven days before executing circular)
  • Filing a copy of the circular with the Registrar within 30 days before the date of issue of the circular.
  • Providing deposit insurance.
  • Certification by the Company that it has not defaulted in the repayment of deposits.
  • Provision of security in respect of deposit and interest and creation of charge on company’s properties and assets.
  • An amount of not less than 15% of the deposits maturing during a financial year shall be deposited in Deposit Repayment Reserve account which shall not be used for any other purpose.

Precaution- A Private Company being subsidiary of a Public Company shall become public company and all the provisions related to public companies shall apply on such private companies. However, the provision of erstwhile Section 4(7) of the Companies Act, 1956, has been dispensed with and now not applicable w.e.f. 1 April 2014. 

Practical Procedure for acceptance of Deposit by Private company
  1. Call Board Meeting:
    • To pass resolution for acceptance of deposit from members
    •  Approve Draft DPT-1 (Circular)
    • Appoint a Trustee
    • Call General Meeting
    • Authorize Director or Secretary for further process 
  2. Call General Meeting 
    • Pass Ordinary Resolution for acceptance of deposit
  3. File form MGT-14 with ROC within 30 days of passing of resolution:
    • Attach Notice, Minute and CTC of Resolution
  4. File DPT-1 with ROC at least 30 days before issue of circular, signed by BOD or Person Authorize by Board.
  5. Enter into contact with Insurance Company at least 30 days before issue of Circular.
  6. Execute Deposit Trust Deed at least 7 days before issuing of circular.
  7. Issue Circular (DPT-1) to members through registered post, courier or through Electronic mode.
    • Company MAY issue circular in DPT-1 through advertisement also.
  8. Within 21 days of Acceptance of Deposit company will issue receipt of deposit to Depositor. Receipt will be signed by Person Authorized by Board of Director.
  9.  Make Entry in register within 7 days of issue of receipt.
  10. Company will create charge on assets of company equal to amount of deposit unsecured by insurance.
  11. File CHG-1 Within 30 days of Creation of Charge.
NOTE:

1. Private Company can accept deposits from member’s up to 25% of paid-up share capital + Free reserve.

2. Company before 30th April each will deposit at least 15% of amount of deposit, whether secured or unsecured, maturing during the year or next financial year in deposit repayment reserve account, maintain with Schedule Bank.

3. Company Before 30th June every year will file DPT-3 with ROC, containing information there in as on 31st March, duly audited by Auditor of company.

4. No trustee can be removed after the issue of circular/advertisement and before the expiry of his term except with the consent of all the Directors Present at a meeting of Board.

5. T & C of Deposit cannot be altered after the issue of circular/ Advertisement or acceptance of Deposit.

6. A panel Rate of Interest 18% shall be payable on nonpayment of matured deposits.

(Author – CS Divesh Goyal, ACS is a Company Secretary in Practice from Delhi and can be contacted at csdiveshgoyal@gmail.com) 

Disclaimer: As under

CS Divesh Goyal Mob: +91-8130757966

PPF Interest rate for FY 2014-15 Notified @ 8.7 % Per annum (no Change)


Central Government notified the interest rate on  subscriptions made in PPF  at the rate of 8.7 per cent.This is same rate as notified for the Financial year 2013-14.

SECTION 5 OF THE PUBLIC PROVIDENT FUND ACT, 1968 - INTEREST - NOTIFIED RATE OF INTEREST ON SUBSCRIPTIONS MADE TO THE FUND ON OR AFTER 1-4-2014 AND BALANCES AT THE CREDIT OF SUBSCRIBER

NOTIFICATION NO. GSR 496(E) [F.NO.6-1/2011-NS-II (PT.II)], DATED 11-7-2014

In pursuance of section 5 of the Public Provident Fund Act, 1968 (23 of 1968), the Central Government hereby notifies that the subscriptions made to the Fund on or after the 1st day of April, 2014 and the balances at the credit of the subscriber shall bear interest at the rate of 8.7 per cent.

Tuesday, July 22, 2014

EPF ceiling Limit Set to Increase from 6500 to 15000 wef ?


In Union Budget 2014-15 presented on 10.07.2014 Finance Minister announced that Maximum wage ceiling for EPF contribution by employer is to be increased from Rs 6500 to Rs 15000. But in his address he has not set the effective date of implementation of the new wage limit for epf contribution.

In budget announcement following two annoucement has been made regarding EPF

  1. Government notified a minimum pension of Rs1000 per month to all subscriber members of EPF Scheme. Initial provision of  Rs 250 crore. 
  2. Increase in mandatory wage ceiling of subscription to Rs 15000. 

As we have already informed you that EPF board of trustees has already approved raising of EPF wage ceiling limit to 15000 and Minimum pension to 1000. Further change in other charges has also been approved by EPF board.

Now EPF department has issued a circular to his officers to prepare themselves for implementation of high wage ceiling limit 


So from the above we hope that new ceiling limit will be applicable form 01.08.2014 or 01.09.2014.Though exact date will be known only after issue of notification from the department

Downlaod Above EPF circular on wage Limit

Friday, July 18, 2014

Clarification on matters relating to Related Party Transactions


Clarification on matters relating to Related Party Transactions. 

Government has received representations from stakeholders seeking certain clarifications on related party transactions covered under section 188 of the Companies Act, 2013. These representations have been examined and the following clarifications are given:

1. Scope of second proviso to Section 188{1):

Bare Act Language: Second proviso to sub-section(1) of section 188 said No Member of the company shall vote on such special resolution, to approve any contract or arrangement which may be entered into by the company, if such member is a related party.

