CA Saravanan Paramasivam

CA Saravanan ParamasivamA) 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.

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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i. Following Services to become taxable in view of the exemptions withdrawn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.

(Author may be reached at sarav@live.in)

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0 responses to “Changes to become effective in SERVICE TAX w.e.f 1st April 2015”

  1. Saravanan says:

    @ Srinivasan: There is no change in the rate of Service Tax. Hence, the rate of Tax as on 01.04.2015 remains @ 12.36% only. No reverse charge is applicable. Hence, entire Tax charged by the Mandap keeper has to be paid to him.

  2. T.V. Srinivasan says:

    Sir,

    What is the rate of service tax for Marriage Mandapams from 1.4.2015. Shall I
    have to pay service tax for all the bill amount raised by the Mandap Keeper?

  3. zahid says:

    Sir,
    Can I know wt will be ST for the transporter
    Who is carrying goods fm one place to another place
    In detail…if the carrying material is taxable…..
    Please sir in need it in detail …

  4. Saravanan says:

    @ Prakash: Sir, at present exemption is granted to the extent of 75% of the value of freight by way of abatement. Hence the effective rate of tax is 3.09%(12.36*25%).

    W.e.f. 1st April 2015, the abatement rate is reduced to 70%.Hence, the effective rate would be 3.708% (12.36×70%).

    Please note that the entire Service Tax liability would be in the hands of the Person liable to pay the freight if he is:
     
    1. factory registered under the factories act, 1948;
    2. Societies registered under Societies Registration Act 1860 or any other law;
    3.Co operative society registered under any law
    4.Dealer of excisable goods registered under Central Excise Act, 1944;
    5.Any body corporate established by law;
    6.Partnership firm whether registered or not including Association of Persons

    If the Person liable to pay frieght doesnt fall under any of the above categories, then the Service provider would be liable to pay the entire Service Tax of 3.90% / 3.708%.

    Please note that there is no Partial reverse charge here. The liability will be entirely in the hands of either the Provider or the Receiver depending upon the circumstances as discussed above..

    Thanks…

  5. S.Prakash says:

    Sir Please let me know that what is the rate of service tax on Goods transporter by Road and how much amount is exempted and how much % of ST payable by service provider , receiver

  6. Rahulkumar Singh says:

    New Service tax rate shall be effective from the date to be notified by central government.

  7. Saravanan says:

    @ Devender Goswami: Sir, no Service Tax is applicable for the services received during the period when the services was not taxable even though the brokerage was paid after the Service becomes taxable. Thanks

  8. Saravanan says:

    @ Mr. Girish: Sir, the proposed rate of 14% to become effective from the date to be notified by the Central Government (Ref: Clause 106 of Finance bill, 2015)

  9. Saravanan says:

    @ Mr. Mishra: Sir, right now the effective rate of Service Tax when the Manpower Supply services are provided by an Individual, HUF, Partnership Firm to a body corporate, the Service recipient shall pay Service Tax @ 9.27% (12.36% * 75%) and the Service Provider i.e. the contractor shall pay @ 3.09%.

    W.e.f. 1st April, 2015, the SR shall pay the entire 12.36% of service Tax. Hence, there would be no liability in the hands of the above contractors.

    The rate of Service Tax would further vary once the rate hike of 14% becomes effective as proposed in the Finance bill. Thanks….

  10. security services says:

    Service tax kit a % Lena hai 1apr se

  11. Mishra says:

    Dear Sir,

    What should be service tax rate for contractor for Manpower supply now,

  12. GIRISH says:

    hello,
    thanks for the info.
    but ST 14% w.e.f?

  13. Devender Goswami says:

    Dear sir

    Please let me know that whether service tax on mutual fund distributors will be apllicable on the business done in the month of March for which brokerage is to be paid in month of April. As brokerage is paid on the next month of all the business done in previous month.

    Regards

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