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Union Budget 2016 - Changes relating to Service Tax

Service Tax - F. No. 334/8/2016-TRU - Dated:- 29-2-2016 - F. No. 334/8/2016-TRU Government of India Ministry of Finance Department of Revenue (Tax Research Unit) *** Amitabh Kumar Joint Secretary (Tax Research Unit) Tel: 011-23093027; Fax: 011-23093037 E-mail: amitabh.kumar@nic.in D.O.F. No.334/8/2016-TRU New Delhi, dated February29th, 2016 Dear Madam/Sir, Subject: - reg. The Finance Minister has, while presenting the Union Budget 2016-17, introduced the Finance Bill, 2016 in the Lok Sabha on th .....

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nd other changes are being given effect to by inserting new entries, and amending/omitting existing entries in notification Nos. 25/2012-ST, 26/2012-ST, 30/2012-ST, 32/2012-ST, all dated 20-6-2012, 23/2004-CE(NT) dated 10.09.2004 and 27/2012-C.E. (N.T.) dated 18.06.2012 and by issuing new notifications. 2.1 It may be noted that changes being made in the Budget are coming into effect on various dates, as indicated below: (i) Changes coming into effect immediately w.e.f. the 1st day of March, 2016 .....

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ence, the Table at Annexure-I lists the changes being made and indicates the dates on which these changes would come into effect. The salient features of the changes being made are discussed below. 3.0 Enabling provision for levy of Krishi Kalyan Cess : 3.1 Krishi Kalyan Cess is proposed to be levied with effect from 1st June, 2016 on any or all the taxable services at the rate of 0.5% on the value of such taxable services. Credit of Krishi Kalyan Cess paid on input services shall be allowed to .....

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them in the general exemption notification (Notification No. 25/2012-ST as amended by notification No. 09/2016-ST, dated 1st March, 2016 refers). Consequently, the definition of approved vocational education course‟ [clause (11) of section 65B] is also proposed to be omitted from the Finance Act and is being incorporated in the general exemption notification (Notification No. 25/2012-ST as amended by notification No 09/2016-ST, dated 1st March, 2016 refers). This amendment in the notifica .....

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tinue to be exempted by way of exemption notification [Notification No. 25/2012-ST, as amended by notification No. 09/2016-ST, dated 1st March, 2016 refers]. The service of transportation of passengers by air-conditioned stage carriage is being taxed at the same level of abatement (60%) as applicable to the transportation of passengers by a contract carriage, with same conditions of non-availment of Cenvat credit. [notification No. 08/2016-St dated 29th February, 2016 refers] (C) The entry in th .....

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The domestic shipping lines registered in India will pay service tax under forward charge while the services availed from foreign shipping line by a business entity located in India will get taxed under reverse charge at the hands of the business entity. The service tax so paid will be available as credit with the Indian manufacturer or service provider availing such services (subject to fulfillment of the other existing conditions). It is clarified that service tax levied on such services shal .....

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Bill refers) 4.2 Further amendments in Chapter V of the Finance Act, 1994: A. Lottery: Section 4(c) of the Lotteries (Regulation) Act, 1998 provides that the State Government shall sell the tickets either itself or through distributors or selling agents. Thus, as per the provisions of the Lotteries (Regulation) Act, 1998, the transaction between the State Government and the distributors or selling agents is on principal to agent basis. Any contract contrary to the aforesaid legal provisions is .....

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rum and subsequent transfers thereof is proposed to be declared as a service under section 66E of the Finance Act, 1994 so as to make it clear that assignment by Government of the right to use the spectrum as well as subsequent transfers of assignment of such right to use is a service leviable to service tax and not sale of intangible goods. (Clauses 147 of the Bill refers) C. Section 67A of Finance Act, 1994. Section 67A is proposed to be amended to obtain specific rule making powers in respect .....

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d, collusion, suppression etc. is proposed to be enhanced by one year, that is, from eighteen months to thirty months by making suitable changes to section 73 of the Finance Act, 1994. (Clauses 149 of the Finance Bill, 2016 refers) E. Amendment to section 75 of Finance Act Section 75 of the Finance Act is proposed to be amended so that a higher rate of interest would apply to a person who has collected the amount of service tax from the service recipient but not deposited the same with the Centr .....

