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TMI BlogFINANCE BILL, 2018 PROVISIONS RELATING TO DIRECT TAXESX X X X Extracts X X X X X X X X Extracts X X X X ..... t year 2018-19. In respect of income of all categories of assessees liable to tax for the assessment year 2018-19, the rates of income-tax have been specified in Part I of the First Schedule to the Bill. These are the same as those laid down in Part III of the First Schedule to the Finance Act, 2017 for the purposes of computation of "advance tax", deduction of tax at source from "Salaries" and charging of tax payable in certain cases. (1) Surcharge on income-tax The amount of income-tax shall be increased by a surcharge for the purposes of the Union,- (a) 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 referred to in sub-clause (vii) of clause (31) of section 2 of the Act,- (i) at the rate of ten per cent. of such tax, where the income or the aggregate of income paid or likely to be paid and subject to deduction exceeds fifty lakh rupees but does not exceed one crore rupees, and (ii) at the rate of fifteen per cent. of such tax, where the income or the aggregate of income paid or likely to be paid and subject to deduction exceeds one crore rup ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of tax computed, inclusive of surcharge, in all cases. No marginal relief shall be available in respect of such cesses. II. Rates for deduction of income-tax at source during the financial year 2018-19 from certain incomes other than "Salaries". The rates for deduction of income-tax at source during the financial year 2018-19 from certain incomes other than "Salaries" have been specified in Part II of the First Schedule to the Bill. The rates for all the categories of persons will remain the same as those specified in Part II of the First Schedule to the Finance Act, 2017, for the purposes of deduction of income-tax at source during the financial year 2017-18. However, in case of long-term capital gain referred to in section 112A of the Act, tax shall now be deducted at source at the rate of 10 per cent.. (1) Surcharge- The amount of tax so deducted, in the case of a non-resident person (other than a company), shall be increased by a surcharge,- (a) in case of an individual, Hindu undivided family, association of person, body of individual or artificial juridical person; (i) at the rate of ten per cent. of such tax, where the income or the aggregate of such incomes paid or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he salient features of the rates specified in the said Part III are indicated in the following paragraphs- A. Individual, Hindu undivided family, association of persons, body of individuals, artificial juridical person. Paragraph A of Part-III of First Schedule to the Bill provides following rates of income-tax:- (i) The rates of income-tax in the case of every individual (other than those mentioned in (ii) and (iii) below) or Hindu undivided family or every association of persons or body of individuals, whether incorporated or not, or every artificial juridical person referred to in sub-clause (vii) of clause (31) of section 2 of the Act (not being a case to which any other Paragraph of Part III applies) are as under:- Upto ₹ 2,50,000 Nil. ₹ 2,50,001 to ₹ 5,00,000 5 per cent.. ₹ 5,00,001 to ₹ 10,00,000 20 per cent.. Above ₹ 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 ₹ 3,00,000 Nil. ₹ 3,00,001 to ₹ 5,00,000 5 per cent.. ₹ 5,00,001 to ₹ 10,00,000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll be increased by a surcharge at the rate of twelve per cent. of such income-tax in case of a firm having a total income exceeding one crore rupees. However, the total amount payable as income-tax and surcharge on total income exceeding one crore rupees shall not exceed the total amount payable as income-tax on a total income of one crore rupees by more than the amount of income that exceeds one crore rupees. D. Local authorities The rate of income-tax in the case of every local authority has been specified in Paragraph D of Part III of the First Schedule to the Bill. This rate will continue to be the same as that specified for the financial year 2017-18. The amount of income-tax shall be increased by a surcharge at the rate of twelve per cent. of such income-tax in case of a local authority having a total income exceeding one crore rupees. However, the total amount payable as income-tax and surcharge on total income exceeding one crore rupees shall not exceed the total amount payable as income-tax on a total income of one crore rupees by more than the amount of income that exceeds one crore rupees. E. Companies The rates of income-tax in the case of companies have been specif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that every person specified therein and who has not been allotted a permanent account number shall apply to the Assessing Officer for allotment of a Permanent Account Number (PAN). In order to use PAN as Unique Entity Number (UEN) for non-individual entities, it is proposed that every person, not being an individual, which enters into a financial transaction of an amount aggregating to two lakh and fifty thousand rupees or more in a financial year shall be required to apply to the Assessing Officer for allotment of PAN. In order to link the financial transactions with the natural persons, it is also proposed that the managing director, director, partner, trustee, author, founder, karta, chief executive officer, principal officer or office bearer or any person competent to act on behalf of such entities shall also apply to the Assessing Officer for allotment of PAN. This amendment will take effect from lst April, 2018. [Clause 42] Widening of scope of Accumulated profits for the purposes of Dividend Section 2 of the Act defines various terms used in the Act. Clause (22) of the said section defines "dividend" to include distribution of accumulated profits (whether capitalized o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en the subject matter of extensive litigation. With a view to bringing clarity and certainty in the taxation of deemed dividends, it is proposed to delete the Explanation to Chapter XII-D occurring after section 115Q of the Act so as to bring deemed dividends also under the scope of dividend distribution tax under section 115-O. Further, such deemed dividend is proposed to be taxed at the rate of 30 per cent. (without grossing up) in order to prevent camouflaging dividend in various ways such as loans and advances. This amendment relating to imposition of dividend distribution tax on deemed dividend will apply to transactions referred to in sub-clause (e) of clause (22) of section 2 of the Act undertaken on or after 1st April, 2018. [Clause 38 & 39] New regime for taxation of long-term capital gains on sale of equity shares etc. Under the existing regime, long term capital gains arising from transfer of long term capital assets, being equity shares of a company or an unit of equity oriented fund or an unit of business trusts , is exempt from income-tax under clause (38) of section 10 of the Act. However, transactions in such long term capital assets carried out on a recognized ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... non-resident, will not be allowed. ii) The cost of acquisitions in respect of the long term capital asset acquired by the assessee before the 1st day of February, 2018 , shall be deemed to be the higher of - a) the actual cost of acquisition of such asset; and b) the lower of - (I) the fair market value of such asset; and (II) the full value of consideration received or accruing as a result of the transfer of the capital asset. (iii) "equity oriented fund" has been defined to mean a fund set up under a scheme of a mutual fund specified under clause (23D) of section 10 and,- a) In a case where the fund invests in the units of another fund which is traded on a recognized stock exchange, (I) A minimum of 90 per cent. of the total proceeds of such funds is invested in the units of such other fund ; and (II) such other fund also invests a minimum of 90 per cent. of its total proceeds in the equity shares of domestic companies listed on recognized stock exchange; and b) in any other case, a minimum of 65 per cent. of the total proceeds of such fund is invested in the equity shares of domestic companies listed on recognized stock exchange. iv) Fair market value has been defi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sting provisions of section 115AD of the Act inter alia, provide that where the total income of a Foreign Institutional Investor (FII) includes income by way of long-term capital gains arising from the transfer of certain securities, such capital gains shall be chargeable to tax at the rate of ten per cent. However, long term capital gains arising from transfer of long term capital asset being being equity shares of a company or a unit of equity oriented fund or a unit of business trusts, is exempt from income-tax under clause (38) of section 10 of the Act. Consequent to the proposal for withdrawal of exemption under clause (38) of section 10 of the Act, such long term capital gain will become taxable in the hands of FIIs also. As in the case of domestic investors, the FIIs will also be liable to tax on such long term capital gains only in respect of amount of such gains exceeding one lakh rupees. The provisions of section 115AD are proposed to be amended accordingly. This amendment will take effect from 1st April, 2019 and will, accordingly, apply in relation to the assessment year 2019-20 and subsequent assessment years. [Clause 32] Tax deduction at source and manner of payme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , if any person acting on behalf of the non-resident, is habitually authorised to conclude contracts for the non-resident, then such agent would constitute a PE in the source country. However, in many cases, with a view to avoid establishing a permanent establishment (hereafter referred to as 'PE') under Article 5(5) of the DTAA, the person acting on the behalf of the non-resident, negotiates the contract but does not conclude the contract. Further, under paragraph 4 of Article 5 of the DTAAs, a PE is deemed not to exist when a place of business is engaged solely in certain activities such as maintenance of stocks of goods for storage, display, delivery or processing, purchasing of goods or merchandise, collection of information. This exclusion applies only when these activities are preparatory or auxiliary in relation to the business as a whole. The OECD under BEPS Action Plan 7 reviewed the definition of 'PE' with a view to preventing avoidance of payment of tax by circumventing the existing PE definition by way of commissionaire arrangements or fragmentation of business activities. In order to tackle such tax avoidance scheme, the BEPS Action plan 7 recommended ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nclude any business activities carried through a person who, acting on behalf of the non-resident, habitually concludes contracts or habitually plays the principal role leading to conclusion of contracts by the non-resident . It is further proposed that the contracts should be- (i) in the name of the non-resident; or (ii) for the transfer of the ownership of, or for the granting of the right to use, property owned by that non-resident or that thenon-resident has the right to use; or (iii) for the provision of services by that non-resident. This amendment will take effect from 1st April, 2019 and will, accordingly, apply in relation to assessment year 2019-20 and subsequent assessment years. [Clause 4] "Business connection" to include "Significant Economic presence" "The oranges upon the trees in California are not acquired wealth until they are picked, not even at that stage until they are packed, and not even at that stage until they are transported to the place where demand exists and until they are put where the consumer can use them. These stages, upto the point where wealth reached fruition, may be shared in by different territorial authorities." (excerpts from a r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... c presence in that country on the basis of factors that have a purposeful and sustained interaction with the economy by the aid of technology and other automated tools. It further recommended that revenue factor may be used in combination with the aforesaid factors to determine 'significance economic presence'. The scope of existing provisions of clause (i) of sub-section (1) of section 9 is restrictive as it essentially provides for physical presence based nexus rule for taxation of business income of the non-resident in India. Explanation 2 to the said section which defines 'business connection' is also narrow in its scope since it limits the taxability of certain activities or transactions of non-resident to those carried out through a dependent agent. Therefore, emerging business models such as digitized businesses, which do not require physical presence of itself or any agent in India, is not covered within the scope of clause (i) of sub-section (1) of section 9 of the Act. In view of the above, it is proposed to amend clause (i) of sub-section (1) of section 9 of the Act to provide that'significant economic presence' in India shall also constitute 'busin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nection with the termination or the modification of the terms and conditions of any contract relating to its business shall be taxable as business income. It is further proposed that any compensation received or receivable, whether in the nature of revenue or capital, in connection with the termination or the modification of the terms and conditions of any contract relating to its employment shall be taxable under section 56 of the Act. These amendments will take effect from 1st April, 2019 and will, accordingly, apply in relation to assessment year 2019-20 and subsequent assessment years. [Clause 3, 9 & 21] Presumptive income under section 44AE in case of goods carriage Section 44AE, inter alia provides that, the profits and gains shall be deemed to be an amount equal to seven thousand five hundred rupees per month or part of a month for each goods carriage or the amount claimed to be actually earned by the assessee, whichever is higher. The current presumptive income scheme is applicable uniformly to all classes of goods carriages irrespective of their tonnage capacity. The only condition which needs to be fulfilled is that the assessee should not have owned more than 10 goo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be allowed on proportionate basis for the number of years for which health insurance cover is provided, subject to the specified monetary limit. . These amendments will take effect, from 1st April, 2019 and will, accordingly, apply in relation to the assessment year 2019-20 and subsequent assessment years. [Clause 24] Enhanced deduction to senior citizens for medical treatment of specified diseases Section 80DDB of the Act, inter-alia, provide that a deduction is available to an individual and Hindu undivided family with regard to amount paid for medical treatment of specified diseases in respect of very senior citizen upto ₹ 80,000/- and in case of senior citizens upto ₹ 60,000/- subject to specified conditions. It is proposed to amend the provisions of section 80DDB of the Act so as to raise this monetary limit of deduction to ₹ 1,00,000/- for both senior citizens and very senior citizens. This amendment will take effect, from 1st April, 2019 and will, accordingly, apply in relation to the assessment year 2019-20 and subsequent assessment years. [Clause 25] Deduction in respect of interest income to senior citizen At present, a deduction upto ₹ 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... omote start-ups Section 80-IAC of the Act, inter alia, provides that deduction under this section shall be available to an eligible start-up for three consecutive assessment years out of seven years at the option of the assessee, if- (i) it is incorporated on or after the 1st day of April, 2016 but before the 1st day of April, 2019; (ii) the total turnover of its business does not exceed twenty-five crore rupees in any of the previous years beginning on or after the 1st day of April, 2016 and ending on the 31st day of March, 2021; and (iii) it is engaged in the eligible business which involves innovation, development, deployment or commercialization of