The Finance Bill, 2015 has proposed Lot of changes in Service tax provisions. These changes will be coming into effect on various dates. Based on date of applicability of provisions, the various changes can be categorized as follows:

(i) Changes coming into effect immediately w.e.f. the 1st day of March, 2015;

(ii) Changes coming into effect from the 1st day of April, 2015;

(iii) The amendments which will get incorporated in the Finance Act, 1994 immediately on enactment of the Finance Bill, 2015;

(iv) The amendments made in the Finance Act, 1994, including the change in service tax rate that will come into effect from a date to be notified by the Government in this regard after the enactment of the Finance Bill, 2015.

We have analyzed the changes/ amendments which will be applicable with effect from 01st April 2015:

RATIONALISATION OF EXEMPTIONS

A. EXEMPTIONS WITHDRAWN

1. Exemption presently available on specified services provided to the Government, a local authority or a governmental authority by way of construction erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of – (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, archeological 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.

Hence, exemption to other services presently covered under S. No. 12 of notification No. 25/12-ST is being withdrawn. These services include services provided to government by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of:

  • a civil structure meant for use other than for commerce, industry, etc.
  •  a structure meant predominantly for use as an educational, clinical, or an art or cultural establishment.
  • a residential complex predominantly meant for self-use or the use of their employees.

2. Exemption to services provided by way of construction, erection, commissioning or installation of original works pertaining to an airport or port is being withdrawn (S. No 14 of the notification No. 25/12-ST). The other exemptions covered under S. No. 14 of notification No. 25/12-ST shall continue unchanged.

3. Exemption to services provided by a performing artist in folk or classical art form of (i) music, or (ii) dance, or (iii) theater, will be Limited only to such cases where amount charged is upto 1,00,000 for a performance (S. No 16 of notification No. 25/12-ST). It is further clarified that the exemption shall not apply if services provided by artist as a brand

4. 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 (S. Nos. 20 and 21 of notification No. 25/12-ST).

Therefore, the services by way of transportation of foodstuff except milk, salt and food grain (including flour, pulses and rice) would be liable to service tax.

5. Exemptions are being withdrawn (S. No 29 of notification No. 25/12-ST)) on the following services:

  • services provided by a mutual fund agent to a mutual fund or assets management company,
  • distributor to a mutual fund or AMC,
  • selling or marketing agent of Lottery ticket to a distributor.

Service Tax on these services shall be Levied on reverse charge basis.

6. Exemption is being withdrawn (S. No. 32 of notification No. 25/12-ST) on the following service,-

  • departmentally run public telephone;
  • Guaranteed public telephone operating only local calls;
  • Service by way of making telephone calls from free telephone at airport and hospital where no Bill is issued.

B. NEW EXEMPTIONS INTRODUCED

1. Any service provided by way of transportation of a patient to and from a clinical establishment by a clinical establishment is exempt from Service Tax. The scope of this exemption is being widened to include all ambulance services. (Amended in the entry at S. No. 2 of notification No. 25/12-ST refers).

2. Life insurance service provided by way of Varishtha Pension Bima Yojna is being (Amendment in entry at S. No. 26A of notification No. 25/12-ST refers)

3. Service provided by a Common Effluent Treatment Plant operator for treatment of effluent is being exempted. (New entry at S. No. 43 of notification No. 25/12-ST).

4. Services by way of pre-conditioning pre-cooling ripening waxing retail packing labeling of fruits and vegetables is being exempted. (New entry at S. No. 44 of notification No. 25/12-ST).

5. Service provided by way of admission to a museum zoo national park wild life sanctuary and a tiger reserve is being exempted. These services when provided by the Government or local authority are already covered by the Negative List. (New entry at S. No. 45 of notification No. 25/12-ST).

6. 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 is being exempted. (New entry at S. No. 46 of notification No. 25/12-ST).

