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SERVICE TAX

Bill - Memorandum Explaining the Provisions in The Finance Bill, 2016 - Bill - I Krishi Kalyan Cess Existing Proposed 1. An enabling provision is being made to levy Krishi Kalyan Cess on all taxable services with effect from 1st June, 2016, to finance and promote initiatives to improve agriculture. - 0.5% II Broadening of Tax base Existing Proposed 1. Exemption on services provided by,- (i) a senior advocate to an advocate or partnership firm of advocates providing legalservice; and (ii) a perso .....

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longings, by ropeway, cable car or aerial tramway is being withdrawn with effect from 1st April, 2016. Nil 14% 4. The Negative List entry that covers service of transportation of passengers, with or without accompanied belongings, by a stage carriage is being omitted with effect from 1st June, 2016. is being levied on transportation of passengers by air conditioned stage carriage with effect from 1st June, 2016, at the same level of abatement as applicable to the transportation of passengers by .....

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under any housing scheme of the State Government, are being exempted from with effect from 1st March, 2016. 5.6% Nil 2. The service of life insurance business provided by way of annuity under the National Pension System regulated by Pension Fund Regulatory and Development Authority (PFRDA) of India is being exempted from with effect from 1st April, 2016. 3.5% Nil Existing Proposed 3. Services provided by Employees Provident Fund Organisation (EPFO) to employees are being exempted from with effec .....

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or savings on behalf of policy holder is not intimated to the policy holder at the time of providing of service, with effect from 1st April, 2016. 3.5% 1.4% 7. The 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 with effect from 1st April, 2016. 14% Nil .....

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training by training partners under Deen Dayal Upadhyay Grameen Kaushalya Yojana are being exempted from with effect from 1st April, 2016. 14% NIL 11. Services of assessing bodies empanelled centrally by Directorate General of Training, Ministry of Skill Development & Entrepreneurship are being exempted from with effect from 1st April, 2016. 14% NIL 12. The threshold exemption to services provided by a performing artist in folk or classical art forms of music, dance or theatre is being enha .....

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India up to the customs station in India with effect from 1st June, 2016 so as to complete the credit chain and enable Indian Shipping Lines to avail and utilize input tax credits. No credit Nil Inputs, input services & capital goods credit 14% 2 Notification No. 41/2012- ST, dated the 29th June, 2012 was amended by notification No.1/2016-ST dated 3rd February, 2016 so as to, inter alia, allow refund of on services used beyond the factory or any other place or premises of production or manuf .....

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a local authority or a governmental authority, in respect of construction of govt. schools, hospitals etc. b) construction of ports, airports, [which were withdrawn with effect from 01.04.2015], are being restored in respect of services provided under contracts which had been entered into prior to 01.03.2015 on payment of applicable stamp duty, with retrospective effect from 01.04.2015. 5.6% of total amount Nil 6 Services provided by way of construction, maintenance etc. of canal, dam or other .....

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egrated Programme in Management and Fellowship Programme in Management (FPM) are being exempted from with effect from 1st March, 2016. 14% NIL 8 The services provided by mutual fund agent/distributor to a mutual fund or asset management company, are being made taxable under forward charge with effect from 1st April, 2016, so as to enable the small sub-agents down the distribution chain to avail small scale exemption having threshold turnover of ₹ 10 lakh per year, subject to fulfillment of .....

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payment of will be 12%. [The above changes will come into effect on the day the Finance Bill receives the assent of the President.] Customs 18% Excise 18% 18% 24% 30% Customs, Excise & 15%; 24% in case of collected but not deposited to the exchequer VI Rationalization of Abatements Existing Proposed 1 Credit of input services is being allowed on transport of passengers by rail at the existing rate of abatement of 70%. 4.2% Without credit 4.2% With input service credit 2 Credit of input serv .....

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service credit 5 The abatement rate in respect of services by way of construction of residential complex, building, civil structure, or a part thereof, is being rationalized at 70% by merging the two existing rates (70% for high end flats and 75% for low end flats). 3.5%/ 4.2% 4.2% 6 The abatement rate in respect of services by a tour operator in relation to packaged tour (defined where tour operator provides to the service recipient transportation, accommodation, food etc) and other than packa .....

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%, without CENVAT credit on inputs, input services and capital goods. 14% 9.8% [The above changes will come into effect from 1st April, 2016.] VII Reduce litigation and providing certainty in taxation 1 Indirect tax Dispute Resolution Scheme, 2016, wherein a scheme in respect of cases pending before Commissioner (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 ass .....

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regard. Point of Taxation Rules, 2011 is being amended accordingly. 3 Section 93A of the Finance Act, 1994 is being amended so as to allow rebate by way of notification as well as rules. 4 Explanation 2 in section 65B (44) of the Finance Act, 1994 is being amended so as to clarify that any activity carried out by a lottery distributor or selling agent in relation to promotion, marketing, organizing, selling of lottery or facilitating in organizing lottery of any kind, in any other manner, of th .....

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mpleted prior to receipt of such payment; or b) issue of invoice, wherepayment, for the service has been received in advance prior to the date of issue of the invoice. 6 Assignment by the Government of the right to use the radio-frequency spectrum and subsequent transfers thereof is being declared as a service under section 66E of the Finance Act, 1994 so as to make it clear that assignment of right to use the spectrum is a service leviable to and not sale of intangible goods. 14% 14% 7 A condit .....

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Software in respect of software recorded on media NOT FOR RETAIL SALE is being ensured by exempting from excise duty only that portion of the transaction value on which is paid. 14% 14% VIII Rules 1 To reduce compliance cost, the number of returns to be filed by a central excise assessee, above a certain threshold, is being drastically reduced, from 27 to 13, one annual and 12 monthly returns. Monthly returns are already being e-filed. CBEC will provide for e-filing of annual return also. The an .....

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associated litigation, particularly those relating to apportionment of credit between exempted and non-exempted final products / services. Changes are also being made in the provisions relating to input service distributor, including extension of this facility to transfer input services credit to outsourced manufacturers, under certain circumstances. The amendments in these rules will also enable manufacturers with multiple manufacturing units to maintain a common warehouse for inputs and distri .....

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