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ints for punishable offences is proposed to be enhanced to ₹ 2 crore. (Clause 152 of Finance Bill 2016 refers) H. Sections 90 and 91 of the Finance Act, 1994 The power to arrest in service tax law is proposed to be restricted only to situations where the tax payer has collected the tax but not deposited it with the exchequer, and amount of such tax collected but not paid is above the threshold of ₹ 2 crore. Sections 90 and 91 of the Finance Act, 1994 are being amended accordingly. (C .....

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d the factory or any other place or premises of production or manufacture of the said goods, for export of the said goods. The said amendment is being given retrospective effect from the date of application of the parent notification, i.e., from 01.07.2012. Time period of one month is proposed to be allowed to the exporters whose claims of refund were earlier rejected in absence of amendment carried out vide notification No.1/2016-ST dated 3rd February, 2016. (Clauses 157 of the Bill refers) K. .....

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The benefit of exemption is proposed to be extended to the said services provided during the period from the 1st July, 2012 to 29.01.2014. (b) Refund of Service Tax paid on the said services during the period from the 1st July, 2012 to 29.01.2014 shall also be allowed in accordance with the law including the law of unjust enrichment. Application for refund may be allowed to be filed within a period of six months from the date on which the Finance Bill, 2016 receives the assent of the President. .....

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e other than for commerce, industry, or any other business or profession; (ii) a structure meant predominantly for use as (i) an educational, (ii) a clinical, or (iii) an art or cultural establishment; (iii) a residential complex predominantly meant for self-use or the use of their employees or other persons specified in the Explanation 1 to clause 44 of section 65B of the said Act; was withdrawn with effect from 1.4.2015. The same is being restored for the services provided under a contract whi .....

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of the Bill refers) (b) Exemption from Service Tax on services by way of construction, erection, etc. of original works pertaining to an airport, port was withdrawn with effect from 1.4.2015. The same is being restored for the services provided under a contract which had been entered into prior to 01.03.2015 and on which appropriate stamp duty, where applicable, had been paid prior to that date subject to production of certificate from the Ministry of Civil Aviation or Ministry of Shipping, as t .....

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, 1994 shall come into force on the day the Finance Bill, 2016 is enacted. 5.0 Information Technology Software: 5.1 With effect from 21.12.2010, media falling under Chapter 85 with recorded Information Technology Software has been notified under section 4A of the Central Excise Act. Accordingly, Central Excise duty/CVD is to be paid on the value of such media with recorded Information Technology Software and the assessable value of such media is required to be determined on the basis of the reta .....

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n Technology Software, is not required to bear the RSP when supplied domestically or imported. Difficulties are being experienced in the assessment of such media to Central Excise duty/CVD besides giving rise to the issue of double taxation - levy of Central Excise duty/CVD as well as service tax. In order to resolve the issue, media with recorded Information Technology Software which is not required to bear RSP, is being exempted from so much of the Central Excise duty/CVD as is equivalent to t .....

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mutually exclusive. (Notification No. 11/2016-CE and 11/2016-Customs, both dated 1st March 2016 refers) 6.0 Review of Exemptions: 6.1 Exemption in respect of the following services is being withdrawn,- · Services provided by a senior advocate to an advocate or partnership firm of advocates, and · A person represented on an arbitral tribunal to an arbitral tribunal; Service tax in the above instances would be levied under forward charge. However, the existing dispensation regarding .....

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ommissioning or installation of original works pertaining to monorail or metro (under S. No 14 of the notification No. 25/12-ST) is being withdrawn, in respect of contracts entered into on or after 1st March 2016. The other exemptions under S. No. 14 of notification No. 25/12-ST shall continue unchanged. (Sl. No(vi)A of notification No. 9/2016-ST, dated 1st March, 2016 refers). The above changes in notification No. 25/12-ST, except the change mentioned in para 6.3, shall come into effect from th .....

