SERVICE TAX Amendments to be effective from a date to be notified after Finance Bill receives the assent of the President 1. ...
SERVICE TAX
Amendments to be effective from a date to be notified after Finance Bill receives the assent of the President
1. Service Tax Rate
The rate of Service Tax is being increased from 12% plus Education Cesses i.e. 12.36% to 14%. The ‘Education Cess’ and ‘Secondary and Higher Education Cess’ shall be subsumed in the revised rate of Service Tax. Accordingly, an amendment is being made in section 66B, sections 95 and section 140 of the Finance Act. The ‘EC’ and SHEC will continue to be levied in Service Tax till the time revised rate comes into effect.
2. Swachh Bharat Cess
Central Government has been empowered to impose a Swachh Bharat Cess on all or any of the taxable services at a rate of 2% on the value of such taxable services. This cess shall be levied from such date as may be notified by the Central Government after the enactment of the Finance Bill, 2015.
Amendments made with immediate effect
3. Existing exemption, vide notification No.
42/12-ST dated 29.6.2012, to the services provided by a commission agent
located outside India to an exporter located in India is being rescinded with
immediate effect. This is done on account of the amendments made in law in the
previous budget making the place of provision of a service provided by such
agents as outside the taxable territory.
4. The facility of Advance Ruling is being extended
to all resident firms by specifying such firms under section 96A (b)(iii) of
the Finance Act, 1994.
A. Amendment to Negative List: to be effective from
a date to be notified after Finance Bill receives the assent of the President
1.
Negative list
entry covering “Entry to Entertainment Events and Access to Amusement
Facilities” has been omitted. Its implications are as follows:
a) Service Tax shall be levied on the service
provided by way of access to amusement facility providing fun or recreation by
means of rides, gaming devices or bowling alleys in amusement parks, amusement
arcades, water parks and theme parks.
b) Service tax to be levied on service by way of
admission to entertainment event of concerts, pageants, musical performances
concerts, award functions and sporting events other than the recognized
sporting event, if the amount charged is more than Rs. 500 for right to admission
to such an event.
c) Service by way of admission to entertainment
event, namely, exhibition of cinematographic film, circus, recognized sporting
event, dance, theatrical performance including drama and ballet is exempted
from Service Tax from notification No. 25/12-ST( Mega exemption Notification)
2. Earlier Negative List covered services by way of
any process amounting to manufacture or production of goods which includes
carrying out any processes for production or manufacture of alcoholic liquor
for human consumption. Now Service Tax shall be levied on contract
manufacturing/job work for production of potable liquor for human consumption.
3.
Earlier Negative
List covered services provided by the Government or a local authority excluding
certain services, as specified, which included “support service” provided by
the Government or local authority to a business entity. Now all services
provided by the Government or local authority to a business entity, except the
services that are specifically exempted, or covered by any another entry in the
Negative List, shall be liable to service tax.
B. Amendments in
Service Tax Rules
1. With effect from 01st March 2015, in respect of
any service provided under aggregator model, the aggregator, or any of his
representative office located in India or an agent of aggregator, is being made
liable to pay Service Tax if the service is so provided using the brand name of
the aggregator in any manner. In this regard appropriate amendments have been made
in rule 2 of the Service Tax Rules, 1994 and notification No. 30/2012-ST dated
20.6.2012.
2. With effect from 01st March 2015, rule 4 has
been amended to provide that the CBEC shall, by way of an order will specify
the conditions, safeguards and procedure for registration in service tax. In
this regard Order No. 1/15-ST, dated 28.2.2015 has been issued, prescribing
documentation, time limits and procedure for registration. It has also been
prescribed that henceforth registration for single premises shall be granted
within two days of filing the application.
3. Rule 4, 4A and 5A: provision for issuing
digitally signed invoices is being added along with the option of maintaining
of records in electronic form and their authentication by means of digital
signatures. The conditions and procedure in this regard shall be specified by
the CBEC. The changes are applicable with immediate effect.
