2015 UNION BUDGET
ANALYSIS ONCHANGES RELATING TO
SERVICE TAX
2015 UNION BUDGET
ANALYSIS ONCHANGES RELATING TO
SERVICE TAX
R. Venkatakrishnan & Associates
Finance Act, 1994Finance Act, 1994
RVK Associates Location – Chennai, Bangalore, Hyderabad, Salem & Devanahalli
Rate of Service TaxStatutory Ref: Section 66B
Existing Provision: ST to be levied at 12%
Proposed Provision: ST to be levied at 14%
Effective from – Date to be notified by Central Government after the bill is approvedby the President of India.
Impact – Inclusive contracts will take a hit & working capital management for corporateservice providers will also suffer.
Note – Advance payment received will be taxable at revised ST rate – Rule 4 of POTRules 2011.
Statutory Ref: Section 66B
Existing Provision: ST to be levied at 12%
Proposed Provision: ST to be levied at 14%
Effective from – Date to be notified by Central Government after the bill is approvedby the President of India.
Impact – Inclusive contracts will take a hit & working capital management for corporateservice providers will also suffer.
Note – Advance payment received will be taxable at revised ST rate – Rule 4 of POTRules 2011.
Statutory Ref: Section 66B
Existing Provision: ST to be levied at 12%
Proposed Provision: ST to be levied at 14%
Effective from – Date to be notified by Central Government after the bill is approvedby the President of India.
Impact – Inclusive contracts will take a hit & working capital management for corporateservice providers will also suffer.
Note – Advance payment received will be taxable at revised ST rate – Rule 4 of POTRules 2011.
RVK Associates Location – Chennai, Bangalore, Hyderabad, Salem & Devanahalli
Education Cess & SHE Cess
Statutory Ref: Finance Act, 2004 & Finance Act, 2007
Existing Provision: Edu Cess to be levied at 2% on ST & SHE Cess to be levied at 1%of ST
Proposed Provision: Deleted (Subsumed in 14% tax rate)
Effective from – Date to be notified by CG after the bill is approved by the Presidentof India.
Note: Cess will continue till the time revised rate comes into effect
Statutory Ref: Finance Act, 2004 & Finance Act, 2007
Existing Provision: Edu Cess to be levied at 2% on ST & SHE Cess to be levied at 1%of ST
Proposed Provision: Deleted (Subsumed in 14% tax rate)
Effective from – Date to be notified by CG after the bill is approved by the Presidentof India.
Note: Cess will continue till the time revised rate comes into effect
Statutory Ref: Finance Act, 2004 & Finance Act, 2007
Existing Provision: Edu Cess to be levied at 2% on ST & SHE Cess to be levied at 1%of ST
Proposed Provision: Deleted (Subsumed in 14% tax rate)
Effective from – Date to be notified by CG after the bill is approved by the Presidentof India.
Note: Cess will continue till the time revised rate comes into effect
RVK Associates Location – Chennai, Bangalore, Hyderabad, Salem & Devanahalli
Swachh Bharat Cess
Statutory Ref: Chapter VI of Finance Act 2015
Existing Provision: NIL
Proposed Provision: SB Cess @ 2% of the value of such taxable services
Effective from – Date to be notified by CG
Note: Though the name is ‘Cess’ it is chargeable on the value of the service and notlike the present cess which is charged on the service tax. Accordingly, along with this2%, the total service tax will become 16% on taxable services.
Statutory Ref: Chapter VI of Finance Act 2015
Existing Provision: NIL
Proposed Provision: SB Cess @ 2% of the value of such taxable services
Effective from – Date to be notified by CG
Note: Though the name is ‘Cess’ it is chargeable on the value of the service and notlike the present cess which is charged on the service tax. Accordingly, along with this2%, the total service tax will become 16% on taxable services.
Statutory Ref: Chapter VI of Finance Act 2015
Existing Provision: NIL
Proposed Provision: SB Cess @ 2% of the value of such taxable services
Effective from – Date to be notified by CG
Note: Though the name is ‘Cess’ it is chargeable on the value of the service and notlike the present cess which is charged on the service tax. Accordingly, along with this2%, the total service tax will become 16% on taxable services.
RVK Associates Location – Chennai, Bangalore, Hyderabad, Salem & Devanahalli
Other Amendments to Finance Act, 1994
Statutory Ref: Section. 67 - Reimbursable Expenditure includable in value of taxableservice.
Consideration for value of taxable services shall include:
All reimbursable expenditure or cost incurred and charged by the service provider.
Amount retained by the distributor or selling agent of lottery from gross saleamount of lottery ticket, or, as the case may be, the discount received, that is thedifference in the face value of lottery ticket and the price at which the distributor orselling agent gets such tickets.
Effective from – 01st March, 2015
Note: ‘Pure agent expenses’ will continue to be exempt, if they satisfy the conditions ofRule 5 of Valuation Rules and the illustrations therein. This is only a statutory power totax, if Rule 5 is violated.
Statutory Ref: Section. 67 - Reimbursable Expenditure includable in value of taxableservice.
Consideration for value of taxable services shall include:
All reimbursable expenditure or cost incurred and charged by the service provider.
Amount retained by the distributor or selling agent of lottery from gross saleamount of lottery ticket, or, as the case may be, the discount received, that is thedifference in the face value of lottery ticket and the price at which the distributor orselling agent gets such tickets.
Effective from – 01st March, 2015
Note: ‘Pure agent expenses’ will continue to be exempt, if they satisfy the conditions ofRule 5 of Valuation Rules and the illustrations therein. This is only a statutory power totax, if Rule 5 is violated.
Statutory Ref: Section. 67 - Reimbursable Expenditure includable in value of taxableservice.
Consideration for value of taxable services shall include:
All reimbursable expenditure or cost incurred and charged by the service provider.