7. 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 is exempt from Service Tax vide notification No. 31/12-ST dated 20.6.2012. Scope of this exemption is being widened to exempt such services when provided for transport of export goods by road from the place of removal to a land customs station (LCS). (Amendment in notification No. 31/12-ST  refers).

CENVAT CREDIT RULES, 2004

Amendment of Rule 4(7): earlier, as per rule 4(7), in case of service tax paid by the service receiver full reverse charge mechanism, CENVAT credit was allowed to be availed on making of service tax payment even if value of service is not paid to service provider.

Similarly, in case of service tax paid under partial reverse charge mechanism, CENVAT credit was allowed to be availed on making payment of value of service as well as portion of service tax payable by the service receiver.

Now as per the proposed amendment, the service tax paid both under partial and full reverse charge by the service receiver, credit of service tax payable by the service recipient is allowed to be availed after making the payment of service tax and even if value of service is not paid.

REVERSE CHARGE MECHANISM

  • Manpower supply and security services when provided by an individual, HUE, or partnership firm to a body corporate are being brought to full reverse charge. Presently, these are taxed under partial reverse charge mechanism. (Notification under sub-section (2) of section 68 – Reverse Charge – Notification No. 30/2012 – Dated 20-6-2012 – Service Tax as amended time to time)
  • Services provided by mutual fund agents mutual fund distributors and agents of lottery distributor are being brought under reverse charge consequent to withdrawal of the exemption on such services. Accordingly, Service Tax in respect of mutual fund agents and mutual fund distributors services shall be paid by assets management company or, as the case may be, by the mutual fund receiving such services. In respect of sub-agents of Lottery, Service Tax shall be paid by the distributor or selling agent of Lottery.

RATIONALIZATION OF ABATEMENTS

  • At present, service tax is payable on 30% of the value of Rail transport for goods and passengers, 25% of the value of goods transport by road provided by a goods transport agency and 40% for goods transport by vessel. The conditions also vary.

A uniform abatement is now being prescribed for transport by Rail, road and vessel. Service Tax shall be payable on 30% of the value of such services subject to a uniform condition of non-availment of Cenvat Credit on inputs, capital goods and input services.

  • At present, Service Tax is payable on 40% of the value of air transport of passenger for economy as well as higher classes, e.g. business class. The abatement for classes other than economy is being reduced and service tax would be payable on 60% of the value of such higher classes.
Type of Service Earlier (Taxable Value after abatement) Proposed    (Taxable   Value
after abatement)
Transport    of    goods   and passengers by Rail 30% 30%
Transport of goods by Road 25% 30%
Transport of goods by vessels 40% 30%
Transport of Passenger by air (Economy) 40% 40%
Transport of Passenger by air (Other than economy) 40% 60%
  •  Abatement is being withdrawn from chit fund service. Consequently, Service Tax shall be paid by the chit fund foremen at full consideration received by way of fee, commission or any such amount. They would be entitled to take Cenvat Credit.

SERVICE TAX – RATE CHANGES

(effective from a date to be notified after the enactment of the Finance Bill, 2015)

The rate of Service Tax is being increased from 12% plus Education Cesses to 14%. The ‘Education Cess’ and ‘Secondary and Higher Education Cess’ shall be subsumed in the revised rate of Service Tax. Thus, the effective increase in Service Tax rate will be from the existing rate of 12.36% (inclusive of cesses) to 14%, subsuming the cesses.

Service Tax Rate Earlier 12.36% New 14.00%

In respect of certain services Like money changing service, service provided by air travel agent, insurance service and service provided by Lottery distributor and selling agent 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 shall also be revised proportionately. Amendments to this effect have been proposed in the Service Tax rules. The new rates are summarized in the table below:

