Service tax: Norms for point of taxation simplified

The Finance Ministry has come to the rescue of industry and professionals by considerably simplifying its norms on ‘point of taxation' for service tax collection purposes. The point of taxation will now be primarily linked to date of invoice/collection, according to the latest changes made by the Central Board of Excise and Customs (CBEC). The simplification has come a month after the original norms were issued and would help allay the concerns expressed by industry. Point of taxation refers to the time when a taxable service should be brought to service tax. Prior to the latest changes, the point of taxation was also linked to the date of provision of services/date when services were to be provided. This has now been dropped. The point of taxation was hitherto decided as the earlier date of invoice, date of collection or date of provision of services/date when services were to be provided. Meanwhile, it has now been clearly spelt out that the point of taxation for services exports will be the date of payment. Also, professionals such as chartered accountants, company secretaries, architects and interior decorators need to pay service tax only when they receive payment for their services and not on accrual basis. This will come as a big relief for small practitioners and professionals as they generally get payments for their services after a gap of 4-6 months.

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Balance Sheet and Profit &Loss A/c New format applicable from F.Y. 2011-12

Company Law : Section 642 of the Companies Act, 1956 – Schedules, forms and rules – Power of Central Government to make rules – Amendment in Notification No. S.O. 447(E), dated 28-2-2011

NOTIFICATION [F. NO. 2/6/2008-C.L-V], DATED 30-3-2011

In exercise of the powers conferred by clause(a) of sub-section(1) of section 642 read with sub-section(1) of section 210A and sub-section (3C) of section 211 of the Companies Act,1956, (1 of 1956), the Central Government hereby makes the following amendment to paragraph 2 of the notification No.447(E) dated the 28th February, 2011:-

“The notification shall come into force for the Balance Sheet and Profit and Loss Account to be prepared for the financial year commencing on or after 1.4.2011″.

Excise Duty on branded garments may be roll back by Government

The government is considering to roll back 10 per cent excise duty on branded garments, due to large scale protest by industry bodies in many parts of the country, including West Bengal, which goes to polls next month. “The excise duty on ready-made garments is being opposed heavily, especially in West Bengal. It might be rolled back ,” a Finance Ministry official told PTI.

Although Finance Minister Pranab Mukherjee had diluted his proposal to tax ready-made garments, the decision failed to satisfy the garment manufacturers who have continued the protest demanding complete roll back of the proposal.

In the Budget 2011-12, the government has levied 10 per cent excise duty on branded ready-made textiles garments.

However, while replying to debate on Finance Bill, Mukherjee had proposed to enhance the abatement from 40 per cent to 55 per cent of the retail sale price.

Changes in Central Excise & Customs & Service Tax in Budget 2011 - Clarifications

Service Tax : Clarifications regarding changes introduced through the Central Excise & Customs Notifications issued on 24-3-2011 LETTER D.O.F.NO. B-1/3/2011-TRU, DATED 25-3-2011

After the presentation of the Budget 2011-12 on the 28th February, 2011, the Ministry received several representations from industry/trade associations and Chambers of Commerce either seeking changes in or clarifications about the scope of the tax proposals. Suggestions were also received from the field formations for modifying the content/wording of some of the proposals with a view to plug gaps or impart more clarity.

2. While responding to the discussions on the Finance Bill, 2011 in Lok Sabha on 22nd March, 2011, Finance Minister has announced certain further changes in Central Excise and Customs duty rates as also the provisions of some exemption notifications. Notification Nos. 20 to 31/2011-Central Excise and Notification Nos. 31 and 32/2011-Customs, all dated 24th March, 2011 have been issued to give effect to these announcements. Notification Nos. 8 to 12/2011-Central Excise (NT), dated 24th March, 2011 have also been issued in this regard.

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3. The changes introduced through these notifications are discussed in the following paragraphs. In addition, clarifications on some of the salient issues have also been provided.

I. CENTRAL EXCISE

3. Branded Ready Made Garments and Made-up Articles of Textiles:

3.1 The following changes have been made with regard to this levy :

    (i)   The tariff value notified under section 3 of the Central Excise Act for these items i.e., goods falling under Chapters 61, 62 and 63 (heading Nos. 63.01 to 63.08) has been reduced from 60% to 45% of the Retail Sale Price. Notification No. 12/2011-CE (NT), dated 24th March, 2011 refers,

  (ii)   It has been pointed out by industry associations that persons owning a brand often get goods bearing their brand from other manufacturers (normally small units) without providing the raw materials or inputs. Such manufacturers do not answer the description of "job-workers" and are necessarily required to register and pay duty on such goods. It has been pointed out that they may face some difficulty in discharging duty on tariff value since the Retail Sale Price of the goods is not disclosed to them by the brand owner. It has been provided that if the RSP is not affixed or marked on goods when they are cleared in the course of sale from the factory of a manufacturer to the brand owner, the wholesale price declared by the manufacturer would be deemed to be the tariff value for the payment of duty. This has been provided through the insertion of a proviso in Notification No.20/2001-CE (NT), dated 30th April, 2001 through amendment Notification No. 12/2011-CE (NT), dated 24th March, 2011. Since the process of labelling or re-labelling constitutes a process of "manufacture", duty on the tariff value (based on the actual RSP) would once again be payable as and when the brand owner labels the goods with the RSP and clears them for further sale. The garments purchased by the brand owner being duty-paid, he would also be entitled to claim credit and utilize that for the payment of duty when he clears the goods after affixing the RSP.