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Act, 1992, by way of protecting the interests of investors in securities and to promote the development of, and to regulate, the securities market are being exempted from service tax. (New entry at S. No. 51 of notification No. 25/2012-ST refers) 7.3 Services provided by Employees‟ Provident Fund Organisation (EPFO) to employees are being exempted from service tax. (New entry at S. No. 49 of notification No. 25/2012-ST refers) 7.4 Services provided by Biotechnology Industry Research Assis .....

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ry and Development Authority (IRDA) of India are being exempted from service tax. (New entry at S. No. 50 of notification No. 25/2012-ST refers) 7.7 Services of general insurance business provided under Niramaya‟ Health Insurance scheme launched by National Trust for the Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation and Multiple Disability in collaboration with private/public insurance companies are being exempted from service tax. (New entry at S. No. 26(q) of notific .....

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S. No. 9D of notification No. 25/2012-ST refers) 7.10 Services of assessing bodies empanelled centrally by Directorate General of Training, Ministry of Skill Development & Entrepreneurship are being exempted from service tax. (New entry at S. No. 9C of notification No. 25/2012-ST refers) 7.11 Services by way of construction, erection etc. of a civil structure or any other original works pertaining to the In-situ Rehabilitation of existing slum dwellers using land as a resource through priva .....

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component of Housing for All (HFA) (Urban) Mission/ Pradhan Mantri Awas Yojana (PMAY) is being exempted from service tax. (New entry at S. No. 13 (bb) of notification No. 25/2012-ST refers) 7.13 Services by way of construction, erection, etc., of original works pertaining to low cost houses up to a carpet area of 60 sq.m per house in a housing project approved by the competent authority under the Affordable housing in partnership component of PMAY or any housing scheme of a State Government are .....

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nformed by Secretary, Ministry of Human Resource Development (MHRD) vide letter D. O. No.2-14/2009-TS.V dated 8th July, 2014 and 5th February, 2014 that MHRD is vested with the power to recognise educational courses [DoPT O.M. dated 08.01.1975], for the purpose of recruitment to posts under Government of India. It has been further stated by MHRD in their above mentioned letters that IIMs have been conducting Post Graduate Programmes in Management and Fellowship Programmes which are equivalent to .....

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w of the same, liability to pay service tax in respect of the said programmes for the past period will also become infructuous. (New entry at S. No. 9B of notification No. 25/2012-ST refers) The above changes in notification No. 25/12-ST, except the change mentioned in para 7.11, 7.12, 7.13 and 7.14 (which will come into effect from 1st March, 2016), shall come into effect from the 1St day of April 2016. 8. New entries being incorporated in notification No. 25/2012-ST, to continue exemption to c .....

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f notification No. 25/2012-ST refers) 8.2 Services by a stage carriage were in the negative list of services [clause (o) (i) of section 66D]. As this entry is proposed to be omitted through the Finance Bill 2016 [para 4.2 above refers], a new entry is being inserted in notification No.25/2012-ST so as to exempt services by a stage carriage other than air conditioned stage carriage (New entry at S. No. 23(bb) of notification No. 25/2012-ST refers) These changes shall be made effective from 1st of .....

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ch accommodation. There is no change in the rate of abatement or the conditions required to be fulfilled for claiming the said abatement. (Entry at S. No. 11(i) of notification No. 26/2012-ST as amended vide notification No. 8/2016-ST dated 1.03.2016 refers) 9.2 Abatement rates in respect of services by a tour operator in relation to a tour other than in para 9.1 above, is being rationalised from 75% and 60% to 70%. Consequently, the definition of package tour as provided in the relevant notific .....

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f renting of motor-cab services, provided no cenvat credit has been taken. It is being made clear by way of inserting an explanation in the notification No. 26/2012-ST that cost of fuel should be included in the consideration charged for providing renting of motor-cab services for availing the abatement. (Insertion of Explanation BA in notification No. 26/2012-ST refers) 9.5 At present, two rates of abatement have been prescribed for services of construction of complex, building, civil structure .....

