TMI BlogABATEMENTS IN SERVICE TAX: CHANGES W.E.F. APRIL 2016X X X X Extracts X X X X X X X X Extracts X X X X ..... ABATEMENTS IN SERVICE TAX: CHANGES W.E.F. APRIL 2016 - By: - Dr. Sanjiv Agarwal - Service Tax - Dated:- 17-5-2016 - - Change in Abatements (w.e.f. 1.4.2016 - Vide Notification No. 8/2016-ST dated 1.3.2016 ) Vide Notification No. 8/2016-ST dated 1.3.2016 , abatement conditions and rates have been rationalized w.e.f. 1.4.2016. The changes have been made in respect of services by tour operator services transport of passengers by rail transport of goods by rail transport of goods by rail in containers shifting of used household goods by a GTA foreman to a chit fund renting of motor-cab services. transport of goods by vessel. construction of complex, building, civil structure, etc. The summary of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... changes is as follows In cases where the tour operator is providing services solely of arranging or booking accommodation for any person in relation to a tour, abatement of 90% is available with specified conditions. However, this abatement of 90% cannot be claimed in such cases where the invoice, bill or challan issued by the tour operator, in relation to a tour, only includes the service charges for arranging or booking accommodation for any person and does not include the cost of such 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 1.03.20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 16 refers ) Abatement rates in respect of services by a tour operator in relation to a tour other than in para 9.1 above, has been rationalised from 75% and 60% to 70%. Consequently, the definition of package tour as provided in the relevant notification is being omitted. (Amendment in entry at S. No. 11 of notification No. 26/2012-ST refers ) Services provided by foreman to a chit fund under the Chit Funds Act, 1982 shall be taxed at an abated value of 70% [i.e., with abatement of 30%], subject to the condition that Cenvat credit of inputs, input services and capital goods has not been availed. (Amendment in entry at S. No. 8 of Notification No. 26/2012-ST refers ) At present, there is abatement of 60% on the gross value o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f renting of motor-cab services, provided no cenvat credit has been taken. It has been 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 ) At present, two rates of abatement have been prescribed for services of construction of complex, building, civil structure, or a part thereof,- (a) 75% of the amount charged in case of a residential unit having carpet area of less than 2000 square feet and costing less than ₹ 1 crore, and (b) 70% of the amount charged in case of other than (a) above, both s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubject to fulfilment of certain conditions prescribed therein. A uniform abatement at the rate of 70% is has been prescribed for services of construction of complex, building, civil structure, or a part thereof, subject to fulfilment of the existing conditions. (Amendment in entry at S. No. 12 of Notification No. 26/2012-ST refers ) 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. Abatement will continue with the same level with cenvat credit of input services for the said service. (Amendment in entry at S. No. 3 of Notifi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cation No. 26/2012-ST refers) At present, service tax is payable on 30% of the value of service of transport of goods by rail without cenvat credit on inputs, input services and capital goods. Thus, abatement of 70% is presently available in respect of the said service. Abatement will continue with the same level with cenvat credit of input services for transport of goods by rail (other than transport of goods in containers by rail by any person other than Indian Railway ). A reduced abatement rate of 60% with credit of input services has been 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) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 the said service. Abatement will continue with the same level with cenvat credit of input services for the said service. (Amendment in entry at S. No. 10 of Notification No. 26/2012-ST refers) Abatement on transport of used household goods by a Goods Transport Agency (GTA) has been rationalised at the rate of 60% without availment of cenvat credit on inputs, input services and capital goods by the service provider (as against abatement of 70% allowed on transport of other goods by GTA). (New entry at S. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No. 7A in Notification No. 26/2012-ST refers) For the purpose of calculating the abatement in case of services of renting of motor cabs, amount charged for provision of service shall include fair market value of all goods (including fuel) and services supplied by the recipient of services. Definition of package tour has been deleted w.e.f. 01.04.2016 stage carriage 01.06.2016. Change in Abatements (w.e.f. 1.6.2016 - Vide Notification No. 8/2016-ST dated 1.3.2016 ) In S.No. 9A of abatement table in Notification No. 26/2012-ST pertaining to transport of passengers, with or without accompanied belongings, one more mode has been added, i.e. of 'a stage carriage'. Services provided by stage carriage shall also b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e covered under entry 9A and allowed abatement @ 60 percent w.e.f. 1.6.2016. Hitherto, this service was covered under clause (o) of section 66D (Negative List) which stands omitted by the Finance Act, 2016 w.e.f. 1.6.2016. Changes in Abatements w.e.f. 1.4.2016 vide Notification 8/2016-ST dated 01.03.2016. Table S. No. Description of service provided Existing Taxable Value Taxable value after amended Abatement 2 Transportation of goods by rail by Indian Railways 30% without Cenvat credit 30% with input service Cenvat credit 2A Transportat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of goods in containers by rail by other than Indian Railways 30% without Cenvat credit 40% with input service Cenvat credit 3 Transportation of passenger, with or without accompanied belongings by Rail 30% without Cenvat credit 30% with input service Cenvat credit 7A Services of GTA in relation to transportation of used household goods 30% without CE Cenvat Credit 40% without Cenvat credit S Services by foreman of chit Nil (omitted) 30% without Cenvat credit 9A (c) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Transportation of passengers with or without accompanied belongings by a stage carrier (w.e.f. 1.6.2016) Not taxable (in negative list) 40% without Cenvat credit 10 Transportation of goods by vessel 30% without Cenvat credit 30% with input service Cenvat credit 11 (i) Services by a tour operator in relation to package tour 25% with input service credit of other operator 30% with input service credit of other operators 10% with 11 (ii) Services by a tour operator, solely arranging booking services 10% withou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t Cenvat credit Cenvat of input service credit of other operators 40% with 11 (iii) Services other than 11 (i) and 11 (ii) 40% without Cenvat credit Cenvat credit of input service of other operators 12 Construction service provided for residential unit where consideration received is less than Rs.l crore and carpet area is less than 2,000/- sq. ft. 25% with Cenvat credit on capital goods and input service 30% with Cenvat credit on capital goods and input service CBEC clarifications CBEC has vide Letter No. 334/8/2016-TRU dated 29.02.2016 clarified as under- Noti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fication No. 26/2012-ST is being amended to provide that transport of goods by rail (other than transport of goods in containers by any person other than Indian Railway) shall be eligible for abatement at the rate of 70% with credit of input services. Transport of goods in containers by any person other than Indian Railway shall be eligible for abatement at the rate of 60% with credit of input services. It is hereby also clarified that service provided by the Indian Railways to Container Train Operators (CTOs) of haulage of their container train (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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 70% with credit of input services. Swachh Bharat Cess on Abated Value Vide Notification No. 22/2015-ST dated 06.11.2015 as amended by Notification No. 23/2015-ST dated 12.11.2015 , it has been notified that Swachh Bharat Cess (SBC) shall be leviable only on that percentage of taxable value which is specified in column (3) of Table in Notification No. 26/2012-ST dated 20.06.2012 (i.e., on abated value). - - Scholarly articles for knowledge sharing authors experts professionals Tax Management India - taxmanagementindia - taxmanagement - taxmanagementindia.com - TMI - TaxTMI - TMITax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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