(iii)   Concerned industry associations have represented that it is a common practice in this industry for goods to be cleared by the manufacturer to the wholesale dealer/retailer on consignment basis. As a result, the duty-paid stock that remains unsold with the latter is returned to the manufacturer either at the end of the season or from time to time. Such returned goods are cleared either as such or after 're-finishing' operations to another wholesaler or retailer for sale (often at reduced prices). The re-finishing operations could involve cleaning, ironing, re-folding, repacking or relabelling some of which constitute "manufacture" in terms of the relevant Chapter Notes. Normally, rule 16 of the Central Excise Rule, 2002 would cover such cases. However, it has been represented that often one-to-one correlation of such returned goods with the original invoice (against which they were cleared initially) is not possible. Accordingly, full exemption from Central Excise duty is being provided to duty-paid goods returned to the manufacturer during a financial year up to an aggregate ceiling not exceeding 10% of the value of clearances for home consumption made in the preceding financial year. The manufacturer would be required to observe the following procedure for this purpose :

    a.   To submit an intimation within 48 hours of the receipt of the returned goods about the value of returned goods received in his factory/registered premises;

    b.   To maintain proper accounts/record of the receipt, finishing operations, and dispatch of returned stock indicating the monthly and cumulative value of the returned stock received during the financial year and to produce the same as and when required;

           Notification No.31/2011-CE, dated 24th March, 2011 has been issued in this behalf. The benefit of this exemption is available only if the manufacturer does not take Cenvat credit of the duty paid on the garments/ made-ups at the time they were initially cleared from the factory. The procedure prescribed for this purpose does not envisage the physical verification of returned stock by Central Excise officers on receipt of the intimation. It may be ensured that visits by the staff are not made to the factory/ registered premises for such verification. Normal checks could be conducted, if required, at the time of audit of the unit on the basis of records/accounts maintained for the purpose. Owing to the fact that most of the units manufacturing ready-made garments or made-ups had opted not to pay Central Excise duty until the presentation of the Budget 2011, it would not be possible to determine the entitlement of a unit for exemption (annual ceiling of 10% of the aggregate clearances for home consumption in the preceding year) on the basis of Central Excise records. A certificate from a Chartered Accountant indicating the aggregate value of clearances for home consumption made by the unit in the preceding financial year may be accepted for this purpose. At the time of scrutiny of the monthly return filed by the manufacturer, it may be verified that the cumulative value of the returned garments on which the unit has claimed exemption under this notification does not exceed the prescribed limit of 10% mentioned above. The facility of rule 16 would also continue to be available where a manufacturer is able to produce and correlate the relevant duty paying documents.

3.2 A clarification has been sought by trade whether the levy is applicable to blinds of all kinds or curtains falling under heading No. 63.03 when these are made to order for a retail customer. It has been pointed out that blinds are normally made in the factory against order of a retail customer only and not kept in stock for sale over the counter. That being so, they do not also bear any RSP. Besides, they do not bear a brand name. Thus it is clarified that the levy would not be applicable to blinds of all kinds which are made to order for a retail customer. Consequently optional exemption benefit would continue to be applicable to such goods under Notification No. 30/2004-CE, dated 9-7-2004. The same is not true of curtains that are available off the shelf in standard sizes and either bear a brand name or are sold under a brand name. These would be liable to duty even though the length or other dimensions are often adjusted according to the requirements of the customer after sale.

3.3 Clarifications have been sought by the industry on several general issues related to the levy on ready-made garments and made-ups. These are discussed point-wise below:

S. No	Issue/Query	Clarification
1.	Who needs to register for this levy? Is it the brand owner or the job-worker?	As stated in the D.O. letter of 28th March, 2011, the Central Excise Rules have been amended to prescribe that the person who gets the goods falling under Chapters 61, 62 or 63 (heading 63.01 to 63.08) manufactured on his own account on job work shall pay the duty leviable on such goods as if the goods were manufactured by him. It is evident, therefore, that the brand name owner (and not the job-worker) is required to register and comply with all the provisions of Central Excise law. It is relevant that the brand name owner has been given the option to authorise his job-worker to pay the duty leviable on the goods. If such an authorisation is given, it is the job-worker who would have to obtain registration.
2.	If a unit manufactures goods bearing the brand name of another person out of inputs or raw materials which have been  purchased independently and not supplied by the brand owner, will the unit be eligible for treatment as a "job-worker"? If not, would it be required to register?	Such a unit does not satisfy the definition of "job-worker" contained in theExplanation to Rule 4(1A). It is not enough for a job-worker to manufacture goods or to undertake a process on behalf of and under instructions of the brand owner. The inputs or goods should also have been supplied by the brand owner or by a person authorised by him. Such units would, therefore, have to obtain registration and discharge the duty liability.
3.	The retail sale price is not disclosed to units mentioned at S. No (2) above by the brand owner. In such case what would be the tariff value for payment of duty?	Notification has been issued to provide that where goods are cleared from the manufacturer to the brand owner in the course of sale and they do not bear the RSP, the transaction value under section 4 would be deemed to be their tariff value.
4.	Many  small  units manufacture ready-made garments for brand owners and clear them without affixing any brand name. Will such units be required to register?	Where no brand name is affixed on such goods, when cleared by the manufacturer, he is not required to register as the levy is only on goods bearing a brand name or sold under a brand name. As and when the brand owner affixes the brand name on such goods, he would be required to pay excise duty.
5.	Many units manufacture branded  ready-made garments exclusively for export or pre-dominantly for export. Would they be required to register?	Normally, units manufacturing exclusively for export would also clear some goods for home consumption either as rejects, seconds or waste. To the extent, the value of clearances for home consumption of the manufacturer/unit is within the eligibility limit (of Rs.4 crore in the previous financial year), benefit of SSI exemption would be available up to a value of clearances of Rs. 1.5 crore in the current financial year. The condition that would have to be fulfilled is that the goods cleared for home consumption should either be unbranded or bear the brand name of the manufacturer himself. If these conditions are fulfilled, the unit would not be required to register till the exemption threshold is crossed. However, if the goods cleared for home consumption bear the brand name of another person, neither the benefit of SSI exemption nor exemption from registration would be available.
6.	Would units referred to at S.No.5 be eligible for the simplified export procedure?	Yes. Since they would avail of the benefit of the SSI exemption i.e., an exemption based on the value of clearances, they would be eligible for the simplified export procedure.
7.	What is the value for computing the turnover for the purposes of SSI exemption? Would it be the Retail Sale Price, wholesale price or the tariff value?	Value for computing the eligibility as well as the exemption limit for purposes of SSI exemption is defined in Explanation (C) to Notification No.8/2003-CE, dated 1st March, 2003. Accordingly, it would be the tariff value of the goods.
8.	Would SSI exemption be available to a manufacturer/ unit for goods falling under Chapters 61, 62 or 63 for the full exemption limit of Rs. 1.5 crore for the month of March, 2011? Or, would this limit be applied on a prorata basis for one month i.e., Rs. 12.50 lakh?	In the absence of a provision in the SSI notification to curtail the exemption to Rs. 12.5 lakh for March, 2011 benefit up to the full exemption threshold of Rs. 1.50 crore would be available for clearances for home consumption made in March, 2011. Of course, the conditions of the notification would have to be fulfilled.
9.	How would the eligibility for SSI exemption be computed for the financial year 2011-12?	As stated above, the eligibility for availing of the SSI exemption in 2011-12 is that the value of clearances for home consumption from one or more manufacturer from one or more unit should not have exceeded Rs.4 crore in the financial year 2010-11. The computation for this purpose should be done in accordance with the provisions of para 3A of Notification No.8/2003-CE. For this purpose, a certificate from a Chartered Accountant based on the books of account for 2010-11 may be accepted.
10.	What is the status of Finished Goods in the factory/warehouse as on 28-2-2011? Will goods produced before 28-2-2011 but lying in the warehouse attract duty? Are the manufacturers required to submit stock Declaration?	Excisable goods which were produced on or before 28-2-2011 but lying in stock as on 28-2-2011 would attract excise duty upon clearance. However, such goods as had already been cleared from the factory of the manufacturer at Nil rate of duty on or before 28-2-2011 but are lying in the warehouse/ private store room for further sale would not be chargeable to the duty of 10% once again. Manufacturers would be required to submit a stock declaration of finished goods, goods- in-process and inputs as on 28-2-2011. Submission of such stock declaration would not only be for the purposes of payment of the excise duty but also for enabling the manufacturers to claim Cenvat credit on inputs or inputs contained in goods lying in stock as already provided for in rule 3(2) of the Cenvat Credit, Rules, 2004.
11.	Can manufacturers claim Cenvat credit of excise duty paid on inputs	Manufacturers can claim Cenvat credit on inputs as per the provisions of the Cenvat Credit Rules, 2004

