Finance Act (No. 20), 2015 had substituted the words ‘support services’ provided by Government or a local authority to a business entity by the words ‘any services’ under Negative List. Now all services provided by the Government or local authority to a business entity, except the services that are specifically exempted, or covered by any another entry in the Negative List, shall be liable to service tax w.e.f. 01.04.2016. Such transactions would be covered under the Reverse Charge Mechanism.
However, to provide relief to small taxpayer, a new entry has been inserted (No. 48) under Mega Exemption Notification to provide that services provided by Government or a local authority to a business entity with a turnover up to Rs. 10 lacs in the preceding financial year will be out of the purview of service tax from 01.04.2016 onwards.
[TO BE PUBLISHED IN THE GAZETTE OF INDIA, EXTRAORDINARY, PART II, SECTION 3, SUB-SECTION (i)]
GOVERNMENT OF INDIA
MINISTRY OF FINANCE
(DEPARTMENT OF REVENUE)
Notification No. 06/2016- Service Tax
Dated: February 18, 2016
In exercise of the powers conferred by section 109 of the Finance Act, 2015 (No. 20 of 2015), the Central Government hereby appoints the 1st day of April, 2016 as the date on which the provisions of sub-section (1) of section 109 of the said Act shall come into effect.
[F. No. B-1/10/2015 – TRU]
Under Secretary to the Government of India
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