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ions. (Amendment in entry at S. No. 12 of notification No. 26/2012-ST refers) 9.6 At present, service tax is leviable on 30% of the amount charged for the service of transport of passengers by rail, without cenvat credit of inputs, input services and capital goods. Thus, abatement of 70% is presently available in respect of the said services. It is proposed to continue with the same level of abatement with cenvat credit of input services for the said service. (Amendment in entry at S. No. 3 of n .....

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lway ). A reduced abatement rate of 60% with credit of input services is being prescribed for transport of goods in containers by rail by any person other than Indian Railway. (Existing entry at S.No. 2 and new entry at S. No. 2A of notification No. 26/2012-ST refers) 9.8 At present, service tax is leviable on 30% of the value of service of transport of goods by vessel without Cenvat credit on inputs, input services and capital goods. Thus, abatement of 70% is presently available in respect of t .....

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goods by GTA). (New entry at S. No. 7A in notification No. 26/2012-ST refers) The proposed rationalization in abatements shall come into effect from the 1st day of April, 2016. 10. Reverse Charge Mechanism 10.1 In Union Budget, 2015, as a policy decision to prune exemptions, the exemption to services provided by mutual fund agents/distributors to an asset management company was withdrawn. However these services were put under reverse charge liability, i.e., the Asset Management Company was made .....

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rdingly, Rule 2(1)(d)(EEA) of Service Tax Rules, 1994 making service recipient, that is, mutual fund or Asset Management Company as the person liable for paying service tax is being deleted along with consequential changes in notification No. 30/2012-ST. 10.2 The liability to pay service tax on any service provided by Government or a local authority to business entities shall be on the service recipient. Consequently, notification No. 30/2012-ST is being amended so as to delete the words by way .....

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e Companies Act, 2013 to support entrepreneurs who on their own are capable of starting a venture by allowing them to create a single person economic entity with limited liability. One person Company has been defined in Section 2(62) of the Companies Act, 2013. The benefits of (a) quarterly payment of service tax and (b) payment of service tax on receipt basis, which are available to individual and partnership firms, are being extended to One Person Company (OPC) whose aggregate value of service .....

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2016-ST dated 1.03.2016 refers) 11.3 The service tax liability on single premium annuity (insurance) policies is being rationalised and the effective alternate service tax rate (composition rate) is being prescribed at 1.4% of the total premium charged, in cases where the amount allocated for investment or savings on behalf of policy holder is not intimated to the policy holder at the time of providing of service. Amendments are being made in rule 7A of Service Tax Rules, 1994 accordingly. 11.4 .....

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le 2(1)(d)(i) (E) of Service Tax Rules, 1994 so as to provide that the liability to pay service tax on any service provided by Government or local authorities to business entities shall also be on the service recipient on reverse charge basis. 11.5 Recipient of services availed from foreign shipping line by a business entity located in India will get taxed under reverse charge at the hands of the business entity. (No fresh provision is being made in this regard, as it is already covered by Place .....

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s of clause (a) and (hhh) of sub-section (1) of section 94, now specific powers is also being obtained under section 67A to make rules regarding point in time of rate of service tax. Thus, any doubt about the applicability of service tax rate or apparent contradiction between section 67A and POTR would be taken care of. Therefore, consequent modifications have been done in POTR. (a) Rule 5 of POTR applies when a new service comes into the service tax net. Although in the case of new levy, provis .....

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g inserted therein stating that in situations other than those specified where new levy or tax is not payable, the new levy or tax shall be payable. The above changes shall come into effect from 1st March, 2016. 13. Cenvat Credit Rules, 2004 With a view to simplify and rationalize the Cenvat Credit Rules, 2004, a number of amendments are being carried out in them. The important changes have been discussed in brief in Annexure-II. 14. Rationalisation Interest rates on delayed payment of duty/tax .....

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r/years covered by the notice is less than ₹ 60 Lakh, the rate of interest on delayed payment of service tax will be 12%. (Notification Nos. 13 and 14/2016-ST dated 1st March, 2016 refer) 15. Certain issues clarified: 15.1 Incentives received by air travel agents from computer reservation system companies (CCRS) 15.1.1 High Level Committee (HLC) in their Second Half Yearly Report in December 2015 have stated that Air Travel Agents (ATA) reportedly have been representing to CBEC since 2012 .....