Amount retained by the distributor or selling agent of lottery from gross saleamount of lottery ticket, or, as the case may be, the discount received, that is thedifference in the face value of lottery ticket and the price at which the distributor orselling agent gets such tickets.
Effective from – 01st March, 2015
Note: ‘Pure agent expenses’ will continue to be exempt, if they satisfy the conditions ofRule 5 of Valuation Rules and the illustrations therein. This is only a statutory power totax, if Rule 5 is violated.
RVK Associates Location – Chennai, Bangalore, Hyderabad, Salem & Devanahalli
Other Amendments to Finance Act, 1994
Statutory Ref: Section. 73
A new sub-section (1B) will enable to Department to recover Service Tax declaredin the return but not paid, without service of any notice.
Sub-section (4A) that provides for reduced penalty if true and complete details oftransaction were available on specified records, is being omitted.
Effective from – 01st March, 2015
Note: In lieu of above provision of 73(4A) (reduced penalty), there are alternatesimplified penalty provisions, discussed later.
Statutory Ref: Section. 73
A new sub-section (1B) will enable to Department to recover Service Tax declaredin the return but not paid, without service of any notice.
Sub-section (4A) that provides for reduced penalty if true and complete details oftransaction were available on specified records, is being omitted.
Effective from – 01st March, 2015
Note: In lieu of above provision of 73(4A) (reduced penalty), there are alternatesimplified penalty provisions, discussed later.
Statutory Ref: Section. 73
A new sub-section (1B) will enable to Department to recover Service Tax declaredin the return but not paid, without service of any notice.
Sub-section (4A) that provides for reduced penalty if true and complete details oftransaction were available on specified records, is being omitted.
Effective from – 01st March, 2015
Note: In lieu of above provision of 73(4A) (reduced penalty), there are alternatesimplified penalty provisions, discussed later.
RVK Associates Location – Chennai, Bangalore, Hyderabad, Salem & Devanahalli
Other Amendments to Finance Act, 1994Statutory Ref: Replacement of Section 76 & 78 – Penalties – w.e.f. date of
enactment of Finance Bill 2015
Particulars Section 76 Section 78
When Applicable Cases other than fraud,suppression etc.
Fraud, Collusion, wilfulmisrepresentation Suppression
Cases other than fraud,suppression etc.
Fraud, Collusion, wilfulmisrepresentation Suppression
When ST paid before issue of show causenotice u/s 73(1)
No penalty No penalty
When ST+ Interest is paid within 30 daysof issue of SCN but before order is issued
No penalty 15% of the service tax demandedin the SCN
When ST+Interest is paid after 30 days ofissue of SCN but before the order is issued
Penalty as decided in theorder as mentioned below
100% of the service tax demandedin the SCN
Maximum penalty to be levied in theorder
Maximum of 10% of servicetax demanded in the order
Equal to 100% of the service taxdemanded in the order
RVK Associates Location – Chennai, Bangalore, Hyderabad, Salem & Devanahalli
Maximum penalty to be levied in theorder
Maximum of 10% of servicetax demanded in the order
Equal to 100% of the service taxdemanded in the order
In case ST+ Interest+ Penalty paid within30 days of Order in Original
25% of penalty imposed inthe order
25% of Service tax demanded inthe order
In case ST amount subsequently reducedby any appeal order
Benefit of reduced penalty (25%) available if ST+ Interest+Reduced Penalty paid within 30 days of such appeal order
Finance Act, 1994… Additions
Statutory Ref: Section. 78B – New section - Transitional provisions for penalties
i. New penalties under section 76 and 78 shall apply to all cases where,
i. No SCN is served or
ii. SCN is served but no order has been issued
iii. Before the date of the finance bill, 2015 being enacted
ii. In respect of cases covered u/s 73(4A) penalty shall not exceed 50% of the servicetax amount
Effective from – After the finance bill 2015 is enacted
Statutory Ref: Section. 78B – New section - Transitional provisions for penalties
i. New penalties under section 76 and 78 shall apply to all cases where,
i. No SCN is served or
ii. SCN is served but no order has been issued
iii. Before the date of the finance bill, 2015 being enacted
ii. In respect of cases covered u/s 73(4A) penalty shall not exceed 50% of the servicetax amount
Effective from – After the finance bill 2015 is enacted
Statutory Ref: Section. 78B – New section - Transitional provisions for penalties
i. New penalties under section 76 and 78 shall apply to all cases where,
i. No SCN is served or
ii. SCN is served but no order has been issued
iii. Before the date of the finance bill, 2015 being enacted
ii. In respect of cases covered u/s 73(4A) penalty shall not exceed 50% of the servicetax amount
Effective from – After the finance bill 2015 is enacted
RVK Associates Location – Chennai, Bangalore, Hyderabad, Salem & Devanahalli
Other Amendments to Finance Act, 1994
Statutory Ref: Section. 80
Existing Provision: Waiver of Penalty in specified situations.
New Provision: The most beneficial Section 80 of Finance Act, 1994 which provides forwaiver of penalty in certain Bonafide circumstances is being omitted.
Effective from – The date Finance Bill 2015 is enacted
Note: An ineffective section, not acted upon by any Commissioner, hence being omitted.
Statutory Ref: Section. 80
Existing Provision: Waiver of Penalty in specified situations.
New Provision: The most beneficial Section 80 of Finance Act, 1994 which provides forwaiver of penalty in certain Bonafide circumstances is being omitted.
Effective from – The date Finance Bill 2015 is enacted
Note: An ineffective section, not acted upon by any Commissioner, hence being omitted.
Statutory Ref: Section. 80
Existing Provision: Waiver of Penalty in specified situations.
New Provision: The most beneficial Section 80 of Finance Act, 1994 which provides forwaiver of penalty in certain Bonafide circumstances is being omitted.