Changes In Service Tax in Budget 2014 Clause By Clause with effective date


With the Promise of “Acche Din” there was great expectations of what would be delivered in the budget this led challenge for finance minister to balance the unduly high expectations built up pre Budget, with the economic realities prevailing at a ground level, with a view to help reshape investment sentiment both domestically and internationally. In his speech, the Finance Minister, rightly pointed to the fact that not everything could be addressed in one Budget and systemic changes would have to be made in the next few years to achieve our economic aspirations.

Amendments in Indirect Taxation

  1. CHANGES IN SERVICE TAX
  2. CHANGES IN EXCISE
  3. CHANGES IN CUSTOMS
  4. CHANGES IN CENVAT CREDIT RULES

Changes in Cenvat Credit Rules , 2004 :Budget-2014


4. Changes in Cenvat Credit Rules , 2004
(Effective from 11th July 2014 except otherwise specifically specified) 

i) The term “Place of Removal” is defined 

Cenvat credit of input services upto the ‘place of removal’ is allowed. The term ‘place of removal’ was earlier not defined in Cenvat Credit Rules 2004. However, the said term was defined in section 4(3)(c) of Central Excise Act 1944. The Hon’ble Delhi CESTAT in the case of M/s Ultratech Cement Ltd. 2014 TIOL 478 held that the definition of the term ‘place of removal’ as appearing under Central Excise Act cannot be applied under Cenvat Credit Rules. Hence, the said term is now defined under rule 2(qa) of Cenvat Credit Rules 2004 as well which is similar to the definition appearing under Central Excise Act 1944. 

ii) Cenvat Credit on services wherein entire service tax is paid by service recipient can be availed on payment of service tax. 

a) Earlier, the cenvat credit of service tax been paid under reverse charge was allowed only after payment of service tax to the government as well as after payment of service value to the service provider. However w.e.f. 11th July, 2014, the credit of service tax paid on services, where 100% service tax is paid by service recipient shall be eligible on payment of service tax to the government irrespective of the fact whether payment to service provider for the services have been made or not. 

Therefore, in case of import of services, the service recipient can take cenvat credit as soon as they pay the service tax even if the payment to the vendor is not made. This will also apply in cases like GTA, sponsorship, legal services etc. 

b) It must be noted that there is no change with respect to cenvat credit of input services wherein entire service tax is paid by service provider i.e. the credit can be availed on receipt of invoice & it must be reversed if payment is not made to the vendor within 3 months of the date of invoice. 

c) Further, in case of partial reverse charge (rent-a-cab, works contract, manpower supply, security) cenvat credit with respect to service tax paid by the service provider can be availed when the payment is made to the service provider for such service (and not on receipt of invoice) & in respect to service tax paid as service receiver, it can be availed only after the payment towards value of services has been paid to the provider of service & service tax has been deposited to the Government. 

iii) Rule 6(8) of Cenvat Credit rules, 2004 

As per the provisions of rule 6(8) of Cenvat Credit Rules 2004, an assessee was required to reverse the cenvat credit pertaining to export of services if the foreign currency is not received within a period of 6 months from the date of provision of service or such extended period as maybe allowed from time-to-time by the RBI As per the amendment made, if the service provider receives the payment after 6 months or after the extended period as maybe allowed by RBI but within one year from such period, then the cenvat credit so reversed can be availed back to the extent of amount received. It must be noted that in case the payment is received after the end of such period of one year, then the assessee is not eligible to avail the cenvat credit. 

This amendment shall even apply to cases where exports have already been made & the payment has not been received within the specified period. 

iv) Rule 12A(4) of Cenvat Credit rules, 2004 

Henceforth, an LTU is not allowed to transfer cenvat credit from one unit to another unit. Any cenvat credit which has been taken upto 10th July 2014 can only be transferred. 

v) Cenvat credit can be availed within 6 months only (effective from 1st September 2014). 

Earlier there was no time restriction on availment of cenvat credit. The provisions of cenvat credit rules are amended whereby a manufacturer or a service provider shall not take cenvat credit of inputs, input services after a period of six months from the date of issue of invoice, bill or challan as the case may be. It must be noted that cenvat credit with respect to invoices/ challans/ bills which are dated prior to 1st September 2014 will also be subject to such time restriction. 

For example, cenvat credit is not yet taken for a bill dated 1st July 2014. Such credit can be availed only till 31st December 2014. It is thus advisable to immediately take cenvat credit of all pending invoices/ bills. 

There are many cases when assessees are receiving input services but have not taken any registration as they are not engaged in providing any taxable service during that period. For example, in telecommunication industry, the assessee incurs huge cost towards setting up of tower & other infrastructure. At this time, the assessee is receiving many input services but is not providing any taxable service. In such cases, the assessee must take registration & file periodical returns wherein credit must be duly availed. 

vi) ISD distribution 

The provisions relating to distribution of credit from ISD were amended vide notification no. 5/2014 dated 24.02.14. There was a confusion that whether credit pertaining to more than one unit is to be distributed amongst only those units to which the service pertains or to all the units. This has now been clarified by the Board vide circular no. 334/15/2014-TRU dated 11.07.14 wherein it is explained that credit is to be distributed to all the units if any service pertains to more than one unit.

 Amendments in Indirect Taxation



  1. CHANGES IN SERVICE TAX
  2. CHANGES IN EXCISE
  3. CHANGES IN CUSTOMS
BY,

CA. Vineeta Chhatwani Chartered Accountant, M.COM
Address: 302, Purab Paschim Apt, Nehru Chowk,Ulhasnagr -421 002. Mumbai. Co: +91-9028207905

Changes in Customs in Budget 2014


Changes In Customs

A. No change in Peak Rate. It remains at rate of 10%.

B. Changes in duty rates with immediate effect of major items are as follows: