To promote green energy initiatives, full exemption from BCD and excise duty has been granted on specified input materials used for solar energy equipment. Specific exemptions from BCD and countervailing duty have been granted on inputs for LED panels and lights.
However, to garner additional revenue, the Budget has proposed an additional duty of 5% on aerated waters containing added sugar. Cigarette, pan masala and tobacco products are proving to be favourite cash cows to garner additional revenue, hence, there is an increase in rate of duty on such products.
A big positive for the manufacturing sector is perhaps the amendment that has been introduced under Central Excise Valuation Rules to reverse the negative impact of the Supreme Court judgment in the case of Fiat India. The relevant provision has been amended to provide that even if goods are sold at a price below the cost of production, where there is absence of any additional consideration flowing from the buyer to the assessee, the transaction value shall hold good.
As a measure to reduce litigation, the Budget proposes to extend the route of advance ruling to the domestic private companies. Similarly, towards the speedier resolution of disputes the scope of settlement commission has been expanded.
On the service tax front, the negative list of services has been pruned to exclude radio cabs. Similarly, sale of space for advertisements on online media, mobiles, websites, out-of-home media are also excluded from negative list, hence made liable to tax.
The Finance Bill has proposed pre-deposit of 7.5% of the tax liability including penalty thereon as a precondition for filing an appeal against the order of adjudication authority and in case of the second appeal a further amount of 10% has to be deposited with the tribunal.
Though the intention is to expedite the disposal of matters by directly taking up the main appeal, the proposal would adversely affect the cash flows of the companies. This is because at tribunal level most cases are eventually decided in favour of the assessee.
On the goods and services tax (GST), the expectation was that the FM would announce a clear and time bound roadmap for its implementation. As opposed to this, the FM has just made a passing reference on GST.