Tuesday, 2 September 2014

Union Budget 2014 - Indirect Tax Amendments

Monday, 20 January 2014

Brush Up - 7 # Service Tax#- Have you received Discharge Certificate (VCES-3) under VCES and availed CENVAT credit??‏

Dear Professional Colleagues

CBEC has come out with a clarification regarding tax payments done in pursuance of Voluntary Compliance Encouragement Scheme.

Gist of the Circular are -

1. Time Limit for issuance of Discharge Form

Rule 7 of the Service Tax VCES Rules 2013, the acknowledgement of discharge in form VCES-3 shall be issued within a period of 7 working days from the date of furnishing of details of payment of tax dues in full along with interest, if any, by the declarant.

2. Availment of Cenvat Credit
Eligibility of the Cenvat Credit is governed by the Cenvat Credit Rules, 2004. Same has been clarified in the answer to question No.22 of FAQ issued by CBEC dated 08.08.2013, eligibility of CENVAT credit would be governed by the CENVAT Credit Rules, 2004.

Extracts of the Circular

Circular No.:

176/2014

Circular Date:

20 Jan 2014

File Number:

F. No. B1/19/2013-TRU (Pt)

New

F. No. B1/19/2013-TRU (Pt)

Government of India

Ministry of Finance

Department of Revenue

Central Board of Excise and Customs

Tax Research Unit

*****

New Delhi, dated the 20^th January, 2014

To,

Chief Commissioners of Central Excise and Customs (All),

Director General (Service Tax), Director General (Systems),

Director General (Central Excise Intelligence), Director General (Audit),

Commissioners of Service Tax (All),

Commissioners of Central Excise (All),

Commissioners of Central Excise and Customs (All)

Madam/Sir,

Subject: Clarification regarding issue of Discharge Certificate under VCES and availment of CENVAT credit - regarding.

Trade and Industry has sought clarification as to whether the first installment of tax dues paid under Voluntary Compliance Encouragement Scheme (VCES), 2013 would be available as Cenvat Credit immediately after payment or Cenvat credit can be availed only after payment of tax dues in full and receipt of Acknowledgement of Discharge in form VCES-3.
The issue has been examined. As per VCES, under Section 108 (2) of the Finance Act, 2013, a declaration made under Section 107 (1) shall become conclusive only upon issuance of acknowledgement of discharge under Section 107 (7). Further, in terms of Rule 7 of the Service Tax VCES Rules 2013, the acknowledgement of discharge in form VCES-3 shall be issued within a period of 7 working days from the date of furnishing of details of payment of tax dues in full along with interest, if any, by the declarant.
It would be in the interest of VCES declarants to make payment of the entire service tax dues at the earliest and obtain the discharge certificate within 7 days of furnishing the details of payment. As already clarified in the answer to question No.22 of FAQ issued by CBEC dated 08.08.2013, eligibility of CENVAT credit would be governed by the CENVAT Credit Rules, 2004.
Chief Commissioners are also advised that upon payment of the tax dues in full, along with interest, if any, they should ensure that discharge certificate is issued promptly and not later than the stipulated period of seven days.

Yours sincerely,

(S. Jayaprahasam)

Technical Officer, TRU

Tel: 011-2309 2037

Friday, 17 January 2014

Brush Up -6 # Income Tax & Service Tax# - Yuppie.........No Tax on Tax - No TDS on Service Tax.‏‏‏

Dear Professional Colleagues

At the time of my first audit during the CA articleship period, my first question to the respective senior is why they are deducting TDS on Service Tax? Service Tax is not the Income of the vendor infact it is his liability towards the government. Moreover TDS is part of "Pay As You Earn Scheme" and Service tax is not the earning of vendor while he is mere acting as an agent of the government.

My senior replied you are right but as per the TDS section, deductee have to deduct tax on payment made to vendor. So there is TDS on Service Tax also. I didn't say anything further and change my prospective while auditing books of accounts. But still I was thinking - Why it is that So????????? How there can be Tax on Tax? It seems to be ridiculous but no one is above law.

After six years of the crazy questions of grooming mind, Government of India awaken and CBDT bring out the Circular that there is no requirement to DEDUCT TAX ON SERVICE TAX PORTION, if it is separately mentioned in the invoice.

INCOME TAX - Circular No. 1/2014 - (DEDUCTION OF TAX AT SOURCE - RENT – CLARIFICATION OF TDS UNDER CHAPTER XVII-B ON SERVICE TAX COMPRISED OF PAYMENTS MADE TO RESIDENTS), dated 13.01.2014.

Extracts of Circular is as follows

The Board had issued a Circular No. 4/2008 dated 28/04/2008 wherein it was clarified that tax is to be deducted at source under section 194-I of the Income-tax Act, 1961 (hereafter referred to as 'the Act'), on the amount of rent paid/payable without including the service tax component. Representations/letters has been received seeking clarification whether such principle can be extended to other provisions of the Act also.

Attention of CBDT has also been drawn to the judgment of the Hon'ble Rajasthan High Court dated 1-7-2013, in the case of CIT (TDS) Jaipur v. Rajasthan Urban Infrastructure (Income-tax Appeal No. 235, 222, 238 and 239/2011), holding that if as per the terms of the agreement between the payer and the payee, the amount of service tax is to be paid separately and was not included in the fees for professional services or technical services, no TDS is required to be made on the service tax component u/s 194J of the Act.

The matter has been examined afresh. In exercise of the powers conferred under section 119 of the Act, the Board has decided that wherever in terms of the agreement/contract between the payer and the payee, the service tax component comprised in the amount payable to a resident is indicated separately, tax shall be deducted at source under Chapter XVII-B of the Act on the amount paid/payable without including such service tax component.

