1) Rate of Service Tax

Finance Bill, 2015 has proposed increase in rate of Service Tax from 12.36% to 14%. News reports are being broadcasted and published stating that the rate has been increased from 01st April 2015, are incorrect. These reports have caused wide spread confusion amongst all.

In order to clear the confusion, we would like to apprise all that the rate of service tax  will be effective from the date to be notified after enactment of Finance Bill, 2015.  The change in rate of tax has been proposed by way of an amendment to section 66B of the Finance Act 1994 and an amendment to the Finance Act can only be made by the Parliament after receiving assent from the President.

Historically the assent is obtained from the President in the first half of May, as the assent has to be obtained with 75 days from the presentation of the Budget in Parliament. Hence, the notification regarding increase in rate of service tax will be issued somewhere around 15th May, 2015.

Thus it is to be noted that there is no change in rate of Service Tax w.e.f. 1st April, 2015.

Also given hereunder is the tabular analysis of the applicable rate of service tax considering all the three events which occasions the liability upon a service provider/recipient to charge/pay service tax

Tabular analysis about applicable Rate of Tax on change in Rate of Tax

Case Date of Provision of Service Date of Issue of Invoice Date of Receipt of Payment Applicable Rate
I Old Rate New Rate New Rate New Rate
II Old Rate Old Rate New Rate Old Rate
III Old Rate After Old Rate Old Rate
IV New Rate Old Rate New Rate New Rate
V New Rate Old Rate Old Rate Old Rate
VI New Rate New Rate Old Rate New Rate

Based on the above table prepared in accordance with Rule 4 of Point of Taxation Rules, a service tax assessee may discharge their service tax liability in case of the change in rate of service tax.

Further, we would also refresh the changes which were announced with the Budget but are effective from 01st April 2015

2)      Exemptions Withdrawn w.e.f.01.04.2015 (Vide Notification No. 6/2015-ST dated 1.3.2015)

following exemption have been withdrawn and the following activities undertaken by service providers will attract service tax with effect from 1st April 2015:

  • Services provided to government, local authority or a governmental authority 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,
    • 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.
  • Services provided by way of construction, erection, commissioning or installation of original works pertaining to an airport or port
  • Services provided by a performing artist in folk or classical art form of (i) music, or (ii) dance, or (iii) theater, where amount charged is more than Rs. 1,00,000 for a performance;
  • Transportation of food stuff by rail, or vessels or road will be limited to food grains including rice and pulses, flour, milk and salt.
  • Services provided by a mutual fund agent or distributor to a mutual fund or assets management company.
  • Services of selling or marketing agent of lottery ticket to a distributor.
  • Telecommunication services by

i. Departmentally run public telephone;

ii. Guaranteed public telephone operating only local calls;

iii.   Service by way of making telephone calls from free telephone at airport and hospital where no bill is issued.

3)    Certain New Exemptions have also been made effective from 01st April 2015. They are as under:

4)      Abatements

a. A tabular presentation of changes in abatement is as under:

Entry No. Description of Taxable Services Taxable Percentage Effective Rate Taxable Percentage Effective rate
Upto 31.03.2015 Upto 31.03.2015 w.e.f.01.04.2015 W.e.f.01.04.2015
5 Transport of passengers by air, with or without accompanied belongings in(i)economy class(ii) other than economy class  

40%

 

 

40%

 

4.944%

 

 

4.944%

 

40%

 

 

60%

 

4.944%

 

 

7.416%

 

7 Services of goods transport agency in relation to transport of goods 25% 3.09% 30% 3.708%
8 Services provided in relation to chit 70% 8.625% 100% 12.36%
10 Service in relation to Transport of Goods in a Vessel. 40% 4.944% 30% 3.708%

b. Restriction on the availment of CENVAT Credit in respect of services of “Transport of goods by rail” and “Transport of passengers, with or without accompanied belongings by rail”

5)      Reverse Charge Mechanism

a. Manpower supply and security services when provided by non corporate to a body corporate are being brought to full reverse charge as a simplification measure. Presently, these are taxed under partial reverse charge mechanism.- Notification No. 7/2015-ST Dated: March 01, 2015

b. Services provided by mutual fund agents, mutual fund distributors and lottery agents- Notification No. 7/2015-ST Dated: March 01, 2015

6)      Cenvat Credit Rules, 2004

Credit of service tax paid under partial reverse charge by the service receiver without linking it to the payments of value of service to service provider.

