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25 Service tax changes applicable from 1st April 2016

Service tax changes applicable from 1st April 2016 due to budget 2016 are summarized in this article.The article provides knowledge about change in exemptions, abatement, reverse charge mechanism and service tax rules from 1/4/2016.

25 Service tax changes applicable from 1st April 2016:

Change in Exemptions from 1st april, 2016:

  1. Exemption to senior advocate in respect of service to advocate or to partnership of advocates and a person represented on an arbitral tribunal to an arbitral tribunal is being withdrawn from 1st April, 2016. Service tax should be charged in bill under forward charges and paid to government.
  2. Exemption to transportation of passenger services , with or without accompanied belongings by ropeway, cable car or aerial transway – s.no. 23(c) has been withdrawn from 1st april, 2016. So these services are taxable.
  3. Exemption has been extended to life insurance service by way of annuity under national pension system regulated by PFRDA. This exemption is effective from 1/4/2016.
  4. Exemption has been extended for services provided by EPFO.
  5. Exemption has been extended for services provided by SEBI.
  6. Services provided by Biotechnology Industry research assistance council – BIRAC approved incubators to incubatees are being exempted.
  7. Services by National Centre for Cold Chain Development are being exempted.
  8. Services of IRDA are being exempted.
  9. For performing artist in folk or classical art forms of music, dance or theater , threshold exemption limit is being increased from Rs. 1 Lakh to Rs. 1.5 Lakh per performance.
  10. Skill vocational training service provided by Deen Dayal Upadyay Grameen Kaushalya Yojana taining partners are being exempted.
  11. Services of assessing bodies empanelled by DGT or Ministry of skill development and Entrepreneurship are being exempted.

Change in Abatement rate from 1/4/2016:

  1. While claiming abatement 90% in relation to Services of solely booking accommodation  of tours, it is made necessary to include accommodation cost in invoice along with service charges.
  2. Now there is single abatement rate of 70%  for tour operator other than mentioned above. To know more about tour operator service, read this article here.
  3. Services provided by foreman to chit fund are proposed to be taxed with 30% abatement availability.
  4. To avail abatement on renting of motor car services, cost of fuel should be included in the consideration charged.
  5. For composition scheme of residential construction activity,condition of  abatement as per carpet area is being removed and single abatement of 70% is now being prescribed subject to fulfillment of existing conditions.
  6. From 1/4/2016, service tax is leviable on 30% on amount charged for service of transport of passengers by rail , without availability of cenvat credit of inputs and capital goods. ( Cenvat credit of input services are now available).
  7. Transport service of goods in containers by rail by any other person other than Indian Railway is taxable under service tax with reduced abatement rate of 60%. So there are two categories of abatement for transport of goods in rails. For Indian railways, it is 70% ( 30% value is taxable) and for others , it is 60% (40% value is taxable). Credit of input services are available to both of them while claiming abatement.
  8. For transport of goods by vessel, 70% abatement is available with cenvat credit of input services.
  9. For GTA, abatement on transport of used household goods is being rationalized with 60% abatement rate without availment of cenvat credit of inputs, input services and capital goods. For other goods, 70% abatement is available.

Changes in Reverse charge mechanism after budget 2016 from 1/4/16:

  1. Services of mutual fund agents/ distributor to a mutual fund or assets management company are being put under forward charge.
  2. The liability to pay service tax on any service provided by government or a local authority to Business Entities shall be on service recipient under reverse charge basis (RCM).

Changes in service tax rules from 1st April, 2016:

  1. One person company ( OPC) whose aggregate value of services provided is up to Rs. 50 Lakhs can get benefit of quarterly payment of service ax and payment of service tax on receipt basis. So relaxation to individuals and partnership firms are available to OPC too.
  2. The service tax rate under composition scheme for single premium annuity policies is being rationalized at the rate of 1.4% of the total premium charged.
  3. Service tax above certain threshold will also be required to file an annual return.

I hope this article has updated you about service tax changes from 1st April 2016. If I forget to mention any point, please remind me through comments and don’t forget to share this article on Facebook  to spread knowledge.

 

31 Comments

  1. By Nagarajan V

    Thanks for useful info

    • By admin

      Pleasure.

  2. By Mahesh

    Interest on bank deposits for senior citizens above 3.00 lakhs , TDs is applicable , even though 15h/g is given. Pl clarify.

    • By admin

      Dont submit form 15H if your income is more than basic exemption limit. Read my article
      http://taxmasala.in/form-15g-form-15h/

      • By kawal arora

        mam can you tell me what is the rate of sarvice tax in data entry

  3. Can you please enlighten us whether service tax is to be paid by the recipient business entity on electricity charges provided by the state govt. as RCM., My mail id is akondanna@gmail.com

    • By admin

      Yes, it is required under RCM.

  4. By Pooja.J.K.

    Maam,

    Wanted to know that when refund is claimed by the exporter of goods in form A1 for the input services used…. Details of each and every shipping bill is required… so the bifurcation of all services is to given per shipping bill ??? Further what attachments are required for each export….. please guide…..