newproducts, processes or services driven by technology or intellectual property. In order to improve the effectiveness of the scheme for promoting start ups in India, it is proposed to make following changes in the taxation regime for the start ups:- (i) The benefit would also be available to start ups incorporated on or after the 1st day of April 2019 but before the 1st day of April, 2021; (ii) The requirement of the turnover not exceeding ₹ 25 Crore would apply to seven previous years commencing from the date of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eriod of employment is relaxed to 150 days in the case of apparel industry. In order to encourage creation of new employment, it is proposed to extend this relaxation to footwear and leather industry. Further, it is also proposed to rationalize this deduction of 30% by allowing the benefit for a new employee who is employed for less than the minimum period during the first year but continues to remain employed for the minimum period in subsequent year. This amendment will take effect, from 1st April, 2019 and will, accordingly, apply in relation to the assessment year 2019-20 and subsequent assessment years. [Clause 27] Tax treatment of transactions in respect of trading in agricultural commodity derivatives Clause (5) of section 43 defines speculative transaction. The proviso to the said clause, however, stipulates certain transactions to be non-speculative nature even though the contracts are settled otherwise than by the actual delivery or transfer of the commodity or scraps. The clause (e) to the said proviso provides that trading in commodity derivatives carried out in a recognised stock exchange, which is chargeable to commodity transaction tax is a non-speculative trans ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the agreement or the arrangement is terminated in accordance with the terms mentioned therein. This amendment will take effect from 1st of April, 2019 and will, accordingly, apply in relation to assessment year 2019-20 and subsequent years. [Clause 5] Royalty and FTS payment by NTRO to a non-resident to be tax-exempt Section 195 requires a person to deduct tax at the time of payment or credit to a non-resident. Given the business exigencies of the National Technical Research Organisation (NTRO), it is proposed to amend section 10 so as to provide that the income arising to non-resident, not being a company, or a foreign company, by way of royalty from, or fees for technical services rendered in or outside India to, the NTRO will be exempt from income tax. Consequently, NTRO will not be required to deduct tax at source on such payments. This amendment will take effect from 1st April, 2018 and will, accordingly, apply in relation to assessment year 2018-19 and subsequent assessment years. [Clause 5] E. FACILITATING INSOLVENCY RESOLUTION Relief from liability of Minimum Alternate Tax (MAT) Section 115JB of the Act, provides for levy of a minimum alternate tax (MAT) on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owners of shares beyond the permissible limit under section 79. This acts as a hurdle for restructuring and rehabilitation of such companies. In order to address this problem, it is proposed to relax the rigors of section 79 in case of such companies, whose resolution plan has been approved under the Insolvency and Bankruptcy Code, 2016, after affording a reasonable opportunity of being heard to the jurisdictional Principal Commissioner or Commissioner. This amendment will take effect from 1st April, 2018 and will, accordingly, apply in relation to assessment year 2018-19 and subsequent assessment years. It is also proposed to amend section 140 of the Act so as to provide that during the resolution process under the Insolvency and Bankruptcy Code, 2016, the return shall be verified by an insolvency professional appointed by the Adjudicating Authority under the Insolvency and Bankruptcy Code, 2016. This amendment will take effect from 1st April, 2018 and will, accordingly apply to return filed on or after the said date. [Clause 22 & 43] F. IMPROVING EFFECTIVENESS OF TAX ADMINISTRATION New scheme for scrutiny assessment Section 143 of the Act provides for the procedure for a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... chargeable and such tax shall be payable by the seller. In order to propose rates for option on commodity derivative, it is proposed to amend the provisions of section 117 so as to prescribe the rate at which sale of an option on commodity derivative shall be chargeable and such tax shall be payable by the seller. It is further proposed to amend the provisions of section 117 so as to prescribe the rate at which sale of an option on commodity derivative, where option is exercised, shall be chargeable and such tax shall be payable by the purchaser. The existing section 118 of the Finance Act, 2013 provides the value of taxable commodities transactions, being commodity derivative and chargeable under section 117 of the Finance Act, 2013. It is proposed to amend the provisions of section 118 so as to include the value of taxable commodities transaction, being option on commodities, chargeable under section 117 of the Finance Act, 2013, in the said section. These amendments will take effect from lst April, 2018, and will, accordingly, apply in relation to the assessment year 2018-2019 and subsequent years. [Clause 215] Rationalisation of section 276CC relating to prosecution for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... person