Budget 2018 Thanuja perera department of fiscal policy ministry of finance

Agenda Value Added Tax Nation Building Tax Income Tax ESC Debt Repayment Levy Cellular Tower Levy SMS Advertisement Levy Carbon Tax Luxury Tax on Motor Vehicles Excise (Ordinance) Duty Excise (Special provisions) Duty Custom Duty Cess PAL Other Fees and Charges

Value Added Tax New Exemptions Solar tracker classified under HS Code 84.79.89.50 With the objective of consolidating the number of towers used by mobile operators

Value Added Tax Removal of Exemptions Import/ import and supply of following goods Plants & Flowers Plastic Beads Yarn/Fabric Woods & Articles Dyes Glass Beads Plants & Machinery/ Industrial Racks Electronic Goods Aero planes & Parts Spectacles Camera & Projectors Watches With the objective of consolidating the number of towers used by mobile operators

Value Added Tax Removal of Exemptions 2. Sale of Condominium Housing Units VAT refund scheme for foreigners at the airports and sea ports will be implemented from 01.05.2018 VAT amendments will be effective from 01.04.2018 With the objective of consolidating the number of towers used by mobile operators

Nation Building Tax Exemptions non-motorized equipment and accessories for water sports (Kayaks, Canoes, Kite Surfing and diving) non-powered equipment and accessories for aero sports (Hang Gliding, Ballooning, dirigibles, Parachutes and Para- Gliders) gem stones for cutting and re-export purposes equipment enabling advanced technology agriculture practices, including greenhouses, poly tunnels and materials for the construction of greenhouses, by any grower NBT exemption on local Coconut Oil & Oil related products will be extended for one year With the objective of consolidating the number of towers used by mobile operators

Nation Building Tax - Removal of Exemptions Exemption on liquor will be removed NBT amendments will be effective from 01.04.2018 With the objective of consolidating the number of towers used by mobile operators

Income Tax Profits and income arising from backward integrated activities relating to agriculture will be taxed at the rate of 14% Backward integrated activities include developing fertilizer, soil management practices and storage of agricultural produce.

Economic Service Charge ESC base for imported motor vehicles will be amended as follows; i. Motor vehicles liable for Excise duty – Payable Excise Duty ii. Motor vehicles not liable for Excise duty – CIF value ESC Amendments will be effective from 01.04.2018 With the objective of consolidating the number of towers used by mobile operators

Finance Act Financial Services Debt Repayment Levy Imposed on all transactions entered in to by a Banks and Financial Institutions The tax rate is 20 cts per Rs.1,000 worth transaction (i.e., 0.02%) Levy is allowed to treat as expense for income tax purpose It is expected that this tax will be similar to the financial transaction levy proposed in the last budget. The levy will be charged on total cash transactions and should be paid by the financial institutions. Loan to value ratio for the electric buses, three wheelers, domestically assembled electric three wheelers, cars and buses will be revised to 90/10.

Finance Act Telecommunication Industry Cellular Tower Levy Imposed on Mobile Tower Operators Rate is Rs. 200,000 per month per tower SMS Advertising Levy On bulk SMS advertisements Rate is 25 cents per SMS Payable by the advertiser With the objective of consolidating the number of towers used by mobile operators

Finance Act Automobile Carbon Tax Electric cars are exempted Type of vehicle Less than 05 years 5 to 10 years Over 10 years Hybrid (Petrol/Diesel) 25 Cts per cm3 50 Cts per cm3 Rs.1.00 per cm3 Fuel (Petrol/Diesel) Rs.1.50 per cm3 Passenger bus Rs.1,000/- Rs.2,000/- Rs.3,000/- With the objective of consolidating the number of towers used by mobile operators

Finance Act Automobile 2. Luxury Tax One-time payment luxury tax will be introduced in lieu of the present system of payment over 7 years The present system will be continued for the vehicles already registered Tax depends on the band of engine capacity or motor power of the vehicle With the objective of consolidating the number of towers used by mobile operators

   Vehicle Type Super Luxury (Rs.) Luxury Semi- Luxury Dual purpose (Petrol/diesel) 2200cm3< 250,000 Motor Car Petrol 1800cm3 < x ≤ 2500 cm3 Diesel 2200cm3 < x ≤ 3000 cm3 Electric 200 kW < x ≤ 300 kw 500,000 Petrol 2500cm3 < x ≤ 3500 cm3 Diesel 3000cm3 < x ≤ 4000 cm3 Electric 300 kW < x ≤ 400 kw 1,000,000 Petrol 3500cm3 < Diesel 4000cm3 < Electric 500 kW < 2,000,000

Excise Duty under Excise Ordinance Liquor Alcohol volume based Excise Duty depending on the type of liquor is introduced as follows: Hard liquor - Rs. 3,300/- per litre of alcohol Beer - Rs. 2,400/- per litre of alcohol Wine - Rs. 2,400/- per litre of alcohol Non-potable alcohol Excise duty is imposed on import of non-potable alcohol at Rs.15/- per Kg With the objective of consolidating the number of towers used by mobile operators

