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)
New Delhi, Dated: 18th February, 2016
Notification No. 07/2016- Service Tax
GSR. 184(E).- In exercise of the powers conferred by sub-section (1) of section 93 of the Finance Act, 1994 (32 of 1994), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby makes the following further amendment in the notification of the Government of India in the Ministry of Finance (Department of Revenue) No. 25/2012-Service Tax, dated the 20th June, 2012, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i) vide number G.S.R. 467 (E), dated the 20th June, 2012, namely:-
1. In the said notification, in the opening paragraph,
(i) after entry No. 47, the following shall be inserted, namely-
(48) Services provided by Government or a local authority to a business entity with a turnover up to rupees ten lakh in the preceding financial year.
2. The amendment shall come into effect on 1st April, 2016.
[F. No. B1/10/2015-TRU]
Under Secretary to the Government of India
Note:-The principal notification was published in the Gazette of India, Extraordinary, by notification No. 25/2012 – Service Tax, dated the 20th June, 2012, vide number G.S.R. 467 (E), dated the 20th June, 2012 and last amended by notification No. 20/2015 – Service Tax, dated the 21st October, 2015 vide number G.S.R. 799(E), dated the 21st October, 2015.