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Pre Budget Memorandum-Indirect Taxes-2016

ICAI Pre-Budget Memoranda 2016 for Indirect Taxes–Key Points Raised on Service Tax, Cenvat, Central Excise, Customs & CST


The  Key Points Raised are  as under:-



Service Tax


1.  Introduction of Tax Audit Report under Service Tax


2.  Introduction Reconciliation Certification under Service Tax


3.  Exempting Employer to Employee Services


4.  Works Contract Definition to be Brought in Parity with CST Act


5.  Trading of Goods to be removed from Negative List as it is not even a Service


6.  Seeking Clarification for Non Taxability of charges/ recoveries for supply of electricity by developers

7.  No Serice tax on Take Away or Home Deliveries to be incorporated in the Act Itself


8.  Seeking Clarification on Non Taxability of Penalties, Liquidated Damages etc


9.  Valuation Clarification on Sharing of Expenses between Sister Concerns / Groups Companies


10.  Deemed Valuation for Transactions whose Consideration is non monetary


11.  Small Scale Exemption to be Raised from 10 Lacs to 25 Lacs

13.  Date of Service Tax Liability to be mentioned in Registration Certificate Itself


14.   Efiling all the documents to the Department CA's to Certify the Form


15.   GAR-7 Challan to mention the Period Pertaining to which Tax Paid


16.   Due Date of Payments to be Made 10th of Following Month in line with GST


17.   Provision for Bad Debts to be covered under Rule 6(3) of Service Tax Rules, 1994


18.   Challan Correction System to be Implemented


19.   Introduction of Annual Return under Service Tax


20.  Instant Acknoledgment in Filing of Service Tax ST-3\


21.  Time Limit to Revise to be Increased to 180 Days


22.  To Curb Vexatious Searches, the reasons for conducting the search may be recorded in writing. This will also be in line with income-tax provisions

23.  Recorded Statement to be provided to the assessee immediately. Use of Printed Statement to be permissible


24.   Prosecution only in exceptional cases and must include mens rea


25.   Power to Arrest must not be delegated below the officer of Rank of JC / AC


26.   Online Filing of CESTAT Appeals


27.  Online Filing of A-1 & A-3


28.   Conflict between Section 67A and Rule 4 / 5 of POT to be removed



Cenvat Credit



1.  Avoid the exclusion clause of Cenvat on Input Services


2.  Allow Credit of Outward Freight


3.  Input Ambit should cover Capital Structures


4.  Discreet Drafting of Rule 2(e) – Definition of "Exempted Services"


5.  Rule 2( d) i.e. Definition of Exempted Goods to be brought in accordance with Bharat Fritz Werner Limited Judgement of Karnataka High Court on Job Work

6.  Utilisation of Old Education and Secondary Education Cess


7.  Swachh Bharat Cess to be Integrated in Cenvat Scheme


8.  100% Cenvat Credit on Capital Goods in the First Year Itself


9.  Refund to be Allowed to be certified by a Practicing Chartered Accountant and not neccesarily the Auditor only


10.  Refund Process Streamling

11.          Reinstatement of Transfer of Credit from LTU one unit to another

12.  No Interest shall be Payable under Rule 14 of CCR, 2004 where assessee is able to substantiate non utilisation of Impugned Credit

13.  Rule 15 Penalty – 'Taken or Utilised' to be replaced with 'Taken and Utilised'.



Central Excise


1.  Procedure for Section 14 to be envisaged in Rules


2.  Advance Ruling on Admissibility of Cenvat Credit on Capital Goods in Factory or Service Provider


3.  Memorandum of Cross Objection before Commissioner (Appeals) – Forms to be Prescribed


4.  Mandatory Pre-deposit to be 1% / 2% instead of Current 7.5% / 10 %. Bank Guarantee to substitute. Tribunal Must be given right to waive predeposit on merit

5.   Excise Returns should be Quarterly and not Monthly


6.  Revision of Excise Returns should be Permissible


7.  Audit Report under EA-2000 must be furnished in all  cases.





1.  Dispensing 1% EDD


2.  SAD Refund to be Smoothened based on CA Certification


3.  SAD Refund not to be subject to Time Limit under Section 27


4.  Increase in Limit of Duty Free Allowance to Rs 75,000/-



Central Sales Tax


1.  Reduction of CST Rate to 1%


2.  Streamlining Form Process related to C, F, H, E1 and EII


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