BUDGET 2016 – Service Tax Amendments.
In budget 2016, various changes are proposed in the Service Tax Law. These Changes are effective from different dates. The said amendments are compiled with respect to the date of their effect. Any further clarification is always welcome. Some amendments which are not conserved important are not included.
Changes with Immediate effect ( From 01.03.2016
- Notification No. 27/2012, providing for refund of accumulated CENVAT Credit is amended. Now the time limit of one year for filling claim will be computed from a) receipt of payment, where service completed before receipt of payment and b) the date of issue of invoice, where payment is received in advance, before issue of invoice.
- Service by way of transportation of goods by a vessel from India to a place outside India excluded from definition of ‘exempted service’. This will allow shipping lines to take credit on inputs and input services.
Changes effective from 1st April, 2016
- Senior Advocates are taken out of preview of Reverse Charge Mechanism. Now, Senior Advocates have to pay Service Tax, themselves.
- Transportation of Passengers, by rope-way, tramway etc. are now liable to Service Tax.
- The Threshold Exemption for performing artists increased from Rs. One Lac to Rs. 1.5 lac per performance.
- Abatement for Tour Operators, solely engaged in arranging booking of accommodation enhanced to 90%.
- Abatement for Tour Operators, other then above, will be 70%.
- Abatement of 30% for foreman of Chit Fund.
- A uniform abatement of 70% prescribed for Construction of Complex.
- Railways now can avail CENVAT Credit of Input Services and continue to pay Service Tax on abated value.
- CENVAT Credit of input services allowed to transportation of goods by vessel, paying Service Tax on abated value.
- Abatement of 60 prescribed for transportation of Household by GTA, as against general abatement of 70%.
- Abatement on rent –a-cab is available only if the cost of fuel consumed is included.
Reverse Charge Mechanism.
- Now Agents and Distributors of Mutual Fund and Asset Management Company are liable to Service Tax.
- All the services, except the Specified Services rendered by Government or a local authority are now brought under reverse charge mechanism.
Service Tax Rules
- One Person Company (OPC) having turnover upto Rs. 50 Lacs in previous year are entitled for a) quarterly payment of Service Tax and b) payment of Service Tax on receipt basis.
- HUFs are entitled to pay Service Tax on quarterly basis.
CENVAT Credit Rules, 2004
- Invoices issued by a service provide for removal of inputs and capital goods will be valid documents for availing CENVAT Credit.
- CENVAT Credit of Service Tax paid on upfront charges for assignment of natural resources such such as Mining Rights, spectrum sale etc. shall be spread over the period of such assignment.
Changes effective from the enactment of Finance Bill, 2016
- Service Tax imposed on Distributors and Selling Agents of Lotteries.
- Assignment of Radio Frequency and spectrum brought under Declared List and hence liable to Service Tax.
- Limitation Period for issue of Show Cause Notice extended from 18 months to 30 months.
- Interest rate on delay payment of Service Tax reduced to 15%. However, in cases of Service Tax collected but not paid, the rate will be 24%.
- Prosecution only above Rs. 2 Crore Tax evasion.
- Arrest only in those cases, where Service Tax collected but not deposited amounts to Rs. 2 Crrors.
- Dispute Resolution Scheme, 2016- Indirect Tax Dispute Resolution Scheme, 2016 is a scheme in respect of cases pending before Commissioner (Appeals) , the assessee, after paying the duty, interest and penalty @ 25% of duty, can file a declaration. In such cases the proceedings against the assessee will be closed and he will get immunity from prosecution.
- Returns – Service Tax assessee above a certain threshold limit, will also be required to file an annual return.
Effective from 1st June, 2016
- Enabling Provisions made for imposition of Krishi Kalyan Cess @ 0.5% of Taxable value from 1st Jun, 2016. Cess will be Cenvatable.
- Service Tax imposed on transportation of passenger by an air-conditioned stage carriage, with an abatement of 60%, subject to the condition of non-availment of CENVAT Credit.
- Service Tax imposed on Occasion Freight.