shall not be proceeded against for an offence under section 49 to section 53 except with the sanction of the Principal Commissioner or Commissioner or the Commissioner (Appeals). Sub-section (2) of the said section provides that the Principal Chief Commissioner or the Chief Commissioner may issue such instructions, or directions, to the tax authorities referred to in sub-section (1), as he may think fit for the institution of proceedings. It is proposed to amend the said sub-section so as to empower the Principal Director General or the Director General also to issue instructions or directions to the tax authorities under the said sub-section. It is also proposed to amend the marginal heading of the said section accordingly so as to include the reference of Principal Director General or Director General. These amendments will take effect from lst April, 2018. [Clause 216] Rationalisation of prima-facie adjustments during processing of return of income Sub-section (1) of the section 143 provides for processing of return of income made under section 139, or in response to a notice under sub-section (1) of section 142. Clause (a) of the said sub-section provides that a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in sub-section (1) of section 90 or sub-section (1) of section 90A, and also an agreement for exchange of the report referred to in sub-section (2) and sub-section (4) as may be notified by the Central Government; (vi) "reporting accounting year" has been defined to mean the accounting year in respect of which the financial andoperational results are required to be reflected in the report referred to in sub-section (2) and sub-section (4). These amendments are clarificatory in nature. These amendments will take effect retrospectively from the 1st April, 2017 and will, accordingly, apply in relation to the assessment year 2017-18 and subsequent years. [Clause 53] Rationalisation of provision of section 115BA relating to certain domestic companies Section 115BA of the Act provides that the total income of a newly set up domestic company engaged in business of manufacture or production of any article or thing and research in relation thereto, or distribution of such article or thing manufactured or produced by it, shall, at its option, be taxed at the rate of 25 per cent. subject to conditions specified therein. This benefit is available from assessment year 2017-18. However, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd subsequent assessment years. [Clause 23] Rationalization of section 43CA, section 50C and section 56. At present, while taxing income from capital gains (section 50C), business profits (section 43CA) and other sources (section 56) arising out of transactions in immovable property, the sale consideration or stamp duty value, whichever is higher is adopted. The difference is taxed as income both in the hands of the purchaser and the seller. It has been pointed out that this variation can occur in respect of similar properties in the same area because of a variety of factors, including shape of the plot or location. In order to minimize hardship in case of genuine transactions in the real estate sector, it is proposed to provide that no adjustments shall be made in a case where the variation between stamp duty value and the sale consideration is not more than five percent of the sale consideration. These amendments will take effect from 1st April, 2019 and will, accordingly, apply in relation to the assessment year 2019-20 and subsequent assessment years. [Clause 14, 19 & 21] Rationalisation of provision relating to conversion of stock-in-trade into Capital Asset Section 45 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rising from the transfer of a long-term capital asset, invested in the long-term specified asset at any time within a period of six months after the date of such transfer, shall not be charged to tax subject to certain conditions specified in the said section. The section also provides that "long-term specified asset" for making any investment under the section on or after the 1st day of April, 2007 means any bond, redeemable after three years and issued on or after the 1st day of April, 2007 by the National Highways Authority of India or by the Rural Electrification Corporation Limited; or any other bond notified by the Central Government in this behalf. In order to rationalise the provisions of section 54EC of the Act and to restrict the scope of the section only to capital gains arising from long-term capital assets, being land or building or both and to make available funds at the disposal of eligible bond issuing company for more than three years, it is proposed to amend the section 54EC so as to provide that capital gain arising from the transfer of a long-term capital asset, being land or building or both, invested in the long-term specified asset at any time within a peri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 36 of the Act to provide that marked to market loss or other expected loss as computed in the mannerprovided in income computation and disclosure standards notified under sub-section (2) of section 145, shall be allowed deduction. (ii) amend 40A of the Act to provide that no deduction or allowance in respect of marked to market loss or other expected loss shall be allowed except as allowable under newly inserted clause (xviii) of sub-section(1) of section 36. (iii) insert a new section 43AA in the Act to provide that, subject to the provisions of section 43A, any