Union Budget 2016 – Indirect Taxes - CREDAI-MCHI · 2016-08-16 · • Excise duty levied on manufacture of certain articles • Exemption from excise duty extended to Ready mix
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Service tax• Krishi Kalyan Cess levied on value of all taxable services @ 0.5 per cent from 1
June 2016, with credit available to service provider
• Effective Service Tax rate increased from 14.5 per cent to 15 per cent
• Exemption extended for affordable housing sector (1 March 2016)
− Services provided for construction, erection etc. of a civil structure or any other original works pertaining to :o the ‘In-situ Rehabilitation of existing slum dwellers using land as a resource through
private participation’ component of Housing for All (HFA) (Urban) Mission/ Pradhan Mantri AwasYojana (PMAY), except in respect of such dwelling units of the projects which are not constructed for existing slum dwellers
o ‘Beneficiary-led individual house construction/enhancement’ component of Housing for All (Urban Mission) PMAY
o Low cost houses upto carpet area of 60 square meters per house for approved project
Service taxEffective from 1 March 2016• Restoration of exemption in respect of specified services provided to government
or governmental authority for services provided under a contract entered into before 1 March 2015 for − construction, erection of civil structures including for educational, clinical or cultural
use (i.e. for use other than for commerce or industry) etc.
− construction, erection, commissioning, etc. of a residential complex meant for self-use or use of their employees
if appropriate stamp duty has been paid prior to that date
Exemption will now be available till 31 March 2020.
• Restoration of exemption till 30 March 2020 and in respect of taxable services provided during 1 April 2015 to 29 February 2016: − for construction, erection, commissioning or installation of original works pertaining to
an airport or port under a contract entered into before 1 March 2015
Service tax • Abatement in respect of services provided by construction of residential complex,
building, civil structure, or a part thereof, is proposed to be rationalised at 70% − 75% for low-end residential units depending on area and value of such unit [carpet area <
2000 sq ft and value < INR 1 crore]
− 70% for other residential units
• Services provided by Government subject to service tax under reverse charge (w.e.f. 1 April 2016)− Assignment by Government of right to use spectrum and subsequent transfer thereof is
now included in the list of declared services
• Services provided by Senior Advocate to advocate or firm of advocate liable to service tax. Such senior advocates to collect and pay service tax (w.e.f. 1 April 2016)
Central excise• Standard rate of Central Excise duty remains unchanged
• Excise duty rates rationalized on certain inputs to improve competitiveness of domestic industry in various sectors − Information technology hardware, capital goods
• Excise duty levied on manufacture of certain articles
• Exemption from excise duty extended to Ready mix concrete manufactured at site for construction purpose
Articles Without Credit With Credit
Articles of jewellery 1 per cent 12.5 per centBranded readymade garments with retail price of more than INR 1000
2 per cent 12.5 per cent
Routers, broadband modems, CCTV and IP camera, set top boxes
The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.