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ncentives received by the Air Travel Agents (ATAs) from the Companies providing Computer Reservation System (CCRS) are for using the software and platform provided by the CCRS like Galileo, Amadeus, etc. The CCRS are providing these incentives either for achieving the targeted booking of air tickets or for loyalty for booking of air tickets using their software system. Thus, the service provided by CCRS is to the Airlines and Air Travel Agent is promoting the service provided by CCRS to Airlines .....

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er. 1st April, 2016 has already been notified as the date from which any service provided by Government or local authorities to business entities shall be taxable. Consequently, 1st April, 2016 is also being notified as the date from which the definition of support services shall stand deleted from the Finance Act, 1994 [notification No. 15/2016-ST dated refers]. 15.3 Services provided by Container Train Operators (CTOs) As discussed above, notification No. 26/2012-ST is being amended to provide .....

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(rake of wagons with containers) is a service of Transport of Goods by Rail‟ and is, therefore, eligible for abatement and tax treatment accordingly, that is, for abatement at the rate of 70% with credit of input services. 15.4 Refund of CENVAT Credit Notification No. 27/2012 - C.E. (N.T.) is being amended so as to provide that time limit for filing application for refund of Cenvat Credit under Rule 5 of the Cenvat Credit Rules, 2004, in case of export of services, shall be 1 year from th .....

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sioner (Appeals), the assessee, after paying the duty, interest and penalty equivalent to 25% of duty, can file a declaration, is being introduced. In such cases the proceedings against the assessee will be closed and he will also get immunity from prosecution. However, this scheme will not apply in certain specified type of cases. 15.6 Returns. Service tax assessees above a certain threshold will also be required to file an annual return. This change shall come into effect from 1st April, 2016. .....

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uld be clarified that the services provided by ILMs are not liable to service tax. 15.7.2The matter has been examined. The services provided by the ILMs are not covered by Section 66D (l) of the Finance Act, 1994 or Entry 9 of Notification No. 25/2012 - ST as they are not providing pre-school education or education up to higher secondary school (or equivalent) or education for obtaining a qualification recognized by law. It is the schools/colleges/institutions (in which the students take admissi .....

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nt only to draw attention to major changes. The text of the statutory provisions and the wordings of the notifications should be read carefully for interpreting the law. 16.2 Field formations are requested to go through the changes made in the Budget carefully. Any issues or doubts which may arise or any omission/error observed may kindly be brought to the notice of the undersigned or Shri Ram Tirath, Member(Budget), Phone No. 011-23094788, Dr. Somesh Chander, Director at somesh.chander@nic.in, .....

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s either by the trade or by the field formations. 16.4 I would like to express my gratitude for the pre-budget suggestions and inputs which have been received from field formations. I would like to say a special thank you to the Director and Officer on Special Duty who have very diligently carried through the budgetary process. I would be found wanting if I do not thank the three Technical Officers, Dr Abhishek Chandra Gupta, Dr. Ravinder Kumar and Shri Abhishek Verma, who put in their best. Wit .....

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of exemption on services to an airport, port. 4.2L(b) (iii) Withdrawal of exemption on services to monorail or metro, in respect of contracts entered into on or before 01.03.2016 6.3 7.11 to 7.13 (iv) Exemption to services by way of construction etc. in respect of- (a) housing projects under Housing For All (HFA) (Urban) Mission/Pradhan Mantri Awas Yojana (PMAY); (b) low cost houses up to a carpet area of 60 square metres in a housing project under Affordable housing in Partnership component of .....

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.0 (vii) Insertion of Explanations in Rule 5 of Point of Taxation Rules, 2011 12 (viii) Cenvat credit is being allowed to service providers providing services by way of transportation of goods by a vessel from India to abroad. 13(d)& 13(i)(iii) (ix) Notification No. 27/2012 - C.E. (N.T.) is amended to specify relevant date. 15.4 (x) Service provided by Container Train Operators 15.3 B. With effect from 1st day of April, 2016 A person represented on an arbitral tribunal to an arbitral tribuna .....

