Public sector companies will find it easier to do business, at least as far as clarity on tax treatment is concerned. This is because the finance ministry has allowed them to avail advance rulings for estimating their tax liability for service tax, central excise duty and customs duty.
The move will allow them to go to the Authority for Advance Rulings for Central Excise, Customs and Service Tax for ascertaining their tax liability for a particular transaction or investment.
Until now the benefit of advance rulings was available only to residents and non residents setting up a joint venture in India in collaboration with other non residents, wholly owned Indian subsidiaries with foreign holding companies, joint ventures in India and specified residents.
Additionally, the Central Board of Excise and Customs (CBEC) has also notified that residents who are importing machinery and equipment for industrial plants, irrigation, mining and power projects or other large-scale development projects can also go in for an advance ruling for Customs duty. ?A resident who proposes to import goods claiming for assessment under heading 9801 of the First Schedule to the Customs tariff Act, 1975,? can also get an advance ruling as per the CBEC notification.
?Many PSUs, especially in the oil and power sector have come to us to understand the taxability of services or imports. Allowing them to go in for advance rulings will help them in their transactions. It will also cut down on post assessment litigation, which can take years to resolve,? a finance ministry official said.
?It?s not that the floodgates of advance rulings have been opened for all residents. This move mainly deals with PSUs and will help create upfront stability and clarity on their tax outgo. It is certainly a welcome move,? said Rajiv Dimri, partner BMR Advisors.
The Authority for Advance Rulings, Central Excise, Customs & Service Tax was set up through the Finance Act of 1998, 1999 and 2003 and is quasi-judicial body headed by a retired judge of the Supreme Court of India. It provides in advance the duty liability in respect of an activity, like import or export, production or manufacture of goods, under the Central Excise Act and taxable services.