gain or loss arising onaccount of effects of changes in foreign exchange rates in respect of specified foreign currency transactions shall be treated as income or loss, which shall be computed in the manner provided in ICDS as notified under sub-section (2) of section 145. (iv) insert a new section 43CB in the Act to provide that profits arising from a construction contract or a contract for providing services shall be determined on the basis of percentage of completion method except for certain service contracts, and that the contract revenue shall include retention money, and contract cost shall not be reduce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... DS was made effective and will, accordingly, apply in relation to assessment year 2017-18 and subsequent assessment years [Clause 10, 11, 13, 15 & 45] Tax deduction at source on 7.75% GOI Savings (Taxable) Bonds, 2018 Government of India introduced 8% Savings (Taxable) Bonds, 2003 in 2003. Under the existing law, the interest received by the investor is taxable. Further the payer is liable to deduct tax at source under section 193 of the Act at the time of payment or credit of such interest in excess of rupees ten thousand to a resident. Government has now decided to discontinue the existing 8% Savings (Taxable) Bonds, 2003 with a new 7.75% GOI Savings (Taxable) Bonds, 2018. The interest received under the new bonds will continue to be taxed as in the case of the earlier once. The provisions of section 193 are proposed to be amended to allow for deduction of tax at source at the time of making payment of interest on such bonds to residents. However, no TDS will be deducted if the amount of interest is less than or equal to ten thousand rupees during the financial year. This amendment will take effect from 1st April, 2018. [Clause 46] H. MISCELLANEOUS Several amendments to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 245-O provides for the constitution of an Authority for Advance Rulings, and constitution of its benches, for giving advance rulings under Chapter XIX-B of the Act or under Chapter V of the Customs Act, 1962 or under Chapter IIIA of the Central Excise Act, 1944 or under Chapter VA of the Finance Act, 1994. In view of the proposed constitution of new Customs Authority for Advance Ruling under section 28EA of the Customs Act, it is proposed to amend the provisions of section 245-O so as to provide that such Authority shall cease to act as an Authority for Advance Rulings, and shall act as an Appellate Authority for the purpose of Chapter V of the Customs Act, 1962 from the date of appointment of Customs Authority for Advance Rulings under section 28EA of the Customs Act, 1962. It is further proposed that such Authority shall not admit any appeal against any ruling or order passed earlier by it in the capacity of Authority for Advance ruling after the date of appointment of Customs Authority for Advance Rulings under section 28EA of the Customs Act, 1962. In order to avoid overlapping, it is also proposed that where the Authority is dealing with an application seeking advance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order or notification thereunder shall be executed only if such prohibition or restriction or obligation is notified under the provisions of Customs Act subject to such exceptions, modifications or adaptations as the Central Government may deem fit. This change would come into force from a date to be notified. [57] 5. Section 17 is being amended so as to: (a) expand the scope of verification beyond self-assessment to all the entries made under section 46 or section 50 by amending sub-section (2) along with consequential changes in sub-section (3); (b) insert a new sub-section (2A) to provide legal backing for the risk-based selection of self-assessed Bill of Entry or Shipping Bill through appropriate selection criteria; (c) extend the scope of re-assessment by omitting specific reference to valuation, classification and exemption or concessions of duty availed consequent to any notification issued therefor under this Act from sub-section (5); (d) omit sub-section (6), in view of the new dedicated Chapter for Audit; [58] 6. Section 18 is being amended so as to: (a) cover export consignments under provisional assessment of duty by amending sub-section (1); (b) inse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pply not from the date of notice, but from the date when such reasons cease to exist. (e) insert a new sub-section (10A) to provide that where an order for refund is modified in appeal and the amount of refund so determined is less than the amount refunded, the excess amount so refunded shall be recovered along with interest thereon at the applicable rate, from the date of refund up to the date of recovery, as a sum due to the Government. (f) insert a new sub-section (10B) to provide a safeguard whereby if a demand notice issued under sub-section (4) is held not sustainable in any proceeding, including at any stage of appeal for the reason that the charges of collusion, willful mis-statement etc. have not been established against the person to whom the demand notice has been issued, then the said notice shall be deemed to have been issued under subsection (1). (g) insert an explanation that a notice issued for non-levy, non-payment, short-levy or short payment of duty or erroneous refund after 14th May, 2015 but before the date on which the Finance Bill, 2018 receives the assent of the President, shall continue to be governed by