(Abhijeet Shrivastava (Advocate), O/o H.S. Shrivastava (Sr. Advocate), Opp. Super Market Ganjipura, Jabalpur, Mobile- 9893276878)

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26 responses to “Service Tax Rates and Changes effective from 1st April 2015”

  1. Shailesh Jain says:

    Dear Sir,
    I have pvt ltd company in which last year first time we have received service of goods transportation by road of Rs 6500/-, In which transporter has issued invoice stated that Service tax @4.2% and SBT@0.15 have to pay by consignee, So what to do in this case, we have no service tax no. so should we pay service tax and in which account it should pay

  2. ashif says:

    Dear sir,
    please provide information related to service tax on freight and including its abatement etc.

  3. g s reddy says:

    we are manpower supply agency. For the month of March in every year, service will be completed in the month of March 31st. But we raised invoice on or after 01-04-2015, when we pay service tax on or before March 31st or April Month. please clarify.

  4. Priya says:

    Dear sir
    When does service tax liablity of the receiver arise on Transporter’s invoice dated 31.3.15 and its payment made on April 2015?
    anticipating ur valuable reply

  5. DHANABALAN says:

    New service tax cess of 0.5% whether applicable for GTA by roads.

    Regards,
    Dhanabalan

  6. BACHAN SINGH BISHT says:

    as regards security agencies service tax 100% liable to service receiver

  7. Laxman Negi says:

    Dear Sir,
    We are into Sales and maintenance Service business of Telecom equipments and security systems(CCTV/Fire alarm.Etc)
    Sir what will be the service tax on the above items, since our C.A says 14% and clint says to bill on 505 of 14%,
    sir please let us know the fact.

  8. Firoz Khan says:

    Respected Sir,

    I am new small trader in courier industry. Kindly guide me for service tax.

    Example
    I am paying to courier company (who is main service provider )for a parcel as basic Rs.1000 + 140 service tax = Total Rs.1140/-.

    I am charging to our customer Rs.1382 for the same parcel and getting profit Rs.242/-

    After service tax registration, our bill will be to our customer as
    basic 1200 + 182 service tax = total Rs.1382/-.

    Now I have to pay service tax to govt. service tax Rs.182 – serive tax Rs.142 = payable service tax Rs.40/-

    Please reconfirm is it okay.

    Thanks and Regards,
    Firoz Khan

  9. Dharmendra says:

    Dear Sir,

    we are billing a private hospital for a tour package for its Directors, whether service tax will be applicable on this bill ?? as the hospital says that no service tax can be charged on billing to hospitable.

    Regards

    Dharmendra

  10. Rupak says:

    Dear Sir / Madam
    We are a Placement Consultant i.e. we provide candidates to companies and the candidates are on the payroll of the company, we do not have any employer employee relationship with the candidate. we charge service fees against referring suitable candidates for the said job to the companies. So is Reverse Charge Mechanism applicable to us or we have to charge ST @ 14% and submit to Govt.
    please help.

    Regards
    Rupak

  11. A MARIAPPAN says:

    DEAR SIR,

    As regards to security service i have query that service provider (security agency) has provided service in the month of june 2015 and raised in the month of July 2015 charging service tax @ 25% of 14%. 75% service tax to be paid by a service receiver. this is correct or inncorrect. pls reply the correct method.

    thanking you

  12. venkatesh says:

    Dear sir,

    Transport of goods(sugar) by agents , whether service tax is applicable if yes how much?

    rgds

    Venkatesh

  13. Pravin Shinde says:

    Dear Sir,

    we r a customer broker, & registered transport service provider. i need clarification on service tax on transportation to be charge or not, since our some customer ask us not to charges service tax on transportation & some customer ask us to charge service tax on transportation (on abatement basis), pls. help me on this issue with notification detail.

