CA Final Indirect Tax Amendments for Sept/Nov 2024 ICAI Exams

Amendments in CA Final Indirect tax are quite important from an examination point of view. Related to previous attempts, there are only a few amendments in CA Final Indirect tax for Sept/Nov 2024 .

The first amendment in CA Final IDT is regarding Custom which is released between 1st November to 30th April 2024. Amendments for Sept/Nov 2024 and new amendments for November 2024 will be applying to May ICAI Exams.

Amendment 1 – Valuation of Goods

CBIC issued a circular on 5th Feb 2020 with regards to the valuation of Second Hand Machinery

The following guidelines shall be followed:

Option-1: Import goods accompanied with overseas Chartered Engineer (or equivalent) [Report -Form A] --

(a) All imports of second-hand machinery or used capital goods will be ordinarily accompanied by an inspection or appraisement report issued by an overseas Chartered Engineer or equivalent, prepared upon examination of the goods at the place of sale.

(b) The report of the overseas chartered engineer or equivalent should be as per Form A.

Option-2: Post arrival, get inspected by Indian Chartered Engineer [Report- Form B] and submit a report for seeking customs clearance

(c) In the event of the importer failing to procure an overseas report of inspection or appraisement of the goods, he may have the goods inspected by any one of the chartered Engineers empaneled locally by the respective Custom Houses.

(d) In cases where the report is to be prepared by the Chartered Engineers empaneled by Custom Houses, the same will be in Form B.

Acceptance/Rejection of declared value by PO —

- first PO shall examine the accuracy/ truthfulness of declared value by comparing it concerning Accountant Report and also to Depreciated Value as notified in Circular issued in 1987

- Then final decision (as to acceptance/ rejection of declared value) shall be taken by PO

(e) The value declared by the importer shall be examined in the report of the Chartered Accountant.

Similarly, the declared value shall be examined to the depreciated value of the goods determined in terms of the Circular dated November 19, 1987.

If such comparison does not create any doubt regarding the declared value of the goods, the same may be appraised (assessed) under rule 3 of the Customs Valuation Rules, 2007.
If significant differences are arising from such comparison, Rule 12 of the Customs Valuation Rules, 2007 requires that the proper officer shall seek an explanation from the importer justifying the declared value.

The proper officer may then evaluate the evidence put forth by the importer and after giving due consideration to factors such as depreciation, refurbishment or reconditioning (if any), and condition of the goods, determine whether the declared transaction value conforms to Rule 3 of Customs

Valuation Rules, 2007. Otherwise, the proper officer may proceed to determine the value of the goods, sequentially, in terms of rules 4 to 9.

Amendment 2 – FTP has been extended by 1 more year due to COVID-19

REWARD SCHEME – As per Circular on 10th Jan 2020, the Social welfare surcharge (SWS) cannot be paid by utilizing MEIS / SEIS Scrip

SWS is levied as per Sec 110 of FA, 2018. AS per Sec 110, SWS is levied and collected, on goods imported into India, as a duty of customs on goods specified in the First Schedule to the Customs Tariff Act, 1975.

The duty credit scrips issued under the Schemes such as MEIS, SEIS, etc. are granted as rewards/ incentives for exporters under the respective FTP.

As per para 3.03of the FTP 2015-20, these scrips can be used for payment of Basic Customs Duty and Additional Customs Duty specified u/Sec 3(1), (3), and (5) of the Customs Tariff Act, 1975 for the import of inputs or goods. The relevant customs exemption notifications also allow debit of basic customs and additional duties of customs in the duty credit script. It is to mention that the debit of SWS through duty credit scrip is not envisaged in the FTP and the exemption notifications.

SWS cannot be paid through MEIS/ SEIS — shall be collected in CASH

It is clarified that SWS is not exempted and has to be levied and collected on the imported goods.

SWS cannot be debited through duty credit scrips and therefore has to be paid by the importer in cash.

Amendment 3 – Export Promotion Scheme

Imports against AA/ EPCG Authorization – Exemption to IGST and GST cases extended to 31st March 2021

Amendment 4 – EU Scheme

Imports by 100% EU – Exemption to IGST and GST cases extended to 31st March 2021

More amendments in the GST part will be shared in the next few days. Keep following us for amendment updates

Amendment 5 -Input Tax Credit (ITC) Provisions

Limitations on the use of ITC: A limit on the portion of the ITC that can be applied to the payment of production tax may be introduce by an amendment. One restriction could be to use just 80% of the available ITC and require cash payment for the remaining 20%.

Complementing idea: Enhancing the idea of matching, which states that ITC can only be claimed if GSTR-1 of the supplier and GSTR-2B of the recipient include same information. The purpose of this modification is to guarantee tax compliance and lessen disparities.

Extended ITC reversal period: The 180-day window for an ITC reversal can be extended to 365 days with changes, providing businesses more time to make payments and avoiding unwarranted reversals.