Excise on fuels may go up by upto Rs 8/ltr to fight Covid-19
The government has decided to raise excise duty on petrol and diesel significantly, by upto Rs 8 per litre, to mobilise additional resources that would be required to fight the Covid-19 pandemic.
 
In amendments introduced in the Finance Bill 2020, the Finance Ministry has proposed to raise special additional excise duty on petrol to Rs 18 per litre from present Rs 10 per litre and on diesel to Rs 12 per litre from the present Rs 4 per litre. The said changes have been made by amending the eighth schedule of the Finance Act 2002.
 
It is not clear whether the entire Rs 8 per litre increase in special additional excise duty would be used as cap to raise duties upto that level or the government would notify the entire increase at one go.
 
If this happens, the retail price of petrol and diesel could shoot up by Rs 5-6 per litre as the remaining amount may be absorbed by public sector oil marketing companies who have been daily reducing the price of two petroleum products in line with global fall of oil prices.
 
Sources said that a notification with changes in duty structure on petrol and diesel may come later.
 
But for the government, a Rs 8 per litre tax would be a bonanza that would increase its annual excise collections from the sector by a whopping Rs 1,20,000 crore. This, govermment officials feel, along with savings of over $ 15-20 billion in oil import bill in FY21, will provide enough room to bring the economy back on track after Covid-19 fight.
 
Along with increase in cap/threshold on special additional excise duty, a new ceiling has also been fixed for additional excise duty (road and infrastructure cess) levied on petrol and diesel. This has also been raised by Rs 8 per litre on the two products to Rs 18 per litre.
 
But any resultant increase in retail price of the two products could have a negative impact on the economy, which is already facing a slowdown. Price rise of auto fuels could have a multiplier effect, raising prices of several essential products and services and pushing up inflation.
 
In February, the consumer price inflation has fallen to 6.58 per cent but this could begin to rise again if petrol and diesel prices are raised.
 
On March 14, the government had raised excise duty on petrol and diesel by Rs 3 per litre, the highest in the five years, taking advantage of the low global oil prices to boost its coffers. Through this increase, the centre, could gain in excess of Rs 45,000 crore of revenue for the full year.
 
The increase of Rs 8 per litre in excise duty will be the highest in the two tenures of the NDA government. It will follow the Rs 3 per litre increase in duty on March 14, and another Rs 2 per litre increase in excise/cess proposed in 2019 Union Budget. Before these increases, petrol and diesel price went for a series of nine hikes in quick succession between 2015 and 2016. There were, however, cuts of Rs 2 per litre twice on both petrol and diesel in October 2017 and again in October 2018.
 
At present, the total central excise duty on petrol stands at Rs 22.98 per litre and on diesel, at Rs 18.83 per litre. With Rs 8 per litre increase these would increase substantially to Rs 30.98 per litre on petrol and Rs 26.83 on diesel. In addition, states also levy VAT on the two products. Petrol and diesel has not been so far included under the GST.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.
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    FM rolls back NRI tax, restricts levy only on their income generated in India
    In a big relief to the Non-Resident Indian community, the government has decided to restrict taxation only to the income generated by them from businesses in India, leaving their global income out of any levy. Moreover, taxes would need to be paid only on income of above Rs 15 lakhs.
     
    The changes formed part of the amendments in the Finance Bill, 2020 proposed by Finance Minister in Parliament. The Lok Sabha passed the Finance Bill on Monday by voice vote without discussion.
     
    Among the other changes introduced by Sitharaman in the Finance Bill includes a clarification that shareholders will have no tax liability if the company issuing the dividend has paid the DDT before April 1 but the shareholder received the dividend afterwards.
     
    The budget proposal for taxing dividends in the hands of shareholders by abolishing the dividend distribution tax (DDT) has, however, been retained.
     
    Further, the TDS rate on payment of dividend to non-resident and foreign company has been prescribed at 20 per cent. The Finance Bill earlier had not provided any specific rate of TDS in respect of payment of dividend to non-residents and foreign companies with the result such dividend would have fallen in residual clause of 40 per cent. The TDS rate of 10 per cent on dividend for resident is already prescribed in the Finance Bill.
     
