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Budget 2015 – Tax rates enhanced but procedures relaxed

28 February 2015

Rate of Central Excise duty, which is levied on goods manufactured in India, have been revised upwards for several items. In its first full Budget presentation since taking office in June last year, the Finance Minister has today (28-2-2015) enhanced the rates of Central Excise duty to 12.5%. There is however a small breather inasmuch as exemption has been provided from the Education Cesses (both Education Cess and Secondary & Higher Secondary Education Cess). Interestingly, there is no exemption from these Education Cesses in respect of imports into India. Service tax, levied on services, is also proposed to be enhanced to 14% from the existing 12.36% (inclusive of Education Cesses).

While, enhancement in the rate of Central Excise duty is effective from 1st of March, 2015, enhancement in the rate of Service tax will come into force from the date to be notified by the Government after the enactment of the Finance Bill, 2015.                

In respect of procedural relaxations, while time limit for taking Cenvat credit (credit of Central Excise duty or Service tax) paid on inputs and input services has been enhanced from six months to one year, time limit for return of capital goods from the job worker has also been enhanced from the present six months to two years. It may be noted that time limit of six months in respect of Cenvat credit on inputs and input services was introduced only last year in July.

Further, in order to promote ‘make in India’, registration process under Central Excise and Service tax has been simplified (with effect from 1-3-2015) to provide for grant of registration within two working days, while verification of documents, etc. will be carried out after such registration. CBEC Circular issued in this regard also states that Registration Certificate downloaded online from the ACES system would be accepted as proof of registration.
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