Effective from – The date Finance Bill 2015 is enacted
Note: An ineffective section, not acted upon by any Commissioner, hence being omitted.
RVK Associates Location – Chennai, Bangalore, Hyderabad, Salem & Devanahalli
Service Tax Rules, 1994Service Tax Rules, 1994
RVK Associates Location – Chennai, Bangalore, Hyderabad, Salem & Devanahalli
Registration
Statutory Ref: Rule 4 of Service Tax Rules r/w Order No. 1/15-ST, dated 28.2.2015.
Subject – Simplification of Registration procedures
To move towards ease of doing business, it has been prescribed to grant registrationfor single premises within 2 days of filing of application. The modalities of the samehave been issued by CBEC vide Order No. 1/2015 which also provides for makingavailable provisional registration for payment of taxes. This will help new assessees.
Effective from – 01st March, 2015
Statutory Ref: Rule 4 of Service Tax Rules r/w Order No. 1/15-ST, dated 28.2.2015.
Subject – Simplification of Registration procedures
To move towards ease of doing business, it has been prescribed to grant registrationfor single premises within 2 days of filing of application. The modalities of the samehave been issued by CBEC vide Order No. 1/2015 which also provides for makingavailable provisional registration for payment of taxes. This will help new assessees.
Effective from – 01st March, 2015
Statutory Ref: Rule 4 of Service Tax Rules r/w Order No. 1/15-ST, dated 28.2.2015.
Subject – Simplification of Registration procedures
To move towards ease of doing business, it has been prescribed to grant registrationfor single premises within 2 days of filing of application. The modalities of the samehave been issued by CBEC vide Order No. 1/2015 which also provides for makingavailable provisional registration for payment of taxes. This will help new assessees.
Effective from – 01st March, 2015
RVK Associates Location – Chennai, Bangalore, Hyderabad, Salem & Devanahalli
Invoices & Records
Statutory Ref: Rule 5 of Service Tax Rules, 1994
Proposed Provision: Invoices can now be digitally signed. Also, records can bepresented in electronic form.
Effective from – Conditions & Procedure for such will be specified by CBEC
Statutory Ref: Rule 5 of Service Tax Rules, 1994
Proposed Provision: Invoices can now be digitally signed. Also, records can bepresented in electronic form.
Effective from – Conditions & Procedure for such will be specified by CBEC
RVK Associates Location – Chennai, Bangalore, Hyderabad, Salem & Devanahalli
Tax Rate for Air Travel Agent
Statutory Ref: Rule 6(7) of Service Tax Rules, 1994
Existing Provision:
a. Air Travel Agent - 10% of ST Rate on Basic Fare in case of Domestic Bookings i.e., 1.20%
b. Air Travel Agent – 5% of ST Rate on Basic Fare in case of International Bookings i.e.,0.60%
Proposed Provision:
a. Air Travel Agent - 10% of ST Rate on Basic Fare in case of Domestic Bookings i.e., 1.40%(14%*10%)
b. Air Travel Agent – 5% of ST Rate on Basic Fare in case of International Bookings i.e.,0.70% (14%*5%)
Effective from – Both are consequential to change of ST rate to 14%; Effective from date tobe notified by CG
Statutory Ref: Rule 6(7) of Service Tax Rules, 1994
Existing Provision:
a. Air Travel Agent - 10% of ST Rate on Basic Fare in case of Domestic Bookings i.e., 1.20%
b. Air Travel Agent – 5% of ST Rate on Basic Fare in case of International Bookings i.e.,0.60%
Proposed Provision:
a. Air Travel Agent - 10% of ST Rate on Basic Fare in case of Domestic Bookings i.e., 1.40%(14%*10%)
b. Air Travel Agent – 5% of ST Rate on Basic Fare in case of International Bookings i.e.,0.70% (14%*5%)
Effective from – Both are consequential to change of ST rate to 14%; Effective from date tobe notified by CG
Statutory Ref: Rule 6(7) of Service Tax Rules, 1994
Existing Provision:
a. Air Travel Agent - 10% of ST Rate on Basic Fare in case of Domestic Bookings i.e., 1.20%
b. Air Travel Agent – 5% of ST Rate on Basic Fare in case of International Bookings i.e.,0.60%
Proposed Provision:
a. Air Travel Agent - 10% of ST Rate on Basic Fare in case of Domestic Bookings i.e., 1.40%(14%*10%)
b. Air Travel Agent – 5% of ST Rate on Basic Fare in case of International Bookings i.e.,0.70% (14%*5%)
Effective from – Both are consequential to change of ST rate to 14%; Effective from date tobe notified by CG
RVK Associates Location – Chennai, Bangalore, Hyderabad, Salem & Devanahalli
Tax Rate for Life Insurance Service
Statutory Ref: Rule 6(7A) of Service Tax Rules, 1994
Effective from – Both are consequential to change of ST rate to 14%; Effective fromdate to be notified by CG
Existing Provisions Proposed Provisions
Statutory Ref: Rule 6(7A) of Service Tax Rules, 1994
Effective from – Both are consequential to change of ST rate to 14%; Effective fromdate to be notified by CG
Existing Provisions Proposed Provisions
First Year- 3% of PremiumCharged
Subsequent Years-1.5% ofPremium Charged
First Year- 3.5% of PremiumCharged
Subsequent Years-1.75% ofPremium Charged
Statutory Ref: Rule 6(7A) of Service Tax Rules, 1994
Effective from – Both are consequential to change of ST rate to 14%; Effective fromdate to be notified by CG
RVK Associates Location – Chennai, Bangalore, Hyderabad, Salem & Devanahalli
Tax Rate for Money Changer’s service
Statutory Ref: Rule 6(7B) of Service Tax Rules, 1994
Effective from – These are consequential to change of ST rate to 14%; Effective fromdate to be notified by CG
Existing Provisions Proposed Provisions
Statutory Ref: Rule 6(7B) of Service Tax Rules, 1994
Effective from – These are consequential to change of ST rate to 14%; Effective fromdate to be notified by CG
