2014

BUDGET 2014
R. SUBRAMANIAN AND COMPANY
CHARTERED ACCOUNTANTS
HIGHLIGHT OF FINANCE BILL 2014
DIRECT TAXES
INDIVIDUALS

1. Personal Income-tax Exemption Limit increased by Rs.50000 i.e from Rs.2 lakh to
Rs.2.5 lakh in case of Individual tax payers who are below the age of 60 years.

2. The Exemption limit increased by Rs.50000 i.e Rs.2.5 lakh to Rs.3 lakh in the case of
Senior Citizens. i.e Individuals of 60 years and above but below 80 years.

3. Investment Limit under Section 80C increased From Rs.1 Lakh to Rs.1.5 lakhs PPF
Limit Increased from Rs.1 lakh to Rs.1.5 Lakhs

4. Housing Loan Interest for Self Occupation Raised from Rs.1.5 lakhs to Rs.2 Lakhs

5 Exemption from tax long term capital gains on sale of residential property or any
other asset under section 54 & 54F is proposed on re-investment is only 1 house in India.

6. The maximum amount of investments as specified under 54EC bonds to save capital
gain tax for a capital asset has been restricted to Rs. 50 lakhs irrespective of financial year.
The assessee cannot make investments in each financial year to the value of Rs. 50 lakhs
.Previously there were chances that an assessee can make investment Rs.50 lakhs in each
financial year provided the investment is made within 6 months from the date of sale. Now
the provision is amended to say that at best, for the capital gain arising out of the transfer
of any capital asset will be restricted to Rs. 50 lakhs. Applicable for companies also.

7. Debt Mutual Fund /Unlisted Securities and Mutual Funds (Other than Equity
Oriented) to qualify as Long term capital asset if held for more than 36 months(Earlier 12

© 2014 R.Subramanian and Company, Chartered Accountants

months). In short, previously the holding period of the above said capital asset was 12
months to qualify as long term capital asset. Now it has been amended to 36 months.
Further the tax rate on such long term capital assets is increased to 20% from 10%.

8. Sale of Listed Mutual Funds (Other than Equity Oriented Mutual Funds) held for a
period of more than 36 months will be taxed at the rate of 20% with Indexation. (Earlier,
such gains were taxable at the rate of 10% without indexation or 20% with Indexation,
whichever is lower).

9. Advance received and forfeited for transfer of a capital asset-such as an apartment is

proposed to be taxed as “Other Income”. Advance received in the course of negotiation for
transfer of a Capital asset will be taxable as “Other Income” if such sum is forfeited and the
negotiations do not result in actual transfer. Previously, the forfeiture amount was to be
reduced from the cost of the capital asset for the purpose of computing capital gain.

10. Reintroduction of Kisan Vikas Patra (KVP) .

11. NSC Proposed to be issued with Insurance cover

12. Employee Provident Fund and Pension Scheme:

Increase in threshold limit from Rs.6500 to Rs.15,000 for mandatory coverage
of employees, increase in monthly pension limit and introduction of ‘Uniform Account
Number’.

13. Deduction for Investment in New Pension Scheme (NPS) proposed for all private
sector employees irrespective of the date of joining.

© 2014 R.Subramanian and Company, Chartered Accountants

14. Tax deduction at source from non-exempt payments made under Life Insurance
Policy at the rate of 2% on such sum paid under a life insurance policy, including the
sum allocated by way of bonus. It is also proposed that no deduction of tax will be made
if the aggregate sum paid in a financial year to an assessee is less than Rs.1 lakh.

TAX SLAB REMAINS THE SAME FOR INDIVIDUALS

(i) In the case of every individual or Hindu undivided family or every association of
persons or body of individuals, whether incorporated or not, or every artificial juridical
person

Upto Rs. 2,50,000 Nil.

Rs. 2500,001 to Rs. 5,00,000 10 per cent.
Rs. 5,00,001 to Rs. 10,00,000 20 per cent.
Above Rs. 10,00,000 30 per cent.

(ii) In the case of every individual, being a resident in India, who is of the age of sixty years
or more but less than eighty years at any time during the previous year,—

Upto Rs. 3,00,000 Nil.