    Proposal to levy (tax collected at source) TCS on sale of goods is to continue despite huge paperwork and compliance obligations. However, exemption of such TCS in respect of Export Sales and also to sellers in respect of Import has been provided. But this provision along with TCS on foreign remittance will be applicable from October 1, 2020.
     
    Moreover, the provision for tax to be deducted @2 per cent on withdrawal of cash from Bank, Co-opt Bank and Post Officer exceeding Rs. 1 crore in aggregate during the year has been amended. Now, in case of a person who has not filed the returns for preceding 3 years then tax will be deducted @2 per cent on withdrawal exceeding Rs 20 lakhs and @ 5 per cent on withdrawal exceeding Rs 1 crore. This provision will be applicable from July 1, 2020.
     
    Government's budget proposal on NRIs had dented sentiments as this community is seen as a big investor in the development of the country. The budget not only changed the qualification criteria of NRIs mandating them a higher number of days stay overseas but also introduced a provision that would have made them liable for tax in India on their incomes generated outside the country.
     
    In the Union Budget 2020-2021, the government proposed to spend Rs 30,42,230 crore in the next financial year, 12.7 per cent higher than the revised estimate of 2019-20. By passing the Bill, these financial proposals have been given effect.
     
    The government has assumed a nominal Gross Domestic Product (GDP) growth rate of 10 per cent in 2020-21, versus the nominal growth estimate at 12 per cent for 2019-20. It expects that receipts will increase by 16.3 per cent to Rs 22,45,893 crore, owing to higher estimated revenue from divestment.
     
    Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.
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    CA Bodies Urge Extension of Deadline to 15th May for Payment of 100% Disputed Tax under VSVS
    Several bodies representing chartered accountants (CAs) from across the country have requested finance minister Nirmala Sitharaman to extend the timeline till 15 May 2020 for payment of 100% of ‘disputed tax’ for vivad se vishwas scheme (VSVS) in wake of the prevailing economic situations due to the outbreak of coronavirus (COVID-19). 
     
    In the letter six bodies of CAs have said, "We understand that there have been several issues raised by stake-holders post introduction of the revised bill by the government and frequently asked questions (FAQs) issued by the central board of direct taxes (CBDT), which is pending clarification and another set of FAQs will have to be rolled out by CBDT, which will take some time. Also, once rules and procedures are notified, there would be certain issues which will require clarifications from Government for smooth implementation and functioning of the Scheme."
     
    The letter is signed by presidents of IMC Chamber of Commerce and Industry, Bombay Chartered Accountants’ Society (BCAS), Chartered Accountants Association of Ahmedabad, Chartered Accountants Association of Surat, Karnataka State Chartered Accountants’ Association and Lucknow Chartered Accountants’ Society. 
     
    According to the CA associations, to avail the scheme under payment of 100% of ‘disputed tax’, taxpayers will have only eight to 10 days to decide to make application, get the same processed from designated authority (DA) and make the payment before 31 March 2020 to avail of benefit of payment of 100% of disputed tax.
     
    The procedure prescribed under VSVS itself provides 15 days for DA to issue certificate and thereafter another 15 days for the taxpayers to make payment under the scheme. "It will therefore be appreciated that since very little time (hardly 10 days) will be available with the taxpayer to do necessary filings and make payments under the scheme, which in effect will not be as promised in the scheme itself, i.e. time limit of 15 days each, necessary extension may be issued," the letter says.
     
    Due to the COVID-19 outbreak, there has been tremendous turmoil in economic situation in India and world-over. "Several business houses across India have asked their teams to refrain from coming to office and instead, work from home. Because of this, the interactions between tax payers and their tax professionals for the purpose of understanding and availing of VSVS has been hampered. Nowadays, very few meetings are taking place as the taxpayers do-not have enough data available with them on their computers while working from remote locations," the CAs have said.
     
    The associations NOT bodies suggested to extend the date till 15 May 2020 to provide a two-month period to taxpayers for evaluating the VSV scheme. In addition, it says, taxpayers should be allowed two or three instalments for payment of disputed taxes under the scheme as was permissible under the earlier scheme, so that the taxpayers are not burdened, in this severe economic meltdown.  
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