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Service tax rate increased from 12.36% to 14% (Subsuming EC and SHEC) effective from June 1, 2015 and Other changes

Service Tax - By: - Bimal jain - Dated:- 22-5-2015 - Dear Professional Colleague, ; After the Hon ble President has given assent to the Finance Bill, 2015 on Thursday, May 14, 2015, the Ministry of Finance, Department of Revenue vide Notification No. 14/2015-ST dated May 19, 2015 has notified increase in the rate of Service tax from 12.36% to flat 14% (Subsuming Education Cess and Secondary & Higher Secondary Education Cess) to be effective from June 1, 2015. Swachh Bharat Cess @ 2% on value .....

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f all or any taxable services. 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. B: Following change in relation to the Negative List - Section 66D of the Finance Act Section 66D(a): Under clause (iv), the words support services to be substituted by the words any service . Accordingly, after such amendment, Any services provided by the Government or local authority to a .....

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Notifications dated May 19, 2015 A: Notification No. 13/2015-ST Amend Notification No. 26/2012-ST dated June 20, 2012, thereby removing the entry relating to Chit in the definition part in view of withdrawal of abatement in relation to Chit Fund vide Notification No. 8/2015-ST dated March 1, 2015 (effective from April 1, 2015). B: Notification No. 14/2015-ST Increase in the rate of Service tax from 12.36% to flat 14% (Subsuming Education cess and Secondary & Higher Secondary Education cess .....

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) of Section 65B of the Finance Act. Section 66D(j): Omitted, which covers admission to entertainment event or access to amusement facilities . Consequent to the above changes in the Negative List of services, definition of following terms to be omitted/ amended in Section 65B of the Finance Act w.e.f. June 1, 2015: Definitions of certain terms omitted [Section 65B(9): amusement facility , Section 65B(24): entertainment event ] Definitions of certain terms amended [Section 65B(40): process amou .....

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distributor and selling agent. D: Notification No. 16/2015-ST Following changes in Mega Exemption Notification No. No. 25/2012-ST dated June 20, 2012 made vide Notification No. 6/2015-ST dated March 1, 2015 effective from June 1, 2015 Entry 30: Service tax would be levied on services by way of carrying out of intermediate production process of alcoholic liquor for human consumption on job work, consequent to imposition of Service tax on services by way of manufacture of alcoholic liquor for hum .....

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Development Fund Scheme of the Ministry of Power from the whole of the Service tax leviable thereon under Section 66B of the Finance Act till April 1, 2017 subject to the conditions specified therein. Changes in Cenvat Credit Rules - Reversal of Cenvat Credit on Exempted Services: Notification No. 14/2015-Central Excise (N.T.), Dated: May 19, 2015 In the light of increase in the rate of Service tax from 12.36% to flat 14% (Subsuming Education Cess and Secondary & Higher Secondary Education C .....

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definitely come to an end but there are chances of turmoil being faced by the service provider in respect of the ongoing transactions for which either certain advance payment is received prior to June 1, 2015 but the completion of provision of service may take place post facto thereof or vice versa. Before taking deeper dive into the area of turmoil, which may crop up pursuant to new rate of Service tax being notified, it is apposite here to have an overview of the Point of taxation as governed .....

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ice, Point of taxation shall be the date of completion of provision of service. Thus, by applying the provisions of Rule 3 of the POT Rules, the service provider would be liable to pay Service tax on the advance payments received at the prevailing rate of 12.36%. However, the service provider may encounter the issue of adjusting this payment of tax for increase in Service tax rate afterwards when the service will be provided and invoice will be raised for the services rendered, for which advance .....

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int of taxation shall be Applicable Rate the change in effective rate of tax the change in effective rate of tax the change in effective rate of tax Date of issuance of invoice or Date of receipt of payment, whichever is earlier New Rate BEFORE the change in effective rate of tax AFTER the change in effective rate of tax Date of issuance of inv .....

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in effective rate of tax BEFORE the change in effective rate of tax Date of issuance of invoice or Date of receipt of payment, whichever is earlier Old Rate the change in effective rate of tax the change in effective rate of tax Date of issuance of invoice New Rate Accordingly, the above scenario of advance payments may have exemplary situation and countered as under: Services are c .....

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: Whether Rule 4 of the POT Rules can override Section 67A of the Finance Act: Question is whether Rule 4 of the POT Rules can override the Section 67A of the Finance Act, 1994 ( the Finance Act ), inserted therein w.e.f. May 28, 2012, this reads as under: 67A. Date of determination of rate of tax, value of taxable service and rate of exchange. - The rate of service tax, value of a taxable service and rate of exchange, if any, shall be the rate of service tax or value of a taxable service or rat .....

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red before change in effective rate of tax but invoice is raised and payment is made after change of rate when as per Section 67A of the Finance Act, applicable rate of Service tax is the rate in force at the time when the taxable service has been provided or agreed to be provided. Here, we would also like to draw your attention towards the decision of the Hon ble Supreme Court in the case of All India Federation of Tax Practitioners Vs. Union of India [2007 (8) TMI 1 - Supreme Court ] wherein i .....

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te of Service tax in respect of ongoing transactions and whether the same should be determined by applying Rule 4 of the POT Rules or as per Section 67A of the Finance Act. Here it would not be out of place to mention that the POT Rules were framed by the Central Government in exercise of the powers conferred under Section 94 of the Finance Act and such delegated legislation cannot be extended to go beyond the vires of the Finance Act. Hence, an illustrative clarification to this effect is much .....

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