TIOL-DDT 2549
02 03 2015
Monday

SO, the Finance Minister is going to collect nearly two lakh crores more than what he did in the previous year. And that is the tax burden on us in the coming year.

How Wealth Tax is to be abolished

IN Para 113 of his Budget Speech, the Finance Minister said, "I have therefore decided to abolish the wealth tax and replace it with an additional surcharge of 2% on the super-rich with a taxable income of over Rs.1crore".

Section 3 of the Wealth Tax Act reads

Charge of wealth-tax.

3. (1)Subject to the other provisions contained in this Act, there shall be charged for every assessment year commencing on and from the first day of April, 1957 but before the first day of April, 1993, a tax (hereinafter referred to as wealth-tax) in respect of the net wealth on the corresponding valuation date of every individual, Hindu undivided family and company at the rate or rates specified in Schedule I.

(2) Subject to the other provisions contained in this Act, there shall be charged for every assessment year commencing on and from the 1st day of April, 1993, wealth-tax in respect of the net wealth on the corresponding valuation date of every individual, Hindu undivided family and company, at the rate of one per cent of the amount by which the net wealth exceeds fifteen lakh rupees.

Provided that in the case of every assessment year commencing on and from the 1st day of April, 2010, the provisions of this section shall have effect as if for the words "fifteen lakh rupees", the words "thirty lakh rupees" had been substituted.

In the Finance Bill 2015, Clause 79 reads as:

In section 3 of the Wealth-tax Act, 1957, in sub-section (2), with effect from the 1st day of April, 2016, after the words, figures and letters "from the 1st day of April, 1993", the words, figures and letters "but before the 1st day of April, 2016" shall be inserted.

This is how wealth Tax is proposed to be abolished with effect from 1 st April 2016.

Wealth-tax Act, 1957 (‘the WT Act') was introduced w.e.f. 01.04.1957 on the recommendation of Prof. Nicholas Kaldor for achieving twin major objectives of reducing inequalities and helping the enforcement of Income-tax Act through cross checks. Accordingly, all the assets of the assessees were taken into account for computation of net-wealth. The levy of wealth-tax was thoroughly revised on the recommendation of Tax Reform Committee headed by Raja J. Chelliah vide Finance Act, 1992 with effect from 01.04.1993. The Chelliah Committee had recommended abolition of wealth-tax in respect of all items of wealth other than those which can be regarded as unproductive forms of wealth or other items whose possession could legitimately be discouraged in the social interest.

Currently, wealth-tax is levied on an individual or HUF or company, if the net wealth of such person exceeds Rs.30 lakh on the valuation date, i.e. last date of the previous year. For the purpose of computation of taxable net wealth, only few specified assets are taken into account.

More than seven years ago, we carried an article Should FM abolish Wealth Tax ?

It was not Budget alone

CENTRAL Excise and Service Tax Audit norms to be followed by the Audit Commissionerates - Circular No. 995/02/2015-CX., Dated: February 27, 2015

CBEC has issued norms and guidelines for audit by the many Audit Commissionerates created recently. Some years ago, Board had purchased several copies of a software called idea for assisting in Audit. Any idea what happened to that?

Recovery of arrears in installments and amendment of Garnishee Notice - Circular No. 996/3/2015-CX., Dated: February 28, 2015

Board clarifies that recovery officers do have powers to add, amend, vary or rescind any Garnishee Notice issued. However, the interest of revenue has to be suitably safeguarded.

It has been decided by the Board to allow recovery of arrears of taxes, interest and penalty in installments. The power to allow such payment in monthly installments shall be discretionary and shall be exercised by the Commissioners for granting sanction to pay arrears in installments upto a maximum of 24monthly installments and by the Chief Commissioners for granting sanction to pay arrears in monthly installments greater than 24 and upto a maximum of 36monthly installments.

Simplification of Registration Procedures in Central Excise and Service Tax - Circular No. 997/4/2015-CX., Dated: February 28, 2015 and ORDER NO 01/2015-SERVICE TAX, Dated: February 28, 2015

Under the new simplified procedure, once duly completed application form is received online on ACES, registration would be granted within two working days and issued online without any examination of the documents and verification of documents or premises before the grant of registration, thus initiating trust based registration. Simultaneously, assessee would be enabled to electronically pay duty. Further, the assessee would not need a signed copy of Registration Certificate as proof of registration. Registration Certificate downloaded online from ACES system would be accepted as proof of registration. Verification of the documents and premises shall be carried out post facto.

Withdrawal of prosecution filed in a court - Circular No. 998/5/2015-CX., Dated: February 28, 2015

CBEC directs that where on identical allegation a noticee has been exonerated in the quasi-judicial proceedings and such order has attained finality, Chief Commissioner shall give direction to the Central Excise Officer in the concerned Commissionerate to file an application through Public Prosecutor requesting the Court to allow withdrawal of the Prosecution in accordance with law. This direction is applicable for Central Excise, Customs and Service Tax.

Place of Removal - Board Clarifies

BOARD was requested to clarify that in the case of exports, for purposes of CENVAT credit of input services, the place of removal is the port or the airport from where the goods are finally exported.

Board clarifies:

In the case of clearance of goods for export by manufacturer exporter, shipping bill is filed by the manufacturer exporter and goods are handed over to the shipping line. After Let Export Order is issued, it is the responsibility of the shipping line to ship the goods to the foreign buyer with the exporter having no control over the goods. In such a situation, transfer of property can be said to have taken place at the port where the shipping bill is filed by the manufacturer exporter and place of removal would be this Port/ICD/CFS. Needless to say, eligibility to CENVAT Credit shall be determined accordingly.

In the case of export through merchant exporters, however, two transactions are involved. First is the transaction between the manufacturer and the merchant exporter. The second transaction is that between the merchant exporter and the foreign buyer. As far as Central Excise provisions are concerned, the place of removal shall be the place where the property in the goods passes from the manufacturer to the merchant exporter. In most of the cases, this place would be the factory gate since it is here that the goods are unconditionally appropriated to the contract in cases where the goods are sealed in the factory, either by the Central Excise officer or by way of self-sealing with the manufacturer of export goods taking the responsibility of sealing and certification.

Circular No. 999/6/2015-CX., Dated: February 28, 2015

Tariff Value of Gold, Silver Decreased

THE Government has decreased the Tariff value of Gold from 397 USD to 393 USD per 10 gms. The tariff value of Silver is also decreased from 551 USD to 549 USD per kilogram.

Tariff values of most of the oils have also been reduced.

TheTariff values as on 13.02.2015 and with effect from 27.02.2015 are as under:

Notification No. 26/2015-Cus.(N.T.), Dated: February 27, 2015

A great Job by Revenue Officers

THE Officers of the Indian Revenue Service in both the Boards have done a commendable job. It is not an easy task to draft all these complicated Bills and notifications, especially in the Indirect Taxes. The Himalayan task they had so silently executed is incredible. The Legislative wing of CBEC is called Tax Research Unit (TRU) and the bright boys in TRU have done tremendous research and for one tenth of this work, they would get Ph.D from the best universities.

DDT salutes these sincere stalwarts.

Budget With TIOL

WE brought to you incisive analyses on some of the issues pertaining to the budget from our in-house experts and our distinguished guests who are all noted authorities in the field. We will bring you more analyses on the budget today and in the coming days from the best brains in the country.

Until Tomorrow with more DDT

Have a nice day.

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