Changes in Service Tax applicable with effect from 1st April, 2015

Budget 2015 came up with many changes which are not part of the Finance Bill 2015. A number of changes were brought in by notifications, some already became applicable and some are applicable with effect from 1^st April, 2015. We have divided changes applicable from today, 1^st April 2015, into the following parts:-

A)   Changes in Abatement Rates

B)   New Exemptions

C)  Exemptions Withdrawn (Now Taxable)

D)  Changes in Reverse Charge

E)   Other Changes

 

A) Changes in Abatement Rates

 

Service Category	Earlier Abatement	New Abatement w.e.f. 01.04.2015	Effective Tax Rate as of now
Transportation of Goods by Road (GTA)	75%	70%	3.708%
Transport of goods in a vessel	60%	70%	3.708%
Transport of passengers by air other than in economy class	60%	40%	7.416%

 

 

B) New Exemptions (W.e.f. 1st April, 2015)

 

            1.   Ambulance Services:

Service provided by way of transportation of a patient in an ambulance by any person is now exempted. Earlier this exemption was limited to services provided by a clinical establishment.

 (Entry 2 of N/n. 25/2012-ST amended)

 

2.   Varishtha Pension Bima Yojna:

Services of Life Insurance in respect of Varishtha Pension Bima Yojna is also exempted.

(In entry 26A of N/n. 25/2012-ST item (d) inserted)

 

3.   Effluent Treatment:

Service provided by a Common Effluent Treatment Plant operator by way of treatment of effluent is now exempted.

(Entry 43 inserted in N/n. 25/2012-ST)

 

4.   Processes on Fruits and Vegetables:

Services provided by way of preconditioning, pre-cooling, ripening, waxing, retail packing, labeling of fruits and vegetables, which do not change or alter the essential characteristics of the fruits or vegetables are now exempted.

(Entry 44 inserted in N/n. 25/2012-ST)

 

5.   Admission to Museum:

Service provided by way of admission to a museum, zoo, national park, wild life sanctuary or a tiger reserve is now exempted.

(Entry 45 inserted in N/n. 25/2012-ST)

 

6.   Exhibition of Movie:

Service provided by way of exhibition of movie by an exhibitor to the distributor or an association of persons consisting of the exhibitor as one of its members is now exempted.

(Entry 46 inserted in N/n. 25/2012-ST)

 

C) Exemptions Withdrawn (Now Taxable)

 

     1. Construction Service to  Government/ Local Authority:

The exemption in the respect of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation or alteration services is curbed and no more available in respect of services of:-

(a)     a civil structure or  any other original works meant predominantly for  use other than for commerce, industry, or any other business or profession;

(b)     a structure meant predominantly for use  as (i) an educational, (ii) a clinical, or  (iii) an art or cultural establishment;

(c)     a residential complex predominantly meant for self-use or the use of their employees or other persons specified in the Explanation 1 to clause 44 of Section 65B of the said Act.

(In entry 12 of N/n. 25/2012-ST, items (a),(c) & (f) are omitted)

 

2.   Construction of an Airport or Port:

Exemption in respect of construction, erection, commissioning or installation of original works pertaining to an airport or port is now withdrawn.

(Entry 14 of N/n. 25/2012-ST amended)

 

3.   Performing Artist:

Services provided by an artist by way of performance in folk or classical art form of music or dance or theater, shall be exempted only if the consideration charged for such performance is upto Rs.1,00,000/-.

(Entry 16 of N/n. 25/2012-ST amended)

 

4.   Transportation of Goods by Rail or a Vessel:

Exemption to services of transportation of goods in respect of foodstuff is modified. Such exemption is now limited to milk, salt and food grains including flour, pulses and rice. Earlier all foodstuff excluding alcoholic beverages were exempted.

(In entry 20 of N/n. 25/2012-ST, item (i) amended)

 

5.   Transportation of Goods by Road:

Exemption to services of transportation of goods in respect of foodstuff is modified. Such exemption is now limited to milk, salt and food grains including flour, pulses and rice. Earlier all foodstuff excluding alcoholic beverages were exempted.

(In entry 21 of N/n. 25/2012-ST, item (d) amended)

 

6.   Mutual Fund Agent or Distributor:

Exemption to services provided by a ‘mutual fund agent’ or ‘distributor’ to a mutual fund or assets management company is withdrawn. This service is now under Reverse Charge.

(In entry 29 of N/n. 25/2012-ST, items (c) and (d) are omitted)

 

7.   Selling or Marketing Agent of Lottery Tickets:

Exemption to services provided by a selling or marketing agent of lottery tickets to a lottery distributor or selling agent is withdrawn. This service is now under Reverse Charge.

 (In entry 29 of N/n. 25/2012-ST, item (e) omitted)

 

8.   Telephone Service:

Exemption is withdrawn on the services by way of making telephone calls from:-

a.    Departmentally run public telephone.

b.    Guaranteed public telephone operating only local calls.

c.    Free telephone at airport and hospital where no bill is issued.

(Entry 32 of N/n. 25/2012-ST omitted)

D)  Changes in Reverse Charge (W.e.f. 1st April, 2015)

    1.   Mutual Fund Agents or Distributor Service:

This service has been made taxable by withdrawal of the exemption. Now, in respect of services provided by a mutual fund agent or distributor, 100% of the tax (12.36%) has to be paid by service receiver (i.e. Asset Management Company or the Mutual Fund).

 

    2.  Selling or Marketing Agent of Lottery Distributor:

This service has been made taxable by withdrawal of the exemption. Now, in respect of services provided by a selling or marketing agent of lottery tickets, 100% of the tax (12.36%) has to be paid by service receiver (i.e. the distributor or selling agent).

    3.  Manpower Supply Services:

This service has been shifted to full reverse charge mechanism from partial reverse charge mechanism. Henceforth, 100% of the tax (12.36%) has to be paid by service receiver.

 

4.   Security Services:

This service has been shifted to full reverse charge mechanism from partial reverse charge mechanism. Henceforth, 100% of the tax (12.36%) has to be paid by service receiver.

 

E)  Other Changes

 

1.   Cenvat Credit of Service Tax paid under RCM:

Cenvat Credit of the portion of Service Tax paid under Partial Reverse Charge by the service receiver directly, shall now be allowed to be availed without the same being linked to the payment of the value of taxable services made to the service provider. However, as regards the portion of service tax charged by the service provider, it shall continue to be available on basis of the invoice and existing provisions will prevail.

Henceforth, Cenvat Credit of service tax liable to be paid by service receiver under Reverse Charge Mechanism shall be eligible to be availed on payment of Service Tax to the Government ex-chequer.

(Provisos to Rule 4(7) of the Cenvat Credit Rules, 2004 amended)

 

2.   Transport by Rail:

Abatement of 70% was unconditionally available on Transport of goods and passengers, with or without accompanied belongings by rail. This abatement has been made conditional and shall now be available if Cenvat Credit on inputs, capital goods and input services used for providing the service, has not been taken under the provisions of the CENVAT Credit Rules, 2004.

(Sl. Nos. 2 & 3 of table of N/n. 26/2012 amended)