In the Union Budget, 2015 presented by the Hon’ble Finance Minister Shri. Arun Jaitley on February 28, 2015, Saturday, numerous changes in Direct and Indirect taxes, have been introduced to address the need of hour, the continued growth to contest the challenges paved in the way of progress. Changes in the Chapter V of the Finance Act, 1994 (“the Finance Act”) is one such step made to combat the impediments in growth by adhering the maxim – “secret of walking on water is – knowing where the stones are”. Certain imperative changes brought by the Union Budget, 2015 in the Finance Act with effect dates are:
| EFFECTIVE FROM MARCH 1, 2015 | |
| Notification No. 42/2012-ST dated 29-06-2012 rescinded vide Notification No. 3/2015-ST dated 1-03-2015. | The exemption vide Notification No. 42/2012-ST dated 29-6-2012, to the service provided by a commission agent located outside India to an exporter located in India, become redundant in view of the amendment made in the previous budget, in the definition of “intermediary” in the Place of Provision of Services Rules, 2012 to include intermediary of goods in its scope at par with Intermediary for services. |
| Service Tax Rules, 1994 amended vide Notification No. 5/2015-ST dated 01-03-2015 | Under Rule 2: Aggregator Model taxable under Full Reverse Charge Mechanism· Definition of the terms ‘aggregator’and ‘brand name or trade name’ has been specifically inserted;· Aggregator means a person, who owns and manages a web based software application, and by means of the application and a communication device, enables a potential customer to connect with persons providing service of a particular kind under the brand name or trade name of the Aggregator.As is evident from the nature of transactions there are 3 parties involved under an Aggregator Model:
– The Aggregator; – Service Provider using the brand name or trade name of Aggregator; and – Customer · Service received by Aggregator is brought under Reverse Charge Mechanism. Under Rule 4: New Registration Process · Rule 4(9) inserted to provide that the CBEC shall, by way of an order, specify the conditions, safeguards and procedure for registration in Service tax. In this regard Order No. 1/15-ST dated 28-02-2015, effective from 1-03-2015 has been issued, prescribing documentation, time limits and procedure for registration for single premises. Registration for single premises: within 2 days of filing of application. New Rule 4C has been inserted after Rule 4B of the Service Tax Rules – Corresponding changes made in Rule 5 thereof: · Provision for issuing digitally signed invoices, bill or challan has been added along with the option of maintaining of records in electronic form and their authentication by means of digital signatures. · It is further provided that the conditions and procedure in this regard shall be specified by the CBEC. |
| Changes in Reverse Charge Mechanism vide Notification No. 7/2015-ST dated 01-03-2015, amending Notification No. 30/2012-ST dated 20-06-2012 | Aggregator Model under Full Reverse Charge Mechanism· Liability of Aggregator(supra) to pay Service tax under Reverse Charge;· Person liable to pay Service tax:- If the Aggregator is located in India, then such Aggregator is liable.
– If the Aggregator does not have physical presence in the taxable territory, then the person representing the Aggregator is liable. – If the Aggregator does not either have a physical presence or representative in the taxable territory then the Aggregator shall appoint a person for the purpose of paying Service tax. |
| Changes in Advance Ruling under Section 96A(b)(iii) of the Finance Act vide Notification No. 9/2015-ST dated 01-03-2015 | Extending scope of Advance Rulings to Resident firmThe facility of Advance Ruling has been extended to Resident firm by specifying such firm as a class of persons under Section 96A (b)(iii) of the Finance Act. |
(Bimal Jain, FCA, FCS, LLB, B.Com (Hons), Mobile: +91 9810604563, Email: bimaljain@hotmail.com)
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The provision of enhancement of Service Tax Rate from 12% to 14% and abolishing Educational and Higher Educational Cess in finance bill 2015 to be effective from publication of Notification which supposed on 01/04/2015. A Insurance Policy having premium due on 29/03/2015 inclusive of Service Tax @ 12.36%, payable with a terms of payment of 15 days grace period. If person pay the premium on 05/04/2015 or a later date (within grace period) whether he is liable, to pay premium with enhanced rate of Service Tax i.e. 14% or rate applicable on 29/03/2015 i.e. 12.36%.