Existing Provisions Proposed Provisions
Upto Rs. 1 Lac- 0.12% subjectto min. Of Rs. 30
1 Lac-10 Lac: 0.06% + 120
Above 10 Lac: 0.012% + 660subject to a max of Rs. 6,000
Upto Rs. 1 Lac- 0.14% subjectto min. Of Rs. 35
1 Lac-10 Lac: 0.07% + 140
Above 10 Lac: 0.014% + 770subject to a max 7,000
Statutory Ref: Rule 6(7B) of Service Tax Rules, 1994
Effective from – These are consequential to change of ST rate to 14%; Effective fromdate to be notified by CG
RVK Associates Location – Chennai, Bangalore, Hyderabad, Salem & Devanahalli
Upto Rs. 1 Lac- 0.12% subjectto min. Of Rs. 30
1 Lac-10 Lac: 0.06% + 120
Above 10 Lac: 0.012% + 660subject to a max of Rs. 6,000
Upto Rs. 1 Lac- 0.14% subjectto min. Of Rs. 35
1 Lac-10 Lac: 0.07% + 140
Above 10 Lac: 0.014% + 770subject to a max 7,000
Tax Rate for Organizing Lottery
Statutory Ref: Rule 6(7C) of Service Tax Rules, 1994
Effective from – Both are consequential to change of ST rate to 14%; Effective fromdate to be notified by CG
Existing Provisions Proposed Provisions
Statutory Ref: Rule 6(7C) of Service Tax Rules, 1994
Effective from – Both are consequential to change of ST rate to 14%; Effective fromdate to be notified by CG
Existing Provisions Proposed Provisions
Guaranteed payout > 80% -Rs. 7,000
Guaranteed Payout < 80% -Rs. 11,000
Guaranteed payout > 80% -Rs. 8,200
Guaranteed Payout < 80% -Rs. 12,800
Statutory Ref: Rule 6(7C) of Service Tax Rules, 1994
Effective from – Both are consequential to change of ST rate to 14%; Effective fromdate to be notified by CG
RVK Associates Location – Chennai, Bangalore, Hyderabad, Salem & Devanahalli
Negative ListNegative List
RVK Associates Location – Chennai, Bangalore, Hyderabad, Salem & Devanahalli
Changes in Negative List….. Deletions
Statutory Ref: Section 66D of Finance Act, 1994
The following services are deleted from the negative list and accordingly will becometaxable, subject to other exemptions discussed in subsequent slides:
Access to amusement facilities for fun or recreation by means of rides, gamingdevices or bowling alleys in amusement parks, amusement arcades, water parks,theme parks.
Admission to entertainment event of concerts, non-recognized sporting events,pageants, music concerts, award functions, if the amount charged is more than Rs.500
Service by way of carrying out any processes for production or manufacture ofalcoholic liquor for human consumption
Any services provided by Government or Local Authority to a Business Entity
Effective from – Date to be notified by CG
Statutory Ref: Section 66D of Finance Act, 1994
The following services are deleted from the negative list and accordingly will becometaxable, subject to other exemptions discussed in subsequent slides:
Access to amusement facilities for fun or recreation by means of rides, gamingdevices or bowling alleys in amusement parks, amusement arcades, water parks,theme parks.
Admission to entertainment event of concerts, non-recognized sporting events,pageants, music concerts, award functions, if the amount charged is more than Rs.500
Service by way of carrying out any processes for production or manufacture ofalcoholic liquor for human consumption
Any services provided by Government or Local Authority to a Business Entity
Effective from – Date to be notified by CG
Statutory Ref: Section 66D of Finance Act, 1994
The following services are deleted from the negative list and accordingly will becometaxable, subject to other exemptions discussed in subsequent slides:
Access to amusement facilities for fun or recreation by means of rides, gamingdevices or bowling alleys in amusement parks, amusement arcades, water parks,theme parks.
Admission to entertainment event of concerts, non-recognized sporting events,pageants, music concerts, award functions, if the amount charged is more than Rs.500
Service by way of carrying out any processes for production or manufacture ofalcoholic liquor for human consumption
Any services provided by Government or Local Authority to a Business Entity
Effective from – Date to be notified by CG
RVK Associates Location – Chennai, Bangalore, Hyderabad, Salem & Devanahalli
Changes in Negative List….. Additions
Statutory Ref: Section 66D of Finance Act, 1994
The following services are Added to the negative list and accordingly will be not betaxable:
Concerts, pageants, award functions, musical or sporting event not covered by theabove exemption, where the consideration for such admission is upto Rs. 500 perperson.
Recognized Sporting Event
Exhibition of cinematographic film, circus, dance, or theatrical performance includingdrama or ballet.
Effective from – Date to be notified by CG
Statutory Ref: Section 66D of Finance Act, 1994
The following services are Added to the negative list and accordingly will be not betaxable:
Concerts, pageants, award functions, musical or sporting event not covered by theabove exemption, where the consideration for such admission is upto Rs. 500 perperson.
Recognized Sporting Event
Exhibition of cinematographic film, circus, dance, or theatrical performance includingdrama or ballet.
Effective from – Date to be notified by CG
Statutory Ref: Section 66D of Finance Act, 1994
The following services are Added to the negative list and accordingly will be not betaxable:
Concerts, pageants, award functions, musical or sporting event not covered by theabove exemption, where the consideration for such admission is upto Rs. 500 perperson.
Recognized Sporting Event
Exhibition of cinematographic film, circus, dance, or theatrical performance includingdrama or ballet.
