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Any services provided by Government or Local authority to a Business Entity chargeable to ST under Reverse Charge w.e.f. April 1 2016 Related Changes/ Clarification

Service Tax - By: - Bimal jain - Dated:- 16-4-2016 - Dear Professional Colleague, Any services provided by Government or Local authority to a Business Entity chargeable to ST under Reverse Charge w.e.f. April 1, 2016: Related Changes/ Clarification The Central Government has issued 3 important Notifications, dated April 13, 2016 to limit the scope of the Governmental services, which have been brought to Service tax under Reverse Charge w.e.f. April 1, 2016. However, before dwelling into the exem .....

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Act, 2015 read with Notification No. 06/2016-ST dated February 18, 2016] is made chargeable to Service tax. However, the services provided by Government or Local authority to a Business Entity having turnover up to ₹ 10 lakh in the preceding Financial Year remains exempt [New entry inserted vide after Entry No. 47 in the Mega Exemption Notification No. 25/2012- ST dated June 20, 2012 ( the Mega Exemption Notification ) amended vide Notification No. 07/2016-ST dated February 18, 2016]. Amen .....

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also been made in Rule 2(1)(d)(i)(E) of the Service Tax Rules and Section 65B(49) of the Finance Act containing definition of the term support services is also deleted. Thus, the liability to pay Service tax on any service provided by Government or a Local Authority to Business Entities is on the service recipient under Reverse Charge w.e.f. April 1, 2016 except in case of (1) renting of immovable property, and (2) services specified in sub-clauses (i), (ii) and (iii) of clause (a) of Section 66 .....

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arding fate of the following types of Governmental services: Services rendered as a sovereign right by Government/ various Public Authorities (set up by Government) which cannot be substituted by any private party. For example, there are various types of Statutory charges and fees e.g. ESI inspection, PF inspection, Motor Vehicles Registration charges, Motor Vehicles Inspection charges, fees payable to Registrar of Companies for filing statutory forms, Building inspection etc.; A Business Entity .....

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which are in the nature of sovereign rights would also come under the purview of Service tax. However, the same was creating havoc amongst the people considering the fact that almost every day, we receive one or other type of Government services on which the service recipient is now liable to pay Service tax. Amendment in the Mega Exemption Notification to exempt certain services provided by Government or a local authority to a Business entity In order to put rest to the much-debated issue of ta .....

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ctivity in relation to any function entrusted to a municipality under article 243 W of the Constitution. New Exemptions Provided Entry No. 54 Services provided by Government or a local authority to another Government or local authority. Provided that nothing contained in this Entry shall apply to services specified in sub-clauses (i),(ii) and (iii) of Section 66D(a) of the Finance Act Entry No. 55 Services provided by Government or a local authority by way of issuance of passport, visa, driving .....

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No. 57 Services provided by Government or a local authority by way of tolerating non-performance of a contract for which consideration in the form of fines or liquidated damages is payable to the Government or the local authority under such contract Entry No. 58 Services provided by Government or a local authority by way of- (a) registration required under any law for the time being in force; (b) testing, calibration, safety check or certification relating to protection or safety of workers, co .....

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r a local authority by way of assignment of right to use any natural resource where such right to use was assigned by the Government or the local authority before the April 1, 2016: Provided that the exemption shall apply only to Service tax payable on one time charge payable, in full upfront or in instalments, for assignment of right to use such natural resource Entry No. 62 Services provided by Government or a local authority by way of allowing a business entity to operate as a telecom service .....

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of the Finance Bill, 2016 ( FB, 2016 ), leading to dispute for taxability for the interim period i.e. from April 1, 2016 to date of enactment of FB, 2016 Entry No. 63 Services provided by Government by way of deputing officers after office hours or on holidays for inspection or container stuffing or such other duties in relation to import export cargo on payment of Merchant Overtime charges (MOT). To access full Notification, please click on the link below: https://www.taxmanagementindia.com/vis .....

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Rules ), the value of any taxable service shall not include interest on delayed payment of any consideration for the provision of services or sale of property, whether moveable or immoveable. Now, the Central Government vide Notification No. 23/2016-ST dated April 13, 2016, has inserted following proviso to Rule 6(2)(iv) of the Service Tax Valuation Rules: Provided that this clause shall not apply to any service provided by Government or a local authority to a business entity where payment for s .....

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ion Rules, 2011 to provide that in case of services provided by the Government or local authority to any business entity, the POT shall be the earlier of the dates on which - Any payment, part or full, in respect of such service becomes due, as specified in the invoice, bill, challan or any other document issued by the Government or local authority demanding such payment; or Payment for such services is made. To access full Notification, please click on the link below: https://www.taxmanagementi .....

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owever, the Service tax paid on spectrum user charges, license fee, transfer fee charged by the Government on trading of spectrum would be available in the year in which the same is paid. Likewise, Service tax paid on royalty in respect of natural resources and any periodic payments shall be available as credit in the year in which the same is paid. The existing eighth proviso in sub-rule (7) of Rule 4 of the Credit Rules is being omitted. Amendments have also been made in the Credit Rules, so a .....

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m/visitor/detail_notification.asp?ID=119049&kw=seeks-amend-sub-rule-7-4-6-cenvat-credit-rules-2004 Clarification on taxability of Governmental services & Illustration explaining how the Cenvat credit is to be availed on Service tax paid for assignment of right to use natural resources The Central Board of Excise and Customs ( the CBEC ) vide Circular No. 192/02/2016-ST dated April 13, 2016 ( the Circular ) has issued a detailed clarification on issues regarding levy of Service tax on the .....

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