the provisions of section 28 as it stood immediate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... corresponding proviso to sub-section (7) of section 28 stating that the period beginning with the date of such advance ruling and ending with the date of order under this sub-section shall be excluded from the time period of two years and five years respectively specified in section 28. [67] 16. A new section 28KA [relating to Appeal provisions in respect of Advance Ruling] is being inserted so as to- (a) provide for appeal by an officer duly authorized by Board by notification, or by an applicant against the ruling or an order passed by Customs Authority for Advance Rulings to the Appellate Authority constituted under Section 245-O of the Income Tax Act; (b) provide that the sections 28I and 28J shall apply mutatis mutandis to appeal proceedings. (c) provide that this section shall come into force only when customs authority for advance ruling is appointed under section 28EA. [68] 17. Section 28L is being amended so as to substitute the word "Authority" with the words "Authority or Appellate Authority" [69] 18. Section 28M is being substituted so as to, - (a) provide that the procedure to be followed by the Authority shall be as prescribed. (b) p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... henticity, validity of the declarations made by the exporter under this section and compliance to the prohibitions or restrictions under this act or any other law for the time being in force. [76] 25. Section 51 is being amended so as to have a provision for clearance of goods by Customs Automated System in addition to existing clearance by the proper officer. [77] 26. To insert Chapter VIIA on payments through electronic cash ledger with governing provisions in Section 51A to have a provision for advance deposit which would enable payment of duties, taxes, fee, interest, and penalty through electronic cash ledger. It is also proposed to issue regulations in this regard. [78] 27. Section 54 is being amended so as to empower the Board to make regulations providing manner of presenting a bill of transshipment and declaration for transshipment. [79] 28. Section 60 is being amended so as to have a provision for clearance of goods by Customs Automated System in addition to existing clearance by the proper officer. [80] 29. Section 68 is being amended so as to have a provision for clearance of goods by Customs Automated System in addition to existing clearance by the prope ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion (2) providing that where any order for provisional release of the seized goods has been passed under Section 110A, the aforesaid period of six months, mentioned in sub-section (2), shall not apply. [90] 39. Section 122 is being amended so as to substitute the existing clauses (b) and (c) to empower the Board to fix monetary limits for adjudication of cases by officers below the rank of Joint Commissioner by way of notification. [91] 40. Section 124 is being amended so as to insert a second proviso to provide for issuance of supplementary show cause notice under such circumstances and in such manner as may be prescribed through regulations.; [92] 41. Section 125 of the Customs Act is being amended so as to: (a) insert a proviso to sub-section (1) to provide that where the demand proceedings against a noticee/co-noticees have been closed on grounds of having paid the dues mentioned in section 28, then the provisions of this section shall not be applicable if the goods are not prohibited or restricted; (b) insert sub-section (3) to provide that where redemption fine has not been paid within a period of one hundred and twenty days from the date of option given under sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent or arrangements have been made, shall be subject to such conditions, exceptions or qualifications as are specified in the said notification.; (c) utilize the information received under sub-section (1) as evidence in investigations and proceedings under this Act subject to provisions of sub-section (2).; (d) where the Central Government has entered into a multilateral agreement for exchange of information or documents for purposes of verification of compliance in identified cases, the Board shall specify the procedure for such exchange, the conditions subject to which such exchange shall be made and designation of the person through whom such information shall be exchanged.; (e) insert a deeming provision that any agreement entered into or any other arrangement made by the Central Government prior to the date on which the Finance Bill, 2018 receives the assent of the President, shall be deemed to have been done or taken under the provisions of this Section.; (f) insert a definition of "contracting state" and "corresponding law" referred to in this section.; [96] 45. Section 153 is being substituted so as to align it with the provisions of the section 169 of the CGST Act t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ading, sub-heading tariff item Commodity From To Food Processing 1 2009 21 00 to 2009 90 00 Fruit juices and vegetable juices including cranberry juice 30% 50% Perfumes and toiletry preparations 2 3303 Perfumes and toilet waters 10% 20% 3 3304 Beauty or make-up preparations and preparations for the care of the skin (other than medicaments), including sunscreen or suntan preparations; manicure or pedicure preparations 10% 20% 4 3305 Preparations for use on the hair 10% 20% 5 3306 Preparations