Effective from – Date to be notified by CG
RVK Associates Location – Chennai, Bangalore, Hyderabad, Salem & Devanahalli
Mega Exemption List of servicesMega Exemption List of services
RVK Associates Location – Chennai, Bangalore, Hyderabad, Salem & Devanahalli
Changes in Mega Exemption List
Statutory Ref: Notification No. 25/2012 dt. 20.06.2012
Existing Provision: Construction related service provided to the Government, a localauthority or a governmental authority are exempted.
Proposed Provision: Construction services provided to Government or local authority ora government authority will be taxable except for
i. Construction of a historical monuments, archeological site or remains of nationalimportance, archeological excavation or antiquity
ii. Construction of Canal, dam or other irrigation work and
iii. Construction of pipeline, conduit or plant for i) water supply ii) sewerage treatmentor disposal.
Effective from – 1st April, 2015
Statutory Ref: Notification No. 25/2012 dt. 20.06.2012
Existing Provision: Construction related service provided to the Government, a localauthority or a governmental authority are exempted.
Proposed Provision: Construction services provided to Government or local authority ora government authority will be taxable except for
i. Construction of a historical monuments, archeological site or remains of nationalimportance, archeological excavation or antiquity
ii. Construction of Canal, dam or other irrigation work and
iii. Construction of pipeline, conduit or plant for i) water supply ii) sewerage treatmentor disposal.
Effective from – 1st April, 2015
Statutory Ref: Notification No. 25/2012 dt. 20.06.2012
Existing Provision: Construction related service provided to the Government, a localauthority or a governmental authority are exempted.
Proposed Provision: Construction services provided to Government or local authority ora government authority will be taxable except for
i. Construction of a historical monuments, archeological site or remains of nationalimportance, archeological excavation or antiquity
ii. Construction of Canal, dam or other irrigation work and
iii. Construction of pipeline, conduit or plant for i) water supply ii) sewerage treatmentor disposal.
Effective from – 1st April, 2015
RVK Associates Location – Chennai, Bangalore, Hyderabad, Salem & Devanahalli
Changes in Mega Exemption List
Statutory Ref: Notification No. 25/2012 dt. 20.06.2012
Existing Provision: Construction, Erection and related services of original contractpertaining to an airport, port or railways including mono rail or metro.
Proposed Provision: Construction, Erection and related services of original contractpertaining to railways including mono rail or metro are exempted.
Note: Accordingly, Construction of an airport or port is being taxable. Otherexemptions covered in serial no. 14 relating to Construction are continued to beexempted.
Effective from – 1st April, 2015
Statutory Ref: Notification No. 25/2012 dt. 20.06.2012
Existing Provision: Construction, Erection and related services of original contractpertaining to an airport, port or railways including mono rail or metro.
Proposed Provision: Construction, Erection and related services of original contractpertaining to railways including mono rail or metro are exempted.
Note: Accordingly, Construction of an airport or port is being taxable. Otherexemptions covered in serial no. 14 relating to Construction are continued to beexempted.
Effective from – 1st April, 2015
Statutory Ref: Notification No. 25/2012 dt. 20.06.2012
Existing Provision: Construction, Erection and related services of original contractpertaining to an airport, port or railways including mono rail or metro.
Proposed Provision: Construction, Erection and related services of original contractpertaining to railways including mono rail or metro are exempted.
Note: Accordingly, Construction of an airport or port is being taxable. Otherexemptions covered in serial no. 14 relating to Construction are continued to beexempted.
Effective from – 1st April, 2015
RVK Associates Location – Chennai, Bangalore, Hyderabad, Salem & Devanahalli
Changes in Mega Exemption List
Statutory Ref: Notification No. 25/2012 dt. 20.06.2012
Existing Provision: Services provided by a performing artist in folk or classical artform of (i) music, or (ii) dance, or (iii) theatre is exempted
Proposed Provision: The above exemption will be applicable only if amount chargedis upto Rs 1,00,000 for a performance. Further, if such services are provided by anArtist who is a Brand Ambassador continues to be taxable service.
Effective from – 1st April, 2015
Statutory Ref: Notification No. 25/2012 dt. 20.06.2012
Existing Provision: Services provided by a performing artist in folk or classical artform of (i) music, or (ii) dance, or (iii) theatre is exempted
Proposed Provision: The above exemption will be applicable only if amount chargedis upto Rs 1,00,000 for a performance. Further, if such services are provided by anArtist who is a Brand Ambassador continues to be taxable service.
Effective from – 1st April, 2015
Statutory Ref: Notification No. 25/2012 dt. 20.06.2012
Existing Provision: Services provided by a performing artist in folk or classical artform of (i) music, or (ii) dance, or (iii) theatre is exempted
Proposed Provision: The above exemption will be applicable only if amount chargedis upto Rs 1,00,000 for a performance. Further, if such services are provided by anArtist who is a Brand Ambassador continues to be taxable service.
Effective from – 1st April, 2015
RVK Associates Location – Chennai, Bangalore, Hyderabad, Salem & Devanahalli
Changes in Mega Exemption List
Statutory Ref: Notification No. 25/2012
Existing Provision: Transportation of goods by rail/vessel and Goods transportagency in relation to foodstuff including flours tea, coffee, jaggery, sugar, milkproducts, salt and edible oil, Excluding alcoholic beverages were exempt.
Proposed Provision: Exemption withdrawn on transportation of all food stuff exceptfor transportation of food grains including rice and pulses, flour, milk and salt.Agriculture produce continues to be exempted
Effective from – 1st April, 2015
Statutory Ref: Notification No. 25/2012
Existing Provision: Transportation of goods by rail/vessel and Goods transportagency in relation to foodstuff including flours tea, coffee, jaggery, sugar, milkproducts, salt and edible oil, Excluding alcoholic beverages were exempt.