Rs. 3,00,001 to Rs. 5,00,000 10 per cent.
Rs. 5,00,001 to Rs. 10,00,000 20 per cent.
Above Rs. 10,00,000 30 per cent.

(iii) in the case of every individual, being a resident in India, who is of the age of eighty
years or more at anytime during the previous year,—

Upto Rs. 5,00,000 Nil.

Rs. 5,00,001 to Rs. 10,00,000 20 per cent.
Above Rs. 10,00,000 30 per cent.

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The amount of income-tax computed in accordance with the preceding provisions of this
Paragraph shall be increased by a surcharge at the rate of 10% of such income-tax in case
of a person having a total income exceeding one crore rupees . Education cess remains at
3%.

FIRMS

No Change in taxation rates. Remains the same as last year

On the whole of the total income -30%

Education Cess remains - 3%
Surcharge: Total income exceeding Rs.1 Crore will attract 10%

CO-OPERATIVE SOCIETY:

No Change in taxation rates. Remains the same as last year

Upto Rs. 10,000 10 percent
From Rs.10001 to Rs.20000 Rs.1000 plus 20%of Income over Rs.10,000
Above Rs. 20,000 Rs.3000 plus 30% of Income over Rs.20,000

Education Cess remains at 3%

Surcharge: Total income exceeding Rs.1 Crore will attract 10%

COMPANIES

1. Investment Allowance to a Manufacturing Industry

Deduction of 15% of Cost of new assets (Plant and Machinery) if made on or

after1stApril 2014 and installed by March 31st 2017. It is also proposed that the
assessee who is eligible to claim deduction under the existing combined
threshold limit of Rs.100 Crore for Investment made in the previous year 2013-14
and 2014-15 shall continue to be eligible to claim deducting under the existing
provision contained in subsection (1) of Section 32AC even if its investment in the
year 2014-15 is below the proposed threshold limit of investment of Rs.25 Crore
during the previous year.

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2. Not allowable – CSR expenditure

Expenditure Incurred on Corporate Social Responsibility referred to in

Section 135 of the Companies Act 2013 shall not be allowable as a Deduction under
Section 37 of Income Tax Act.

3. Provisions relating to disallowance of expenditure due to non-deduction of tax

rationalized

- Disallowance for non-deduction of tax on payments to residents reduced

from 100% to 30%

- Scope increased to include payment of Salary , Directors Fee, Non Compete

Fee as well

- No disallowance in respect of payments to non-residents if tax is paid prior

to due date of filing the Tax Return ie. 30th September (Non Transfer pricing
assessee) / 30th November (Transfer pricing assessee). Earlier, if the tax was
deducted and not deposited before the due date ie. 30th April the deduction was not
available for that year.

4. 80-IA Extension of Time limit

Extension of time limit under Section 80IA for power Industry which begin
generation, distribution and transmission of power extended up to 31st March 2017.

5. Penalty under TP by TPO:

The TPO can now levy penalty under section 271G. Earlier the AO will levy
penalty for Transfer pricing.

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6. Multiple year data rather than single year data:- Transfer pricing:

Transfer pricing provisions are amended to permit use of multiple year data
for comparability study to determine arms length pricing, instead of only single
year data. This proposal would result in a fall in transfer pricing litigation. Also,
often tax payers face challenges because the single year data is not available when
they undertook the transfer pricing study.

7. Advance Pricing Agreement(APA) for previous for years- Transfer pricing

Roll back provisions are being proposed in Advance Pricing Agreement

(APA) wherein APA could also cover the 4 previous years immediately preceding
the first year covered under the APA. At present a tax payer could apply for an
APA only for future years for an existing transaction, although in substance the
transaction was a continuing one. Subject to conditions that may be prescribed in
this regard, this would provide relied to tax payers facing litigation for such
transactions.

E.g., APAs applicable from FY 2013-14 onwards, may now extend to FY 2009-10
onwards

8. Deemed International Transaction include domestic transactions:

Scope of ‘deemed international transaction’ widened -taxpayers having

transactions with domestic vendors / customers wherein prices / terms and
conditions agreed by Associated Enterprises with such vendors / customers by
way of prior agreement between the associated enterprise and domestic vendors/
customers need to comply with transfer pricing provisions.