Service Old Rate New Rate
Air Travel Agent
Domestic booking 0.6 per cent 0.7 per cent
International booking 1.2 per cent 1.4 per cent
Life insurance
First year premium 3 per cent 3.5 per cent
Subsequent year premium 1.5 per cent 1.75 per cent
Money changing service
Amount of currency exchanged upto  INR 0.1 million 0.12 per cent subject to
minimum of INR 30
0.14 per cent subject to minimum of INR 35
Amount of currency exchanged exceeding INR 0.1 million and upto INR1 million INR 120 and 0.06 per cent INR 140 and 0.07 per
cent
Amount of currency exchanged exceeding INR1 million INR 660 and 0.012 per cent subject to maximum of INR 6,000 INR 770 and 0.014 per cent subject to
maximum of INR  7,000
Lottery
Where guaranteed prize payout is more than 80 per cent INR 7,000 INR 8,200
Where guaranteed prize payout is Less than 80 per cent INR 11,000 INR 12,800

SWACHH BHARAT CESS

An enabling provision is being incorporated in the Finance Bill, 2014 to empower the central Government 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. The cess shall be levied from the date to be notified after the enactment of the Finance Bill 2014.

( Author – CA. Chitresh Gupta, B.Com(H), FCA, IFRS (Certified), IDT (Certified) is Author of Book “An Insight Into Goods & Service Tax”  and also Managing Partner at M/s Chitresh Gupta & Associates)

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66 responses to “Service Tax Amendments Applicable w.e.f. 01st April 2015”

  1. BUSTEE WELFARE CENTRE says:

    Annual Lift maintenance (without parts ), we are paying Rs. 8000 per year . Now the maintenance co. asking for Service Tax. We want to know is it applicable for service tax

  2. franklings says:

    1. Transportation of all Military canteen items from military Main canteen to different

    military canteens (Unit run Canteen) by road is liable to service tax or not?. Under

    which section?.Is it is necessary to pay service tax by the service provider in this

    case.

    2.if I spends half portion of my total turnover for diesel like expenses ,can I show the

    rest half as my turnover while income tax filing.

    if i do so what are the other parameters that i should arrange/take care to substantiate

    this.

    Please clarify

  3. Anil Kumar T says:

    Negative list

  4. Anil Kumar T says:

    Please send amendments with respect to Negative list services.

  5. Anil Kumar T says:

    Please provide amendments with regard to Negative list services.

  6. SUJEET KUMAR THAKUR says:

    Dear sir Please advice …

    what is Applicable in with material Repairing and Paintainence …. Material + Service

    Then What is applicable Vat..? and service tax …? , I registered in Vat also and Service Tax Registered… Please kindly advice me … But no registered in WCT …

  7. mahesh vyas says:

    If manufacturer sales machine with levying only VAT. Being part of sales condition doing fitting job of machine at customer’s place. In profit & loss account he debits X amount as labour charges for this fitting of machine. Can service tax officer while scrutiny assessment charge service tax on this labour payment considering services provided by manufacturer.

  8. pavithra says:

    For b.c om 6 th sem n service tax now we consider 12.36 or 14.5 please reply to this

  9. K V raju says:

    Sir I am running brick Manufacturing industry and also works contract for Roads
    whether for Roads Service tax applicable or not and Rate of tax pls reply

  10. PRASANTA says:

    REVERSE CHARGE MECHANISM

    Manpower supply and security services when provided by an partnership firm to Ltd.co.SERVICE TAX UNDER REVERSE CHARGE IF APPLICABLE OR NOT. BEFORE JULY’15 WE WERE PROPRIETORSHIP FIRM AND CHARGED SERVICE TAX UNDER REVERSE CHARGE BUT WE HAVE CONVERTED FROM PROPRIETORSHIP TO PARTNERSHIP.

    SIR – PLEASE ADVICE SERVICE TAX UNDER REVERSE CHARGE WILL BE CHARGED OR NOT.

  11. Raju Ranjan Sahay says:

    What is the tax liability on me if I generate a retail order of Rs 100 for a Garment merchant.