4.
Rule 6 (6A): provided for recovery of service
tax self-assessed and declared in the return under section 87 is being omitted
consequent to the amendment in section 73 for
enabling such recovery. This change will come
into effect from the date of enactment of the Finance Bill, 2015.
5.
In respect
of services given in below table the service provider has been allowed to pay
service tax at an alternative rate subject to the conditions as prescribed
under rule 6 (7), 6(7A), 6(7B) and 6(7C) of the Service Tax Rules, 1994.
Consequent to the upward revision in Service Tax rate, the said alternative
rates is revised proportionately as per the table given below:
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S No.
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Name of Service
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Old Rate
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New Rate
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1.
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Air Travel Agent(Domestic
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0.6%
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0.7%
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Bookings)
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Air Travel Agent( International
|
1.2%
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1.4%
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Bookings)
|
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2.
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Life Insurance Service
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3 % and 1.5 %
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3.5 % and 1.75 %
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respectively.
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3.
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Money Changer Service
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(a) 0.12 per cent. of the
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(a) 0.14 per cent. of the
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gross amount of currency
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gross
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amount
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of
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exchanged for an amount
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currency
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exchanged
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for
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upto
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rupees
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100,000,
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an amount upto
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rupees
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subject to
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the
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minimum
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100,000,
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subject
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to
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the
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amount of rupees 30; and
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minimum
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amount
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of
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(b) rupees 120 and 0.06
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rupees 35; and
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per cent. of the gross
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(b) rupees 140
and 0.07
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amount
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of
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currency
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per cent. of the gross
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exchanged for an amount
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amount
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of
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currency
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of
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rupees
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exceeding
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exchanged
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for
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an
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rupees 100,000 and upto
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amount
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of
|
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rupees
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|||||
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rupees 10,00,000; and
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exceeding
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rupees
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100,000 and upto rupees
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(c) rupees 660 and 0.012
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10,00,000; and
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per cent. of the gross
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amount
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of
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currency
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(c) rupees 770 and 0.014
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exchanged for an amount
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per cent. of the gross
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of
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rupees
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exceeding
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amount
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of
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currency
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|
||||
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10,00,000,
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subject
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to
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exchanged
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for
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an
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maximum
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amount
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of
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amount
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of
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rupees
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rupees 5000
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exceeding
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10,00,000,
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subject
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to
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maximum
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amount
of rupees 5000
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4.
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lottery
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Rs. 7,000/- &
Rs.
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Rs. 8,200/- & Rs.
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distributor
and selling agent
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10,000/-
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12,800/- respectively.
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The
above changes will become effective from a date to be notified after Finance
Bill receives the assent of the President
Amendments applicable w.e.f. 1st April 2015
A. Amendment
to Mega Exemption Notification 1. Rationalization of Existing Exemptions
(a) Exemption presently available on specified
services of construction, repair, maintenance, renovation or alteration service
provided to the Government, a local authority, or governmental authority ( vide
S. No. 12 of the notification No. 25/12-ST ) shall be limited only to:-
(a) a historical monument, archaeological site or
remains of national importance, archaeological excavation or antiquity;
(b)
canal, dam or other irrigation work; and
(c) pipeline, conduit or plant for (i) water supply
(ii) water treatment, or (iii) sewerage treatment or disposal.
Exemption to
other services presently covered under S. No. 12 of notification No. 25/12-ST
is being withdrawn.
(b) Exemption to construction, erection,
commissioning or installation of original works pertaining to an airport or
port provide vide entry 14 is being withdrawn. However the other exemptions
covered under entry 14 will continue unaltered.
(c) Exemption to services provided by a performing
artist in folk or classical art form of (i) music, or (ii) dance, or (iii)
theatre, will be limited only to such cases where amount charged is upto Rs
1,00,000 for a performance.
