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Corporate News *  Tax rates lowered on consumer goods,only luxury goods taxed @ 28% *   Businesses can revise GST transition claim form now *  Multiplex owners in UP demand clarity on refund as tax exemptions go away after GST *   GST compliance: A case of much ado about nothing *  PM hints more relief for traders & businesses to ease GST compliance burden *  Infosys deploys more people in states to ease GSTN load *   Further reforms are needed for the GST to succeed *   GST impact! Massive stock clearance discounts on apparels, gadgets likely in December *  Kerala HC releases Detained Goods since State has No Power to make Rules to regulate Inter-State movement of Goods under GST *  Infosys is to blame for GST Network glitches, say government officials *   Publishers versus authors: Who will pay GST on royalty? *   कपड़ा निर्यातकों ने कहा, जीएसटी के कारण भारत से शिपमेंट में आ सकती है भारी कमी *   Tax professionals protest over GST returns filing in Gujarat *  Publishers versus authors: Who will pay GST on royalty? *   Pilot Implementation of Paperless Processing under SWIFT *   Anti-dumping duty levied on the imports of " Color Coated/ Pre-Painted flat products of alloy or non-alloy steel " s *   Anti-dumping duty levied on the imports of "Wire Rod of Alloy or Non- Alloy Steel "   *   Exemption on goods imported by EOUs from integrated tax and compensation cess   *   Fixation of Tariff Value of Edible Oils, Brass Scrap, Poppy Seeds, Areca Nut, Gold and Sliver  *   Appointment of Common Adjudicating Authority by DGRI  *   Amendment in various Customs exemption notifications to exempt Integrated Tax/Cess on import of goods under AA/EPCG schemes  *   BCD and IGST rates on certain goods prescribed   *   Amendment in rates of supply of services  *   Integrated Tax rate on the leasing of motor vehicles prescribed.  *   RCM to apply on supply of Used vehicles, seized and confiscated goods, old and used goods, waste and scrap  *   Amendment in notification no. 8/2017-IT dated 14.09.2017 so as to add certain items to the list of “handicrafts goods”  *   Exemption to few goods from GST  *   Amendment in rates of goods *   Applicability of RCM on Supply of services by the members of Overseeing Committee to Reserve Bank of India  *   RCM on supplies from unregistered dealers postponed till 31.03.2018 
Subject News *  Refund of unutilized input tax credit of GST paid on inputs in respect of exporters of fabrics vide cicular no 18/2017 GST dt 16.11.17 *   CBEC prescribes procedure for manual filing and processing of refund claims for zero rated supplies *  Suppliers of services through an e-commerce platform are exempted from obtaining compulsory registration *  All taxpayers  exempt from payment of tax on advances received in case of supply of goods *  Changes in Tax rate of permanent transfer of Intellectual Property *  GST on Services by way of admission to protected monuments shall be exempted. *  Relevant Notification to be issued shortly, so as to be made available from 15th of November'17 *  Late fee payable for those where a tax liability arises will be Rs. 50/- per day. *  Supply of services by Composition taxpayer upto Rs 5 lakh per annum will be allowed *  Restaurants in hotel premises having room tariff of less than Rs 7500 per unit per day will attract GST of 5% without ITC. *  Restaurants in hotel premises having room tariff of Rs 7500 and above per day (even for a single room) will attract GST of 18% with full ITC. *  Job work services in relation to manufacture of those handicraft goods in respect of which the casual taxable person has been exempted from registration, shall be reduced to 5% with full ITC. *  All restaurants to levy 5% GST except 5-star ones. *  Tax rate on Bangles made out of lac/shellac has been reduced from 3% to Nil. *  GST rate on Fly Ash bricks has been reduced from 12% to 5%. *  GST rate has been reduced from 18% to 12% for Furniture wholly made of bamboo or cane. *  Tax Rate on Goods of Granites and marbles have been reduced from 28% to 18%. *  Gst rate on Guar meal has been reduced from 5% to nil. *  All stand-alone restaurants irrespective of air conditioned or otherwise, will attract 5% GST without ITC. *  Uniform rate of tax @ 1% under composition scheme for manufacturers and traders. *  Services provided through E-commerce platform shall be exempt from obtaining compulsory registration. *  Due date of TRAN-1 extended till 31.12.2017 along with one time option of revision. *  Due date of GSTR-4 for the quarter July-Sept,2017 revised to 24.12.2017. *  Due date of ITC-04 for the quarter July-Sept,2017 revised to 31.12.2017. *  A facility for manual filing of application for advance ruling shall be introduced. *  Late fee payable where tax liability for that month is ‘NIL’will be Rs. 20/- per day *  Late Fee of GSTR-3B will be re-credited to Electronic Cash Ledger under “Tax” head instead of “Fee” head. *  The time period for filing GSTR-2 and GSTR-3 for the months of July, 2017 to March 2018 would be worked out. *  Extension of due date for filing GSTR-1 till March, 2018 for taxpayers with annual aggregate turnover upto Rs. 1.5 crore. *  Filing of GSTR-3B extended till March,2018 by 20th of the Succeeding month.  