4. Levy of 1% Excise Duty without Cenvat Credit on 130 items:

4.1 The following changes have been made with respect to levy of 1% excise duty on 130 items which were fully exempt till 1st March 2011:

    (i)   Out of the 130 items covered under Notification 1/2011-CE, dated 1-3-2011, 35 items have been notified under section 4A of the Central Excise Act, 1944 with an abatement of 35%. Notification No. 11/2011-CE (NT), dated 24th March, 2011 refers. The excise duty (and CVD) on these goods will thus be charged on the assessable value determined under section 4A.

  (ii)   Since units that exclusively manufacture items attracting the duty of 1% are neither allowed to take Cenvat credit nor to pass it on to their buyers, a simplified procedure is being prescribed for them so that physical interface with them is minimized and the levy does not pose a compliance burden on them. The salient features of this are as under :

    a.   Waste, scrap and parings arising in the course of manufacture of items subject to the 1% levy have been fully exempted. The benefit of this exemption is available only to units that exclusively manufacture these items. Notification No. 27/2011-CE, dated 24th March, 2011 refers. The benefit of this exemption is also available to units exclusively manufacturing mobile handsets including cellular phones.

    b.   Post- registration verification of the factory premises shall not be required for such units.

     c.   Visits to such units should not be required in the normal course. If at all the need arises, the officer visiting them should do so only with the prior authorization of the Assistant Commissioner or the Deputy Commissioner Central Excise of the jurisdictional division. The authorisation should be shown to the assessee and his signatures obtained on it at the time of the visit. These instructions may be disseminated to the field formations for strict compliance.

    d.   Facility of quarterly returns is being prescribed for these units. Notification No. 8/2011-CE (NT), dated 24th March, 2011 refers.

    e.   A simple format for this quarterly return will be notified in due course as the first return from such units will become due only in July 2011.

4.2 The entry relating to mobile handsets (S. No. 100 of Notification No. 1/2011-CE, dated 1-3-2011) has been modified. 1% conditional excise duty will now apply only to Radio Trunking Terminals while separate Notification No.20/2011-CE, dated 24-3-2011 has been issued prescribing unconditional excise duty rate of 1% on mobile handsets including cellular phones. The imports of these goods as well as their clearances from SEZ into DTA also will attract additional duty of customs of 1% over and above the NCCD of 1%. This duty rate will also be available to clearances from EOUs into the DTA.

4.3 The excise duty exemption on silicon wafers has also been restored. Other forms of silicon would continue to attract excise duty of 1% ad val.

4.4 As you are aware, the levy of 1% excise duty covers all kind of carpets (S. No. 57 of the Notification 1/2011-CE refers). The trade has represented that most of the carpets are woven by individual weavers and exported. It has been informed that in most of the cases, the domestic sales of the carpets are well within the exempted threshold of Rs. 1.5 crore. It is to clarify that in such cases the units need not register and can continue to export following the simplified export procedure for exempted units as prescribed under part III of Chapter 7 of CBEC's Excise Manual of Supplementary Instructions, 2005.

4.5 Some difficulty has been expressed on behalf of producers of coal with regard to the registration of each mine. Centralised registration facility on the lines of that available for the purpose of the Clean Energy Cess imposed on this item last year has been permitted to coal producers in terms of Notification No. 10/2011-CE (NT), dated 24th March, 2011.

