Doing Business in India - RSM Austria

on goods manufactured and vice versa. Further, education cess (including
secondary and higher education cess) paid on input services is available as credit
for payment of education cess (including secondary and higher education cess) on
output services.
Credit in respect of capital goods is allowed at the rate of 50% in the financial year
of receipt of capital goods in premises of output service provider and 50% in the
subsequent financial year. Credit is not allowed on input services used in providing
exempted services.
9.4.5 Rebate/Refund for input services and inputs used in providing taxable services
The Export of Services Rules, 2005 provides for rebate of service tax paid on
taxable service or service tax or duty paid on input services or inputs, as the case
may be, used in providing taxable service, subject to specified conditions or
limitations.
Further, the Cenvat Credit Rules 2004, also provide for claiming refund of unutilized
Cenvat Credit used for providing output services, which are exported as per the
Export of Services Rules, 2005.
9.4.6 Threshold Limits
Small service providers whose aggregate value of taxable services provided during
the preceding financial year does not exceed Rs. 10,00,000 have been given an
option to claim exemption from service tax up to an aggregate value of taxable
services of Rs. 10,00,000 in a financial year, subject to certain conditions as
prescribed. Benefit of this exemption scheme is not available wherever service tax
is payable by a person other than the service provider or the taxable services are
provided by a person under a brand name or trade name, whether registered or not,
of another person. Threshold limit for obtaining service tax registration is
Rs. 9,00,000.
10.0 DIRECT TAX CODE ('DTC')
The Finance Minister of India presented the Direct Taxes Code Bill 2010, in Lok Sabha
on 30 August 2010. The purpose of introducing DTC Bill, which is proposed to be
effective from 1 April 2012, is to completely overhaul the existing complexities of the
Income Tax Act, 1961. DTC would eventually replace the present Income-tax Act,
1961 (“IT Act”) and the Wealth-tax Act, 1957 (“WT Act”) and would consolidate both
the Acts. The present IT Act, is about 50 years old and it was high time to replace it in
view of innumerable amendments to it over a period of time. The primary thrust of
DTC is on certainty and continuity and DTC in its present structure has chosen the
path of stable reforms rather than indulging in path breaking radical reforms.
Initially, the Draft DTC along with the Discussion Paper was released by Ministry of
Finance on 12 August, 2009 for public comments. In response to the same, a number
of valuable inputs on the proposals outlined in the draft DTC were received from a
large number of various organizations and individuals. The Ministry of Finance
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DOING BUSINESS IN INDIA