Proposed Provision: Exemption withdrawn on transportation of all food stuff exceptfor transportation of food grains including rice and pulses, flour, milk and salt.Agriculture produce continues to be exempted
Effective from – 1st April, 2015
Statutory Ref: Notification No. 25/2012
Existing Provision: Transportation of goods by rail/vessel and Goods transportagency in relation to foodstuff including flours tea, coffee, jaggery, sugar, milkproducts, salt and edible oil, Excluding alcoholic beverages were exempt.
Proposed Provision: Exemption withdrawn on transportation of all food stuff exceptfor transportation of food grains including rice and pulses, flour, milk and salt.Agriculture produce continues to be exempted
Effective from – 1st April, 2015
RVK Associates Location – Chennai, Bangalore, Hyderabad, Salem & Devanahalli
Changes in Mega Exemption List
Statutory Ref: Notification No. 25/2012
Existing Provision: Services provided by the following were exempt
a. Mutual fund agent or distributor to a mutual fund or Asset management company,
b. Selling or marketing agent lottery ticket to a distributor or a selling agent
Proposed Provision: The above Exemption is withdrawn making it a taxable service.Further, service tax on these services will be levied on reverse charge basis.
Effective from – 1st April, 2015
Statutory Ref: Notification No. 25/2012
Existing Provision: Services provided by the following were exempt
a. Mutual fund agent or distributor to a mutual fund or Asset management company,
b. Selling or marketing agent lottery ticket to a distributor or a selling agent
Proposed Provision: The above Exemption is withdrawn making it a taxable service.Further, service tax on these services will be levied on reverse charge basis.
Effective from – 1st April, 2015
Statutory Ref: Notification No. 25/2012
Existing Provision: Services provided by the following were exempt
a. Mutual fund agent or distributor to a mutual fund or Asset management company,
b. Selling or marketing agent lottery ticket to a distributor or a selling agent
Proposed Provision: The above Exemption is withdrawn making it a taxable service.Further, service tax on these services will be levied on reverse charge basis.
Effective from – 1st April, 2015
RVK Associates Location – Chennai, Bangalore, Hyderabad, Salem & Devanahalli
Changes in Mega Exemption List
Statutory Ref: Notification No. 25/2012
Existing Provision: ST exempt on
a. Telecommunication Services Departmentally run public telephone
b. Guaranteed public telephone operating only local calls and
c. Service by way of making telephone calls from free telephone at airport andhospital where no bill is issued.
Proposed Provision: The above exemption is being withdrawn on all of the aboveservices are taxable
Effective from – 1st April, 2015
Statutory Ref: Notification No. 25/2012
Existing Provision: ST exempt on
a. Telecommunication Services Departmentally run public telephone
b. Guaranteed public telephone operating only local calls and
c. Service by way of making telephone calls from free telephone at airport andhospital where no bill is issued.
Proposed Provision: The above exemption is being withdrawn on all of the aboveservices are taxable
Effective from – 1st April, 2015
Statutory Ref: Notification No. 25/2012
Existing Provision: ST exempt on
a. Telecommunication Services Departmentally run public telephone
b. Guaranteed public telephone operating only local calls and
c. Service by way of making telephone calls from free telephone at airport andhospital where no bill is issued.
Proposed Provision: The above exemption is being withdrawn on all of the aboveservices are taxable
Effective from – 1st April, 2015
RVK Associates Location – Chennai, Bangalore, Hyderabad, Salem & Devanahalli
Changes in Mega Exemption List
Statutory Ref: Notification No. 25/2012
Service by way of pre – conditioning, pre – cooling, ripening, waxing, retailpacking, labeling of fruits and vegetables is being exempted.
Service provided by a common effluent treatment plant operator for treatment ofeffluent is being exempted.
Life insurance services provided by way of Varshitha Pension Bima is beingexempted.
Transportation of a patient in an ambulance for all purposes
Statutory Ref: Notification No. 25/2012
Service by way of pre – conditioning, pre – cooling, ripening, waxing, retailpacking, labeling of fruits and vegetables is being exempted.
Service provided by a common effluent treatment plant operator for treatment ofeffluent is being exempted.
Life insurance services provided by way of Varshitha Pension Bima is beingexempted.
Transportation of a patient in an ambulance for all purposes
Statutory Ref: Notification No. 25/2012
Service by way of pre – conditioning, pre – cooling, ripening, waxing, retailpacking, labeling of fruits and vegetables is being exempted.
Service provided by a common effluent treatment plant operator for treatment ofeffluent is being exempted.
Life insurance services provided by way of Varshitha Pension Bima is beingexempted.
