Southern India Regional Council of
The Institute of Chartered Accountants Of India
(Setup by an Act of Parliament)

Professional Updates- August 2017

 

SESHADRI NADAN, B.com, FCA DISA (ICAI) CITY LIGHTS SHOPPING COMPLEX Chartered Accountant

VADAKKENCHERRY – 678 683
PALAKKAD (DIST), KERALA
PHONE: 04922-255528
MOBILE: 92497 17557
seshadri.itax@rediffmail.com
seshadrinadan@icai.org


CLARIFICATIONS ON RATE OF TAX LEVIABLE UNDER KVAT ACT, 2003: -

  • ORDER No.C3/5133/13/CT DATED 03/07/2017: The commodities hydrogen, nitrogen, oxygen and naphtha would be taxable @5% under entries 78(1), 78(4), 78(5)(b) and 92A of the List A to the Third schedule and carbon monoxide, mixture of carbon monoxide and hydrogen (synthesis gas), steam and natural gas would be taxable at the rate of 14.5% under entry 103 of SRO No. 82/2006.
  • ORDER No.CT/4337/2016-C3 DATED 04/07/2017: ‘Medicated toilet soap’ is covered under Entry 27(1)(a) of the SRO No. 82/2006, bearing HSN Code 3401.11.10 and hence taxable at 14.5% (entry 27(1)(a) of the SRO No. 82/2006).
  • ORDER No.C3/11481/13/CT DATED 03/07/2017: Entry 38 of the 3rd schedule includes only the edible grade of vegetable oils. Non-edible grade of vegetable oils would come under entry 138 of the 3rd schedule. Hence, ‘lamp oil’ (produced by adding 0.01% by weight of sugandha draviyas to edible palm oil) would come under entry 138(4) of Schedule III of KVAT Act with HSN 1511.90.90, and, hence, taxable at 5%.
  • ORDER No.CT/3177/16-C3 DATED 12/04/2017: Issue raised was whether sale of pre-recorded compact discs (after recording the blank audio cassettes) would be covered under the category of “dealer effecting first taxable sales of goods within the state” and recording of audio cassettes on duplicating music system amounts to manufacture. The order clarifies that sale of pre-recorded compact discs are covered under the category of “dealer effecting first taxable sale of goods within the State” for the purpose of sec. 6(5) and that recording of audio cassettes on duplicating music system amounts to “manufacture”.


Professional Updates- July 2017

Kerala VAT

C.SESHADRI NADAN, B.com, FCA DISA (ICAI)
Chartered Accountant
CITY LIGHTS SHOPPING COMPLEX
VADAKKENCHERRY – 678 683
PALAKKAD (DIST), KERALA
PHONE: 04922-255528
MOBILE: 92497 17557

seshadri.itax@rediffmail.com
seshadrinadan@icai.org

  • ORDER No.C3/40710/10/CT DATED 22/02/2017 of Authority for Clarification deals with rate of tax for the commodity “Bakery Shortening (Inter Esterified Vegetable Oil)”. It was held that HSN Code 1517.90 does not appear in any of the schedules to the Act and the commodity is classified under the HSN 1517.90 by the Director General of Foreign Trade, and also by the Hon’ble Customs, Excise & Service Tax Appellate Tribunal, New Delhi in the case of M/s. Shree Gopal Vanaspati Ltd. v/s. C.C.(ICD), New Delhi. Hence, it was clarified that by virtue of Entry 103 of SRO No. 82/2006, applicable rate of tax would be 12.5%/13.5%/14.5%.
  • ORDER No.C3/11060/13/CT DATED 29/03/2017 of the Authority for Clarification holds that ‘Blended Edible Vegetable Oil’ would come under entry 38(19) (c) of the third schedule to the KVAT Act, and, hence, would be taxable at 5%.
  • ORDER No. CT/1117/2017-C3 DATED 25/03/2017: The applicant, a dealer situated in the State of West Bengal, was awarded a works contract by the Southern Railway, Thiruvananthapuram for the renewal of Corroded Steel Channel Sleepers. The work involved manufacturing, supplying and fixing of BG galvanized steel channel sleepers along with all fittings and fixtures. The materials were moved from the factory at Hawrah after issue of a certificate, after inspection, by Rites Ltd. The issue considered by the Authority for Clarification was whether the above work is an interstate works contract and whether the provisions of TDS under the KVAT Act is applicable in this case. It was clarified by the Authority that the transaction involved was an interstate works contract for which the applicant is not liable to pay any tax under the KVAT Act.

