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Analysis of Union Budget 2012 CENVAT Credit CA. Atul Kumar Gupta.

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Presentation on theme: "Analysis of Union Budget 2012 CENVAT Credit CA. Atul Kumar Gupta."— Presentation transcript:

1 Analysis of Union Budget 2012 CENVAT Credit CA. Atul Kumar Gupta

2 CENVAT Credit CA. Atul Kumar Gupta What to avail When to avail How to avail How much to avail How to utilize Rule 2 & 3 Rule 4 Rule 9 Rule 6 & 7 Rule 3 6/3/20142

3 CENVAT Credit CA. Atul Kumar Gupta InputsCapital GoodsInput Services 6/3/20143

4 CENVAT Credit Motor Vehicles Applicable from April 01, 2012 Trucks & Lorries Cars & CabsMotorcyclesBus Specified Motor Vehicles their Bodies CA. Atul Kumar Gupta6/3/20144

5 CENVAT Credit Motor Vehicles Specified Service Providers Courier Service, Tour Operator Service, Rent-a-Cab Service, Cargo Handling Service, Transport of Goods by Road, Outdoor Caterer Service, Pandal or Samiana Service CA. Atul Kumar Gupta6/3/20145

6 CENVAT Credit Motor Vehicles As Capital Goods Specified Motor Vehicles + Other Motor Vehicles to Specified Service Providers Other Motor Vehicles to All Service Providers CA. Atul Kumar Gupta6/3/20146

7 CENVAT Credit Motor Vehicles Input Service of Rent a Cab/Hiring Specified Motor Vehicles + Other Motor Vehicles to Specified Service Providers Other Motor Vehicles to All Service Providers CA. Atul Kumar Gupta6/3/20147

8 CENVAT Credit Motor Vehicles Input Service of Repair/Insurance Specified Motor Vehicles + Other Motor Vehicles to Specified Service Providers + Manufacturer/Insurer Other Motor Vehicles to All Service Providers + Manufacturer/Insurer CA. Atul Kumar Gupta6/3/20148

9 CENVAT Credit Rules Capital goods removed after use or removed as scrape/waste Applicable from 17.03.2012 CENVAT Credit to be reversed Higher of (A) Total CENVAT Credit on Capital Good Less 2.5% CENVAT Credit for each Quarter or part from date of taking Credit (B) Duty on transaction value CA. Atul Kumar Gupta6/3/20149

10 CENVAT Credit Document Capital goods and Inputs Allowed when received in premises Delivered to Service Provider/Manufacture with Documentary Evidence CA. Atul Kumar Gupta6/3/201410

11 Refund of CENVAT Credit Rule 5 redrafted CA. Atul Kumar Gupta Refund amount = Export turnover of services Net CENVAT CreditX Total turnover 6/3/201411

12 Refund of CENVAT Credit Value of Export Service CA. Atul Kumar Gupta 2009-10 For 2010-11 2011-12 Payments received for 2010-11 + Exports completed - Advance for Exports Advance for Exports Exports to be completed 6/3/201412

13 Refund of CENVAT Credit Total turnover Export turnover of Service + Inputs removed as such not capital goods CA. Atul Kumar Gupta6/3/201413

14 CENVAT Credit Rules Standard ratio of reversal in Rule 6(3)(i) enhanced from 5% to 6% (April 01, 2012) Calculation of reversal ratio Rule 6(3)(ii) Exempted Service Turnover Total Service Turnover CA. Atul Kumar Gupta CENVAT Credit 6/3/201414

15 Value of Service CA. Atul Kumar Gupta Service taxed @ normal rate & Service taxed under abatement Value as per Section 67 Service taxed @ special rate Tax @ special rate Grossed up by Normal Rate Trading a)10% of COS or a)Sale price less COS 6/3/201415

16 Sample Profit & Loss A/c CA. Atul Kumar Gupta Commission on sale of air tickets 100 L (taxed paid on basic fare) Tour operations20 L (packaged tours) Outbound tours30 L (payment in Forex) Trading of goods50 L Commission to Sub agents70 L Cost of local tour packages purchased15 L Cost of outbound tours purchased 25 L Cost of goods purchased 48 L Overheads 50 L 6/3/201416

17 Value of Commission Income Taxable Service Commission Income100 L Basic Fare 50 L Service Tax @ 0.6% 50L X 0.6%30000 Value 30000 X 100/103 L CA. Atul Kumar Gupta6/3/201417

18 Value of Tour Operations Exempted Service Tour Operations Income 20 L Service Tax @ 10% on 75% value 20L X 75% X 10% 1.5 L Value 20 L Value of Outbound tours Taxable Service Export of Services 30 L CA. Atul Kumar Gupta6/3/201418

19 Value of Trading Income Exempted Service Trading Income 50 L Purchases 48 L Cost of Sales 45 L Opening Stock0 + Purchases48 L - Closing Stock 3 L CA. Atul Kumar Gupta6/3/201419

