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Union budget 2015-16 highlights : Service tax

Union budget 2015-16 has been presented by honourable Finance minister Mr. Arun Jetley on 28th February, 2015. I have gathered details of key changes in service tax in union budget 2015-16. Let’s have a look.

Union budget 2015-16 highlights: service tax:

Change in service tax rate in budget 2015-16:

Service tax rate has been increased from 12.36% to 14 %. Please note that there will be no levy of education cess and higher secondary cess on 14%. The new service tax rate will be applicable from 1st june, 2015.

 

 

 

Levy of swachh Bharat Cess 2% on service tax:

Central Government is empower to charge 2%  Swachh Bharat cess on any or all taxable services. That will be notified.

union budget 2015-16 highlights : service tax

Entertainment events/ ammusement facilities are taxable now:

  1. Fully taxable services : Amusement facilities like means of rides, gaming devises, bowling alleys in amusement parks, theme parks etc. which were exempted earlier because of inclusion in negative list are now taxable fully.
  2. Partially taxable services : Admission / entry to concerts, non recognised sporting events, music concerts, award functions are exempted if admission or entry fees is up to Rs. 500. If entry fees is more than Rs. 500, service tax should be levied.
  3. Fully exemted services: Some services are still fully exempted after budget 2015-16. Those services are used by large people frequently. The services are exhibition of cinematographic film, circus, dance, theatrical performance including drama and ballets. These services are still included in negative list.

services by government or Local authority to Business entity:

Before budget 2015-16, only support services provided by government / local authority to Business entity is taxable. Other services are There is removal of all the services provided by Government / local authority to business entity from negative list. So all the services provided by government / local authority to business entity is taxable except exempt services or covered by any other entry in negative list. (amedment in section 66D (a) (iv) ).

Alcoholic liquor job work:

Job work for production of alcoholic liquor is now taxable.

Revision in alternative rate for air travel agent, insurance service, lottery distributor and selling agents:

Air travel agent, insurace service provider, lottery distributor can pay service tax at an alternative rate as prescribed in rule 6 (7), 6(7A), 6(7B), 6(7C) of the service tax rules, 1994. As there is revision in service tax rate, alternative rate shall also be revised proportionately.

 

 

 

Applicable service tax changes with effect from 1st March, 2015:

Cenvat credit availment:

Cenvat credit for input and input services can be availed up to one year from the date of invoice. Before budget 2015-16, the limit was 6 months from invoice.

Service tax registration procedure:

Now, service tax registration will be more easy. Service tax registration for single premises shall be granted within 2 days from filling online application.

Records maintenance in electronic formats:

Now, service provider can issue digitally signed  invoice and can maintain records in electronic formats. There should be authority of assessee by digital signature.

‘Aggregator Model’ to levy service tax:

Service tax shall be levy as per aggregate model. If service is provided under brand name of aggregator in any manner, he or his representative or his appointed agent shall pay the service tax.

Service tax changes applicable from 1st April, 2015:

Changes applicable from date notified by central government:

Reverse charge mechanism changes:

  1. Manpower supply and security services are now brought to full reverse charge when service provided by an individual, HUF, partnership firms to a body corporate.Means full service tax shall be paid by body corporate as service receiver and service provider is no need to charge service tax in bill. Before, it was in partial reverse charge.
  2. Services provided by mutual fund agents, mutual fund distributors and lottery distributor are now in full reverse charge.
  3. Cenvat credit for service tax paid under partial reverse charge shall be allowed and no linking required to the payment of service provider.

Unique abatement rate for transport by rail, vessel or road:

Now, service provider can now avail abatement at the rate of 70% for transport services by rail, vessel or road and require to pay service tax on 30% of value. The cenvat credit of inputs, capital goods, input services should not be taken to avail abatement.

Higher service tax on higher class flights:

Now, passenger has to pay more service tax on higher class flights. Because abatement rate for classes other than economy has reduced and service tax is required to pay 60% of the value of flight services in higher class.