5. Jewelery and other articles of precious metals bearing or sold under a brand name :

   A.   Liability to pay excise duty

5.1. In respect of levy of excise duty @ 1% on jewelery and other articles of precious metals which bear or are sold under a brand name, the provisions of Rule 12AA of the Central Excise Rules and Rules 2 & 4 of the Cenvat Credit Rules as amended by Notification Nos. 8/2011-Central Excise (N.T.) and 9/2011-Central Excise (N.T.) both, dated 24th March, 2011 may kindly be referred to. As in the case of branded garments, in case of goods falling under Chapter heading 7113 and 7114 also, where a brand owner gets jewellery or articles other than jewelery made from any other person, and supplies the raw materials such as gold/ silver/ gemstones etc. (of Chapter 71) to the job-worker for such manufacture, the duty liability would be on such person who gets jewelery or articles made from the job worker, unless the job worker opts to discharge the duty liability. However, a person manufacturing jewelery of heading 7113 or articles of heading 7114 bearing a brand name or sold under a brand name on his own account will be liable to pay excise duty unless he claims benefit of the SSI exemption.

   B.   What constitutes a Brand name for the purposes of this exemption

5.2.1 It has been prescribed in respect of jewelery and other articles, "brand name" means a brand name or trade name, whether registered or not, that is to say, a name or a mark, such as a symbol, monogram, label, signature or invented words or any writing which is used in relation to a product, for the purpose of indicating, or so to indicate, a connection in the course of trade between the product and some person using such name or mark with or without any indication of the identity of that person. Only such jewelery or other articles of precious metals which either bear or are marketed and sold under a brand name attract this levy. Whether a particular name or mark or symbol etc. is a brand name or not is a matter of fact, and can be ascertained from the manner in which it is understood in commercial or trade parlance. The test of goods being branded would be if the buyer seeks to buy the goods because they bear or are sold under a particular brand. As such, a mere mark of identity put by a jeweler or the job worker, commonly known as a 'house-mark' shall not be considered a brand name. Some illustrations are given below to explain the scope of the term "brand name":

    (i)   A manufacturer, say "ABC Jewellers", getting jewelery or other articles manufactured on his behalf from gold smiths/job-workers who put a mark/sign/initials, etc. on the jewelery/article. This is only to identify that the article or jewelery was received from a particular goldsmith, etc. This is not branded jewellery and will not attract duty.

  (ii)   "ABC Jewellers", when it sells articles of jewelery to customers, puts a distinctive sign/mark/initials etc. on the jewelery- very often a simple acronym of his name e.g.; ABC. It may be noted that mere alphabets or numerals (unless stylized) cannot be registered as a brand name or trademark. This is again for the purpose of identification when the customer re-sells or returns the jewellery or article and goods bearing it would not attract the levy.

(iii)   "ABC Jewellers" advertises and sells its products under the brand "Star" or puts a logo like ^AB_C or ^AB_C i.e., in a stylized manner. It also puts the same brand name or an abbreviation thereof or a mark which has a connection with such brand name either on the jewellery or article itself or on the packing such as the jewellery box or pouch or even on the warranty card or certificate of quality. Such goods will clearly be treated as branded and will be liable to duty.

5.2.2. Hallmarking of the jewelery, which is an accurate determination and official recording of the proportionate content of precious metal in gold and is thus only official marks used as a guarantee of purity or fineness of gold jewelery, cannot be treated as 'branding' for the purposes of the excise levy.

II. CUSTOMS :

6. Full exemption from levy of Special Additional Duty of Customs has been provided to Ships; Aircrafts imported by non-scheduled operators and specified parts of personal computers viz., Microprocessor for computer, other than motherboards, Floppy disc drive, Hard disc drive, CD-ROM drive, DVD Drive/DVD Writers, Flash memory and Combo drive. The exemption on parts of personal computers is subject to actual user condition.

7. It may be recalled that excise duty of 1% was imposed on ships and other goods falling under heading 89.01 on the condition that no Cenvat credit is taken. Doubts have been raised about the applicability this levy as CVD to foreign-going vessels. It is clarified that the levy would not apply to such imports which are temporary in nature.

8. In the Budget 2011-12, concessional rate of 5% excise duty/CVD and NIL SAD had been provided for parts of ink jet printers and laser jet printers. The concessional rate is being extended to parts of all printers capable of being attached with computers, subject to actual user condition.

9. As you are aware, a definition of Completely Knocked down Unit had been prescribed in the Budget. However, considering the representations by the industry, the custom duty rate on vehicles imported in the form of completely knocked down kits having all the necessary components, parts and sub-assembly including the pre-assembled engine, gearbox and transmission mechanism of Motor cars and other motor vehicles principally designed for the transport of persons (other than those of heading 87.02) including motor cycles is being reduced from 60% to 30%. Such imports of vehicles in completely built form or in any other form including in a form where any of the three viz., engine, gear box or transmission assembly are imported fixed to a chassis will attract 60% BCD. The imports in form of CKD kits where all the parts and components including engine, gearbox and transmission assembly are present in completely knocked down condition will attract 10% BCD.

10. Doubts have been raised about the applicable CVD rate on the 130 items, on which Excise Duty @ 1% has been levied vide Notification 1/2011-CE, dated 1-3-2011, when imported. It is further learnt that manual bills of entry have been permitted at certain customs locations as 1% CVD rate was not available in the system. This concessional rate of 1%, however, is available only if the Cenvat credit on inputs and input services is not availed of; otherwise all these items attract 5% Excise duty as prescribed vide Notification 2/2011-CE, dated 1-3-2011 and Tenth Schedule to the Finance Bill. At the time of updating of ICES, the Directorate of Systems had been advised not to feed Notification 1/2011-CE, dated 1-3-2011 in the system as 1% rate will not be applicable for CVD purposes. There should have been no confusion on the subject. Since the CVD is levied to provide a level playing field for the domestic manufacturers, CVD is charged at a rate equal to excise duty rate. However, in respect of these 130 items, there are two excise duty rates. It needs to be appreciated that if CVD is levied @ 1%, the protection for the domestic manufacturer would be lost since in the country of origin, the overseas supplier enjoys input tax neutralization on goods exported to India (akin to availment of input tax credit), whereas on the other hand the domestic manufacturer suffers all the input taxes and 1% excise duty over and above that. Since 5% excise duty rate is payable when the Cenvat credit of duties and taxes paid on inputs and input services is availed of, the tax treatment becomes equitable with the goods being imported into India, the input taxes having been neutralized in the country of export. As such, the CVD of 5% will be applicable in respect of all the goods covered under Notification 1/2011-CE, dated 1-3-2011 and 1% rate will not apply.

