Key Changes in Service Tax in the Finance Budget 2015

Key changes being made in the Service Tax in the Union Budget 2015-16, by amending the clauses 105 to 116 of the Bill under Chapter V of the Finance Act, 1994 and Chapter VI of the Bill (clause 117) to levy Swachh Bharat Cess @ 2% of the value of taxable services. These changes are categorized below based on the dates on which they would come into effect.

Date to be notified after the enactment of the Finance Bill 2015.

Changes in Service Tax rates

The rate of Service Tax is being increased from 12% plus Education Cesses to 14%. The ‘Education Cess’ and ‘Secondary and Higher Education Cess’ shall be subsumed in the revised rate of Service Tax. Thus, the effective increase in Service Tax rate will be from the existing rate of 12.36% (inclusive of cesses) to 14%, subsuming the cesses.

Swachh Bharat Cess

An enabling provision is being incorporated in the Finance Bill, 2014 (Chapter VI/clause 117) to empower the Central Government to impose a Swachh Bharat Cess on all or any of the taxable services at a rate of 2% on the value of such taxable services.

Review of Negative List

• Service Tax is to be levied on the service provided by way of access to amusement facility such as rides, bowling alleys, amusement arcades, water parks, theme parks, etc.
• Service tax to be levied on services by way of admission to entertainment event of concerts, non-recognised sporting events, pagents, music concerts and award functions, if the amount charged for admission is more than Rs. 500. Service by way of admission to exhibition of the cinematographic film, circus, dance, or theatrical performances including drama, ballets or recognized sporting events shall continue to be exempt.
• Service tax to be levied on service by way of carrying out any processes as job work for production or manufacture of alcoholic liquor for human consumption. 
• An enabling provision is being made to exclude all services provided by the government or local authority to a business entity from the Negative List. Once this amendment is given effect to, all service provided by the government to business entities, unless specifically exempt, shall become taxable.

Amendments in Notification No .25/2012-ST.

• To exclude job work in relation to alcoholic liquor for human consumption from the scope of this exemption.
• To exempt services by way of (i) right to admission to exhibition of film, circus, dance or theatrical performances including drama, or ballet; (ii) recognized sporting event; and (iii) admission to other events where the consideration for admission is upto Rs. 500;

Amendments in Service Tax Rules

Amendments in alternative rates of service tax provided for air travel agent, insurance service, money changing service and service provided by a lottery distributor and selling agent in rule 6(7), 6(7A), 6(7B) and 6(7C) of the Service Tax Rules.