CA Saravanan Paramasivam
A) Tax reliefs/ benefits
i. Following Services which are currently taxable, to become exempted
- Transport of pulses and rice by rail, vessels or road in a goods carriage.
- Transportation of patient in an ambulance.
- Life Insurance services provided under the scheme of Varishtha Pension Bima Yojna.
- Services of Common Effluent Treatment Plant Operator for treatment of effluent.
- Services of pre-conditioning, pre-cooling, ripening, waxing, retail packing, labelling of fruits and vegetables which do not change or alter the essential characteristics of the said fruits or vegetables.
- Admission to a museum, national park, wildlife sanctuary, tiger reserve or zoo.
- Exhibition of movie by an exhibitor to the distributor or an Association of Persons consisting of the exhibitor as one of its members.
- Transport of export goods by road from the place of removal to a land customs station.
ii. Reduction in effective rate of Tax
- Service Tax to become payable only on 30% of the value of freight paid on Goods transport by vessels as against the current rate of 40% in view of changes in abatement rates.
iii. Benefits under CENVAT Credit
- Cenvat Credit of Service Tax paid under partial reverse charge can be availed by the service receiver immediately on payment of tax without linking it to the payment to the service provider.
B) Additional Tax burdens
i. Following Services to become taxable in view of the exemptions withdrawn
- Services provided to Government, local authority or governmental authority by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of civic structure predominantly meant for non-commercial purposes; structure meant predominantly for use as an educational, clinical, or an art of cultural establishment; a residential complex predominantly meant for self-use or the use of their employees or MP, MLAs and other specified persons.
- Services by way of construction, erection, commissioning, or installation of original works pertaining to an airport or port.
- Services provided by performing artists i.e. musicians, dancers, theatre artist in folk or classical art forms where the consideration charged exceeds One lakh rupees for a performance. The exemption to continue where the amount charged per performance has not exceeded One lakh rupees.
- Transport of tea, coffee, jaggery, sugar, milk products, edible oil by way of rail, vessels or road in a goods carriage.
- Services of making telephone calls from departmentally run public telephone, guaranteed public telephone operating only for local calls; or free telephone at airport and hospital where no bills are being issued.
- Services of mutual fund agent to a mutual fund or asset management company, distributor to a mutual fund or AMC and selling or marketing agent of lottery agent to a distributor to become taxable. The entire Service Tax (100%) on the same has to be paid by the above service recipients under reverse charge.
ii. Increase in effective rate of tax
- Service Tax to become payable on 30% of the value of Goods transport by road and 60% of the value of air transport of passenger for higher classes as against the current rates of 25% and 40% respectively in view of changes in abatement rates.
- Service Tax to become payable on entire value of consideration for the fee or commission received by Chit Fund Foremen in relation to the Chit fund business. Presently, abatement is granted to the extent of 30%.
iii) Procedural changes
- Manpower Supply and Security services when provided by an individual, HUF, or partnership firm to a body corporate are brought under full Reverse Charge in the hands of the Service Recipients. Presently, the Company is liable to discharge only to the extent of 75% of the total Service Tax liability and the balance has to be discharged by the Service provider.
Advance Happy Financial Year 2015-16.
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