9. New concession in tax rates:

 Tax on dividend from specified foreign affiliates continues to be 15% without

any sunset clause.

 Lower tax rate of 5% on interest income on foreign currency loans / bonds

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 - Scope expanded beyond the infrastructure sector

- Bonds / loans availed upto 1 July 2017 eligible for this relief

10. CG on Compulsory acquisition at Final order passed.

Taxability of capital gains on transfer of an asset on account of compulsory

acquisition to be at the time when the final order providing for compensation is
made. This will provide much needed clarity with respect to taxability of gains arising
on compulsory acquisition of capital asset, such as land and reduce tax litigation.

11. Income of Foreign Portfolio Investors (FPIS)

Income of Foreign Portfolio Investors (FPIS) from transactions in securities to

be treated as capital gains as against Business Income.

12. Advance Authority Ruling :

Even domestic companies can approach for advance ruling authority.

13. Withholding tax:

 Time limit in respect of withholding tax assessment extended to 7 years from

the end of the financial year

• Power of survey extended in respect of withholding tax proceedings.

14. 269 SS/269T

Electronic Clearing Scheme (ECS) transactions exempted from section

269SS/T provisions.

15. Limit under Section 44AE

The profits and gains from each goods carriage shall be an amount equal to
seven thousand five hundred rupees for every month or part of a month during
which the goods carriage is owned by the assessee in the previous year or an
amount claimed to have been actually earned from the vehicle, whichever is
higher.

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 16. Demand valid though Appeal filed or initiated

Where any notice of demand has been served upon an assessee and any
appeal or other proceeding, as the case may be, is filed or initiated in respect of the
amount specified in the said notice of demand, then, such demand shall be deemed
to be valid till the disposal of the appeal by the last appellate authority or
disposal of the proceedings, as the case may be, and any such notice of demand
shall have the effect as specified in section 3 of the Taxation Laws (Continuation and
Validation of Recovery Proceedings) Act, 1964.

17. Period for determining interest:

Where as a result of an order under sections specified in the first proviso, the
amount on which interest was payable under this section had been reduced and
subsequently as a result of an order under said sections or section 263, the amount
on which interest was payable under this section is increased, the assessee shall be
liable to pay interest under sub-section (2) from the day immediately following the
end of the period mentioned in the first notice of demand, referred to in sub-
section (1) and ending with the day on which the amount is paid.

18. Time limit for Section 281B:

The time limit of two years has been amended to two years or sixty days
after the date of assessment or re-assessment whichever is later.

EFFECTIVE TAX RATES FOR COMPANIES

1. There is no change in tax rates for domestic companies and remains at 30%.
Surcharge at 5% is applicable for companies having taxable income between Rs 1
crore and Rs 10 crores. If the taxable income exceeds Rs 10 crores , the surcharge
will be 10% .Education cess remains at 3%

2. There is no change in tax rates for foreign companies and remains as 40%.
Surcharge at 5% is applicable for companies having taxable income between Rs 1
crore and Rs 10 crores .Education cess remains at 3%

© 2014 R.Subramanian and Company, Chartered Accountants

 3. There is no change in the rate of MAT and remains at 18.5%with applicable
surcharge and education cess at 3%.

DOMESTIC COMPANIES

Particulars Rate Rate Rate

including EC including EC including EC
3% + without 3% + with SC 3% + with SC
SC 5% 10%
Corporate Tax 30.90 32.445 33.99
MAT 19.055 20.0077 20.9605

DIVDIEND DISTRIBTION TAX:

Gross up mechanism for computation of DDT introduced. The tax rate under
Section 115-0 remains the same at 15%.

