SECTION 30 OF KVAT - OMITTED

The Karnataka VAT (Amendment) Act, 2012 has omitted Section 30 of Karnataka VAT Act w.e.f. 1.4.2012. The effect of the said omission that a dealer can no more issue credit notes or debit notes altering his sales turnover. The amendment has been brought to nullify the judgement of Karnataka High Court in re Reliance Industries case wherein the Honourable High Court has clearly upheld that a dealer can give trade discount subsequent to issue of sales Invoice by way of issue of credit note which can have the effect of reducing the taxable turnover under the Act. 

The effect of the said amendment is that trade discount can now be given by the dealer in the sales invoice only at the time of sale as laid down in Rule 3(2) of Karnataka VAT Rules. Such discounts can be given subsequent to issue of sales invoice also but the same shall not have effect of reducing the taxable turnover i.e., the selling dealer shall be not be entitled to vat credit in respect of such trade discount given. 

Since the entire section has been omitted, a question now arises that if there any is a post sale event which has effect of reduction in sales turnover, how the same needs to be tackled? For Example, In case of sale of goods CIF, if the quantity or quality of goods received by the buyer is not as per the sale contract, then it shall have the effect of reduction of Invoice Price and must, therefore, result in reduction of corresponding VAT Liability also. But the same cannot happen pursuant to omission of Section 30 since it was the only provision which enabled the adjustment in taxable sales turnover pursuant to events arising after sale. There are many commodities whose prices fluctuates on daily basis. In such cases, it is not possible for the selling dealer to guard the effect of downward fluctuation in prices without issuing debit notes or credit notes. 

The question remaining unanswered is as to how a dealer will be able to save loss of VAT on such transactions which were earlier allowed under section 30? While the Act provides that if there is any upward revision in price pursuant to post sale event, the same need to be brought within the purview of taxable turnover by issue of supplementary invoice but the vice versa is not true... the Government do not intend to pass on the tax benefit of reduction in price to the consumers.

This amendment is bound to be questioned before the court of law as to its validity and till then more litigations and harrassments are expected on the said issue until the same is settled by Judiciary or the Government.

RATE OF SERVICE TAX WEF 1.4.12- CLARIFICATION

Circular No. 158/9/ 2012 – ST

F.No 354/69/2012- TRU

Government of India

Ministry of Finance

Department of Revenue

Central Board of Excise and Customs

Tax Research Unit

Room No 146, North Block, New Delhi

Dated : 8^th May 2012

To

Chief Commissioner of Customs and Central Excise (All)

Chief Commissioner of Central Excise & Service Tax (All)

Director General of Service Tax

Director General of Central Excise Intelligence

Director General of Audit

Commissioner of Customs and Central Excise (All)

Commissioner of Central Excise and Service Tax (All)

Commissioner of Service Tax (All)

Madam/Sir,

Subject: - Clarification on Rate of Tax - regarding.

    

  

1.             The rate of service tax has been restored to 12% w.e.f. 1^st April 2012.  Representations have been received requesting clarification on the rate of tax applicable wherein invoices were raised before 1^st April 2012 and the payments shall be after 1^st April 2012. Clarification has been requested in case of the 8 specified services provided by individuals or proprietary firms or partnership firms, to which Rule 7 of Point of Taxation Rules 2011 was applicable and services on which tax is paid under reverse charge.

2.             The rate of service tax prevalent on the date when the point of taxation occurs is rate of service tax applicable on any taxable service. In case of the 8 specified services and services wherein tax is required to be paid on reverse charge by the service receiver the point of taxation is the date of payment. Circular No 154/5/2012 – ST dated 28^th March 2012 has also clarified the same. Thus in case of such 8 specified services provided by individuals or proprietary firms or partnership firms and in case of services wherein tax is required to be paid on reverse charge by the service receiver, if the payment is received or made, as the case maybe, on or after 1^st April 2012, the service tax needs to be paid @12%.

3.             The invoices issued before 1^st April 2012 may reflect the previous rate of tax (10% and cess). In case of need, supplementary invoices may be issued to reflect the new rate of tax (12% and cess) and recover the differential amount. In case of reverse charge the service receiver pays the tax and takes the credit on the basis of the tax payment challan. Cenvat credit can be availed on such supplementary invoices and tax payment challans, subject to other restrictions and conditions as provided in the Cenvat Credit Rules 2004.

