TIOL-DDT 2856
30 05 2016
Monday  

THE CBEC seems to have decided that Krishi Kalyan Cess is to be collected on all services.

Section 161(2) of the Finance Act 2016, stipulates,

There shall be levied and collected in accordance with the provisions of this Chapter, a cess to be called the Krishi Kalyan Cess, as service tax on all or any of the taxable services at the rate of 0.5 per cent. on the value of such services for the purposes of financing and promoting initiatives to improve agriculture or for any other purpose relating thereto .

If I provide five services, should I pay KKC on all the five services or any of the five services and who will decide that? The Act does not specify as to who will decide whether the cess is on all services or any of the services.

For now, CBEC seems to have decided that it has the power to decide this and so has decided that the cess will be on all services. Board has issued several notifications relating to KKC.

CENVAT Credit Rules Amended : - Notification No. 28/2016-Central Excise (N.T.), Dated: May 26, 2016

1. New Rule 3(1a): Cenvat Credit of Krishi Kalyan Cess   allowed.

2. New proviso (tenth) to Rule 3(4): Cenvat credit other than KKC credit cannot be used for paying KKC.

3. New Clause 3(7)(d): Cenvat credit of KKC Cess can be used only for payment of KKC Cess.

Reverse Charge to apply to KKC: Notification No. 27/2016-Service Tax, Dated: May 26, 2016

Notification No. 30/2012 - Service Tax, dated the 20th June, 2012, shall be applicable mutatis mutandis for the purposes of Krishi Kalyan Cess.

Exempted Services exempted from KKC also: Notification No. 28/2016-Service Tax, Dated: May 26, 2016

1. Taxable services which are exempted from the whole of service tax by a notification or special order or otherwise not leviable to service tax under section 66B of the Finance Act, 1994, are exempted from KKC.

2. KKC payable only on the abated value as per Notification No. 26/2012-Service Tax, dated 20th June, 2012.

3. Value of taxable services for the purposes of the Krishi Kalyan Cess shall be the value as determined in accordance with the Service Tax (Determination of Value) Rules, 2006.

Export Rebate allowed on KKC: Notification No. 29/2016-Service Tax, Dated: May 26, 2016

Krishi Kalyan Cess is included in the definition of "service tax and cess" for the purpose of granting rebate for exported services under Notification No. 39/2012- Service Tax, dated the 20th June, 2012.

Services used in SEZ - Exemption from KKC: Notification No. 30/2016-Service Tax, Dated: May 26, 2016

Krishi Kalyan Cess is included in the notification No. 12/2013 dated 1.7.2013 granting exemption to services used in SEZs. A minor error in the Notification is also corrected.

Service Tax Rules - KKC included: Notification No. 31/2016-Service Tax, Dated: May 26, 2016

A new sub-rule 7D is added to Rule 6 - Payment of Service Tax.

Today we are carrying an article by Advocate Monarch Bhatt on KKC. Please see Krishi Kalyan Cess - yet another Cess! in ST Se GST Tak.

Anti Dumping Duty -Re-imposed - No Resurrection

ANTI-dumping duty on "Coumarin":  The anti dumping duty on Coumarin, originating in, or exported from, People's Republic of China, imposed vide notification No. 12/2012 -Customs (ADD), dated the 8th February, 2012, expired on 23.03.2015. This was extended till 22nd day of March, 2016 by Notification No. 08/2015-Customs (ADD), dated April 07, 2015 - after expiry. This again expired on 22 nd March 2016 and they forgot to extend it. They have now re-imposed the duty, but true to the Government's new policy, there is no retrospective imposition.

Notification No. 20/2016-Customs (ADD)., Dated: May 27, 2016

FTP - Import of Pepper - DGFT Allocates 2500 MTs

DGFT has allocated 2498 MTs Black Pepper for import under the Indo-Sri Lanka Free Trade Agreement for the financial year 2016-17 among 12 Firms.

Since, no application has been received within the stipulated time i.e. 28.02.2016 for import of Vanaspati Bakery, Shortening & Margarine and Desiccated Coconut, allocation of quantity of these items could not be made.

DGFT Trade Notice No. 7/2016., Dated: May 27, 2016

FTP - Single Application for claim under MEIS for Shipments from Different EDI Ports

DGFT has amended the Handbook of Procedures of FTP 2015-20 to simplify the procedure for filing of application under MEIS Scheme for EDI Shipping Bills. Shipments from different EDI ports will not require separate applications. The ANF3A has been modified.

The amendments:

Paragraph 3.01(e): Applicant shall file separate application for each port of export in case of Non EDI Shipping bills. In case of EDI shipping bills, the applicant can file a single application containing shipping bills of different EDI ports. Accordingly, shipments from different EDI ports will not require separate applications.