Example:

Amount of Dividend paid or Distributed by a Company is Rs.85, then DDT under

amended provision would be calculated as follows:

Dividend Distributed amount =Rs.85

Increase by Rs.15 (ie 85*0.15/(1-0.15)

Increased Amount =Rs.100

DDT@15% of Rs.100=Rs.15

Tax Payable u/s115O is Rs.15

Dividend Distributed to Shareholders is Rs.85

This amendment is effective from 1st October 2014

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FOREIGN COMPANIES

Particulars Rate Rate Rate

including EC including EC including EC
3% + without 3% + with SC 3% + with SC
SC 2% 5%
Corporate Tax 41.20 42.024 43.26
MAT 19.055 19.4361 20.0077

Trusts:

1. Depreciation not to be allowed for computing income- Section 11

When the cost of the acquisition of the asset is claimed as application of income in
the current or previous year, the depreciation cannot be allowed as deduction for the
purpose of computing the income available for application. By clarifying the said
provision, it the dispute in respect of claiming depreciation is settled.

2. Income derived from Property held under trust cannot be excluded

Where a trust or an institution has been granted registration under clause (b) of sub-
section (1) of section 12AA or has obtained registration at any time under section 12A [as it
stood before its amendment by the Finance (No. 2) Act, 1996] and the said registration is in
force for any previous year, then, nothing contained in section 10 [other than clause (1)
and clause (23C) thereof] shall operate to exclude any income derived from the property
held under trust from the total income of the person in receipt thereof for that previous
year.

3. Application of provisions of section 11 and 12 apply for Income derived from

property held under trust registered under section 12AA:- Pending assessment:

The provisions of sections 11 and 12 shall apply in respect of any income derived
from property held under trust of any assessment year preceding the aforesaid
assessment year, for which assessment proceedings are pending before the Assessing

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Officer as on the date of such registration and the objects and activities of such trust or
institution remain the same for such preceding assessment year.

No re-opening of assessment under section 147 on account of non registration of the

trust.

The above said provisions shall not apply in case of any trust or institution which
was refused registration or the registration granted to it was cancelled at any time under
section 12AA.

4. Registration cannot be cancelled the trust or institution if the assessee proves that
there was a reasonable cause for the activities to be carried out in the said
manner deviating from the objects what was there at the time of registration.

INDIRECT TAXES
SERVICE TAX

1. Reverse Charge Mechanism:

 Reverse charge mechanism extended to: - services provided by

director to a body corporate

 To broaden the tax base in Service tax, Sale of space or time for
advertisements in broadcast media, namely radio or television,
extended to cover such sales on other segments like online and
mobile advertising, etc.

 Sale of space for advertisements in print media however would

remain excluded from Service tax.

 Service provided by radio-taxis brought under the Service tax. The

abatement of 60% presently available to rent-a-cab service would also
be made available to radio taxi service.

© 2014 R.Subramanian and Company, Chartered Accountants

  In case of Renting of motor vehicle where the service provider does
not take abatement, the portion of Service tax payable by the service
provider and service receiver has been modified as 50% each effective
from October 1, 2014.

2. Place of Provision of Service and Valuation:

The definition of intermediary shall include goods. Accordingly, an

intermediary of goods, such as a commission agent or consignment agent shall be
covered under Rule 9(c) of the POP Rules instead of Rule 3 of the POP Rules.

Rule 4(a) of the POP Rules is not applicable on repair of goods imported
temporarily into India and then exported after repairs without being put to any use in
the taxable territory. It may be noted that this exclusion does not apply to goods that
arrive in the taxable territory in the usual course of business and are subject to repair
while such goods remain in the taxable territory, e.g., any repair provided in the taxable
territory to containers arriving in India in the course of international trade in goods will be
governed by Rule 4 of the POP Rules.

3. Valuation :

Value of service portion in Works contract relating to movable and

immovable property aligned (70% for both)

4. Others:

 Variable rate of interest (18% to 30%) for delayed payment prescribed from 1st
October 2014

Extent of delay Simple interest rate per annum

Up to six months 18%
More than six months and 18%for first six months and 24%for the
up to one year period of delay beyond six months.
18% for first six months, 24% for second six
More than one year months and 30% for the period of delay
beyond one year

© 2014 R.Subramanian and Company, Chartered Accountants

 This new interest rate regime will become operational from October 1, 2014 up to
which the rate of interest of 18%, as presently applicable, will continue to apply.
E.g. Assume a case, where service tax became due, say, on the 6th of July, 2012 and
the assessee pays the dues on 6th of December, 2014. In such a case, the interest to be
charged would be as below:

(i) 18% simple interest upto September, 30th, 2014.

