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Finance Bill, 2016 enacted: Significant changes in Service Tax, effective from May 14, 2016 

Service Tax - By: - Bimal jain - Dated:- 18-5-2016 - Dear Professional Colleague, Finance Bill, 2016 enacted: Significant changes in Service Tax, effective from May 14, 2016 The Hon ble Finance Minister Shri .Arun Jaitley presented the Union Budget for 2016-17 on February 29, 2016 in the Lok Sabha. On May 5, 2016, the Lok Sabha passed the Finance Bill, 2016 and later on May 11, 2016, the Finance Bill, 2016 was passed by the Rajya Sabha. Now, the Hon ble President has given assent to the Finance .....

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be increased from 14.5% to 15%. CHANGES IN SERVICE TAX EFFECTIVE FROM MAY 14, 2016: We are summarizing herewith the changes in Service tax, which are effective from May 14, 2016 for easy digest: A: Changes under various Sections under the Finance Act, 1994 ( the Finance Act ) Section 65B(11): Definition of the term approved vocational education course , is deleted with the deletion of Section 66D(l) of the Finance Act. It is incorporated in the Mega Exemption Notification No. 25/2012-ST dated Ju .....

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vices viz. services by way of pre-school education, higher secondary school education or equivalent, education as a part of a curriculum for obtaining a qualification recognised by any law for the time being in force, education as a part of an approved vocational education course, covered under Section 66D(l) of the Finance Act, stands deleted from the Negative List of services. However, corresponding exemption is to be read in the Mega Exemption Notification, duly amending the definition of edu .....

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overnment of the right to use the spectrum as well as subsequent transfers of assignment of such right to use is a Declared service leviable to Service tax and not sale of intangible goods. Period Gap for taxability for interim period: It may be noted that effective from April 1, 2016, the liability to pay Service tax on any service provided by Government or a Local Authority to Business Entities is on the service recipient except (1) renting of immovable property, and (2) services specified in .....

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.com/watch?v=AB0LpVkuoUY Section 67A: Section 67A is amended to obtain specific rule making powers in respect of the Point of Taxation Rules, 2011 to determine the time or the point in time with respect to the rate of Service tax. (Corresponding amendments carried out in the Point of Taxation Rules, 2011 also). Section 73: Section 73 is amended to extend the limitation period for recovery of Service tax not levied or paid or short levied or short paid or erroneously refunded, for cases not invol .....

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he following manner: Serial No. Situation Rate of simple interest per annum 1. Collection of any amount as Service tax but failing to pay the amount so collected to the credit of the Central Government on or before the date on which such payment becomes due. 24% 2. Other than in situations covered under serial number 1 above. 15% In case of assessees, whose value of taxable services in the preceding year/years covered by the notice is less than ₹ 60 Lakhs, the rate of interest on delayed p .....

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d when 24% or 15% rate of interest applicable for delayed payment of Service tax, please watch video presentation at: https://www.youtube.com/watch?v=pWBMo4v54cc Section 78A: An explanation is inserted to provide that penalty proceedings under Section 78A (Penalty for offences by director, etc., of company) shall be deemed to be closed in cases where the main demand and penalty proceedings have been closed under Section 76/ Section 78 of the Finance Act. Section 89: Section 89 (Offence and Penal .....

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reference of Section 89(1)(i) of the Finance Act under Sub-Section (1) and to delete Sub-Section (3) thereof, again to restrict the power to arrest only to situations where the tax payer has collected the Service tax but not deposited it with the exchequer, and threshold amount of such tax collected but not deposited, now increased to ₹ 2 crore as against ₹ 50 lakhs . Section 93A: Section 93A is amended so as to allow rebate by way of notification as well as rules. Retrospective eff .....

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12. Time period of one month from the date on commencement of the Finance Bill, 2016, is allowed to the exporters whose claims of rebate were earlier rejected in absence of amendment carried out vide Notification No. 1/2016-ST dated February 3,2016, to file an application for claim of rebate of Service tax. New Section 101: Retrospective Service tax exemption to canal, dam or other irrigation works Definition of Governmental authority as contained under the Mega Exemption Notification was amende .....

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ther irrigation works provided to entities set up by Government but not necessarily by an Act of Parliament or a State Legislature were exempted w.e.f. January 30, 2014 [Entry No. 12(d) of the Mega Exemption Notification]. However, services provided prior to January 30, 2014 to such bodies remained taxable. Now, a new Section 101 is inserted to provide Service tax exemption to canal, dam or other irrigation works with retrospective effect in the following manner: The benefit of exemption is exte .....

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certain exemptions withdrawn w.e.f April 1, 2015 Exemption from Service tax on services provided to the Government, a local authority or a Governmental authority by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of: a civil structure or any other original works meant predominantly for use other than for commerce, industry, or any other business or profession; a structure meant predominantly for use as (i) an edu .....

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ervices provided under a contract which had been entered into prior to March 1, 2015 and on which appropriate stamp duty, as applicable, had been paid prior to that date. New Entry 12A inserted in the Mega Exemption Notification to restore such exemption till 31.03.2020 [Read with Notification No. 9/2016-ST dated March 1, 2016]; The services provided during the period from April 1, 2015 to February 29, 2016 under such contracts are also being exempted from Service tax; Refund of Service tax paid .....

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