BUDGET - BMR Advisors

• Supply of tangible goods where VAT is not applicableproposed to be made liable to service tax. Likely to impactdeployment of excavators, wheel loaders, dump trucks,crawler carriers, compaction equipment, cranes etc, highvalue machineries, in projects where contractors supplythese goods without transfer of legal right of possession andeffective control and charge rentals• Transaction between associated enterprises proposed tobe made liable to service tax on accrual basis. Likely toimpact services provided interse between group companiesCentral Sales Tax (CST)The rate of CST proposed to be reduced from 3 percent to 2percent. Coal Mines are likely to benefit on indigenouspurchases, on account of this reduction.Thus, the combined rate of excise duty and CST (on domesticpurchases by coal mines) would stand reduced from19.97 percent to 16.70 percent.Indirect tax proposals – AviationinfrastructureThe much sought after unambiguous customs duty exemptionsto cover the entire gamut of maintenance, repair and overhaulservices still not met.Except providing for partial relief to helicopter simulators, the taxproposals remain silent with respect to this sector. The generalchanges in indirect taxes which have a bearing on the sectorhave been discussed below.Customs• Helicopter simulators fully exempt from basic customs duty.Currently the exemption was available only to aeroplanesimulators• Impact of customs duty on import of helicopter simulators isas under:– BCD reduced from 10 percent to nil2– CVD remains at nil– ACD reduced from 4 percent to nil1Under Project Imports2For goods falling under 8805 29 00 of Excise Tariff ActindiaBUDGET200865