SERVICE TAX AMENDMENTS
The rate of Service Tax will continue @12.36% until the new rate is notified. The increase in service tax rate from 12.36% to 14% is yet to be notified.
Service Tax amendments applicable from 01 April 2015.
New Exemptions provided
- Services provided by way of transportation of a patient in an ambulance would now be exempt from Service Tax. The scope of this exemption is being widened to include all ambulance services in addition to health care services.
- Life insurance services provided under Varishtha Pension Bima Yojna scheme would now be exempted.
- The scope of exemption on transportation of goods by road has been extended from the place of removal to an inland container depot, a container freight station, a port, airport or Land Customs Station is exempt from Service Tax vide notification No. 31/12-ST dated 20 June 2012.
- Service provided by a Common Effluent Treatment Plant operator for treatment of effluent would now be exempted.
- Services by way of pre-conditioning, pre-cooling, ripening, waxing, retail packing, labeling of fruits and vegetables would now be exempted.
- Service provided by way of admission to a museum, zoo, national park, wild life sanctuary and a tiger reserve would now be exempted.
- Service provided by way of exhibition of movie by the exhibitor (theatre owner) to the distributor or an association of persons consisting of such exhibitor as one of its members would now be exempted.
Withdrawal of Exemptions
- The following 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, etc.
- 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 would be taxable.
- Services provided by way of construction, erection, commissioning or installation of original works pertaining to an airport or port would now be taxable.
- Exemption to services provided by a performing artist in folk or classical art form
- music, or
- Dance, or
Will be limited only to such cases where amount charged is uptoRs. 1, 00,000 for a performance would be taxable. It is further clarified that the exemption shall not apply if services provided by artist as a brand ambassador;
- Goods Transport services by rail or water in respect of following products which were exempt earlier will now be taxable with regards to fruits, vegetables and eggs. Hence, Goods transport services by rail or water will not be taxable in case of Milk, Salt and food grain including flours, pulses and rice.
- Goods transportation by roadin respect of following products which were exempt earlier will now be taxable with regards to tea, coffee, Jaggery, Sugar, Milk Products and edible oil Hence, GTA (road) will not be taxable in case of Milk, Salt and food grain including flours, pulses and rice.
- The following services provided would be taxable:
- distributor to a mutual fund or AMC,
- a mutual fund agent to a mutual fund or assets management company,
- Selling or marketing agent of lottery ticket to a distributor.
- These services are now covered under reverse charge basis.
- Departmentally run public telephone, guaranteed public telephone operating only local calls; Service by way of making telephone calls from free telephone at airport and hospital where no bill is issued would be taxable.
Changes in Abatement
- Currently, the Service Tax is payable on 70% of the fees, commission or any such amount in case of Chit Funds. The abatement is being withdrawn from services provided in relation to chit fund business.
- The service tax abatement is several transportation services have been changed to bring them to same rate of service tax and related conditions. In the table below, we have summarized the old and new rate of service tax:
|Services||Old Rate and Conditions||New Rate and Conditions|
|Goods Transport Agency||25% and no cenvat credit shall be allowed on inputs, capital goods and input services||30% and no cenvat credit shall be allowed on inputs, capital goods and input services|
|Rail Transportation of Goods||30% and no further conditions||Same as above|
|Rail transport of Passengers||40% and no cenvat credit shall be allowed on inputs and capital goods||Same as above|
|Transportation of goods by Vessel||50% and no cenvat credit shall be allowed on inputs, capital goods and input services||Same as above|
- Currently, the Service Tax is payable on 40% of the value of air transport of passenger irrespective of the class. The service tax would now be payable on 60% of the value in case of classes above economy class.
Reverse Charge Mechanism
- Manpower supply and security services when provided by an individual, HUF, or partnership firm to a body corporate are being brought to full reverse charge. Currently, the service receiver pays 75% of the service tax due and balance is paid by service provider.
- The following servicers are brought under reverse charge mechanism:
Mutual fund agents,
Mutual fund distributors and
Agents of lottery distributor.
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