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Service Tax Voluntary C ompliance Encouragement Scheme(VCES )– broaden the tax base – Are honest tax payers put at a disadvantage? . Losses over Rs 9,872 crore - April- December, 2012. Recovery Over Rs 1,969 crore realised from 4,133 defaulters .

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  1. Service Tax Voluntary Compliance EncouragementScheme(VCES)– broaden the tax base – Are honest tax payers put at a disadvantage?

  2. Losses • over Rs 9,872 crore - April- December, 2012. • Recovery • Over Rs 1,969 crorerealised from 4,133 defaulters. • Extensive publicity about the pending service tax liability • Service Tax collection - Rs132000 crore against expected 132697 crore for 2012-13. • Proposed Service Tax Collection for the current fiscal Rs180141crore Statistics

  3. Extract of Budget Speech • Registered Assesses17 Lakh • Return Filers 7Lakh • The FM Proposed VCES to Collect A Reasonable sum of Money From The Defaulters. • Immunity from Interest, Penalty & Prosecution

  4. Constitutional Validity • The presidential assent was received on 10th May 2013. Thereafter • The CBEC, vide notification no. 10/2013 – ST dated 13 May 2013, notified the Service Tax Voluntary Compliance Encouragement Rules, 2013 • The VCE Scheme was brought into effect upon enactment of the Finance Bill, 2013.

  5. What is VCES? • An Amnesty Scheme • To Broaden the Tax Base • To give incentive to defaulting persons to voluntarily Pay tax dues • To know the Probable Defaulters • Period Involved 1/10/2007 to 31/12/2012

  6. Few Salient Features Of VCES • For Tax Dues from January 2013 onwards-Benefits Of VCES Cannot Be Availed • If Declared once- Payment Is Must as Per Proposed Section 100 of The Finance Act, 2013 • No Refunds

  7. How and when the liabilities have to be paid?

  8. Waiver Of Interest • Waiver Of Penalty • Free From Any Prosecution What are the Immunities Available?

  9. Reason behind the Amnesty • To Introduce a Tax Generation Instrument • Large scale non-compliance Golden Chance • For those who wants to Make Good their Wrong Done • For 10 lakh Probable Defaulters

  10. Who Is Eligible to get Immune? • Assessees disclosing true liability in service tax returns • Assessees in receipt of Show Cause Notice / Order of Determination • u/s 72, 73 or 73A of Finance Act, 1994 • Assessees being audited under the provisions of Finance Act, 1994 • and such audit is pending as on 1 March 2013 • Assessees against whom inquiry / investigation has been initiated and is pending as on 1 March 2013: • Stop-filers of returns; • Non-filers of returns; • Non-registrants; • Service providers who have not disclosed true liability in the returns filed during the period of scheme Who Is Not Eligible?

  11. Procedure For Availing Amnesty • Submit Declaration in Form VCES-1 with Designated Authority • a Half Yearly Calculation Sheet is also to be submitted • a separate calculation sheet for each category of service. • The calculation sheets are to be in the format of the service tax return • After submission of form VCES – 1, the Designated Authority shall issue an acknowledgement in form VCES – 2 within seven working days. • The acknowledgement does not certify the correctness of the declaration furnished by the assesse. • proof of payment periodically along with copy of acknowledgement (Form VCES – 2) is also to be furnished • Upon furnishing of the same in full, the Designated Authority will issue an Acknowledgement of Discharge in form VCES – 3 within seven working days • To make a Declaration, First You needs to Get registered with the dpartment.

  12. Inherent Flaws • Undertaking given by Mr. P.ChidambaramTo The Hon’ble Supreme court • Cumbersome Procedure of availing the befits of the Scheme. • Unawareness among the semi urban & rural areas about Service Tax Laws.

  13. Broadening of Country’s Tax Base • The Amnesty Scheme is a welcome move by the Finance Ministry to increase the tax base and, thereby, increasing service tax collections.  • The expected collection from the scheme is Rs. 35000 Crore

  14. Conclusion Are Honest Tax Payers at A Disadvantage? NO YES

  15. Bibliography www.Indiabudget.nic.in www.Servicetax.gov.in www.Google.com Websites of Various Reputed CA Firms Various Blogs Authenticate Blogs I would Like to add Few Names Who helped me in making This Presentation: CA YogitaAnand Ma’am CA Pankaj Jain IshaChitkara& Tanvi Jain

  16. Elocutionist: GovindRaiGarg Reg. No. : NRO0302415

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