  12. JYOTI says:

    IF WE HAVE BOOKED TRANSPORT CHARGES WITH OTHER CHARGES ON WHICH SERVICE TAX IS APPLICABLE SO IS ST APPLICABLE ON TRANSPORT CHARGES ALSO???
    AND THE WHOLE THING IS TO BE REIMBURSED BY A FOREIGN PARTY i.e. IT IS AN USD INVOICE.

  13. Amit Modi says:

    Hi…

    Our Pvt. Ltd company and we are releasing Movie in all theater and we have taken service from various party. my question is can we take service tax input on service from vendor .

    on movie distribution service take is not applicable in that can we take input of service tax .

    please advice.

    amit

  14. NIRAJ SINGH says:

    If an propertiship firm charging service tax at full rate @14% for repair, then can we take input of the whole service tax amount. Party has service tax registration.

  15. SUKUMAR says:

    Dear Sir,

    I am working with Govt Company as a consultant per annual fee Rs.9,60,000/- and they are Reimbursing Expenses like DA, HRA, Conveyance Allowance, Travel
    Expenses, Telephone etc

    if the above reimbursements expenses attract service tax

    Kindly clarify

    thanking you

  16. KETAN CHAUHAN says:

    Dear sir,
    we can avail serice tax on wastage product bill amount / enfluent bills amount

  17. Pashupath Nath Agrawal says:

    Sir
    1 Hand Drawing & Scketch drawing are taxable in Service Tax
    2 Scaning and digitalition are taxable in service Tax

  18. krushna bari says:

    hi

  19. krushna bari says:

    service tax is applicable on transport service provide to employee ?

  20. Pritee SM says:

    Kindly advise for export of services what will be the reverse charge calculation mechanism.

  21. M.A. KARIM says:

    Sir,
    I am a service provider for Telecom Industries (Mobile). We provide installation & commissioning activities. Some time we transport their Tower accessories to site for installation wherein we charge Transportation charges for Example say 5000/- . Against this we pay to the local lorry fellow 4000/- do I have to pay service tax for any of these amounts.
    We are also registered with service tax under 1) Installation & commissioning 2)transportation of goods by Road 3) auxiliary services.

    Kindly advice.

    Regards

  22. OM PRAKASH says:

    Dear Sir

    please help for a notification . if we are job work(erection commission and installation ) in dairy plant in f.y.2014-15 .please tell me exempt notification

  23. Vikas says:

    Transport by goods service on road .what is service taxable ? From service provided , service provided is individual person . Plz give me reply I am confused

  24. Avinash says:

    What is the service tax (12.36% or 14%) rate when we have submitted the bill in june month for service provided in April,may,June quarter.?

  25. Abhinav says:

    Dear Owner,

    For transportation of goods for Manufacturing Industry, how much should be the service tax levied??

    Is it only 3.5% (25% abatement) or 14%??

  26. Deepak Nariyal says:

    We have food service in different cities. Some of our store Have AC, provided by Builders or Mall and else store AC purchase by us.

    Now Q

  27. Bharat Prajapati says:

    Dear Sir,

    We had provided works contract service to government and the work was completed before 31st march 2015, but invoice raised in the month of july 2015 and also payment received in the month of July 2015. please guide me that service tax is applicable or not and if applicable what is the rate of service tax?

  28. s k majumdar says:

    Respected, Sir please send under noted information
    1. Is Rail way repair maintenance of building, road , sanitary, painting, white washing
    in service building, residential colony, circulating area are covered for service tax.
    2. is there different rule for service building and residential colony and rail way tanning institute, rest house, etc.
    3. what rate of service tax applicable
    4. from which date service tax is payable
    please note that the work involve in addition and alteration, new addition.
    thanking and regards . s k majumdar

  29. Inder Kapoor says:

    Sir, we are partnership firm and we have security services from Pvt. Ltd. Co. in this case who is responsible to pay service tax. if we are responsible to pay S.Tax then on which amount we have to pay service tax.