4.             Trade Notice/Public Notice may be issued to the field formations accordingly.

5.             Please acknowledge the receipt of this circular. Hindi version to follow.

(Dr. Shobhit Jain)

OSD, TRU

Fax: 011-23093037

Service Tax Liability both for Receiver and Provider

Government of India

Ministry of Finance

(Department of Revenue)

New Delhi, the 17^th March 2012

Notification No.15/2012-Service Tax

            GSR. (E).—In exercise of the powers conferred by sub-section (2) of section 68 of the Finance Act, 1994 (32 of 1994), and in supersession of the notification of the Government of India in the Ministry of Finance (Department of Revenue), No. 36/2004-Service Tax, dated the  31^st  December, 2004, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R 849 (E), dated the 31^st December, 2004, except as respects things done or omitted to be done before such supersession, the Central Government hereby notifies the following taxable services and the extent of service tax payable thereon by the person liable to pay service tax for the purposes of the said sub-section, namely:—

I.    The taxable services,—

(A)  (i)   provided or agreed to be provided  by an insurance agent to any person carrying on the insurance business;

(ii)   provided or agreed to be provided  by a goods transport agency in respect of  transportation  of goods by road, where the consignor or the consignee  is,—

(a)  any factory registered under or governed by the Factories Act, 1948 (63 of 1948);

(b)  any society registered under the Societies Registration Act, 1860 (21 of 1860) or under any other law for the time being in force in any part of India;

(c)  any co-operative society established by or under any law;

(d)  any dealer of excisable goods, who is registered under the Central Excise Act, 1944 (1 of 1944) or the rules made thereunder;

(e)  any body corporate established, by or under any law; or

(f)  any partnership firm whether registered or not under any law including association of persons;

(iii) provided or agreed to be provided by way of sponsorship,  to anybody corporate or partnership firm located in the taxable territory;

(iv) provided or agreed to be provided by an arbitral tribunal or an individual advocate or the support service provided or agreed to be provided by Government or local authority, to any business entity located in the taxable territory;

 (v) provided or agreed to be provided by way of renting or hiring any motor vehicle designed to carry passenger or supply of manpower for any purpose or  works contract by any individual, Hindu Undivided Family or  proprietary firm or  partnership firm, whether registered or not, including association of persons;  located in the taxable territory to any company formed or registered under the Companies Act, 1956 (1 of  1956) or a business entity registered as body corporate located in the taxable territory;

(B) in relation to any taxable service provided or agreed to be provided by any person who is located in a non-taxable territory and received by any person located in the taxable territory;

(II) the extent of service tax payable by the person who receives the service and the person who provides the service for the taxable services specified in (I) shall be as specified in the following Table, namely:-

Table

Sl.No.	Description of a service	Percentage of  service tax payable by the person providing service	Percentage of service tax payable by the person receiving the service
1	in respect of  services  provided or agreed to be provided  by an insurance agent to any person carrying on insurance business	Nil	100%
2	in respect of  services  provided or agreed to be provided  by a goods transport agency in respect of  transportation  of goods by road	Nil	100%
3	in respect of  services  provided or agreed to be provided  by way of sponsorship	Nil	100%
4	in respect of  services  provided or agreed to be provided  by an arbitral tribunal	Nil	100%
5	in respect of  services  provided or agreed to be provided  by individual advocate	Nil	100%
6	in respect of  services  provided or agreed to be provided  by way of support service by Government or local authority	Nil	100%
7	(a)   in respect of  services  provided or agreed to be provided  by way of renting or hiring any motor vehicle designed to carry passenger on abated value. (b)   in respect of  services  provided or agreed to be provided  by way of renting or hiring any motor vehicle designed to carry passenger on non abated value.	Nil 60%	100 % 40%
8.	in respect of  services  provided or agreed to be provided  by way of supply of manpower for any purpose	25%	75 %
9.	in respect of  services  provided or agreed to be provided  by way of works contract	50%	50%
10	in respect of  any taxable services  provided or agreed to be provided  by any person who is located in a non-taxable territory and received by any person located in the taxable territory	Nil	100%

2. Person who pays or is liable to pay freight either himself or through his agent for the transportation of goods by road in goods carriage, located in the taxable territory shall be treated as the person who receives the service for the purpose of this notification.

3. This notification shall come into force from the date on which section 66B of the Finance Act, 1994 comes into effect.

 [F.No. 334/1/2012- TRU]

(Samar Nanda)