for oral or dental hygiene, including denture fixative pastes and powders; yarn used to clean between the teeth (dental floss), in individual retail packages 10% 20% 6 3307 Pre-shave, shaving or after-shave preparations, personal deodorants, bath preparations, depilatories and other perfumery, cosmetic or toilet preparations, not elsewhere specified or included, prepared room deodorizers, whether or not perfumed or having disinfectant properties 10% 20% Automobile parts 7 4011 20 10 Truck and Bus radial tyres 10% 15% 8 8407, 8408, 8409, 8483 10 91, 8483 10 92, 8511, 8708, 8714 10 Specified parts/accessories of motor vehicles, motor cars, motor cycle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 20% 33 9613 Cigarette lighters and other lighters, whether or not mechanical or electrical, and parts thereof other than flints and wicks. 10% 20% 34 9616 Scent sprays and similar toilet sprays, and mounts and heads therefor; powder-puffs and pads for the application of cosmetic or toilet preparations. 10% 20% B. Amendments not affecting rates of duty [to be effective from 02.02.2018]* [Clause 101(a) of the Finance Bill, 2018] 1 8507 60 00 Tariff rate of BCD on Lithium-ion batteries [The effective rate of import duty on Lithium-ion batteries [except those for cellular mobile phones will, however, remain unchanged at 10%.] 10% 20% 2 9018, 9019, 9020, 9021 9022 Tariff rate of BCD on medical devices [The effective rates of BCD on such medical devices will, however, remain unchanged.] 7.5% 10% C. Technical amendment not affecting rates of duty [Clause 101(b) of the Finance Bill, 2018] 1 Bifurcate the tariff item 0713 31 00 to create separate tariff items each for Moong Dal and Urad Dal. 2 Omit tariff item 0904 22 12 and entries relating thereto and create new tariff item 1209 91 70, in relation to chilly seed of genus capsicum. 3 Amend the tariff item ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8704 CBU imports of motor vehicles 20% 25% Diamonds and Precious stones 14 71 Cut and polished colored gemstones; 2.5% 5% 15 71 Diamonds including lab grown diamonds-semi processed, half-cut or broken; non-industrial diamonds including lab-grown diamonds (other than rough diamonds), including cut and polished diamonds 2.5% 5% Medical Devices 16 Any Chapter Raw materials, parts or accessories for the manufacture of Cochlear Implants 2.5% Nil Rationalization in Customs duty rates Edible oils of vegetable origin 17 1508, 1509, 1510,1512, 1513, 1515 Crude edible vegetable oils like Ground nut oil, Olive oil, Cotton seed oil, Safflower seed oil, Saffola oil, Coconut oil, Palm Kernel/Babassu oil, Linseed oil, Maize corn oil, Castor oil, Sesame oil, other fixed vegetable fats and oils. 12.5% 30% 18 1508, 1509, 1510,1512, 1513, 1515, 1516 20, 1517 10 21, 90 10, 00 11, 1518 00 21, 1518 00 31 Refined edible vegetable oils, like Ground nut oil, Olive oil, Cotton seed oil, Safflower seed oil, Saffola oil, Coconut oil, Palm Kernel/Babassu oil, Linseed oil, Maize corn oil, Castor oil, Sesame oil, other fixed vegetable fats and oils, edible margarine of vegetab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se 106 of Finance Bill, 2018] ₹ 6 per litre Nil 4 Additional duty of customs under sections 3(1) of the Customs Tariff Act, 1975 in lieu of basic excise duty 2710 (i) Motor spirit commonly known as petrol ₹ 6.48 per litre ₹ 4.48 per litre 2710 (ii) High speed diesel oil ₹ 8.33 per litre ₹ 6.33 per litre EXCISE Note: "Basic Excise Duty" means the excise duty set forth in the Fourth Schedule to the Central Excise Act, 1944. I. PROPOSALS INVOLVING CHANGE IN EXCISE DUTY RATES: Commodity Rate of Duty From To I Motor spirit commonly known as petrol and high speed diesel oil 1. Levy of Road and Infrastructure Cess on motor spirit commonly known as petrol and high speed diesel oil [clause 110 of Finance Bill, 2018] -- ₹ 8 per litre 2. Abolition of Additional Duty of Excise [Road Cess] on motor spirit commonly known as petrol and high speed diesel oil [clause 106 of Finance Bill, 2018] ₹ 6 per litre Nil 3. Basic excise duty on: (i) Unbranded Petrol ₹ 6.48 per litre ₹ 4.48 per litre (ii) Branded petrol ₹ 7.66 per litre ₹ 5.66 per litre (iii) Unbranded diesel ₹ 8.33 per l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Central Board of Excise and Customs as the Central Board of Indirect Taxes and Customs 1. Name of Central Board of Excise and Customs is being changed to Central Board of Indirect Taxes and Customs with consequential amendments in the following Acts: - i. The Central Boards of Revenue Act, 1963 (54 of 1963) ii. The Customs Act, 1962 (52 of 1962) iii. The Central Goods and Services Tax Act, 2017 (12 of 2017) [157 and 218] C. REPEAL OF CERTAIN ENACTMENTS 1. Additional duty of Customs on Motor Spirit commonly known as Petrol is being abolished by repealing section 103 of the Finance Act (No.2), 1998 [106] 2. Additional duty of Excise on Motor Spirit commonly known as Petrol is being abolished by repealing section 111 of the Finance Act (No.2), 1998 [106] 3. Additional duty of Customs on High Speed Diesel oil is being abolished by repealing section 116 of the Finance Act, 1999 [106] 4. Additional duty of Excise on High Speed Diesel oil is being abolished by repealing section 133 of the Finance Act, 1999 [106] 5. Education Cess on imported goods is being abolished by omitting Chapter VI of the Finance Act (No.2), 2004 [106] 6. Secondary and Higher Educa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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