Transportation of a patient in an ambulance for all purposes
RVK Associates Location – Chennai, Bangalore, Hyderabad, Salem & Devanahalli
Changes in Mega Exemption List
Statutory Ref: Notification No. 25/2012
The following services are Added to the mega exemption notification and accordinglywill become exempt:
Exhibition of movie by the exhibitor (theatre owner) to the distributor or anassociation of persons consisting of such exhibitor as one of it’s members
Admission to a museum, zoo, national park, wild life sanctuary and a tiger reserve
Transport of export goods by road from the place of removal to a land customsstation (LCS)
Effective from – 01st April, 2015
Statutory Ref: Notification No. 25/2012
The following services are Added to the mega exemption notification and accordinglywill become exempt:
Exhibition of movie by the exhibitor (theatre owner) to the distributor or anassociation of persons consisting of such exhibitor as one of it’s members
Admission to a museum, zoo, national park, wild life sanctuary and a tiger reserve
Transport of export goods by road from the place of removal to a land customsstation (LCS)
Effective from – 01st April, 2015
Statutory Ref: Notification No. 25/2012
The following services are Added to the mega exemption notification and accordinglywill become exempt:
Exhibition of movie by the exhibitor (theatre owner) to the distributor or anassociation of persons consisting of such exhibitor as one of it’s members
Admission to a museum, zoo, national park, wild life sanctuary and a tiger reserve
Transport of export goods by road from the place of removal to a land customsstation (LCS)
Effective from – 01st April, 2015
RVK Associates Location – Chennai, Bangalore, Hyderabad, Salem & Devanahalli
Reverse Charge Mechanism (RCM)Reverse Charge Mechanism (RCM)
RVK Associates Location – Chennai, Bangalore, Hyderabad, Salem & Devanahalli
Supply of Manpower
Statutory Ref: Notification No. 30/2012 dt. 20.06.2012
Existing Provision: Service Provider is liable to Pay 25% of ST Liability & ServiceReceiver is liable to pay 75% of ST Liability
Proposed Provision: Service Receiver will be required to dishcarge100% of the STLiability
Effective from – 01st April, 2015
Statutory Ref: Notification No. 30/2012 dt. 20.06.2012
Existing Provision: Service Provider is liable to Pay 25% of ST Liability & ServiceReceiver is liable to pay 75% of ST Liability
Proposed Provision: Service Receiver will be required to dishcarge100% of the STLiability
Effective from – 01st April, 2015
Statutory Ref: Notification No. 30/2012 dt. 20.06.2012
Existing Provision: Service Provider is liable to Pay 25% of ST Liability & ServiceReceiver is liable to pay 75% of ST Liability
Proposed Provision: Service Receiver will be required to dishcarge100% of the STLiability
Effective from – 01st April, 2015
RVK Associates Location – Chennai, Bangalore, Hyderabad, Salem & Devanahalli
Service provided under Aggregator model
Statutory Ref: Rule 2 of Service tax rules 1994 and Notification No. 30/2012 date20-06-2012
New item added to RCM : Service provided or agreed to be provided by an in anaggregator model, the aggregator or any of his agent or representative office locatedin India is liable to pay service tax on all the services rendered under the model
Effective from – 01st March, 2015
Statutory Ref: Rule 2 of Service tax rules 1994 and Notification No. 30/2012 date20-06-2012
New item added to RCM : Service provided or agreed to be provided by an in anaggregator model, the aggregator or any of his agent or representative office locatedin India is liable to pay service tax on all the services rendered under the model
Effective from – 01st March, 2015
RVK Associates Location – Chennai, Bangalore, Hyderabad, Salem & Devanahalli
AbatementsAbatements
RVK Associates Location – Chennai, Bangalore, Hyderabad, Salem & Devanahalli
Services relating to Chit fund
Statutory Ref: Notification No: 26/2012 – ST dated 20.06.2012
Existing Provision: ST on Service provided in relation to chit was taxable only at 30%wherein 70% abatement was provided.
Proposed Provision: The above abatement is withdrawn wherein service tax will bepaid by the chit fund foremen at full consideration received by way of commissionreceived by way of fee, commission or any such amount.
However, CENVAT Credit will be available.
Effective from – 1st April, 2015
Statutory Ref: Notification No: 26/2012 – ST dated 20.06.2012
Existing Provision: ST on Service provided in relation to chit was taxable only at 30%wherein 70% abatement was provided.
Proposed Provision: The above abatement is withdrawn wherein service tax will bepaid by the chit fund foremen at full consideration received by way of commissionreceived by way of fee, commission or any such amount.
However, CENVAT Credit will be available.
Effective from – 1st April, 2015
Statutory Ref: Notification No: 26/2012 – ST dated 20.06.2012
Existing Provision: ST on Service provided in relation to chit was taxable only at 30%wherein 70% abatement was provided.
Proposed Provision: The above abatement is withdrawn wherein service tax will bepaid by the chit fund foremen at full consideration received by way of commissionreceived by way of fee, commission or any such amount.
However, CENVAT Credit will be available.
Effective from – 1st April, 2015
RVK Associates Location – Chennai, Bangalore, Hyderabad, Salem & Devanahalli
Transport of goods by Rail, Road &Vessel
Statutory Ref: Notification No. 26/2012 dt. 20.6.2012
Existing Provision: Tax on Transport of goods by
a. Rail - 30% wherein 70% of value is abated (CENVAT Credit was allowed)
b. Road – 25% wherein 75% of value is abated (CENVAT Credit was not allowed)
c. Vessel - 40% wherein 60% of value is abated (CENVAT Credit was not allowed)
Proposed Provision: Abatements are rationalized now wherein ST rate will be chargedat 30% wherein 70% of the value is abated.
Further, CENVAT Credit on Inputs, Capital Goods & Input Services will not be allowedwhen abatement is opted
Effective from – 1st April 2015
Statutory Ref: Notification No. 26/2012 dt. 20.6.2012
Existing Provision: Tax on Transport of goods by
a. Rail - 30% wherein 70% of value is abated (CENVAT Credit was allowed)
b. Road – 25% wherein 75% of value is abated (CENVAT Credit was not allowed)
c. Vessel - 40% wherein 60% of value is abated (CENVAT Credit was not allowed)
Proposed Provision: Abatements are rationalized now wherein ST rate will be chargedat 30% wherein 70% of the value is abated.
Further, CENVAT Credit on Inputs, Capital Goods & Input Services will not be allowedwhen abatement is opted
Effective from – 1st April 2015
Statutory Ref: Notification No. 26/2012 dt. 20.6.2012
Existing Provision: Tax on Transport of goods by
a. Rail - 30% wherein 70% of value is abated (CENVAT Credit was allowed)
b. Road – 25% wherein 75% of value is abated (CENVAT Credit was not allowed)
c. Vessel - 40% wherein 60% of value is abated (CENVAT Credit was not allowed)
Proposed Provision: Abatements are rationalized now wherein ST rate will be chargedat 30% wherein 70% of the value is abated.