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Publish Date: 15 Mar, 2016
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Hopes of Auto Industry Shattered!

Hopes of Auto Industry Shattered! 

 

An article by:-
CA Pradeep Jain
CA Neetu Sukhwani &
Somya Jain

 
Introduction:- With the forthcoming budget 2016-17 there were lot of hopes and expectations of the automobile industry that they will be encouraged by way of various tax incentives but the budget came as a curse to them. All the hopes went in vain as soon as the Finance minister announced levy of Infrastructure cess on the vehicles. The levy of infrastructure cess came as a big blow to the car manufacturers.
 
Levy of Infrastructure Cess:-Vide Budget 2016-17, the government has announced to levy infrastructure Cess at the rate of 1 to 4 per cent on manufacturing of cars.
Infrastructure Cess is being levied on motor vehicles, of heading 8703, as per details mentioned hereunder:

Rate of Infrastructure Cess – Eleventh Schedule of Finance Bill 2016 read with Notification No. 01/2016-Infrastructure Cess dated 01.03.2016
The government has provided full exemption from the levy of Infrastructure Cess without any conditions on the following motor vehicles:-

SERIAL NO. CHAPTER HEADING DESCRIPTION OF EXCISABLE GOODS
1. 8703 Motor vehicles cleared as ambulances duly fitted with all the fitments, furniture and accessories necessary for an ambulance from the factory manufacturing such motor vehicles
4. 8703 Electrically operated vehicles, including three wheeled electric motor vehicles
5. 8703 Hybrid Motor Vehicles
6. 8703 Three wheeled vehicles
8. 8703 Hydrogen vehicles based on fuel cell technology

 
Furthermore, the government has provided exemption to the following motor vehicles subject to satisfaction of conditions prescribed therein:-

SERIAL NO. CHAPTER HEADING DESCRIPTION OF EXCISABLE GOODS CONDITION NO.
2. 8703 Motor vehicles (other than three wheeled motor vehicles for transport of upto seven persons), which after clearance has been registered for use solely as ambulance 1
3. 8703 Motor vehicles (other than three wheeled motor vehicles), which after clearance has been registered for use solely as taxi 1
7. 8703 Cars for physically handicapped persons 2

 
It is also worth noting that the condition no. 1 provides the exemption by way of refund mechanism as motor vehicles after clearance has been registered as ambulance or taxi.  A certificate issued by concerned State Transport Authority that the motor vehicle has been registered for use as ambulance/taxi is also required to be submitted to Assistant/Deputy Commissioner of Central Excise within 3 months or extended period of 3 months from the date of clearance of motor vehicle.
 
Furthermore, condition no. 2 requires certification from Deputy Secretary of Department of Heavy Industries that goods are capable of being used by physically handicapped persons and affidavit by buyer of car that the car will not be sold for five years after its purchase.
Moreover, the rate of infrastructure cess for following motor vehicles has been prescribed as follows:-

SERIAL NO. HEADING DESCRIPTION OF EXCISABLE GOODS RATE
9. 8703 Motor vehicles of length not exceeding 4000 mm, namely petrol, liquefied petroleum gases (LPG) or compressed natural gas (CNG) driven vehicles of engine capacity not exceeding 1200 cc 1%
10. 8703 Motor vehicles of length not exceeding 4000 mm, namely diesel driven vehicles of engine capacity not 2.5% - exceeding 1500 cc 2.5%

 
It is worth noting that the effective rates of the Infrastructure Cess have been made applicable with effect from 1st March, 2016.
 
Amendment in Rule 3 of Cenvat Credit Rules, 2004 renders Infrastructure Cess as ‘Non-Cenvatable’

No Cenvat credit of this Infrastructure Cess will be available under the Cenvat Credit Rules, 2004. The Notification No. 13/2016-CE (N.T.) dated 01.03.2016, has amended Cenvat Credit Rules, 2004 made applicable from 01.04.2016 wherein proviso has been inserted in Rule 3 (4) thereby stating that the cenvat credit shall not be utilised for payment of Infrastructure Cess leviable under sub-clause (1) of clause 159 of the Finance Bill, 2016. Hence, when the payment of Infrastructure Cess is to be made in cash only and no cenvat credit can be utilised for its payment, it is implied that the Infrastructure Cess is non-cenvatable. This is for the reason that restricting utilisation tantamounts to restricting availment of credit as there is no point in taking credit when the same cannot be utilised at all.
 
Good bye words:-The intention of levying Infrastructure Cess is clear from the Budget speech wherein it was clarified that the pollution and traffic situation in Indian Cities is a matter of concern and so this new levy is being introduced on motor vehicles.  However, this infrastructure cess will definitely result in hike in the prices of cars. Moreover, even the Supreme Court has already imposed a ban on registration of diesel vehicles with engine capacity of over 2000 cc in Delhi, observing the alarming rise in pollution levels. Now the government has decided to impose infrastructure cess upto 4 per cent.  
 

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PRADEEP JAIN, F.C.A.

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Phone No. :
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Mobile No. :
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Fax No. :0291 - 2439496


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E-mail :pradeep@capradeepjain.com