Withdrawal of exemption granted under Notification no. 25/2012-ST:

Following exemption has been cancelled or reduced in union budget 2015-16:

  1. Services to Government for building civil structure and residential complex, educational, clinical, art or cultural establishments are now taxable due to removal of exemption.
  2. Construction, erection, commissioning or installation of original works of airport /port is taxable now.
  3. Exemption to services by a performing artist in folk or classic art in form of music or dance or theater will be made limited to Rs. 1,00,000 for each performance.
  4. Exemption to transport of food stuff will be limited to food grains including rice and pulses, flour, milk and salt. Trans portion of agricultural produce is exempt separately.
  5. Services provided by mutual fund agent to mutual fund or asset management company , distributor to mutual fund /AMC , selling or marketing agent of lottery ticket to a distributor is taxable now.
  6. Telephone calling service on departmentally run public telephone, guranteed public telephone operation only local calls, free telephone calling at airport or hospital where no bill is issued are taxable now.

NEW exemption included under notification no. 25/2012 -ST:

  1. Services by common effluent treatment plant operator is being exempted.
  2. Pre conditioning, pre cooling, ripening, waxing, retail packing, labeling of fruits and vegetables is being exempted.
  3. Life insurance service provided by Varishtha Pension Bima Yojna has been covered under exemption.
  4. Service provided by exhibitor (theatre owner ) by exhibition of movie to distributor or association of persons is being exempted.
  5. Ambulance services are now exempted.
  6. Admission in zoo, museum, national park, wild life sanctuary and tiger reserve is being exempted.
  7. Good transport agency services when provided for transport of export goods by road from place of removal to a land customs station is being exempt.

The big change is rate of service tax in union budget 2015-16. You can read more at budget 2015-16 union budget.

 

 

 

 

 

 

 

24 Comments

  1. By MOHAN BALEHOSUR

    New Service Tax Rate 14% w.e.f. ?

  2. By 123raj

    New Service Tax Rate 14% w.e.f. ?

    • By admin

      Effective from the date of enactment of financial bill 2015. The date will be notified by central government.

    • By admin

      Service tax new rate will be effective from the date of enactment of finance bill, 2015. The date will be notified by central government.

    • By Gagan Satija

      New rates i.e., 14% are applicable from 01st June 2015

      • By admin

        Yes, I have updated.

  3. By Ajay Mohanty

    Records maintenance in electronic formats:

    Now, service provider can issue digitally signed invoice and can maintain records in electronic formats. There should be authority of assessee by digital signature.

    what it mean? Manually bills are not acceptable?

    • By admin

      No, manually bill and digitally signed invoices both can be accepted.

  4. By IMRAN

    Good transport agency services when provided for transport of export goods by road from place of removal to a land customs station is being exempt

    MEANING OF PLACE OF REMOVAL TO A LAND CUSTOM STATION MEANS???

  5. By kesavaraj

    can avail cenvat credit for service provider for man power agency?

    • By admin

      Please clear the question.

    • By D. R. Pandit

      If you mean whether the receiver of Manpower Agency service can avail credit (now 100%) of the Service Tax paid by him, the answer is YES. Based on the challan vide which the service tax is paid, the service receiver can avail cenvat credit.

  6. By M.A.I.D.C.TLD F.F.JALNA

    What is rate of service tax of service provide in the Month of May 2015 & bill paid in June.2015

  7. By Rajesh Lele

    is service tax on consultancy services exempt upto a certain invoicing limit or applicable from first rupee?

  8. By Prakash

    Should tds deduct from basic amt on rent (immovable) or should deduct from gross amt (rent + service tax) ?

    • By admin

      TDS should be deducted from rent excluding service tax as per CBDT circular no.1/2014 dated 13th January, 2014.

  9. By Shekhar Jangam

    If Manpower receipant is a partnership firm and supplier is individual or partnership firm then who has to pay service tax and at what rate

    • By admin

      Service provider is required to charge service tax at 14% and service receiver is liable to pay him.

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