11. Some amendments have been proposed in the provisions of the Finance bill, 2011 too. These would be communicated as and when the Bill is enacted. The changes discussed above may kindly be communicated to the field formations under your charge as well as trade. In conclusion, I would take the opportunity to once again emphasize that in the case of new levies all possible help, guidance and facilitation should be provided to the trade. Difficulties, if any, may kindly be brought to my notice immediately.


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Union Budget presented and passed by both the houses of the Parliament

Perhaps, for the first time in Indian history, we have a situation that the Union Budget is presented and passed by both the houses of the Parliament in less than a month. Not only this,  that too in the current financial year itself. Thanks to virtually no debate in the house even on crucial proposals impacting economy and growth of nation and thanks to the democratic country we are. Simply because there are elections in few states in May / June, we had to cut short the economic agenda of Parliament and made budget a not so important event.

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A major event which took place is introduction of a Bill to amend the Constitution of India so that a nationwide tax called goods and service tax (GST) could be introduced. This Bill would enable the Government to levy a two tier GST- Central GST and State GST in near future (could be 2012 or later). It will eliminate multiple tax structure and broaden the tax base. Taxes like central excise, service tax, value added tax, entry tax, octroi etc will all get subsumed into one ax called GST. The only fear states are having is the loss of fiscal autonomy which is misplaced as Union has agreed to make up for the revenue loss, if any.

While getting the Finance Bill 2011 approved, some sigh of relief  has been given to taxpayers. Bowing to tremendous pressure from all quarters, the proposed ‘misery tax’ on medical profession has been withdrawn and now there will be no levy of service tax on doctors, clinics and diagnostic centres. However, this, seems to be temporary as in GST regime, these services are likely to be taxed. But yes, for the present, it is a welcome sign. This move is certainly pragmatic and welcome. In fact, it should not levy any tax on sectors such as education, medical health etc. Both these sectors are the primary responsibilities of the Government and there should be all out encouragement to these services in private sector. The rising cost of health care and education makes a strong case for their non taxability even in GST regime.

While there is no relief to the legal profession yet, the base for taxing all the services from cash basis to accrual basis will be deferred by three months. The new point of taxation based on earliest of the three events  – rendering of service, raising of invoice  or receipt of payment will now applicable from July 1, 2011 instead of 1^st April .

Some marginal relief in excise duty and concessions has been provided to sectors such an automobiles, garments, personal computers etc. In case of branded garments, abatement has been increased from 40 percent to 55 percent of the retail sale price which will help small garment manufactures. However, contrary to expectations,  18.5 percent minimum alternate tax (MAT) has been retained on SEZ developers and units which may hamper further entrants in SEZ segment.

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14 Foreign Direct Investment (FDI) Proposals Approved

JOB ALERT: SSC COMBINED GRADUATE LEVEL EXAMINATION

14 FDI Proposals worth Rs. 1289.85 Crore Approved. Based on the recommendations of Foreign Investment Promotion Board (FIPB) in its meeting held on March 11, 2011, Government of India has approved 14 Proposals of Foreign Direct Investment  (FDI) amounting to Rs. 1289.85 crore approximately.

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Following 14 (Fourteen) proposals have been approved.

Sl. No.

Name of the applicant

Particulars of the proposal

FDI/NRI inflows (Rs. in crore)

CONSUMER AFFAIRS

1

M/s MF Global Sify Securities India Pvt. Ltd., Mumbai

Ex-post facto approval (i) for setting up of step down subsidiaries, including in Commodity Broking and (ii) to use internal accruals/free reserves to make downstream investments required to meet the minimum capitalization norms.

No fresh inflow

ECONOMIC AFFAIRS

2	M/s Unihorn India Pvt. Ltd., Delhi & Haryana	Ex-post facto approval for issue and allotment of partly paid up Rights Equity shares to carry out the business of technical and engineering consultants, advisors, planners, engineering for construction of roads, airports and bridges.	1.24
3	M/s Ghir Investments (Mauritius) Ltd., Mauritius	Induction of foreign equity in an Investing company.	530.00

ECONOMIC AFFAIRS

4

M/s VRL Logistics Ltd.

Induction of foreign investment through an IPO to carry out the business of transportation of goods and passengers, Courier services other than postal services, aircraft charter services, and wind power generation, involving the installation and sale of electricity produced by wind power generators.

Not indicated

INDUSTRIAL POLICY & PROMOTION

5

M/s PCRD Services Pte. Limited, Singapore

To increase the foreign equity percentage in an investing company.

4.05

CHEMICALS & PETROCHEMICALS

6

M/s Vivimed Labs Ltd., Hyderabad

Transfer of shares by way of share swap.

Nil

INDUSTRIAL POLICY & PROMOTION

7	M/s Triguna Hospitality Ventures (India) Pvt. Ltd.	To amend the clause of the FC approval to include a new foreign collaborator in an investing company.	Nil
8	M/s Taksheel Solutions Ltd.	Ex post facto approval for transfer of shares by way of shares swap.	Nil
9	M/s Dhunseri Investments Ltd., Kolkata	To issue and allot equity shares to the non-resident shareholders consequent upon demerger.	715.00

INFORMATION & BRAODCASTING

10

M/s G+J International Magazines GmbH, Germany

Induction of foreign equity to carry out the business of publication and sale of speciality and life style magazines in India.

