The highlights/announcements of the Budget 2012-13
Textiles
· Government has announced a financial package of Rs.3,884 crore for waiver of loans of handloom weavers and their cooperative societies.
· Two more mega handloom clusters, one to cover Prakasam and Guntur districts in Andhra Pradesh and another for Godda and neighbouring districts in Jharkhand to be set up.
· Three Weaver’s Service Centres one each in Mizoram, Nagaland and Jharkhand to be set up for providing technical support to poor handloom weavers.
· Rs. 500 crore pilot schemes announced for promotion and application of Geo-textiles in the North Eastern Region.
· A powerloom mega cluster to be set up in Ichalkaranji in Maharashtra with a budget allocation of Rs. 70 crore.
Micro, Small and Medium Enterprises
· Rs. 5,000 crore India Opportunities Venture Fund to be set up with SIDBI.
· To enable greater access to finance by Small and Medium Enterprises (SME), two SME exchanges launched in Mumbai recently.
· Policy requiring Ministries and CPSEs to make a minimum of 20 per cent of their annual purchases from MSEs approved. Of this, 4 per cent earmarked for procurement from MSEs owned by SC/ST entrepreneurs.
Manufacturing
· Relief proposed to be extended to sectors such as steel, textiles, branded readymade garments, low-cost medical devices, labour-intensive sectors producing items of mass consumption and matches produced by semi-mechanised units.
Central Excise
Chapter 50 to 60
No Change
Chapter 61
61.1. The excise duty is being enhanced to 12% on readymade garments bearing a brand name or sold under a brand name. [S.No.49, 50, 51 of Notification No.18/2012-CE dt. the 17th March 2012 refers]
61.2 The rate of abatement on such readymade garments is being increased from 55% to 70%. Hence, the tariff value for purposes of charging duty would be @ 30% of the retail sale price. [S.No. of Notification No.17 /2012-CE (NT) dated the 17th March 2012 refers]
61.3. The scope of exemption on return goods have been modified [Notification No. 8/2012-CE dated the 17th March 2012 refers]
Chapter 62 to 63
The rate of abatement on made –ups bearing a brand name or sold under a brand name is being increased from 55 % to 70%. Hence, the tariff value for purposes of charging duty would be @ 30% of the retail sale price. [S.No. of Notification No.17/2012-CE (NT) dated the 17th March 2012 refers]
Customs
Chapter 50
No Change
Chapter 51
51.1 Basic customs duty on Wool Waste (CTH 5103) is being reduced from 10% to 5%. [S. No279 of notification No. 12/2012-Customs dated 17.03.2012 refers]
51.2 Basic customs duty on Wool Tops (CTH 5105) is being reduced from 15% to 5%. [S. No 281 of notification No. 12/2012-Customs dated 17.03.2012 refers]
Chapter 52 to 53
No Change
Chapter 54
54.1 Basic Customs duty on Aramid thread/ Yarn/ fabric for manufacture of Bullet proof helmets for Defence and Police personnel is being reduced from 10% to Nil with Nil CVD and Nil SAD (S. No. 16 of Notification No.39/96-Customs dated 23rd July, 1996 as inserted vide Notification No.11 /2012-Customs dated 17th March, 2012 refers).
Chapter 55
No Change
Chapter 56
56.1 Basic customs duty on Hydrophilic Non –Woven, Hydrophobic Non –Woven (CTH 56031100) imported for use in the manufacture of Adult Diapers is being reduced from 10% to 5%, With 5% CVD and Nil SAD on actual user basis [S. No295 of notification No. 12/2012-Customs dated 17.03.2012 refers]
Chapter 57 to 63
No Change
Chapter 84
Baggage Allowance:
Service Tax
· The rate of service tax is being restored to the statutory rate of 12% - same as goods-and Notification No. 8/2009-ST dated February 24, 2009 reducing the rate to 10% has been rescinded effective April 1, 2012.
· Exemption from service tax is proposed for some sectors.
· Service tax law to be shorter by nearly 40 per cent.
· Number of alignment made to harmonise Central Excise and Service Tax. A common simplified registration form and a common return comprising of one page are steps in this direction.
· Revision Application Authority and Settlement Commission being introduced in Service Tax for dispute resolution.
· New scheme announced for simplification of refunds.
· Rules pertaining to point of taxation are being rationalized
Direct Taxes
· Exemption limit for the general category of individual taxpayers proposed to be enhanced from Rs. 1,80,000 to Rs. 2,00,000 giving tax relief of Rs. 2,000.
· Upper limit of 20 per cent tax slab proposed to be raised from Rs. 8 lakh to Rs. 10 lakh.
· Proposal to allow individual tax payers, a deduction of upto Rs. 10,000 for interest from savings bank accounts.
· Proposal to allow deduction of upto Rs. 5,000 for preventive health check up.
· Senior citizens not having income from business proposed to be exempted from payment of advance tax.
· New sectors to be added for the purposes of investment linked deduction.
· Turnover limit for compulsory tax audit of account and presumptive taxation of SMEs to be raised from Rs. 60 lakhs to Rs. 1 crore.
· Exemption from Capital Gains tax on sale of residential property, if sale consideration is used for subscription in equity of a manufacturing SME for purchase of new plant and machinery.
· Proposal to provide weighted deduction at 150 per cent of expenditure incurred on skill development in manufacturing sector.
Explanation – Excise Duty
Ready-Made Garments, made-up articles and textiles:
6.1 The rate of excise duty applicable to ready-made garments and made -up articles of textiles falling under Chapters 61, 62 and 63 (heading nos.63.01 to 63.08) of the Central Excise Tariff except those falling under heading nos.63.09 and 63.10 when they bear or are sold under a brand name has been increased from 10% to 12%. However, the tariff value for these items has been revised and shall now be equal Retail Sale Price (RSP) less abatement of 70% instead of 55%. In other words, duty would be payable on 30% of the RSP.
6.2 In terms of notification no.31/2011-CE dated 24.3.2011, full exemption from Central Excise duty is available to duty-paid, branded ready-made garments and made-ups returned or brought back to the same factory or premises and cleared after being re-made, re-conditioned, repacked or subjected to any other process, subject to the fulfillment of certain conditions. Certain procedural relaxations have been made in the operation of this exemption. The exemption will now be available to goods returned or brought back to any registered premises of the same brand owner/ manufacturer and not only to those returned to the same factory. It would be available only if the goods are returned or brought back within a maximum period of one year from the date of their clearance. It has been clarified by way of an explanation that the threshold limit of 10% of the aggregate value of clearances for home consumption in the preceding year is to be computed for each factory/ registered premises separately. It has also been clarified that in computing this limit the value of goods cleared under the provisions of rule 16 of the Central Excise Rules are to be excluded. Finally, duty-free clearance after the prescribed processes have been carried out on the returned goods is to be allowed on the basis of a declaration from the manufacturer that the goods are duty-paid. This aspect should be verified on the basis of documents/ records maintained by the manufacturer at the time of audit of the unit.
6.3 The effective excise duty rate applicable to the textile sector (other than readymade Garments and made ups bearing a brand name or sold under a brand name) is currently covered by Notification No. 29/2004-CE dated 9.7.2004. This notification is being superseded by notification no. 7/2012 –CE dated 17th March, 2012.
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