Amendment in Paragraph 3.08(a) (i): Duty Credit Scrip (including splits) under MEIS shall be issued with a single port of registration which shall be any one of the EDI ports from where export is made. In case of shipments from Non EDI ports, the Duty Credit Scrip (including splits) under MEIS shall be issued with a single port of registration which shall be the port of export.

Amendment in Paragraph 3.16 (b): Port of registration for EDI enabled ports shall be any one of the ports from where export is made.

DGFT Public Notice No. 13/2015-2020 ., Dated: May 27, 2016

Income Tax - Charitable Institutions - Charitable in one year, not so in another - cancellation of registration u/s 12AA- CBDT Clarifies

SECTIONS 11 and 12 of the Income Tax Act, exempt income of charitable trusts or institutions, if such income is applied for charitable purpose and such institution is registered under section 12AA of the Act.

As per definition of "charitable purpose" under Section 2(15) of the Act it includes "advancement of any other object of general public utility" provided it does not involve carrying on of any activity in the nature of trade, commerce or business etc. for financial consideration.

The 2nd proviso to the section, introduced w.e.f 01-04-2009 vide Finance Act 2010, provides that in case where the activities of any trust or institution is of the nature of advancement of any other object of general public utility and it involves carrying on of any activity in the nature of trade, commerce or business; but the aggregate value of receipts from such commercial activities does not exceed Rs. 25,00,000/- in the previous year, the purpose of such trust/institution shall be deemed as "charitable" despite it deriving consideration from such activities.

However, if the aggregate value of these receipts exceeds the specified cut-off, the activity would no longer be considered as charitable and the income of the trust/institution would not be eligible for tax exemption in that year.

Thus an entity, pursuing advancement of object of general public utility, could be treated as a charitable institution in one year and not a charitable institution in the other year depending on the aggregate value of receipts from commercial activities.

The position remains similar when the first and second provisos of section 2(15) get substituted by the new proviso introduced w.e.f. 01-04-2016 vide Finance Act, 2015, changing the cut-off benchmark as 20% of the total receipts instead of the fixed limit of Rs.25,00,000/- as it existed earlier.

CBDT clarifies that it shall not be mandatory to cancel the registration already granted u/s 12AA to a charitable institution merely on the ground that the cut-off specified in the proviso to section 2(15) of the Act is exceeded in a particular year without there being any change in the nature of activities of the institution. If in any particular year, the specified cutoff is exceeded, the tax exemption would be denied to the institution in that year and cancellation of registration would not be mandatory unless such cancellation becomes necessary on the ground(s) prescribed under the Act.

CBDT advises the field authorities not to cancel the registration of a charitable institution granted u/s 12AA just because the proviso to section 2(15) comes into play. The process for cancellation of registration is to be initiated strictly in accordance with section 12AA(3) and 12AA(4) after carefully examining the applicability of these provisions.

CBDT Circular No. 21/2016, Dated: May 27, 2016

Krishi Kalyan Cess - Board Bungles Year

KRISHI KALYAN Cess is imposed by the Finance Act 2016, but Board seems to think otherwise.

In Circular No. 194/04/2016-ST, dated 26.05.2016, the CBEC states, "Chapter VI of the Finance Act, 2015 will come into effect from 1st June, 2016" . What the Board means is obviously ‘Finance Act 2016' and not 2015.

Advantage of technology is that the Board can retrospectively correct its mistakes with hardly anyone noticing. The Board will correct this mistake silently in their website, but all those who have downloaded it, printed it and distributed it will look guilty.

On Friday, we pointed out that there was a mistake in paragraph numbering in the same Circular, which the Board silently corrected.

Global Entry Card - US Customs Bungles

GLOBAL Entry is a U.S. Customs and Border Protection (CBP) programme that allows expedited clearance for pre-approved, low-risk travellers upon arrival in the United States. Members enter the United States through automatic kiosks at select airports.

At airports, programme members proceed to Global Entry kiosks, present their machine-readable passport or U.S. permanent resident card, place their fingerprints on the scanner for fingerprint verification and complete a customs declaration. The kiosk issues the traveller a transaction receipt and directs the traveller to baggage claim and the exit.

Travellers must be pre-approved for the Global Entry program. All applicants undergo a rigorous background check and in-person interview before enrolment.

While Global Entry's goal is to speed travellers through the process, members may still be selected for further examination when entering the United States.

But recently, it seems the Customs issued a Global Entry Pass to an American citizen, but the photo on the card was that of a Korean!

Until Tomorrow with more DDT

Have a nice day.

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