(ii) For the period from 1st October, 2014 to 6th December, 2014, the rate of interest
will be 30% since the period of delay is beyond one year.

 Mandatory e-payment of service tax

 Rules for determination of rate of exchange to be prescribed

 Advance ruling provisions extended to resident private limited company

 Procedure for exemption in case of SEZ units simplified

 It is provided that the Central Excise Officer would issue authorization

in Form A-2, within fifteen working days from the date of receipt of
Form A-1.

 Authorization shall be valid from the date on which Form A-1 is

verified by the Specified Officer of SEZ. However, if Form A-1 is
furnished after a period of 15 days from the date of its verification by
the Specified Officer, the authorization shall have validity from the
date on which it is furnished.
 SEZ Units or the Developer will, pending issuance of Form A-2, be
entitled to avail upfront exemption on the basis of Form A-1.
However, in such a case, the SEZ Unit/ Developer would be required
to furnish a copy of authorization issued by the Central Excise
Officer within 3 months from the date of receipt of specified services.
If a copy of authorization is not provided within the said period of 3
months, the service provider shall pay Service tax on the service so
provided availing the exemption.

 As regards services covered under full Reverse Charge, it is

mentioned specifically in Form that there would be no requirement of
furnishing service tax registration number of service provider.

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  It is provided that a service shall be treated as exclusively used for
SEZ operations if the recipient of service is SEZ unit or developer,
invoice is in the name of such unit/ developer and the service is used
exclusively for furtherance of authorized operations in SEZ.

 The jurisdictional Deputy Commissioner/ Assistant Commissioner

of Central Excise for all purposes under the said notification would be
the authority with whom SEZ Units or the Developers are registered
for taking upfront exemption or for the purposes of Chapter V of the
Finance Act, 1994. In this context, attention is also invited to Circular
No. 105/08/2008-ST, dated 16.9.2008. If SEZ units have obtained a
centralized registration under the Service Tax Rules, it will have option
to file a common service tax refund in respect of all units covered
under the Centralized Registration or file a unit-wise refund at its
option, to the authority having jurisdiction over centralized
registration.

 Certain provisions of excise also made applicable for service tax

Mandatory pre-deposit of 7.5%/10% of tax for filing appeals, subject to

ceiling of INR 10 crores.

 CENVAT credit on Service tax

 It is clarified that abatement on the GTA services is applicable only if

Cenvat credit on inputs, capital goods and input services is not
availed by the service provider. Service recipient will not be required
to establish satisfaction of this condition by the service provider.

 Taxable portion in respect of transport of goods by vessel has been

reduced from 50% to 40% with effect from October 1, 2014.

 Service related to transportation of passenger by air-conditioned

contract carriages or radio taxi has now become taxable. Therefore, a
new entry is inserted at Sr. No. 9A providing taxable portion of such

© 2014 R.Subramanian and Company, Chartered Accountants

 services to be 40% with the condition that Cenvat credit of inputs or
capital goods or input services has not been availed.

 The condition in entry No. 9 is amended with effect from October 1,

2014 allowing credit of input service of renting of a motor cab if such
services are received from a person engaged in the similar business
i.e. a sub-contractor providing services of renting of motor cab to the
main contractor. The whole of the Cenvat credit has been allowed with
respect to input service of renting of any motor cab, received from a
person who is paying Service tax on 40% of the value of services. The
Cenvat credit eligibility will be restricted to 40% of the credit of the
input service of renting of any motor cab if Service tax is paid or
payable on full value of the services i.e. no abatement is availed.

 Effective from October 1, 2014, the service of tour operator is also

being allowed to avail Cenvat credit on the input service of another
tour operator, which are used for providing the taxable service.

 Time limit for availment of Cenvat Credit:

Rule 4(1) (for input credit) and Rule 4(7) (for input service
credit) are being amended in order to fix a time limit of six months for availment of
the CENVAT Credit. In case of service tax paid under full reverse charge, the
condition of payment of invoice value to the service provider for availing credit of
input services is being withdrawn. However, the said change is not applicable in
respect of partial reverse charge.