Professional Updates- April 2017

    • HIGHLIGHTS OF FINANCE BILL 2017:
  1. A. If arrears of tax under KAIT ACT, KVAT Act and CST Act for 2005-06 to 2010-11 is remitted, interest and 70% of the penalty and interest on penalty, will be waived.

  2. B. Presumptive Tax Dealers: Total turnover will be calculated by adding a gross profit of 5% of unaccounted purchases along with the sales turnover declared as per return. If total turnover so calculated is below the limit u/s. 6 (5), tax of 0.5% percent is to be paid. If turnover is above the limit but below 1 Crores, rate of tax is 1% and tax of 2% applies to turnover above 1 crore. Option is to be filed before the assessing authority on or before 30th June, 2017. This scheme is also applicable for those dealers who have opted amnesty scheme for 2016-17 but had defaulted payments. There will be no other changes in the conditions prescribed under the amnesty scheme for 2016-17.

  3. C. Works Contract: - Disputes in works like installation of kitchen cabinet, aluminium fabrication, air-conditioning plant is to be settled if compounded tax was paid by the contractors, provided that purchases were from within the State and contractors pay 2% tax for total contract amount over and above compounded tax already paid. This scheme applies for assessments up to the financial year 2014-15.

  4. D. Rate of tax for solar energy devices and spare parts is levied at 14.5% for installation of such devices, considering it as works contract.

  5. E. Packing materials used in exporting goods will be exempted from tax, subject to conditions, for the period from 2005-06 up to 31/03/2016. Form H to be filed. Tax already paid during this period will not be refunded.

  6. F. Simplification of Procedures: - Revisions u/s 57 pending with Deputy Commissioners and second revisions u/s 59 pending with the Commissioner shall stand transferred to the first Appellate Authority and to the Tribunal respectively w.e.f. 01.04.2017.

  7. G. The time limit for assessments, including completion of assessments under Sec.24, 25 of the KVAT Act shall be extended by a year.


Professional Updates- March 2017

Kerala VAT

  • CIRCULAR No. 02 / 2017: By S.R.O. No. 796/2014 dtd.20-12-2014, natural rubber and its variants were exempted from the tax payable under the Kerala Value Added Tax Act, 2003 for the period from 20th day of December, 2014 to 31st March, 2015. The Government has now clarified that as the notification was not introduced in the Assembly, it has become infructuous. Hence, the above Circular is issued by the Commissioner directing all assessing authorities to assess the turnover of said commodities for the period from 20-12-2014 to 31-03-2015.
  • CIRCULAR NO.03 I 2017: The time limit for filing Form No.13 and Form No.13A by the companies for the assessment year 2015-16 was 31st January, 2017 and for other dealers 31st December, 2016. By the above circular, time limit for filing Form 13 and Form 13A is extended upto 31st March 2017 for all category of dealers. This extension is based on the representation of All Kerala Chartered Accountants' Association.
  • CIRCULAR No.04 I 2017: Commissioner has directed that steps be taken to ensure that all pending annual statement of accounts and closing stock inventory are filed by dealers by 1st March 2017. All Dy. Commissioners are instructed to ensure that all statutory documents are filed by the dealers for the financial year 2011-12 as these will become time bar. In case any dealer fails to file the above documents within the said time limit, the Dy. Commissioner may take appropriate actions to ensure that dealers file all the statutory documents.