The Hindu Business Line : Details of duty changes

Financial Daily from THE HINDU group of publications Friday, Jan 09, 2004

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Industry & Economy - Budget

Details of duty changes

INDIRECT TAXES

The Government has decided to make certain changes, which take effect from January 9, 2004 in the rates of indirect taxes.

Salient features of the changes are given below:

I. Overall duty structure (Customs)

1. Peak rate of customs duty on non-agricultural goods is being reduced from 25 per cent to 20 per cent.

2. Special additional duty of customs (SAD) of four per cent is being abolished.

3. Customs duty on project imports with investment of at least Rs 5 crore, in plant and machinery, is being reduced from 25 per cent to 10 per cent.

4.Customs duty on coal is being reduced from 25 per cent to 15 per cent.

5.Customs duty on nickel and articles thereof is being reduced from 10 per cent to five per cent.

II. Power sector

1. Customs duty on power transmission and distribution projects is being reduced from 25 per cent to 10 per cent.

2. Customs duty on electricity meters is being reduced from 25 per cent to 15 per cent.

III. Information technology (IT)/Electronics

1. Customs duty on Information Technology Agreement (ITA) bound items is being reduced as per our commitments.

2. Customs duty on specified raw materials/inputs used for manufacture of electronic components or optical fibres/cables is being reduced from 15 per cent/five per cent to five per cent/nil.

3. Customs duty on specified capital goods used for manufacture of electronic goods is being reduced from 15 per cent/10 per cent to nil.

4. Specified infrastructure equipment for basic/cellular/Internet, V-Sat, radio paging and public mobile radio trunked services and parts of such equipments are being exempted from basic customs duty.

5. Customs duty on cellphones is being reduced from 10 per cent to five per cent.

6. Excise duty on computers is being reduced from 16 per cent to eight per cent.

7. Recorded Video Compact Discs (VCDs) and Digital Video Discs (DVDs) are being exempted from excise duty.

IV. Health

1. Customs duty on specified life-saving bulk drugs, formulations, and medical equipments is being reduced to five per cent. These items are also being exempt from countervailing duty (CVD) by way of excise duty exemption.

2. Customs duty on parts of artificial limbs and specified rehabilitation aids is being reduced to five per cent. These items are also being exempted from CVD by way of excise duty exemption.

3. Excise duty on medical, surgical, dental and veterinary furniture is being reduced from 16 per cent to eight per cent.

4. Mosquito nets treated with pesticide are being exempted from excise duty.

V. Civil aviation

1. Excise duty on Aviation Turbine Fuel (ATF) is being reduced from 16 per cent to eight per cent.

2. Inland Air Travel Tax (IATT) of 15 per cent is being abolished.

3. Foreign Travel Tax (FTT) of Rs 500 per passenger is being abolished.

VI. Water supply

1. Exemption from customs and excises duty available to water supply projects for drinking purposes is being extended to water supply projects for industrial as well as agricultural purposes.

VII. Trade facilitation measures

1. Round-the-clock electronic filing of customs documents for clearance of goods, presently available in nine custom formations, is being extended to 23 custom formations.

2. Custom clearances will be based on self-assessment and selective examination.

3. Baggage rules are being liberalised:

i. Duty on six items (namely VCD/VCR, washing machines, personal computers, laptop computers, refrigerators of capacity up to 300 litres and cooking range) under Transfer of Residence are being made duty-free.

ii. Duty on 17 items under Transfer of Residence is being reduced from 30 per cent to 15 per cent.

iii. Import of cinematographic films, exposed but not developed, imported as part of baggage is being made duty-free.

iv. Quantity of alcoholic liquor/wines allowed duty-free under baggage is being increased from one litre to two litres.

v. Laptops brought as part of the baggage are being exempted from customs duty.

4. Manufactures will now be allowed to remove semi-finished goods and finished goods for further processing or testing, without payment of excise duty.

5. Electronic filing of service tax returns, presently allowed only in respect of 10 services, is being extended to all the 58 taxable services.

6. Service providers providing more than one taxable service will be allowed to take single registration and file a single return.

7. Only a simple verification will now be made for grant of registration for service tax.

DIRECT TAXES

The Government has simplified procedures under direct tax.

The new procedures are to be implemented from April 1, 2004.

The Government has decided to amend the rules and issue necessary notifications in respect of the following:

* No filing of returns for employees having salary income up to Rs 1,50,000, in whose cases the entire tax payable is deducted at source by the employer. Salary certificate furnished by employer to the Income-Tax Department to be treated as return.

* Pensioners to be exempt from the purview of one-by-six scheme, thereby exempting pensioners who do not have taxable income, from filing returns.

* For perquisite valuation, rates of interest for housing loans etc, to be reduced, to bring them in line with prevailing market rates.

* Instead of separate certificates to several deductors, there will be just one certificate from the Assessing Officer for no tax deduction at source (TDS) in case of tax exempt entities like trusts, etc.

* Infrastructure projects to be granted one time approval for purpose of exemption under Section 10 (23G) to replace the present system of seeking periodical renewals.

Notifications in this connection will issue next week and will come into force from the next financial year (April 1, 2004)

Some administrative measure are also proposed for a taxpayer friendly regime. These are:

* Furnishing of paperless income-tax returns by introduction of direct filing through Internet under digital signatures for salaried taxpayers, professionals like doctors, accountants, etc.

* Expansion of computer network to cover all 501 income-tax offices in the country by June 2004.

* Number of challan forms for payment of TDS will be reduced from four to one.

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