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tional Centre for Cold Chain Development Insurance Regulatory and Development Authority (IRDA) of India. "Niramaya‟ Health Insurance scheme implemented by National Trust Threshold exemption to services provided by a performing artist in folk or classical art form is being increased from ₹ 1 lakh charged per event to ₹ 1.5 lakh charged per event. Deen Dayal Upadhyay Grameen Kaushalya Yojana training partners Assessing bodies empanelled centrally by Directorate General of Tr .....

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(i) The benefit of (a) quarterly payment of service tax being extended to OPC and HUF and (b) payment on receipt basis being extended to OPC. (ii) Rule 2(1)(d)(i) (D)(II) modified as an individual advocate other than senior advocate. (iii) The word support shall stand deleted from rule 2(1)(d)(i) (E) (iv) Rule 2(1)(d)(EEA) making mutual fund agents/distributor as person liable for paying service tax will be deleted (v) The service tax composition scheme for single premium annuity policies Rever .....

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under sub-rule (1), (2) and (3) of the Rule 6 along with rule 6(3B) of the Cenvat Credit Rules, 2004. (iii) Cenvat credit of service tax paid on upfront charges for assignment of spectrum/ mining rights etc. (iv) Reversal of Cenvat Credit of inputs/input services which have been commonly used in a taxable output service as well as an activity which is not a service . (v) Sub-rule (2) of rule 14 being omitted. 11.1 11.2 11.4 10.1 11.3 10.1 10.2 13 Changes in the Finance Act, 1994 that get incorpo .....

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) Insertion of proviso to section 75. (7) Insertion of Explanation in section 78A (8) Amendments in sections 89, 90 and 91. (9) In section 93A of the 1994 Act, the words prescribed or by notification in the Official Gazette shall be substituted. (10) Retrospective effect to notification No. 41/2012- ST, dated the 29th June, 2012 as amended by notification No. 01/2016- ST. (11) Retrospective exemption is to be extended to the construction, repair, maintenance etc of canal, dam or other irrigation .....

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inal works pertaining to an airport, port. (15) Rationalisation of rate of interest in case where is service tax is collected and not credited in Govt. account and others 4.2 A 4.1 (A) 4.2B 4.2C 4.2D 4.2E 4.2 F 4.2G, 4.2H 4.2I 4.2J 4.2K 4.1(A) 4.2L (a) 4.2(L(b) 14 (16) Dispute resolution scheme, 2016 (17) Returns 15.5 15.6 With effect from 1st day of June, 2016 after enactment of the Finance Bill, 2016 in respect of each provision (1) Krishi Kalyan Cess (2) Negative List entry that covers servic .....

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tinue to be outside service tax net by way of exemption through notification 3.0 & 3.1 4.1(B) 4.1(C) 8.2 8.1 Annexure-II Important changes in Cenvat Credit Rules, 2004 effective from 01.04.2016 [ Para 13 of the JS(DO) letter dated 1.03.2016] With a view to simplify and rationalize the Cenvat Credit Rules, 2004, a number of amendments are being carried out in them. Following are the important changes: (a) Wagons of sub heading 8606 92 of the Central excise Tariff and equipment and appliance u .....

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(k) sub-clause (ii) of the Rules refers]. (c) All capital goods having value up to Rs. ten thousand per piece are being included in the definition of inputs. This would allow an assessee to take whole credit on such capital goods in the same year in which they are received. [Amendment in rule 2 clause (k) refers] (d) Service by way of transportation of goods by a vessel from customs station of clearance in India to a place outside India is being excluded from the definition of exempted service&# .....

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oducts. It is also being provided that a manufacturer can send these goods directly to such other manufacturer or job-worker without bringing the same to his premises. [Amendment in Rule 4(5) (b) refers] (f) Presently, the permission given by an Assistant Commissioner or Deputy Commissioner to a manufacturer of the final products for sending inputs or partially processed inputs outside his factory to a job-worker and clearance there from on payment of duty is valid for a financial year. It is be .....