20 Value of Trading Income Exempted Service Higher of (a) and (b) (a)Sales less COS 50 L – 45 L5 L (b) 10% of COS 45 L X 10% 4.5 L Value5 L CA. Atul Kumar Gupta6/3/201420

21 CENVAT Credit eligible CA. Atul Kumar Gupta Commission to Sub agents70 L (35 L X 0.6%)21000 Cost of local tour packages15 L (15 L X 75% X 10%)112500 Cost of outbound tours25 LNil Cost of goods purchased 48 L Nil Overhead (50 L X 10%) 50 L500000 Total Credit521000 6/3/201421

22 How much to avail Exempted Services25 L Trading & Tour operations Taxable Services33 L Commission & Outbound Tours CENVAT Credit allowed 521000 – {25 L/(33 L + 25L) X 521000} = 296431 CA. Atul Kumar Gupta6/3/201422

23 Input Service Distributor CA. Atul Kumar Gupta Common Credit Pro rata basis Credit related to exempted unit No distribution Credit exclusively related to one unit No distribution to other units 6/3/201423

24 CENVAT Credit Rules Purchased in 2009 Credit availed by CA 10 L No tax liability till 2012 Earlier Credit to be reversed with Interest Now Credit to be reversed without Interest Applicable from 17 March 2012 Rule 14 CA. Atul Kumar Gupta6/3/201424

25 Reverse Charge Applicable from date to be Notified After enactment of Finance Bill, 2012 CA. Atul Kumar Gupta6/3/201425

26 Reverse Charge Telecommunication General Insurance Auxiliary Insurance Auxiliary Service by agent Import of Service Goods Transport Agency Service Mutual Fund Distributors Sponsorship Service EarlierNow CA. Atul Kumar Gupta6/3/201426

27 Reverse Charge by Individual Advocates Service to Business Entity TaxNil 100% CA. Atul Kumar Gupta6/3/201427

28 Reverse Charge by Arbitral Tribunal Service to Business Entity Tax Nil 100% CA. Atul Kumar Gupta6/3/201428

29 Reverse Charge by Government/ local authority Support Service to Business Entity Tax Nil 100% CA. Atul Kumar Gupta6/3/201429

30 Reverse Charge Rent a Cab Service to Body Corporate Tax (abetment) Nil 100% by Individual/ proprietary firm/HUF by Partnership firm/LLP Tax 60% 40% CA. Atul Kumar Gupta6/3/201430

31 Reverse Charge Manpower Service to Body Corporate by Individual/ proprietary firm/HUF by Partnership firm/LLP Tax 25% 75% CA. Atul Kumar Gupta6/3/201431

32 Reverse Charge Works Contract Service to Body Corporate by Individual/ proprietary firm/HUF by Partnership firm/LLP Tax 50% 50% CA. Atul Kumar Gupta6/3/201432

33 CENVAT Credit Document Credit allowed on Invoices + Challans used for payment of Tax under Reverse Charge CA. Atul Kumar Gupta6/3/201433

34 New Abatement & Valuation Scheme Applicable from date to be Notified enactment of Finance Bill, 2012 CA. Atul Kumar Gupta6/3/201434

35 New Abatement & Valuation Scheme CA. Atul Kumar Gupta Works Contract Service Composition Scheme @ 4.8% + Cess on full value Value = Gross Amount less Sale of/ Transfer in property Exemption Original work 60% Completion work 40% Land included 75% No Credit of Inputs 6/3/201435

36 New Abatement & Valuation Scheme CA. Atul Kumar Gupta Existing Abatement 90 70 NA Proposed Abatement 90 70 Financial Leasing Service 04/2006 Transport of Goods by Rail Transport of Passengers by Rail CENVAT Credit of Inputs, Capital Goods and Input Services Allowed 6/3/201436

37 New Abatement & Valuation Scheme CA. Atul Kumar Gupta Existing Abatement 40 30 70 50 Proposed Abatement 30 60 40 Convention center/Mandap + Catering Pandal + Catering Restaurant Outdoor Catering Credit of Capital Goods and Input Services Allowed Inputs (food items) not allowed 6/3/201437

38 New Abatement & Valuation Scheme CA. Atul Kumar Gupta Existing Abatement 50 NA Slabs deleted Proposed Abatement 40 60 01.04.2012 Hotels Airlines Credit of Input Services Allowed Inputs & Capital Goods not allowed 6/3/201438

39 New Abatement & Valuation Scheme CA. Atul Kumar Gupta Existing Abatement 75 60 30 25 Proposed Abatement 75 60 30 50 GTA Rent a Cab Chit Fund Goods by Vessel Credit of Capital Goods, Input Services and Inputs not allowed 6/3/201439

40 New Abatement & Valuation Scheme CA. Atul Kumar Gupta Existing Abatement 75 90 60 Proposed Abatement 75 90 60 Tour & Travel Package Tour Hotel Accommodation Unpackaged Tour Credit of Capital Goods, Input Services and Inputs not allowed 6/3/201440

41 Atul Kumar Gupta A P R A & A SSOCIATES CHARTERED ACCOUNTANTS atul@servicetax.net, 9810103611


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