(d) Exemption to transportation of food stuff by
rail, or vessels or road will be limited to food grains including rice and
pulses, flour, milk and salt. Transportation of agricultural produce is
separately exempt, and this exemption would continue.
(e)
Exemptions are being withdrawn on the following
services:
a. services provided by a mutual fund agent to a
mutual fund or assets management company,
b.
distributor to a mutual fund or AMC,
c.
selling or marketing agent of lottery ticket to
a distributor.
Service
Tax on these services shall be levied on reverse charge basis.
(f)
Consequent to imposition of Service Tax levy on
service by way of manufacture of alcoholic liquor for human consumption, an
amendment is being made in the entry at S. No. 30 of notification No. 25/12-ST
to exclude carrying out of intermediate production process of alcoholic liquor
for human consumption on job work from this entry. The
change shall come into effect from a date to be
notified after the enactment of the Finance Bill, 2015.
(g)
Exemption is being withdrawn on the following
service,-
a.
Departmentally run public telephone;
b.
Guaranteed public telephone operating only local
calls;
c. Service by way of making telephone calls from
free telephone at airport and hospital where no bill is issued.
2.
New exemptions introduced
(a) Exemption to any service provided by way of
transportation of a patient to and from a clinical establishment by a clinical
establishment. All ambulance services are covered within the scope of this
exemption.
(b)
Exemption to Life insurance service provided by
way of Varishtha Pension Bima Yojna.
(c) Exemption to Service provided by a Common
Effluent Treatment Plant operator for treatment of effluent.
(d) Exemption to Services by way of
pre-conditioning, pre-cooling, ripening, waxing, retail packing, labelling of
fruits and vegetables.
(e) Exemption to Service provided by way of
admission to a museum, zoo, national park, wild life sanctuary and a tiger reserve.
These services when provided by Government or local authority are covered under
Negative List.
(f) Exemption to Service provided by way of
exhibition of movie by the exhibitor (theatre owner) to the distributor or an
association of persons consisting of such exhibitor as one of it’s members.
(g) Exemption to Goods transport agency service
provided for transport of export goods by road from the place of removal to an
inland container depot, a container freight station, a port or airport vide notification
No. 31/12-ST dated 20.6.2012.
(h)
Exemption to service by way of right to
admission to,-
i.
exhibition of
cinematographic film, circus, dance, or theatrical performances including drama
or ballet.
ii.
recognized sporting events.
iii.
concerts,
pageants, award functions, musical performances or sporting events not covered
by S. No. ii, where the consideration for such admission is upto Rs. 500 per
person.
These exemptions
are in lieu of activities covered by the Negative List which are withdrawn. The
change shall come into effect from a date to be notified after the enactment of
the Finance Bill, 2015.
B. Abatement
Notification amended
1.
The taxable
portion of service of transportation by rail, road and vessel shall be 30%
subject to a uniform condition of non-availment of CENVAT Credit on inputs,
capital goods and input services.
2. The taxable portion of value of air transport of
passenger for higher classes shall be 60% as against economy class for which
Service Tax is payable on 40% of the value.
3. Abatement is withdrawn for services provided in
relation to chit and Service Tax is payable by chit fund foremen on the full
consideration received by way of fee, commission or any such amount with a
facility to avail CENVAT Credit on the same.
C.
Reverse
charge/Partial reverse charge
1. In relation to manpower supply and security
services provided by an individual, HUF, or partnership firm to a body
corporate, only service receiver to pay service tax as against present system
of partial reverse charge.
2.
Service Tax in respect of mutual fund agent and
mutual fund distributor services shall be paid by the assets management company
or by the mutual fund receiving such services.
3.
Distributor of Lottery is required to pay
Service Tax in respect of agents of lottery.
D. CENVAT CREDIT
RULES
1. Earlier CENVAT credit to service receiver under
partial reverse charge was eligible only if payment of service has been made to
service provider. Now with effect from 1.4.2015 Rule 4(7) has been amended to
allow CENVAT Credit of Service Tax paid under partial reverse charge by the
service receiver without linking it to the payment to the service provider.