 Re-credit of Cenvat Credit on non receipt of export proceeds:

Re-credit of CENVAT credit reversed on account of non-

receipt of export proceeds within the specified period or extended period, to be allowed,
if export proceeds are received within one year from the period so specified or
extended period. This can be done on the basis of documents evidencing receipt of
export proceeds [Refer the newly inserted proviso to Rule 6(8)].

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  Input Service Distributor:

Rule 7 of the CENVAT Credit Rules, 2004, provides for the

manner of distribution of common input service credit by the Input Service Distributor.
This was amended vide notification No. 05/2014-CE (N.T.) amending, inter-alia, Rule 7(d),
to provide for distribution of common input service credit among all units in their
turnover ratio of the relevant period.

 Point of taxation for service tax under reverse charge mechanism amended

 The Point of Taxation in respect of Reverse Charge under the first

Proviso to Rule 7 of the POT Rules has been amended to be the
payment date or the first day that occurs immediately after a period
of three months from the date of invoice, whichever is earlier.

 The said amendment will apply only to invoices issued after October 1,
2014. A transition rule for the same has also been prescribed under
new Rule 10 of the POT Rules, which provides as under:

“10. Notwithstanding anything contained in the first proviso to rule 7, if the invoice
in respect of a service, for which point of taxation is determinable under rule 7 has
been issued before the 1st day of October, 2014 but payment has not been made as on
the said day, the point of taxation shall,–

 if payment is made within a period of six months of the date of

invoice, be the date on which payment is made;
 if payment is not made within a period of six months of the date of
invoice, be determined as if rule 7 and this rule do not exist.”

 Power of waive penalty removed:

Section 80 is amended excluding reference of first proviso to

Section 78 wherein power was granted to waive the 50% penalty imposable in cases where
Service tax has not been levied, not paid or short levied or short paid on account of
suppression of facts or wilful misstatement but details of transactions are available in the
specified record. The said power has now been removed.

© 2014 R.Subramanian and Company, Chartered Accountants

 5. Changes in the Mega Exemption List of Services Vide Notification No. 6/2014-
ST Dated. 11-7-2014 amending Notification No. 25/2012-ST Dated. 20-6-
2012 (Effective From 11-7-2014):-

 Entry 2B: For safe disposal of medical and clinical wastes, services provided by
common bio- medical waste treatment facilities exempted.

 Entry 7: Exemption withdrawn to services by way of technical testing or analysis of

newly developed drugs, including vaccines and herbal remedies on human
participants by a clinical research organization approved to conduct clinical trials
by the Drug Controller General of India.

 Entry 9: Concept of ‘auxiliary educational services’ has been omitted and the
following services received by eligible educational institutions are exempted from
service tax:

(i) Transportation of students, faculty and staff of the eligible educational

institution;
(ii) Catering service including any mid-day meals scheme sponsored by the
Government;
(iii) Security or cleaning or house-keeping services in such educational institution;
(iv) Services relating to admission to such institution or conduct of examination.

 Further, for the purposes of this exemption, “educational institution” is being

defined in the exemption Notification No. 25/2012-ST Dated. 20-6-2012 as
institutions providing educational services specified in the negative list.

 Furthermore, the exemption hitherto available to services provided by way of

renting of immovable property to educational institutions stands withdrawn.

 Entry 18: Service by way of renting of a hotel, inn, guest house, club or campsite or
other commercial places meant for residential or lodging purposes, having a declared
tariff of a unit of accommodation below rupees one thousand per day or equivalent
is exempt from Service tax i.e. Exemption not available if declared tariff > Rs.
1,000/- Per day irrespective of fact whether for commercial purpose or not. Hence,
this exemption, upto the specified threshold level, is available to any entity
providing service by way of accommodation, including dharmashalas or ashram or

© 2014 R.Subramanian and Company, Chartered Accountants

 such other entities. Tax base has been widened by removal of term ‘other
commercial places’.

 Exemption provided on Transport of organic manure by vessel, rail or road (by

GTA) by amending entries at Entry. No. 20 and 21. Therefore, organic manure will
be on par with fertilizer which is already exempted.

