TIOL-DDT 2851
23 05 2016
Monday

AS per the provisions of FTP 2015-20 a new scheme called "Service Exports from India scheme" (SEIS) was introduced. As per the scheme, incentive in the form SFIS scrip@5% of Net foreign exchange earned is awarded to the Service exporters. The relevant provisions are covered vide Para 3.07 to 3.19 of Policy and Para 3.04 to 3.17 of procedures.

The Services exporter is required to file the application in FORM ANF-3B through online mode only within one year from the end of previous financial year. Filing of application in person/hardcopies is not accepted as per the DGFT Trade Notice No.14/2015 dated 19/01/2016.

An exporter prepared all relevant data and tried to file the application ANF-3B online. He found that there was no provision for such online filing in the DGFT website. Immediately he requested the DGFT-NIC in- charge vide e mail dated 5th May to resolve the issue. There was no reply but the facility was made available on 16th May.

Happy at the turn of events, our exporter uploaded the application, but found that net banking online payment was not working. The exporter sent another email on 16th May to resolve the online payment issue. No reply to this mail also, but the next day the DGFT site carried a scrolling - While making online payments some customers are facing problems with Corporate Net Banking Facility of banks like SBI / ICICI bank etc. Efforts are being made to resolve this technical issue. The inconvenience caused is regretted.

The persistent exporter tried the credit card mode. When he tried the debit/credit card mode of payment, he found that the system was not accepting it. The DGFT site carried another scroll - Online payment facility for application fees in DGFT through Credit/Debit cards released.

The frustrated exporter tried to meet the Regional Authorities of the DGFT, but he was informed that as per the facilitation as explained in the Trade Notice No.14/2015 dated 19/01/2016, all queries and submissions to DGFT shall be only by e-mail and he will not be allowed to enter the DGFT office or meet any officer.

But as per the Trade Notice, all such e-mails will be replied to within 48 hours of their receipt and the matter resolved in the prescribed timeframe. Where further clarification, etc. is required, it will be indicated in the e-mail reply for suitable response by the applicant.

As on Saturday, the exporter informs that he was not able to make any online headway. He is hoping for a bright Monday to get his problem resolved.

ST - Government Clarifies on Services Provided by Government

AS per Entry 48 of Notification No. 25/2012-ST, dated 20.06.2012, Services provided by Government or a local authority to a business entity with a turnover up to rupees ten lakh in the preceding financial year are exempted.

Now the Government has inserted an explanation to this entry:

"Explanation.- For the purposes of this entry, it is hereby clarified that the provisions of this entry shall not be applicable to the following services, namely:-

(a) services specified in sub-clauses (i),(ii) and (iii) of clause (a) of section 66D of the Finance Act, 1994;

(b) services by way of renting of immovable property.".

Services specified in sub-clauses (i),(ii) and (iii) of clause (a) of section 66D of the Finance Act, 1994 are:

(i) services by the Department of Posts by way of speed post, express parcel post, life insurance and agency services provided to a person other than Government;

(ii) services in relation to an aircraft or a vessel, inside or outside the precincts of a port or an airport;

(iii) transport of goods or passengers.

Notification No. 26/2016-Service Tax, Dated: May 20, 2016

Allotment of Warehouse Code for Customs Bonded Warehouses - CBEC Instructions

AS per the changes made in the Finance Act, 2016 to shift towards record based control with respect to Bonded Warehouses, it is proposed that each warehouse be allotted a unique warehouse code so that importers can declare the warehouse in which goods shall be deposited, at the into-bond bill of entry stage.

A module has been developed in ICES to capture details of customs bonded warehouses licensed in each Commissionerate and generate a warehouse code in the system.

It is proposed to publish the unique warehouse code so generated on the ICEGATE website for the information of trade. This activity will start from 10th June 2016 and shall be completed by the 15th June 2016.

From 20th June 2016,declaring the Warehousing Code in the Bill of Entry would become mandatory for filing Into-Bond and Ex-Bond Bill of Entry. Ex-Bond Bill of Entries with invalid warehousing code will be rejected.

CBEC Circular No. 19/2016-Cus., Dated: May 20, 2016

Customs Warehousing - Duty Free Shops - Transitional Provisions

IS a Duty Free Shop in the airports required to be licenced as a warehouse?

The CBEC answers:

A duty free shop cannot meet the ingredients of sub-section (2) and (3) of erstwhile section 62 of the Customs Act, or currently, the provisions of section 58A. Similarly, the provisions contained in erstwhile section 64 or as it now stands, do not permit retail sales from a warehouse.From this it flows that a duty free shop located in a customs area should not be treated as a warehouse. In fact, it is a point of sale for the goods which are to be ex-bonded and removed from a warehouse for being brought to a DFS in the customs area for sale to eligible persons, namely, international passengers arriving or departing from India.

It is gathered that Duty Free Shop operators store goods in large warehouses in the city and / or in smaller warehouses in and around the precinct of the airport to act as a staging area for replenishing stocks in the duty free shopping area. These warehouses in the city and / or precinct of the airport qualify to be licensed as bonded warehouses as they are capable of being under the lock of customs.