  30. prasad says:

    Sir,

    I have a question on ST new rates

    Service provided before ist of June 2015
    Bill raised before 1st June 2015
    Payment made after 1st June 2015

    in this case what will be the rate applicable Service Tax (12.36 or 14) when the Reverse charge is applicable (Rule 7 of point of Taxation )

    Kindly provide reply

    thanks

  31. Bhagwan Solanki says:

    what will be in case of subcontract while main contract is exempt from service tax.either due to main contract exempt subcontract also exempt from service tax or any other pls clarify.

  32. RENU KULKARNI says:

    Serice tax applicable on installation & commissioning of AC wef 01.04.15?

  33. Gaurav Acharya says:

    if manpower supplied is on per tonne basis(iron & steel)..whether the service tax liability is applicable or not under manpower supply & security services….. pl help

  34. Ramesh Kumar says:

    Dear Sir,

    I need a clarifications, when a foreign company does a maintenance contract in India, are they required to charge service tax, the said company does not have a office in India, or it is mandatory for the service receiver which is a government organisation is required to make the payment of service tax for the services received from foreign company, although they have not charged them. please clarify.

  35. Raja says:

    I have paid for a flat under construction to be ready in 2018.I paid 92% money with all taxes stamp suty

  36. Dilip kumar jha says:

    thanks

  37. M Kishan says:

    Please inform the service tax liability on commission earned by foreman of chit fund company from which date as per the budget 2015 and any abatement and cenvat credit. Thanking you Kishan

  38. Lingaraju K V says:

    Want to know the new rates w.e.f. date

  39. Mittal Sonetha says:

    The rate changed from 12.36% to 14%, Kindly explain the effect of Education Cess and Secondary Education Cess.

    One of our client is providing service of Works Contract and they used to deducted Service Tax @ 4.944% (40% of 12.36% – for original work). Now after amendment in Rate of Service Tax they need to deduct Service Tax @ 5.6%, Correct? or they need to deduct @ 5.768% (including Cess)and from when they need to change it ?

    And

    What treatment need to be given to Swachh Bharat Cess of 2% ?

  40. Karishma says:

    Reply to Winnie Satwani : You can make the payment even after June (after enactment of Finance Bill) , still rate of 12.36% will be applicable. since service has been already provided + bill has been raised before june. if service is still to be provided, then the service provider will charge you for the difference of service tax rate.

    For your reference :
    (Basically, if Invoice is issued (this month) May for service to be provided in June & any Payment not received , the rate applicable will be 14%.
    If Invoice issued in May for service to be provided in June plus Payment already received in may,the rate of 12.36% is applicable.
    Also if invoice is issued in May for service already provided, but the payment is received on 1st June or later, old service tax rate of 12.36% will be applicable.

    If Invoice is to be issued in June for service to be provided after change i.e June or later, but the payments r received before June, the new rate of 14% will be applicable.
    If Invoice issued in June for service Provided before June & the Payment is also received Before June, rate of 12.36% is applicable.
    Also, If Invoice is issued in June for service already provided (Before June) & Payment is received in June or later, Rate applicable is 14%.)

  41. Karishma says:

    there is abatement for ” renting of motor cab” and for “transport of passengers with or w/o acc belongings in a contract carriage except motor cab & radio taxi” of 60%.
    RCM is applicable on “renting of motor vehicle designed to carry passengers”.

    It is clear that RCM is applicable on “rebting of motor cab” but , My doubt is , is RCM applicable on “transport of passengers”.
    does tranport of passengers & Renting of motor vehicle to carry passengers mean the same thing??

  42. ACME says:

    We want service tax % for customers those purchases of flats and shops.

  43. Winnie Santwani says:

    One of our service provider has raised a bill in March 2015 and has charged the old rate of service tax. However, he claims that if the payment is made after the enactment of the new Finance Bill, then the he shall recover the difference amount of service tax as would be calculated based on the new service tax rate. Is this proposition right? How can I defend this.