Copy of Circular is attached for your kind perusal.

Regards

Gaurav Arya

Chartered Accountant

Wednesday, 27 November 2013

Brush-Up - 3 # Service Tax # - Service Tax Updates - 25th November, 2013‏‏

25th November, 2013 was booked for changes. CBEC have brought out the following amendments and clarifications.

1. E-Payment limit decreases

W.e.f. 1st January, 2014 the limit of e-payment of Service Tax & Central Excise Duty has been reduced from Rupees Ten Lakhs to Rupees One Lakhs. It means that assessee having tax liability more than Rupees One Lakhs have to mandatory paid service tax through electronically mode.

(Notification 16/2013 - Service Tax dated 22nd November, 2013)

(http://www.servicetax.gov.in/st-notfns-home.htm)

2. VCES Clarification - Circular No.174/9/2013 – ST dated 25th November, 2013

CBEC has issued the the captioned circular to bring more clarity in VCES, 2013.

The said Circular is being issued in pursuance with the recently held interactive sessions at Chennai, Delhi and Mumbai, which were chaired by the Hon’ble Finance Minister. In the circular those issues have been answered / clarified which have not been specifically clarified hitherto or clarified adequately.

Mainly the questions related to acceptance, rejection of declaration, tax dues etc. have been answered.

(http://www.servicetax.gov.in/st-circulars-home.htm)

3. Central Excise :- Valuation Rules Amended (W.e.f 1st December, 2013)

Rules 8, 9 and 10 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 has been amended vide Notification No. 14/2013-CENT dated 22-11-2013

Old rules have been substituted by the new rules.

Summary of new rules are as under : -

Rule 8 -

Now in case of partly consumption goods, value of such goods taken as 110% COP. Earlier it covers the cases where the whole of excisable goods were captively consumed.

Rule 9 -

Now in case of part of the excisable goods not sold by the assessee to or through the relative of the assessee , as per the amendment the value of such goods shall be the normal transaction value.

(Relative as per the sub-clauses (ii), (iii) or (iv) of clause (b) of sub-section (3) of section 4 of the Act)

Rule 10 -

Now in case of part of goods unsold by the inter-connected undertaking, the value of such goods shall be determined in the manner prescribed in the rule.

(Earlier these Rules talks about when whole of the excisable goods are not sold by the assessee to or through the relative / inter-connected undertaking. Substituted rules talks about valuation of part of goods unsold by the assessee)

(http://www.cbec.gov.in/excise/cx-act/notfns-2013/cx-nt2013/cent14-2013.htm)

Hope the information assist you in fulfilling Professional Commitments.

Warm Regards

Gaurav Arya

Chartered Accountant

"Victory is not a property of brilliants but it is a crown for those who pursue hard work with confidence and devotion"

Brush-Up - 2 # Service Tax # - Changes in provisions of Service Tax in relation to SEZ‏

Last week two major amendments were brought in the provisions of Service Tax in relation to SEZ. Changes are as follows:-

1. Time Limit for Furnishing of Quarterly Statement

Notification No. 15/2013 dated 21st November, 2013 has prescribed the time limit for filing the quarterly statement to the jurisdictional Superintendent of Central Excise.

The same has been come into effect by substituting the clause (d) of sub para (II) of para 3 of the Notification No.12/2013-Service Tax, dated the 1^st July, 2013. The new text is as follows:-

"Now, as per the New Notification every SEZ unit or the Developer shall furnish to the jurisdictional Superintendent of Central Excise a quarterly statement in Form A-3, furnishing the details of specified services received by it without payment of service tax, by 30^th of the month following the particular quarter:

Provided that for the quarter of July, 2013 to September, 2013, the said statement shall be furnished by the 15^th of December, 2013."

2. Inclusion of Two more services

Good News for SEZ sector, now they can receive two more Input Services without payment of Service Tax.

The Ministry of Commerce & Industry, Department of Commerce (SEZ Division) vide Instruction No. 79 dated 19th November, 2013 have included two more services in the list of default authorised services, namely:-

(i) Rent-a-Cab Scheme Operator's Services

(ii) SEZ Online Services

Now, the list of default authorised services expanded to 58 services.

Hope shared information help you to fulfil the professional commitments.

Warm Regards

Gaurav Arya

Chartered Accountant

"Victory is not a property of brilliants but it is a crown for those who pursue hard work with confidence and devotion"

Thursday, 21 November 2013

Brush-Up - 1 # - Service Tax Rebate Claims -Declaration may be filed after export in case of IT-enabled services/call centres [Wipro Ltd. v. Union of India [2013] 39 STT 639/32 taxmann.com 113 (Delhi)]‏

Decision - In favour of Assessee. Rebate Claim allowed.

As regards requirement of filing declaration, it was held that in case of assessee engaged in services provided in call centre or BPO centre, every phone call is an export of taxable service, while input services are received only at regular intervals, depending upon arrangement with service-providers. It is impossible to anticipate date of export and with precision demarcate point of time prior to export.

Further, such service-exporter cannot value and specify amount of service tax/cess payable on input services "actually required" to be used in providing exported service, which can be known only when bill or invoice for input-services is received. Hence, it is impossible for an assessee to comply with requirement of filing of declaration of input services actually required 'prior to date of export'.

Filing of a declaration after date of export and after all requisite details were available was a sufficient compliance. Therefore, assessee was eligible for rebate even if declaration was filed after export.

Warm Regards

Gaurav Arya

Chartered Accountant