It is also clarified that warehouses licensed under section 58A can belong to an importer of ship stores / airline stores / diplomatic stores / duty free shop stores (exclusive use).There could also be warehouses under section 58A which could be catering to several parties engaged in the business of ship stores / airline stores / diplomatic stores / duty free shop stores (non-exclusive).

Since it is the end use which determines whether a warehouse is eligible for being licensed under section 58A, there shall be no restrictions on the type of goods that can be stored in such warehouses, as long as they are meant for the end use notified at serial no. (2) of notification 66/2016-Cus dated 14.5.2016.

CBEC Circular No. 20/2016-Cus., Dated: May 20, 2016

Income Tax -CBDT Notifies Income Declaration Scheme Rules, 2016

CBDT has notified the Income Declaration Scheme Rules, 2016. The Rules explain the manner of determination fair market value of asset and the declaration of income or income in the form of investment in any asset.

CBDT Notification No. 33/2016., Dated: May 19, 2016

Income Tax - printing and publishing - Additional Depreciation

AN assessee, engaged in the business of manufacture or production of an article or thing, is eligible to claim additional depreciation under clause (iia) of sub-section (1) of section 32 of the Income-tax Act in addition to the depreciation allowance under sub-section (1) of section 32 of the Act.

Whether printing or printing and publishing amounts to manufacture or production of article or thing has been contested in legal forums.

The Kerala High Court in the case of Mathrubhoomi Printing & Publishing Co. vide its judgment in 2015-TIOL-3047-HC-KERALA-IT  relied upon the Delhi High Court judgement in 2013-TIOL-463-HC-DEL-IT  and held that printing and publishing activity is a manufacturing activity and therefore, assessee is eligible for grant of additional depreciation u/s 32(1)(iia).

The Board has accepted the position that printing or printing and publishing amounts to manufacture or production of article or thing. The judgments of Hon'ble Delhi and Kerala High Courts on this issue have been accepted.

It is, therefore, a settled position that the business of printing or printing and publishing amounts to manufacture or production of an article or thing and is accordingly eligible for additional depreciation u/s 32(1)(iia) of the Act.

CBDT directs that henceforth, appeals may not be filed on this ground by officers of the Department and those already filed, in Courts/Tribunals may be withdrawn/not pressed upon.

CBDT Circular No. 15/2016., Dated: May 19, 2016

Explanatory Notes on Provisions of the Income Declaration Scheme, 2016

CBDT has released the Explanatory Notes on Provisions of the Income Declaration Scheme, 2016, contained in the Finance Act, 2016, which received the assent of the President on the 14th of May 2016.

The Scheme provides an opportunity to persons who have not paid full taxes in the past to come forward and declare the undisclosed income and pay tax, surcharge and penalty totalling in all to forty-five per cent of such undisclosed income declared.

A declaration under the Scheme may be made in respect of any income or income in the form of investment in any asset located in India and acquired from income chargeable to tax under the Income-tax Act for any assessment year prior to the assessment year 2017-18 for which the declarant had, either failed to furnish a return under section 139 of the Income-tax Act, or failed to disclose such income in a return furnished before the date of commencement of the Scheme, or such income had escaped assessment by reason of the omission or failure on the part of such person to make a return under the Income-tax Act or to disclose fully and truly all material facts necessary for the assessment or otherwise.

Where the income chargeable to tax is declared in the form of investment in any asset, the fair market value of such asset as on 1st June, 2016 computed in accordance with Rule 3 of the Income Declaration Scheme Rules, 2016 shall be deemed to be the undisclosed income.

CBDT Circular No. 16/2016., Dated: May 20, 2016

Income Declaration Scheme, 2016 - Q&A

THE CBDT has issued a Circular in the form of questions and answers on the Income Declaration Scheme, 2016. Some of the clarifications:

1. The declarant will be liable for capital gains under the Income-tax Act on sale of declared asset in future.

2. The declarant will not be eligible for declaration under the Scheme where the undisclosed income relates to the assessment year where a notice under section 142, 143(2), 148, 153A or 153C of the Income-tax Act has been issued and served on the declarant on or before 31st day of May, 2016.  

3. Where investment in any asset is partly from an income which has been assessed to tax, the undisclosed income represented in form of such asset will be the fair market value of the asset determined in accordance with sub-rule (1) of rule 3 as reduced by an amount which bears to the value of the asset as on the 1.6.2016, the same proportion as the assessed income bears to the total cost of the asset.

4. The declarant is not entitled to re-open any assessment or reassessment made under the Income-tax Act. Therefore, he is not entitled to avail the tax compliance in respect of such income.

5. A person is not eligible to make a declaration under the Scheme if a search has been initiated and the time for issuance of notice under section 153A has not expired, even if such notice for the relevant assessment year has not been issued.

6. It is expected that one should declare all his undisclosed income.

7. After the declaration is made the Principal Commissioner/ Commissioner will enquire whether any proceeding under section 142(1)/143(2)/148/153A/153C is pending for the assessment year for which declaration has been made. Apart from this no other enquiry will be conducted by him at the time of declaration.

8. The Scheme incorporates the provisions of section 138 of the Income-tax Act relating to disclosure of information in respect of assessees. Therefore, the information in respect of declaration made is confidential as in the case of return of income filed by assessees.

CBDT Circular No. 17/2016., Dated: May 20, 2016

Until Tomorrow with more DDT

Have a nice day.

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