Further, CENVAT Credit on Inputs, Capital Goods & Input Services will not be allowedwhen abatement is opted
Effective from – 1st April 2015
RVK Associates Location – Chennai, Bangalore, Hyderabad, Salem & Devanahalli
Air Travel other than economy class
Statutory Ref: Notification No. 26/2012 dt 20.06.2012
Existing Provision: Abatement of 60% is available on Air travel. The effective taxrate is only 4.944% (12.36%*40%). CENVAT credit on Input Services is only available
Proposed Provision: In case of Air travel other than Economy class, say business classAbatements is reduced from 60% to 40%. CENVAT credit on Input Services is onlyavailable
Note: There is no change in abatement for economy class, which continues to be 60%
Effective from – 1st April 2015
Statutory Ref: Notification No. 26/2012 dt 20.06.2012
Existing Provision: Abatement of 60% is available on Air travel. The effective taxrate is only 4.944% (12.36%*40%). CENVAT credit on Input Services is only available
Proposed Provision: In case of Air travel other than Economy class, say business classAbatements is reduced from 60% to 40%. CENVAT credit on Input Services is onlyavailable
Note: There is no change in abatement for economy class, which continues to be 60%
Effective from – 1st April 2015
Statutory Ref: Notification No. 26/2012 dt 20.06.2012
Existing Provision: Abatement of 60% is available on Air travel. The effective taxrate is only 4.944% (12.36%*40%). CENVAT credit on Input Services is only available
Proposed Provision: In case of Air travel other than Economy class, say business classAbatements is reduced from 60% to 40%. CENVAT credit on Input Services is onlyavailable
Note: There is no change in abatement for economy class, which continues to be 60%
Effective from – 1st April 2015
RVK Associates Location – Chennai, Bangalore, Hyderabad, Salem & Devanahalli
CENVAT Credit Rules, 1994CENVAT Credit Rules, 1994
RVK Associates Location – Chennai, Bangalore, Hyderabad, Salem & Devanahalli
Eligibility to Avail CENVAT Credit under RCM
Statutory Ref: Rule 4(7) of CENVAT Credit Rules, 2004
Existing Provision: Under partial reverse charge mechanism, CENVAT Credit can beavailed only after making payment to the service provider.
Proposed Provision: CENVAT Credit can be availed without linking the payments toservice provider.
Effective from – 01st April, 2015
Statutory Ref: Rule 4(7) of CENVAT Credit Rules, 2004
Existing Provision: Under partial reverse charge mechanism, CENVAT Credit can beavailed only after making payment to the service provider.
Proposed Provision: CENVAT Credit can be availed without linking the payments toservice provider.
Effective from – 01st April, 2015
Statutory Ref: Rule 4(7) of CENVAT Credit Rules, 2004
Existing Provision: Under partial reverse charge mechanism, CENVAT Credit can beavailed only after making payment to the service provider.
Proposed Provision: CENVAT Credit can be availed without linking the payments toservice provider.
Effective from – 01st April, 2015
RVK Associates Location – Chennai, Bangalore, Hyderabad, Salem & Devanahalli
Timeline to Avail CENVAT Credit
Existing Provision: CENVAT Credit needs to be availed within 6 months from the dateof Invoice
Proposed Provision: CENVAT Credit will be allowed within 1 year from the date ofInvoice
Effective from – 01st March, 2015
Existing Provision: CENVAT Credit needs to be availed within 6 months from the dateof Invoice
Proposed Provision: CENVAT Credit will be allowed within 1 year from the date ofInvoice
Effective from – 01st March, 2015
RVK Associates Location – Chennai, Bangalore, Hyderabad, Salem & Devanahalli
Contact UsChennai
+ 91 44 24618778 [email protected]
Bangalore
+9 1 80 23418753 [email protected]
Hyderabad
+91 40 66620039 [email protected]
Salem
+91 42 74554458 [email protected]
Devanahallai
+9 1 80 27682480 [email protected]
Contact UsChennai
+ 91 44 24618778 [email protected]
Bangalore
+9 1 80 23418753 [email protected]
Hyderabad
+91 40 66620039 [email protected]
Salem
+91 42 74554458 [email protected]
Devanahallai
+9 1 80 27682480 [email protected]
http://www.rvkassociates.com
Disclaimer
This information contained herein is of limited analysis of the topics covered. Further, manyof the contents of this document are subject to approval of Finance Bill by the Parliamentand its assent by the President of India.
This document is prepared only as guiding tool reflecting highlights of Union Budget2015. While every care has been taken in the preparation of this document, it maycontain inadvertent errors for which we shall not be held responsible. No one should act onsuch information without appropriate professional advice. We accept no responsibility forloss arising from any action taken or not taken by anyone using this material andinformation.
This information contained herein is of limited analysis of the topics covered. Further, manyof the contents of this document are subject to approval of Finance Bill by the Parliamentand its assent by the President of India.
This document is prepared only as guiding tool reflecting highlights of Union Budget2015. While every care has been taken in the preparation of this document, it maycontain inadvertent errors for which we shall not be held responsible. No one should act onsuch information without appropriate professional advice. We accept no responsibility forloss arising from any action taken or not taken by anyone using this material andinformation.
This information contained herein is of limited analysis of the topics covered. Further, manyof the contents of this document are subject to approval of Finance Bill by the Parliamentand its assent by the President of India.
This document is prepared only as guiding tool reflecting highlights of Union Budget2015. While every care has been taken in the preparation of this document, it maycontain inadvertent errors for which we shall not be held responsible. No one should act onsuch information without appropriate professional advice. We accept no responsibility forloss arising from any action taken or not taken by anyone using this material andinformation.
RVK Associates Location – Chennai, Bangalore, Hyderabad, Salem & Devanahalli