 Exemption provided on Services by way of loading, unloading, packing, storage or

warehousing, transport by vessel, rail or road (GTA), of cotton, ginned or baled,
[amendment of entry at Entry. No. 20 & 21 and 40].

 Entry 23: Presently service of passenger transportation by a contract carriage other

than for the purposes of tourism, conducted tour, charter or hire, is exempt from
Service tax. The scope of exemption is being reduced by withdrawing the
exemption in respect of air-conditioned contract carriages. As a result, any service
provided for transport of passenger by air-conditioned contract carriage including
which are used for point to point travel, will attract service tax, with immediate
effect. Service tax will be charged at an abated value of 40% of the amount
charged from service receiver; therefore, effective tax will be 4.944%.

 Entry 25: The exemption in respect of services provided to Government or local

authority or Governmental authority has been made more specific. Services by way
of water supply, public health, sanitation conservancy, solid waste management or
slum improvement and up-gradation will continue to remain exempted but the
exemption would not be extendable to other services such as consultancy,
designing, etc., not directly connected with these specified services.

 Entry 26A: Exemption available for specified micro insurance schemes approved by
IRDA expanded to cover all life micro-insurance schemes where the sum assured
does not exceed Rs. 50, 000/- per life insured.

 Entry 41: Specialized financial services received by RBI from outside India, in the
course of management of foreign exchange reserves, e.g. external asset
management, custodial services, securities lending services, are being exempted.

 Entry 42: Exemption available on services provided by the Indian tour operators to
foreign tourists in relation to tours wholly conducted outside India.

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  New definition provided for certain terms – ‘Educational institution’, ‘life micro
insurance product’, ‘radio–taxi’, ‘recognised sports body’ and deletion of term –
‘auxiliary education service’

CUSTOMS

1. Basic Customs Duty on battery waste and battery scrap is reduced to 5%

2. Advance ruling facility extended to private limited companies

3. Powers of settlement commission expanded to specified exports through post or

courier

4. Mandatory pre-deposit of:

- 7.5% of duty and penalty at the first stage appeal to Commissioner

(Appeals) or Tribunal

- 10% of duty and penalty at the second stage appeal to Tribunal ,subject to ceiling of
INR 10 crores

5. There are many changes in customs tariff of many items

6. The Scheme of Advance Ruling is also being extended to Resident Private

Limited Companies.

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EXCISE DUTY

 Excise duty exempted on parts of tractors removed from one/more factory

toanother factory for further manufacture of tractors

 If goods sold at a price less than manufacturing cost including profit and if
no additional consideration flowing from the buyer, then transaction value
to be adopted

 Restriction on transfer of credit by a LTU from one unit to other

 Discretionary powers of the Tribunal to refuse admission of appeals

increased from INR 50K to INR 2 Lacs

 Mandatory pre-deposit for appeal to Commissioner (Appeals) or Tribunal in

line with customs law

 The Scheme of Advance Ruling is also being extended to Resident Private

Limited Companies

 E-payment is being made mandatory for all assessees subject to certain

exceptions.

 Sub-rule (3A) of Rule 8 is being substituted to provide that in case of default

in payment of duty, the assessee shall on his own pay a penalty of 1% per
month on the amount of duty not paid for each month or part thereof.

© 2014 R.Subramanian and Company, Chartered Accountants

DISCLAIMER
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information on a particular subject or subjects and are not an exhaustive treatment of such
subject(s). Further, the views and opinions expressed herein are the subjective views and
opinions of R.Subramanian and Company based on such parameters and analyses which
in its opinion are relevant to the subject.

Accordingly, the information in this material is not intended to constitute accounting, tax,
legal, investment, consulting or other professional advice or services. This information is
not intended to be relied upon as the sole basis for any decision which may affect you or
your business. Before making any action that might affect your personal finances or
business, you should consult a qualified professional adviser. The firm shall not be
responsible for any loss whatsoever sustained by any person who relies on this material.
This material is intended only for the use of the entity /person to whom it is addressed and
the others authorised to receive it on their behalf.

© 2014 R.Subramanian and Company, Chartered Accountants

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© 2014 R.Subramanian and Company, Chartered Accountants