Excise Duty under Excise Ordinance Raw material for manufacturing ethanol Excise Duty is imposed on raw materials used for manufacturing ethanol Rate of liquor license fee and the procedure for issuance of new liquor license will be simplified (w.e.f 01.01.2018) Type of raw material Proposed Duty (Rs.) Toddy Rs.05/- per litre Molasses/Maize/Rice/Fruits Rs.10/- per Kg With the objective of consolidating the number of towers used by mobile operators

Excise (Special Provisions) Duty Canned Beer Excise (Special Provisions) Duty applicable on canned beer will be removed Beverages with added sugar Excise duty based on the quantum of sugar contained is introduced for the beverages with added sugar Rate is 50cts per gram of sugar

Excise (Special Provisions) Duty Plastic resin Excise duty on plastic resin is introduced at Rs.10/kg This duty will be applicable for items classified under the HS Codes 3901.10, 3901.20, 3902.10, 3903.11 and 3904.10

Excise (Special Provisions) Duty Motor Vehicle Ad-valorem rate is removed Duty on electric vehicles is reduced and calculate on the power of the engine (kw) Tax on a three-wheeler is increased by Rs.50,000/- Tax concession on permit vehicle is defined in Rupee value and NOT as percentage of duty

Excise (Special Provisions) Duty Motor Vehicle Duty is revised for off-road electric sports vehicles classified under HS Code 8703.10.11, 8703.10.19, 8703.10.21, 8703.10.29

Motor Vehicle (Petrol/ Petrol Hybrid) Engine capacity Petrol fuel (Rs. Per cm3) Petrol hybrid ≤ 1000cm3 1,750 1,250 1000cm3 < x ≤ 1300 cm3 2,750 2,000 1300cm3 < x ≤ 1500 cm3 3,250 2,500 1500cm3 < x ≤ 1600 cm3 4,000 3,000 1600cm3 < x ≤ 1800 cm3 5,000 4,500 1800cm3 < x ≤ 2000 cm3 6,000 2000cm3 < x ≤ 2500 cm3 7,000 2500cm3 < x ≤ 2750 cm3 8,000 2750cm3 < x ≤ 3000 cm3 9,000 3000cm3 < x ≤ 4000 cm3 10,000 4000 cm3< 11,000 10,00

Motor Vehicle (Diesel/ Dieasel Hybrid) Engine capacity Diesel fuel (Rs. Per cm3) Diesel hybrid ≤ 1500cm3 4,000 3,000 1500cm3 < x ≤ 1600 cm3 5,000 1600cm3 < x ≤ 1800 cm3 6,000 1800cm3 < x ≤ 2000 cm3 7,000 2000cm3 < x ≤ 2500 cm3 8,000 2500cm3 < x ≤ 2750 cm3 9,000 2750cm3 < x ≤ 3000 cm3 10,000 3000cm3 < x ≤ 4000 cm3 11,000 4000 cm3< 12,000

Electric Vehicle Motor power Unregistered (brand new) vehicle (Rs. Per kw) Used vehicle ≤ 50 Kw 7,500 15,000 50Kw < x ≤ 100 Kw 12,500 25,000 100 Kw < x ≤ 200 Kw 40,000 200 Kw 55,000

Three Wheeler i. Petrol - Rs.2,100 per cm3 ii. Diesel - Rs.1,250 per cm3 iii. Electric  Unregistered (brand new) - Rs.7,500 per Kw Registered (used) - Rs.10,000 per Kw

Vehicle Permit for Public Sector Employees Upper ceiling of excise duty concession of vehicle permits is defined in rupee value without changing the existing concession rate Upper ceiling of CIF value of imported vehicles is removed Restriction on transferability is removed

Custom Import Duty New Exemptions Crust (semi processed) leather for further processing (Tanning Industry) Supply of raw materials for leather products industry. Machinery, equipment, accessories and raw materials or intermediate materials, to be used only for manufacturing of biodegradable packaging products and materials.

CESS Duty Cess to be removed on 253 items facilitating the emerging sectors namely, tourism, value adding industries and other industries. Cess to be revised on 22 items facilitating the availability of goods for value addition and consumption purposes.

Ports and Airports Development levy Exemptions Non-motorized equipment and accessories for water sports (Kayaks, Canoes, Kite Surfing and diving) Non-powered equipment and accessories for aero sports (Hang Gliding, Ballooning, dirigibles, Parachutes and Para-Gliders) Machinery and equipment including solar panels and, storage batteries which will be imported for the establishment of solar charging stations. upfront payment on the sale of yachts built by BOI companies to the local BOI charter companies,

Other Fees and Charges The rates of fees and charges of government agencies which have not been revised in last 03 years will be increased by 15%

Land (Restriction on Alienation) Act Restriction on land ownership applicable for foreign companies will be removed for PLCs Foreigners will be permitted to own the condominium units below the 4th floor

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