7.35

POWER

11

M/s Kyuden International Corporation, Japan

To set up a JV company to act as an investing company to make downstream investment in the business of developing and establishing renewable power projects.

1.625

SHIPPING

12

M/s Pipavav Shipyard Ltd., Gujarat

To undertake additional activity relating to defence sector.

Nil

TOURISM

13

M/s Oryx Aviation (India) Pvt. Ltd., Kolkata

Induction of foreign equity by a company from Bangladesh to carry out the business of General Services Agent.

0.99

REVENUE

14

M/s Gremach Infrastructure Equipments & Projects Limited

Ex-post facto approval for issue of warrants.  The company is engaged in the business of providing equipments on rental for infrastructure projects.

29.60

The following 27 (Twenty seven) proposals have been deferred:

Sl. No	Name of the applicant		Particulars of the proposal
1	M/s Forbo Holding AG, Lindenstrasse, Switzerland	To set up a new WoS to undertake the business of manufacturing, sale, distribution, lease, import and export of power transmission belts, sophisticated conveyor and processing belts as well as plastic modular, timing and flat belts made of synthetic materials and other related machines and tools.  The proposal attracts para 4.2.2.2 of Circular 2 of 2010 of the Consolidated FDI policy.
2	M/s Punj Lloyd Ltd., Delhi & Haryana	To undertake additional activities of manufacture, assembly and repair of defence equipment.
3	M/s Sejong Industrial Co. Ltd., Republic of Korea	To set up a new WoS to undertake the business of manufacturing and supply of automobile parts and components including exhaust muffler assembly and catalytic converters.  The proposal attracts para 4.2.2.2 of Circular 2 of 2010 of the Consolidated FDI policy.
4	M/s iFast Financial India Pvt. Ltd., Mumbai	To engage in the business of publishing magazine.
5	M/s Kale Consultants, Pune	Ex-post-facto approval for issue of warrants.  The company is engaged in IT sector.
6	M/s ACB (India) Limited, Delhi	Ex-post-facto approval for issue of warrants.  The company is engaged in the business of coal washing and electricity generation.
7	M/s Oriental Tollways Pvt. Ltd., Delhi & Haryana	Induction of foreign equity in an Investing company.
8	M/s Al Habtoor-STFA Soil Group LLC, Dubai, UAE	To set up a WOS to undertake the business of bored piling, shoring, diaphragm wall construction, anchoring, sheet piling, soil improvement, jet grouting, CFA piling, vibro piling, stone columns, wick drains, dynamic consolidation, reverse circulation drilling in rock and mini piling.  The Proposal attracts provision of para 4.2.2.2 of Circular 2 of 2010 of the Consolidated FDI Policy.
9	M/s Harsh Intertrade Private Limited, Ahmedabad	Ex-post-facto approval for allotment of shares against the amount received and kept in Escrow account.  The company is engaged in the business of Development and Management of Hotels.
10 11	M/s Shiva Regency Pvt. Ltd., Ahmedabad	Ex-post-facto approval for allotment of shares against the amount received and kept in Escrow account.  The company is engaged in the business of Development and Management of Hotels.
12	M/s Rahimafrooz Batteries Ltd., Bangladesh	To set up a WOS to undertake import and wholesale distribution of batteries and providing after sales services in India by a company from Bangladesh.
13	M/s Arshiya International Ltd., Mumbai	Ex-post-facto approval for issue of warrants to carry out the business of providing logistics solutions, integrated supply chain and logistics infrastructure services.
14	M/s Maini Precision Products Pvt. Ltd., Bangalore	To undertake defence related additional activities of manufacture of parts and accessories of aircrafts, spacecrafts.
15	M/s Verizon Communications India Pvt. Ltd.	Transfer of equity shares from non-resident shareholder to non-resident group in Telecom Sector.
16	M/s Pran Beverages (India) Pvt. Ltd., Kolkata	Induction of foreign equity by a company from Bangladesh.
17	M/s Checkmate Services Pvt. Ltd., Gujarat	Induction of foreign equity in a company engaged in private security services.
18	M/s Lokmat Media Limited, Mumbai	Induction of foreign equity by way of IPO, including issuance and allotment of equity shares to person resident outside India, including FIIs, foreign VCFs, multilateral and bilateral financial institutions and non-resident Indians to carry out the business of publishing of newspapers dealing with news and current affairs.
19	M/s Ybrant Digital Ltd.	Ex post facto approval for issue of warrants to carry out the business of Software Development, IT and IT enabled services.
20	M/s Southern CNG Automobiles India Pvt. Ltd., Kolkata	Induction of foreign equity in by a company from Bangladesh.
21	M/s Royale Asia Couriers Pvt. Ltd., Chennai	Induction of foreign equity to carry out the business of international courier operations.
22	M/s Essar Capital Holdings (India) Ltd., Mumbai	Acquisition of equity shares by way of subscription to new equity shares and/or purchase of existing equity shares in an investing company engaged in the telecom sector.
23	M/s Netmagic Solutions Pvt. Ltd., Mumbai	To increase foreign equity from 49 per cent to 74 per cent to carry out the business of ISP with gateways.
24	M/s Mango Holding Limited, Bangladesh	To subscribe to equity shares of an Indian company engaged in the business of manufacturing and Supply of Wireless Equipment by a company from Bangladesh.
25	M/s Augere Wireless Broadband India Pvt. Ltd., Delhi	To increase foreign equity from 49 per cent to 74 per cent to carry out the business of Broadband wireless services, internet services and other telecommunication related services.
26	Mr. M. Rezaul Hassan and Ms. Monnujan Nargis, Bangladesh	Ex post facto approval to set up a WOS to undertake the business of Software development Services by citizens of Bangladesh.
27	M/s UT Starcom India Telecom Private Limited	To undertake additional activity relating to Telecom/I&B sector.