Under Secretary to the Government of India

BUDGET 2011 - INCOME TAX PERSPECTIVE

Section /Schedule	Head	Amendment/New Provision	Effective date
Part III to Schedule I	Advance taxes & TDS u/s 192	Advance taxes for the FY 2011-12 and TDS u/s 192 from salary shall be made at the following rates: ·   In case of Individuals, HUF, AOP/BOI & Artificial juridical person: Slab of Income Rate of Income tax Upto Rs. 180,000# Nil Rs. 180,001 to Rs. 500,000@   10% RS. 500,001 to Rs. 800,000 20% Rs. 800,001 & above 30% Surcharge irrespective of the total income Nil # In case of individual being woman resident in India and below the age of 60 years at any time during the PY, the basis exemption limit is Rs. 190,000. #In case of individual, being resident in India, who is age of 60 years [Senior Citizen Age Criteria Reduced from 65 Years to 60 Years] or more  but less than 80 Years at any time during the PY, the basic exemption limit is Rs. 2,50,000. @ In case of individual, being resident in India, who is age of 80 years or more at any time during the PY, the basic exemption limit is Rs. 5,00,000. In case of Partnership firms [Including LLP], the rate of tax shall be 30%. Surcharge shall be NIL. In case of companies, the rate of taxes shall be same as specified in the Finance Act 2010. Further, Surcharge has been reduced to 5% in case of domestic companies [and reduced to 2% in case of non domestic companies continues], if total income of the company exceeds Rs. One crore. Education cess and SHEC shall be continued to be levied in all cases.	1-4-2011
2(15)	Definition of Charitable purpose	The term ‘Charitable Purpose” has been amended as follows: “advancement of any other object of general public utility” included in definition is not a charitable purpose if the activity involves carrying of trade, commerce or business or rendering any service in relation thereto for consideration irrespective of nature of use or application, or retention of income from such activity. However, if total receipts from aforesaid activity do not exceed Rs. 25 Lakhs [Earlier Rs. 10 Lakhs] in the PY, the said activity shall continue to be charitable in nature.	1-4-2011
10(45)	Exemption from Perquisities	Notified Special Allowances and Perquisites received by Serving or retired chairman and members of the Union Public Service Commission	Retrospective 1-4-07
10(47), 115A and 194LB	Exemption of Infra Debt Fund	Income of Notified Infrastructure Debt Funds shall be Exempt from tax subject to following Conditions: # It shall file its Return of Income. # Interest received by Non Resident shall be taxed u/s 115A @ 5% of Gross Amount #TDS shall be made u/s 194LB @ 5% on interest paid to non resident.	1-6-2011
35(2AA)	Contribution to approved institutions for scientific research	Deduction eligibility has been increased from 175% to 200%	1-4-2011
35AD	Investment linked deduction	100% deduction shall be allowed in respect of any capital expenditure [other than on land, goodwill or financial instrument] incurred for the purposes of specified business: The list of specified business has been extended to include : Production of Fertilizer in India Developing and Building Affordable Housing Project under notified schemes. Loss from business of Hotels & hospitals specified u/s 35AD shall be allowed to be set off u/s 73A against profit of another specified business whether or not claiming deduction u/s 35AD.	1-4-2011
36	Deduction  of Contribution to NPS	Contribution not exceeding 10% of salary of employee made to NPS by Employer on account of Employee allowed as deduction	1-4-2011
80CCE	Deduction above Rs. 1 Lakh	Contribution made by Central Government or Employer to pension scheme specified u/s 80CCD shall be excluded from the limit of Rs. 1,00,000/- specified for 80C, 80CCC and 80CCD	1-4-2011
80CCF	Deduction in respect of investment in LT Infra Bonds	Deduction is allowed to Individual & HUF only in respect of investment in notified long term infrastructure bonds to the extent of Rs. 20,000/-. This deduction is over and above the limit of Rs. 1,00,000/- specified u/s 80CCE. Deduction Extended for further period of One Year.	1-4-2011
80IA(4)	Deduction for Power Generating Units	Terminal date for setting up of generation or distribution of power or transmission or distribution thereof or undertaking substantial renovation or modernization of existing network has been extended to 31.3.2012	1-4-2011
115BBD	Rate of Tax for Dividend	Dividend received by Indian Company from its Foreign Subsdiary Company shall be taxable @ 15% of Gross Amount without allowing any deduction in respect thereof	1-4-2011
115JB	MAT	-         Rate of MAT is increase to 18.5% of Book Profits. MAT to be made applicable to developer of SEZ and Units in SEZs  in the Income Tax Act as well as SEZ Act	1-4-2011
115O	Dividend Distribution Tax	Exemption from DDT to SEZ Developers and Units in SEZ has been removed	1-6-2011
115R(2)	Tax on Distribution by MF	Mutual Fund shall be liable to pay additional income tax @ 30% on distributed income [from Money Market Mutual Funs or Liquid Fund or any debt fund] , if recipient is any person other than individual or HUF.	1-6-2011
139(1C)	Filing of Return of Income	Salaried persons not having any other source of income and whose tax liability has been discharged by way of TDS u/s 192, are not required to file their return of income.	1-6-2011
XII BA	AMT	-         Alternate Minimum Tax [AMT] @ 18.5% to be levied on Adjusted Total Income of LLP. -         Adjusted Total Income shall be Total Income of the LLP before giving effect to provisions of Chapter XII BA and Deduction u/c VI-A - deduction relating to incomes and deduction u/s 10AA. -         Tax credit shall be allowed in respect of AMT Paid for a period of 10 Years.	1-4-2011