    Best Regards,
    Pravin Shinde.

  14. shailendra says:

    Dear sir,
    i have working pvt ltd co we are service Receivable (00440262-Transport of
    Goods by Road )service tax on grand total amount how much % calculate
    (exp:- old Calculation are bills grand total 100/- the calclation 100×25%=25 x12.36% service Tax amount 3.09/-) please give us 100/-basic Rate% X 14%service Tax whether service Receiver how much paid
    shailendra

  15. Amar Khurana says:

    Dear Sir,

    We are a custom broker and charging service tax on the service rendered to customers. is their any amendment in section 67 which makes it mandatory to include receipted charges also in taxable head.

    Like payment to Concor and shipping line or CFS operator on which service tax have already been charged

    kindly through some light

  16. MM ARORA says:

    Dear Sir,

    we are sole proprietorship firm as service provider as a placement consultants in manpower recruitment. Please advise us as to what rate of service tax we should charge from corp-orates from 01/04/2015.

  17. MM ARORA says:

    Dear Sir,

    we are service provider as a placement consultants in manpower recruitment. Please advise us as to what rate of service tax we should charge from corp-orates from 01/04/2015.

  18. Anu Kumar Sharma says:

    ….INVOICE IS ISSUED ON OR AFTER 01-04-2015 AND PAYMENT IS ALSO MADE ON OR AFTER 01-04-2015 -:

    Here following two situations may arise:

    a) Invoice is raised within 30 days of date of completion of service – Clearly, service receiver will have to pay 100% Service tax;

    b) Invoice is not raised within 30 days of date of completion of service – Here again, service provider is liable to pay 25% in terms of Rule 3 of the POT Rules. However, since payment is made on or after 01-04-2015, the Department may invoke Rule 7 of the POT Rules and allege that the service receiver is liable to pay 100% in view of the amended provisions as the date of payment is Point of taxation.

    Anu Kumar Sharma
    Ca Final Student

  19. Laxmi Narayan Jhawar says:

    Sir,I am military Engineer Serviced contractor and exempted from service tax.Now service tax imposed wef 01/04/2015.I had one bill dated March 2015 and payment has been made in May 2015.Please confirm service tax is applicable or not.Waiting for your kind suggestion.

  20. Manish says:

    Dear Sir,
    As regards to security service i have a query that how much of service tax amount have to pay by service receiver and the security service provider from 01.04.2015.
    Whether receiver of service is liable to pay only 75% of Service Tax or on 100% service tax.
    Regards,
    Manish

  21. Payal Kothari says:

    I am not getting any feedback.

  22. D K Das says:

    Please let me know that is any abatement available in Rent a cab service if so at what rate?

  23. VENKATESH says:

    Please tell me the service tax applicable for works contract. We were under composition and we were charging 4.944% earlier. Please guide me on this.

  24. VIKASH DADHICH says:

    please tell me the services tax applicability in courier services effected from 1 April 2015, it is paid by service receiver or service provider,or any changes in it, please tell

  25. Vineet says:

    I am sole propeity firm giving service of placements. If i m raising an Invoice today, should i show Service Tax in it or keep it blank and charge or show the amount which is a fees. As now it is 100% reversible. Please guide.

    thanks

  26. CMA Utpal K Saha says:

    Dear Sir,
    As regards to security service i have a query that
    Service provider ( Security Agency) has provided service in the maonth of march 2015 and raised invoice in the month of 4th April 2015 charging Service TAx @3.09%. The service receiver is a company.Now, Service receiver has paid him on 6th April 2015.
    Whether receiver of service is liable to pay only 75% of Service TAx or on 100% service tax based on POT Rule 7.
    Regards,
    CMA Utpal K Saha

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