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Service tax rate of 14 shall come into effect only from a date to be notified Finance Bill 2015 enacted

Service Tax - By: - Bimal jain - Dated:- 18-5-2015 - Dear Professional Colleague, Service tax rate of 14% shall come into effect only from a date to be notified - Finance Bill, 2015 enacted The Hon ble President has given assent to the Finance Bill, 2015 on Thursday, May 14, 2015. Accordingly, the Finance Bill, 2015 now becomes Finance Act (No.20), 2015. However, it is to be noted here that increase in the rate of Service tax from 12.36% to flat 14% (Subsuming Education Cess and Secondary and Hi .....

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from present 12.36% to 16% for specified services on which Swachh Bharat Cess is levied from a date notified later. Therefore, it is to be noted that Higher rate of Service tax from 12.36% to 14% and Swachh Bharat Cess of 2% will become effective only from the date to be notified and not from May 14, 2015. Further, the changes in Negative List of services will also come into effect from the date notified later. We are summarizing hereunder the changes in Service tax that are effective from May 1 .....

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anation 2 to Section 65B(44) of the Finance Act, defining the term Service is amended to specifically state the intention of the legislature to levy Service tax on activities undertaken by Chit fund foremen in relation to Chit, and lottery distributors and selling agents, in relation to lotteries. [Lottery Distributor or Selling Agent needs to pay Service tax under Reverse Charge on services received from selling or marketing agents of lottery tickets] Section 66F: Section 66F (1) prescribes th .....

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y service, being input service, used by the Reserve Bank of India for providing the main service, for which the consideration by way of fee or commission or any other amount is received by the agent bank, does not get excluded from the levy of service tax by virtue of inclusion of the main service in clause (b) of the negative list in section 66D and hence, such service is leviable to service tax. Section 67: Amendment in definition of the term Consideration to include: any reimbursable expend .....

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nd the price at which the distributor or selling agent gets such ticket.. Section 73: New sub-section (1B) inserted to provide that the Service tax amount self-assessed and declared in the return but not paid (either in part or full) shall be recovered under Section 87 thereof, without service of any notice under Section 73(1).Consequently, Rule 6(6A) of the Service Tax Rules, 1994 ( the Service Tax Rules ) has been omitted, which provided for recovery of Service tax self-assessed and declared .....

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n are available on specified records. Section 76: Rationalization of penal provisions in cases not involving fraud or collusion or wilful misstatement or suppression of facts or contravention of any provision of the Finance Act or Rules with the intent to evade payment of Service tax, in the following manner: Ceiling of 10% of Service tax amount as penalty has been incorporated; No penalty leviable if Service tax and interest is paid within 30 days of issuance of SCN under Section 73(1) of th .....

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imposed) shall be admissible if Service tax, interest and reduced penalty on such increased amount is paid within 30 days of such Appellate Orders. Section 78: Rationalization of penal provisions relating to penalties in cases involving fraud or collusion or wilful misstatement or suppression of facts or contravention of any provision of the Finance Act or Rules with the intent to evade payment of Service tax, in the following manner: Penalty shall be of 100% of Service tax amount. However, i .....

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issuance of SCN under Section 73(1) of the Finance Act. Further proceedings in respect of such Service tax, interest and penalty shall be deemed to be concluded; Reduced penalty equal to 25% of the Service tax amount, determined by the Central Excise officer by an Adjudication Order, shall be levied if the Service tax, interest and reduced penalty is paid within 30 days of receipt of Order of the Central Excise Officer; and If the Service tax amount gets modified in any Appellate proceedings, .....

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admissible if Service tax, interest and reduced penalty on such increased amountis paid within 30 days of such Appellate Orders. New Section 78B inserted after Section 78A: A new Section 78B has been inserted to prescribe transition provision in the following manner: Amended provisions of Sections 76 and 78 of the Finance Act shall apply to cases where either no SCN is served, or SCN is served under Section 73(1)or proviso thereto but no Order has been issued under Section 73(2) thereof, befo .....

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so to sub-section (1) of Section 78, shall be counted from the date on which the Finance Bill, 2015 receives the assent of the President (i.e. May 14, 2015). Section 80 omitted: Now, no waiver of penalty under Section 76 and 77 of the Finance Act, on Reasonable cause will be allowed. Section 83: Certain changes have been made in the provisions relating to Settlement Commission under the Excise Act,which are made applicable to the Finance Act by virtue of Section 83 thereof. Section 86: Amende .....

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g on the date when the Finance Bill, 2015 receives assent of the President (i.e. May 14, 2015) shall be transferred and dealt in accordance with Section 35EE of the Excise Act. Section 94: Clause (aa) of Section 94(2) has been substituted with determination of the amount and value of taxable service, the manner thereof, and the circumstances and conditions under which an amount shall not be a consideration, under Section 67 . PART II: CHANGES IN SERVICE TAX TO BE EFFECTIVE FROM DATE TO BE NOTIF .....

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Cenvat Credit Rules, 2004( the Credit Rules ),which requires clarification by the CBEC at the earliest. Consequent to the upward revision in Service tax rate, the composition rate is proposed to be revised proportionately under Rule 6(7), 6(7A), 6(7B) and 6(7C) of the Service Tax Rules on specified services, namely, Air Travel Agent: From 0.6% and 1.2 % , to 0.7 per cent. and 1.4 per cent of Basic fares in the case of domestic bookings and international bookings respectively. Life insurance .....

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10,00,000/ or; From Rs. 660 and 0.012% to Rs. 770 and 0.014% of gross amount of currency exchanged for an amount exceeding ₹ 10,00,000/- subject to maximum amount of ₹ 7000/- which was ₹ 6000/- earlier Service provided by lottery distributor and selling agent: Guaranteed price payout is more than 80%: ₹ 8200/- (earlier ₹ 7000/-) on every ₹ 10,00,000/- (or part of ₹ 10,00,000/-) of aggregate face value of lottery tickets printed by organizing S .....

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ces. The proceeds from this Cess would be utilized for Swachh Bharat initiatives. The Government will specify the categories of taxable services on which SB Cess would be leviable. Open issues: What all services are going to be covered under the levy of SB Cess? In the absence of clearly defined provisions, it is likely that the SB Cess may re-ignite the tussle on classification of services. Whether Cenvat credit of SB Cess would be available or not because there are no amendments proposed in .....

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been omitted from the Rule 2(1)(d)(i)(E) of the Service Tax Rules, which provides for liability of service receiver to pay Service tax under Reverse Charge in relation to support services provided or agreed to be provided by Government or Local authority with certain exceptions. Further, in paragraph I, clause (A) sub clause (iv) Item under Notification No. 30/2012-ST dated June 20, 2012 (Reverse Charge Mechanism), the term support has been omitted for services provided or agreed to be provided .....

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e tax net. Section 66D(i): Explanation inserted whereby the expression betting, gambling or lottery shall not include the activity as specified in substituted explanation 2 to Clause (44) of Section 65B of the Finance Act:. Section 66D(j): Omitted, which covers admission to entertainment event or access to amusement facilities . Consequently, Service tax to be levied on the services provided by way of access to amusement facility such as rides, bowling alleys, amusement arcades, water parks, t .....

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ST dated March 1, 2015 vide which changes has been made in the Mega Exemption List of Services] Consequent to the changes in the Negative List of services, definition of following terms has been omitted/ amended in Section 65B of the Finance Act: Definitions of certain terms omitted [Section 65B(9): amusement facility , Section 65B(24): entertainment event and Section 65B(49): support services has been omitted;] Definitions of certain terms amended [Section 65B(40): process amounting to manufa .....

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