  5. By Mohinder Paul Gupta

    Whether Rotary Clubs who take subscription from members and utilise it for dinner & other expenses are liable to pay service tax .Can not we take plea that ours is a charitable oragnisatio

  6. By Vishal Prasad

    Are Individuals who are providing services such as renting out premises or providing business support services and aggregating more than RS.50 lakhs per annum required to pay service tax every month or paying the same quarterly is sufficient? Thanks

  7. By P subramanian

    Madam,
    My daughter is an nri for the past 2 years and she has only interest on NRE deposits and the int is Rs 3.5 lakhs p.a she has no other income.whether she has to file income tax return.

    P subramanian

    • By admin

      It is not taxable and no need to file income tax return as she is NRI.

    • By P subramanian

      Thank you very much. P Subramanian

  8. By kartik dev

    Respected Madam,

    There was search/verification took place in our office by service tax department before 4 months (on verificatin, no evasion found), at that time an amount of Rs.64 lacs were pending to pay and return was also pending to file (we are the partnership firm, a firm is just establised before 2 years).

    We have not received Show Casue Notice (Received only letters from department to submit misc. details) as of now we have paid all serviec tax (but interest is pending to pay), following are queries.

    1) as we have paid service tax and filled returns do we are liable for pay penaly if yes than at what % ?

    or

    If we pay interest before receiving SCN, do department can impose penaly ? Please Guide.

  9. By Ameya

    In the amendment relating to abatement for construction services,you mentioned that abatement on the basis of carpet area has been removed.Then is it so that agreement value above 1 crore will be the only determining criteria for abatement??

    • By admin

      Both criteria are removed – value of contract and area of construction.

  10. By Basant

    Is there service tax liability in terms of installation of solar panels roofs top as there it is exempted under excise and MVAT..Please let me know whether needs to charge the service tax if my T/o is more than 25 lakhs being LLP.

  11. By Maninder Singh

    I run a small business (tutorial), last year turnover was less than 10Lakhs. This year we will cross 10Lakhs.

    Can you help me understand service tax applicable rate for tuition centre and how do we make these payments to government of India?

    Regards, Maninder

    • By admin

      Service tax rate is 14.5% for tuition fees. You can pay via challan. First, you need to apply service tax registration.

  12. By sunita

    hello, i want to know what is new service tax for under construction property,previously it was 3.625%

  13. By K M Sundaram

    I am an consultant for DGFT works and yearly income is Rs. 6 Lakhs, is I have to charge Service Tax on my bill.

  14. By Anita.B

    Hi,

    We are into Manpower Recruitment- Service Provider .
    In manpower supply service previously we were covered under partial reverse charge of 25% now after amendment it got under 100% reverse charge.

    Where do we have to mention the turnover of 100% reverse charge while filing Service tax return?

    Thanks And Best Regards

    Anita

  15. By Ram

    Hi.

    Service Tax for Builders.

    1. Builder give labor contract (civil work) for a contractor (rate / sq.ft basis)
    for example Rs.1000 / sq.ft. The building area is 2500 sq.ft. So contract value is 2500 x 1000 = 25,00,000.

    a. what the rate (%) the builder needs to charge to contractor?
    b. whether any portion (%) will be owned by the Builder?

    To reduce the service tax burden – Whether the contractor can split the bill like below?

    ** Rent for equipment like centering sheets, mixer m/c, water pump etc.,
    ** Labor charges for construction of 1st floor, 2nd floor etc.,

    So the service tax can be put for labor charges… In this case is any service tax for equipment rent?

  16. I have bought a property which is under construction and in April I got Demand letter for 8th Slab Payment.
    There I see Service Tax has been increase to 4.35% from 1st April 2016 .
    But I could not find any relevant link where I can see the tax has been increased. How to find if this is valid or not?

    • By R K

      Hi,
      I too have a same query.
      Please suggest this 4.35% service tax is valid or not.

  17. By Mahesh

    Hello maam. if i am managing a franchise, and i get a commission on sales, does it qualify for service tax? if yes, any threshold limit or exemptions?

  18. By shubham jindal

    Mam,
    I have MF commission receipt of 10 lacs per annum, please tell me whether i am liable to pay service tax or not …. thanks

  19. By deepak popat

    An individual providing services of Borwell work for government organisation Public Health Engineering of Madhya Pradesh. The work is alloted to through e tendering to the individual contractor. My querry is whether the individual can claim exemption S. No. 12 of the notification No. 25/12-ST as he is doing borewell work of state government of madhya pradesh.

  20. By R Kumar

    Has service tax increased in 4 wheeler motor vehicle- car insurance

  21. By Dinesh Patel

    Mam
    I am a small local cable operator,,connect with GTPL ( one of the big MSO) my yearly collecton is more than 10 lack.
    i am liable to pay service tax or not …. thanks

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