As you are aware that, in this year’s Union Budget no major amendments have been
carried out in Service Tax Law. The circular explaining the amendments is given below:
Government of India
Ministry of Finance
***
V. K. Garg
Joint Secretary (Tax Research Unit)
Tel: 011
-23093027; Fax: 011-23093037
e-mail:
garg.vk@nic.in
D.O.F. No. 334/3/2013
-TRU
N
ew Delhi, dated February 28, 2013.
Dear Sir/ Madam
,
Subject: Union Budget 2013: Changes in Service Tax
-reg.
The service tax changes in Budget 2013 are largely guided by the objectives to
provide a stable tax regime and improve voluntary compliance. The important changes
are
as follows:
A. Legislative changes
Following changes are being made in the Finance Act, 1994:
1.
There are following changes in relation to the negative list:
(i)
The definition of approved vocational course in section 65B(11) is being
pr
oposed to be changed to:
a) include
courses run by an industrial training institute or an
industrial training centre affiliated to State Council for Vocational
Training
; and
b)
delete clause (iii) dealing with courses run by an institute affiliated
to the National Skill Development Corporation.
(ii)
section 65B(40) is being expanded to include processes under the
Medicinal and Toilet Preparation
s (Excise Duties) Act, 1955
(iii)
The negative list entry in sub-clause (i) of clause (d) of section 66D is being
2.
The provisions of section 73 are being modified such that if the grounds for
invoking extended period are not sustained
, the Central Excise officer will be able to
determine the demand for the shorter period of eighteen months.
3.
The penalty under section 77(a) is being restricted to Rs 10,000. A new section
78A is also being introduced to impose penalty on directors and officials of the
company for specified offences in cases of willful actions.
New provisions are being introduced to prescribe revised punishments for
offences in section 89, make certain offences cognizable and others non
-cognizable and
bailable. The Policy wing of the Board will be issuing detailed instructions in due
course.
2
These changes will come into force when the Finance Bill
, 2013 is enacted.
B. Exemptions
4.
The following changes are being made w.e.f April 1, 2013 in the exemption
notification number
25/2012-ST dated June 20, 2012:
(i)
Exemption by way of auxiliary educational services and renting of immovable
property
by (and not to) specified educational institutes under S. No 9 will not
be available;
(ii)
The benefit of exemption under S. No 15 of the notification in relation to
copyrights for cinematograph films will now be available only to films exhibited
in a cinema
hall or theatre. This will allow service providers to pass on input tax
credits to taxable end
-users;
(iii)
Exemption under S. No 19 will now be available only to non air-conditioned
(non-
centrally air-heated) restaurants; the dual requirement earlier that it
should also have a license to serve alcohol is being done away with;
(iv)
The exemptions available to transportation of goods by railway and vessel
under S. No 20 and services provided by a goods transportation agency (GTA)
under S. No.21 are being harmonized. Thus exemption to transportation of
petroleum and petroleum products, postal mails
or mail bags and household
effects by railways and vessels will not be available while the benefit of
transportation of agricultural produce, foodstuffs, relief materials for specified
purposes, chemical fertilizers and oilcakes, registered newspapers
or magazines
and defence equipments will be available to GTAs;
(v)
The exemptions under S. No 24 for vehicle parking to general public and S. No
25 for repair
or maintenance of government aircrafts are being withdrawn; and
(vi)
listed in
sub-clause (v) of clause (k). Thus the benefit to charities providing
services for advancement of any other object of general public utility up to Rs
25 Lakh will not be available. However the threshold exemption will continue to
be available up to Rs 10 lakh.
C.
Abatement
5.
The abatement available under S. No 12 of notification 26/2012-ST dated June
20, 2012 for construction of a complex, building, civil structures etc
. is being reduced
from the existing 75% to 70% for
construction other than residential properties
having a carpet area up to 2000 sq ft
or where the amount charged is less than Rs 1
crore. This will come into effect from March 1, 2013
.
D. Voluntary Compliance Encouragement Scheme, 2013 (VCES)
6.1
A new scheme is proposed to be introduced to encourage voluntary compliance
with the following main features
:
(i)
The scheme can be availed of by non-filers or stop-filers or persons who have
not made a truthful
declaration in their return. However it will not be applicable
to persons against whom any
inquiry or investigation is pending by the issue of
search warrant or summon or by way of
audit;
3
(ii)
The defaulter will be required to make a truthful declaration of all his pending
tax dues (from October1, 2007 to December 31, 2012) and pay at least half of
that before December 31, 2013; remaining half to be paid by:
(a) June 30, 2014 without interest; or
(b) By December 31, 2014 with interest from July 1, 2014 onwards
;
(iii)
On compliance with all the requirements the person will have immunity from
interest (as specified), penalties and other proceedings
;
6.2
The scheme will come into force when the Finance Bill is enacted. It is clarified
that the tax
-payers will need to settle their dues for the period after December 31, 2012
under the present law.
E. Advance Ruling Authority
7.
The benefit of Advance Ruling Authority is being extended to resident public
limited companies.
F. Disclaimer and requests
8.
This letter is meant to provide a quick glimpse of the important changes and
should not be used in any
quasi-judicial or judicial proceedings, where only the
relevant legal
texts need to be referred to.
9.
Despite best efforts it is possible that you may find some unintended errors, or
omissions
. I shall be extremely thankful if you could point out them to me or to my
colleagues at the earliest.
10.
Please also feel free to contact us in case of any doubt, difficulty, or suggestion
relating to interpretation or implementation of the provisions mentioned above. You
may also like to contact Shri J.M. Kennedy, Director (TRU) [Tel: 23092634; e
-mail:
jm.kennedy@nic.in
] or Shri G.D. Lohani, Director [Tel: 23092374; e-mail:
gd.lohani@nic.in
] or Shri Sachin Jain, O.S.D. [Tel: 23092374; e-mail:
sachinjainirs@yahoo.com
].
11.
I express my sincere thanks for your suggestions which provided us rare
perspective
s on many issues and helped us carry out our task with greater precision.
Sincere regards,
Yours sincerely
(V. K. Garg)
To:
All Chief Commissioners/ Director
s General
All Commissioners of Service Tax
All Commissioners of Central Excise
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