  44. ramesh says:

    Dear Sir,

    Service Tax New Rate of Tax 14% or old only continued. Kindly do the update new rate of tax

  45. santosh prasad says:

    What about partial charges if a individual, partnership firm provide security service to proprietorship, partnership or corporate firm

  46. kalkifluid says:

    Sir,

    It is said new service tax rate of 14 % will be into effect after sanctioning of finance bill, till such time can we proceed with the exisiting service tax rate of 12.36% and from which date 14% is effective.

  47. Sachin Mate says:

    The Increase Rate 14% is going to be effective From a date to be notified soon after the enactment of Finanace Atc 15 In addition to this Now St Rate Is 12.36%

  48. Sneha says:

    What is a the service tax rate applicable for bills raised after 1st April 2015.

    Is Swachh Bharat cess applicable to all and everywhere?

  49. S Chandrasekaran says:

    What is the effective rate of Service tax w.e.f. 01.04.2015 whether 14% (inclusive of Cess) or 12.36%.

  50. Jitesh Jalan says:

    Very informative and cleanly explained.

    thanks a tonne!

  51. chetan manger says:

    dear sir,
    what are the rate of service tax to be applicable as from 01.04.2015, as from we have started service tax @ 14% on our sales invoices, we are very confuse, which rate of service tax is applicable 12.36% or 14% from 01.04.2015.

    Please replay me

  52. r.srimathi says:

    As Mr. Sharma’s says new service tax rate will be into effect after sanctioning of finance bill, till such time can we proceed with the exisiting service tax rate of 12.36%

  53. r.srimathi says:

    As Mr. Sharma’s says new service tax rate will be implemented after the submission of Finance bill, if its so, can we proceed with the old service tax rate of 12.36%

  54. CA Priyanka says:

    a simple and understandable compilation.
    good one.

    thanks

  55. Prakash R says:

    My question is same as that of Mr Kannan- “FOR THE SERVICE RENDERED IN MARCH 2015 BUT TO BE BILLED IN APRIL 2015, THEN PLEASE TELL US WHETHER WE HAVE TO TAKE 12.36% OR 14% SERVICE TAX”

    Also please let me know what happens to the row-298 for E cess and row -426 Hr E Cess as was being followed till date…

    Thanks
    Prakash.R

  56. kannan says:

    FOR THE SERVICE RENDERED IN MARCH 2015 BUT TO BE BILLED IN APRIL 2015, THEN PLEASE TELL US WHETHER WE HAVE TO TAKE 12.36% OR 14% SERVICE TAX.

  57. bk sharma says:

    Tax Research Unit of CBEC has issued instructions vide F. No. 334/5/2015 TRU dated 28-02-2015 and clarified at para 3.3 as quoted below:-

    “3.3 The new Service Tax rate shall come into effect from a date to be notified by the Central 6overnment after the enactment of the Finance Bill, 2015.”
    It means, that the new service tax rate cannot come into force before the Finance Bill, 2015 get assent from the President of India, after which the government will notify the effective date.

  58. ajay says:

    what is the service tax on insurance premium from 1st april 2015. is it 3.92 or 3.50 ? does educational cess and sec & higher sec educational cess need to charge separate on 14% or its already included. please reply. before it was 3.09%. what about from 1st april 2015.

  59. S.Durai raj says:

    Good Work keep it up, very usful information.

    we are into system hardware support industry, currently we are into 12.36% of service tax, when the new amendment will be effective and what is the % of service tax

  60. Somashekar says:

    Hi

    Software industry service tax new rates will be applicable from which date

  61. Ashok says:

    Thanks for Valuble Information

  62. CA RASHMI ACHARYA says:

    A NICE COMPREHENSIVE COMPILATION.

    EFFECTIVE DATES EXPECTED IN YOUR NEXT ARTICLE.

  63. kishan says:

    A very good compilation of the amendments.
    Thank you.

  64. Shah mukesh says:

    Advance received from customer on 15-3-2013 to supply capital item, still customer not lifted material as at 31-3-2015, pl clarify same advance to repay on 31-3-2015

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