The following 5 (Five) proposals have been rejected:

Sl. No	Name of the applicant		Particulars of the proposal
1	M/s Henry Lamotte India Pvt. Ltd.	Ex-post-facto approval for capitalisation of the pre-incorporation.  The company engaged in the business of sales of Natural oil, waxes and special ingredients.
2	M/s Dieffenbacher India Pvt. Ltd., Karnataka	Ex-post-facto approval for capitalisation of the pre-incorporation and preliminary expenses to carry out the business of Marketing and sales support services.
3	M/s Mecords India Ltd., Mumbai	Ex-post-facto approval for issue of partly paid up equity shares.
4	M/s Brampton Infrastructure India Private Limited	(i) Grant of condonation of delays in fulfillment of minimum capitalization norms; and (ii) Post facto approval for capitalization of pre-incorporation expenses.
5	M/s Everstyle Hotel Supplies India Private Limited	To issue shares against consideration other than internal remittance.

The following 1 (One) proposal has been withdrawn from the Agenda on the request of the applicant:

Sl. No	Name of the applicant
1	Mr. Jaishankar Ramchandran, NRI, South Africa

The following 04 (Four) proposals have been withdrawn from the Agenda:

Sl. No.	Name of the applicant
1	M/s Eagle Hunter Solutions Ltd., Delhi & Haryana
2	M/s Abbott Truecare Pharma Pvt. Ltd., Mumbai
3	M/s Rajpur Hydro Power Pvt. Ltd., Shimla
4	M/s People Infocom Pvt. Ltd., Mumbai

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Highlight of Maharashtra State Budget 2011-12

Highlights Of The Budget Presented By Deputy Chief Minister Shri Ajit Pawar, On Wednesday, 23rd March 2011.

PART-I

+          Remarkable growth in revenues of the State

•           2009-10 Revenue Receipts Rs.86,910 crore

•           2010-11 Revenue Receipts Rs. 1,07,159 crore

Total increase 23.3 per cent

•           26 per cent increase in Sales Tax collection in 2010-11 over 2009-10

•           31 per cent increase in Stamp Duty Collection in 2010-11 over 2009-10

•           Expected Revenue Rs. 1,21,503 crore in 2011-12

•           Significant increase expected due to change in levy of Excise Duty

•           Due to increase in Revenue, Revenue surplus status achieved.

+ State Annual Plan

•           Size of Annual Plan of State – Rs.4 1,500 crore

•           Special Component Plan for Scheduled Castes – Rs.4,233 crore

•           Tribal Sub Plan – Rs.3,693 crore

•           District Plan (General) – Rs.4,3 19.50 crore. Increase of Rs.500 crore over last year.

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+          Agriculture and Allied Sectors

•           Loans to farmers upto Rs.50,000 at zero rate of interest and beyond that upto Rs.3 lakh at 2 per cent rate of interest.

•           Fertilizers would be made available to farmers on time for next Kharif season, Buffer stock of Fertilizers would be kept.

•           Subsidy to farmers in electricity Bills – Rs.2,500 crore

•           To remove backlog of electrification of Agricultural pumps Rs.80 crore – Steps for Electric Connections on demand.

•           Krishi Sanjeevani Yojana to be launched – 22 lakh farmers would get benefit of waiver of upto Rs.3,000 crore towards interest and late fees, if principal amount is paid.

•           Under National Crop Insurance Scheme – 22 lakh farmers to be covered.

•           Rashtriya Krishi Vikas Yojana – Rs.4 15 crore

•           Agriculture Marketing Development Projects – Rs.60 crore.

•           State Employment Guarantee Scheme – Rs.745 crore -

under it Jawahar Wells Rs. 221 crore and

Horticulture Rs. 134 crore

•           For strengthening and modernisation of veterinary Institutions – Rs. 57 crore.

•           Mechanisation of Fishermen Boats – Rs. 42 crore

•           For Irrigation Projects – Rs. 6,300 crore

•           For Water Shed Development Programme – Rs. 112 crore

•           For Hydro Electric Projects – Rs.380 crore

SSC COMBINED GRADUATE LEVEL EXAMINATION

 

+ Health, Education and Nutrition

•           For construction works of Health Institutions – Rs. 241.95 crore

•           For National Rural Health Mission – Rs. 166 crore

•           Facility of x-ray and ECG in Primary Health Centres and Blood Bank in Rural Hospitals – Rs. 24 crore

•           For construction works of Medical Colleges and Hospitals significant amounts.

•           Sasoon Hospital, Pune – Rs. 20.5 crore

•           Government Medical College, Nanded – Rs. 8.33 crore

•           Cancer Hospital, Aurangabad – Rs. 5.43 crore

•           Ghati Hospital, Aurangabad – Rs.25 crore

•           Kasturba Cancer Hospital, Wardha – Rs.6 crore

•           Government Medical College, Nagpur construction of new Library Build¬ing – Rs. 2 crore.

•           Government Medical College, Yavatmal fund will be made available for Building.

•           For education of children – State share : Rs. 1,280 crore

•           Sarva Shiksha Abhiyan – Rs.780 crore

•           Rashtriya Madhyamik Shiksha Abhiyan – Rs.500 crore

•           For Supplementary Nutrition Programme – increase of Rupee one per day per beneficiary -Additional cost of Rs.21 1 crore.

•           For eradication of Child Labour – Rs. 16 crore.

•           Minority Prematric Scholarlship – Rs. 48 crore

•           For Development of Minority Community – Rs. 275 crore outlay.

•           For construction works of Technical Education Department – Rs.90 crore.

+ Drinking Water Supply

•           8,300 villages/habitations to be provided drinking water under National Rural Drinking Water Programme – Rs. 700 crore

•           Maharashtra Sujal and Nirmal Abhiyan – Water supply and Sewage Disposal Schemes – significant allocation

•           For Kolhapur, Jalna and Amravati – special fund of Rs. 100 crore for Drinking Water Supply and Sewage disposal.