E. Other Amendments which shall get incorporated in
the said Act on the day the Finance Bill, 2015 is enacted.
1. Consideration for a taxable service shall
include all reimbursable expenditure or cost incurred and charged by the
service provider and amount retained by the distributor or selling agent of
lottery from gross sale amount of lottery ticket or the discount received.
2.
Section 73 is being amended
in the following manner:
(a) A new sub-section (1B) is being inserted to
provide that recovery of the Service Tax amount self-assessed and declared in
the return but not paid shall be made under section 87, without service of any
notice under sub-section (1) of section 73; and
(b) sub-section (4A) that provides for reduced
penalty if true and complete details of transaction were available on specified
records, is being omitted.
3. Section 76 is being amended to rationalize the
provisions relating to penalties, in cases not involving fraud or collusion or
wilful misstatement or suppression of facts or contravention of any provision
of the Act or rules with the intent to evade payment of Service Tax, in the
following manner,-
(a)
penalty not to exceed ten per cent. of Service
Tax amount involved in such cases;
(b)
no penalty is to
be paid if Service Tax and interest is paid within 30 days of issuance of
notice under section 73 (1);
(c) a reduced penalty equal to 25% of the penalty
imposed by the Central Excise officer by way of an order is to be paid if the
Service Tax, interest and reduced penalty is paid within 30 days of such order;
and
(d) if the Service Tax amount gets reduced in any
appellate proceeding, then the penalty amount shall also stand modified
accordingly, and benefit of reduced penalty ( 25% of penalty imposed) shall be
admissible if service tax, interest and reduced penalty is paid within 30 days
of such appellate order.
4. Section 78 is being amended to rationalize
penalty, in cases involving fraud or collusion or wilful mis-statement of suppression
of facts or contravention of any provision of the Act or rules with the intent
to evade payment of Service Tax, in the following manner,-
(a)
penalty shall be hundred per cent of Service Tax
amount involved in such cases;
(b) a reduced penalty equal to 15% of the Service
Tax amount is to be paid if Service Tax, interest and reduced penalty is paid
within 30 days of service of notice in this regard;
(c) a reduced penalty equal to 25% of the Service
Tax amount, determined by the Central Excise officer by an order, is to be paid
if the Service Tax, interest and reduced penalty is paid within 30 days of such
order; and
(d) if the Service Tax amount gets reduced in any
appellate proceeding, then the penalty amount shall also stand modified
accordingly, and benefit of reduced penalty (25%) shall be admissible if
Service Tax, interest and reduced penalty is paid within 30 days of such
appellate order.
5.
A new section 78 B is being inserted to
prescribe, by way of a transition provision, that,-
(a) amended provisions of sections 76 and 78 shall
apply to cases where either no notice is served, or notice is served under
subsection (1) of section 73 or proviso thereto but no order has been issued
under sub-section (2) of section 73, before the date of enactment of the
Finance Bill, 2015; and
(b) in respect of cases covered by sub-section (4A)
of section 73, if no notice is served, or notice is served under sub-section
(1) of section 73 or proviso thereto but no order has been issued under
sub-section (2) of section 73, before the date of enactment of the Finance
Bill, 2015, penalty shall not exceed 50% of the Service Tax amount.
6.
Section 80, that provided for waiver of penalty
in certain circumstances, is being omitted.
7.
Section 86
is being amended to prescribe that remedy against the order passed by
Commissioner (Appeal), in a matter involving rebate of Service Tax, shall lie
in terms of section 35EE of the Central Excise Act. It is also being provided
that all appeals filed in Tribunal after the date the Finance Act, 2012 came
into effect and pending on the date when the Finance Bill, 2015 receives assent
of the President shall be transferred and dealt in accordance with section 35EE
of the Central Excise Act.
COMMENTS