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to use assigned to him by the Government or any other person, in any financial year, to another person against a consideration, balance CENVAT credit not exceeding the service tax payable on the consideration charged by him for such further assignment, shall be allowed in the same financial year. It is also being provided that CENVAT credit of annual or monthly user charges payable in respect of such assignment shall be allowed in the same financial year. [Amendment in rule 4, sub-rule (7) refe .....

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put services as is used in or in relation to manufacture of exempted goods and exempted service. The rule then directs that the procedure for calculation of credit not allowed is provided in sub-rules (2) and (3), for two different situations. (ii) sub-rule (2) of rule 6 is being amended to provide that a manufacturer who exclusively manufactures exempted goods for their clearance up to the place of removal or a service provider who exclusively provides exempted services shall pay (i.e. reverse) .....

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provider of the output service shall exercise one of the two options, namely, (a) pay an amount equal to six per cent of value of the exempted goods and seven per cent of value of the exempted services, subject to a maximum of the total credit taken or (b) pay an amount as determined under sub-rule (3A). (iv) The maximum limit prescribed in the first option would ensure that the amount to be paid does not exceed the total credit taken. The purpose of the rule is to deny credit of such part of th .....

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lusively in manufacture of exempted goods or for provision of exempted services shall be available ; (b) Full credit of input or input services used exclusively in final products excluding exempted goods or output services excluding exempted services shall be available; (c) Credit left thereafter is common credit and shall be attributed towards exempted goods and exempted services by multiplying the common credit with the ratio of value of exempted goods manufactured or exempted services provide .....

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l Excise officer, competent to adjudicate such case, to follow the procedure and pay the amount prescribed subject to payment of interest calculated at the rate of fifteen per cent. per annum (vii) A new sub-rule (3AB) is being inserted as transitional provision to provide that the existing rule 6 of CCR would continue to be in operation upto 30.06.2016, for the units who are required to discharge the obligation in respect of financial year 2015-16. (viii) Sub-rule (3B) of rule 6 is being amende .....

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nder the Finance Act, 1994. (ii) Sub-rule (4) is being amended to provide that where the capital goods are used for the manufacture of exempted goods or provision of exempted service for two years from the date of commencement of commercial production or provision of service, no CENVAT credit shall be allowed on such capital goods. Similar provision is being made for capital goods installed after the date of commencement of commercial production or provision of service. (iii) Sub-rule (7) is bei .....

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f clearance in India to a place outside India is being excluded from the definition of exempted service‟ by amending rule 2(e) of the rules as discussed above. Amendment in sub-rule (7) coupled with the corresponding amendment in the definition of Exempted Service is aimed at allowing credit of eligible inputs, input services and capital goods for providing the said service and providing Indian shipping lines a level playing field vis a vis the foreign shipping lines. The credit available .....

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acturing unit also in addition to its own manufacturing units. Outsourced manufacturing unit is being defined to mean either a job-worker who is required to pay duty on the value determined under the provisions of rule 10A of the Central Excise Valuation (Determination of Price Of Excisable Goods) Rules, 2000, on the goods manufactured for the Input Service Distributor or a manufacturer who manufactures goods, for the Input Service Distributor under a contract, bearing the brand name of the Inpu .....

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s to its manufacturing units or units providing output service or to outsourced manufacturing units subject to, inter alia, the following conditions, ,: · credit attributable to a particular unit shall be attributed to that unit only. · credit attributable to more than one unit but not all shall be to attributed to those units only and not to all units. · credit attributable to all units shall be attributed to all the units. Credit shall be distributed pro rata on the basis .....

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provisions of rule 6 of Cenvat Credit Rules, 2004 relating to reversal of credit in respect of inputs and input services used in manufacture of exempted goods or for provision of exempted services, shall apply to the units availing the CENVAT credit distributed by Input Service Distributor and not to the Input Service Distributor. (m) Rule 7B is being inserted in Cenvat Credit Rules, 2004 so as to enable manufacturers with multiple manufacturing units to maintain a common warehouse for inputs an .....

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