•           Grants to Village Panchayats under Environment Friendly Village Development Campaign – Rs. 200 crore

+          Sports and Youth Welfare

•           State’s Youth and Sports Policy in final stages – preliminary provision of Rs.25 crore

•           Increase in grant to Wrestling, Kabbadi, Volleyball and Kho-Kho competitions

•           Increase in honorarium of wrestlers.

•           Rs.40 crore for Nagpur Divisional Sports Complex

+          Welfare of Scheduled Caste/Scheduled Tribe

•           Group Housing Scheme for Scheduled Caste and Neobuddhists Rs.800 crore.

•           Yashwantrao Chavan Mukta Vasahat Yojana for Vimukta Jati and Nomadic Tribes for people below poverty line – Rs.20 crore

•           Construction of Government Hostels (SC) – Rs. 135 crore

•           Construction of Ashram Shalas (ST) – Rs. 196 crore

•           For Premataric Scholarship for Tribals – Rs. 225 crore

•           Under Special Assistance Schemes – Rs. 380 crore and use of Biometric cards.

+          Development of Roads, Energy and Industry

•           Huge outlay of Rs.2,749 crore for road development

•           Viability Gap Funding of Rs. 150 crore for Projects under privatization.

•           Assistance of Rs. 150 crore to Maharashtra Road Development Corporation.

•           Outlay of Rs. 127 crore for construction of Buildings.

•           To make the State free from load shedding – for various infrastructural facilities Rs.2,300 crore

•           For Solar powered Community Study Centres – in 4,435 villages – Rs.75 crore.

•           Levy of additional duty/tax on electricity and from this fund development of infra¬structure facilities of the cities having power generation plants. 2,500 MW of power is generated at Chandrapur, which is 500 year old city, action plan of 3 years for Rs.250 crore.

•           For Incentive Scheme for Industries – Rs.400 crore.

•           New Textile Policy Rs. 100 crore.

•           Electric subsidy for power looms- Rs.500 crore.

+          Housing & Urban Development.

•           For providing basic infrastructure facility to urban poor and Integrated Housing & Slum Development Programme- Rs. 1,440 crore.

•           JNNURM- Urban Infrastrcture – Rs.2,500 crore.

•           JNNURM- ‘D’ Class Municipal Corporation & Municipalities – 50 per cent of cost escalation difference as grant – Rs.400 crore.

•           Maharashtra Suwarnajayanti Nagrothan Abhiyan – Rs.250 crore.

•           For Urban Infrastructre in Mumbai Metorpolitan Region works in progress Rs. 1400 crore.

VGF from Government of India for Metro Rail Phase 2, Mumbai – Rs. 1,532 crore.

•           Constrction of Floating Jetty at Gateway of India, Mumbai- Rs.5 crore.

•           For development of Airports – Outlay of Rs. 162 crore.

For MIHAN project- Outlay of Rs.69 crore.

+          Tourism & Cultural Affairs.

•           For publicity & other developmenntal activity of MTDC at National & Interna¬tional Level – Rs.25 crore.

•           Ashta Vinayaka Temple – Rs. 10 crore.

•           Kolhapur Chitra Nagri – Rs. 10 crore.

•           Development of Forts – Rs.20 crore.

•           Development of Beach Security System at Konkan Coast – Rs. 10 crore.

•           Tiger Project Tourism – Rs.25 crore.

•           For Gorewada & Goregaon Zoological Garden – Rs.28 crore.

+          Special Area Development Programmes.

•           Special programme for development of places of pilgrimage – Rs. 175 crore.

+          Home Department

•           6000 houses for police personnel to be made available – Rs. 115 crore.

•           For security of Mumbai- installation of CCTV Cameras

•           For security of Legislative building – Rs.5 crore.

+          Strengthening of Administrative Machinery.

•           Rs.300.85 crore for construction of buildings for Tehasils and other administrative buildings of Revenue Department, Construction of Godowns for food stock and infrastructure for courts.

•           E Governance – Rs.40 crore.

+          Marathi Language Department

•           Creation of Separate marathi Language Department for development of Marathi Language.

+          Platinum Jubilee Celebration of Legislature

•           Platinum Jubilee Celebration of Maharashtra Legislature – Rs. 7 crore

•           For Renovation of Legislative building at Mumbai, Nagpur & Majestic MLA Hostel, Mumbai – Rs. 25 Crore.

PART II

•        Record growth in Sales Tax revenue. 26% rise as compared to last year.

•        Stringent punishment for Hawala dealers.

Tax exemptions and concessions

•        Exemption to foodgrains and essential commodities.—Extension of tax exemp¬tion to Rice, Wheat, Pulses, their flours, Chillies, Gur, Tamarind, coconut, Corainder, Fenugreek, Turmeric, Parsely (Suva), Papad, Wet dates, Solapuri Chadars and Towels. Similarly concessional rate of 5% for tea also to continue.

•        Tax concession to Vadapav served in restaurants.

•        Standard VAT rate of 12.5% not increased. Many States have enhanced this to 13.5 or 15%

•        Composition scheme for bakers –Increase in Turn over limit from 30 lakhs to 50 lakhs.

•        Tax exemptions to cinematographic copyrights for exhibition in theatres.

•        Relief in composition scheme for retailers

•        Tax exemptions to domestic Biogas units to promote the use of non conventional energy sources.

•        Amnesty Scheme for rehabilitation of sick Sugar Factories.

Hike in tax rate

•        Increase in rate of tax on soft drinks and Goggles

•        Restructuring of levy of excise duty on Liquor.

•        Increase in rate of tax of declared goods from 4% to 5%.

•        Simplification of levy of Stamp Duty in respect of Share Market Transactions.

—Uniform Stamp Duty rate of 0.005% on all sale-purchase transactions in share market.

—Duty on tenancy right transfer to be at market rate.

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