Presentation on major service tax changes by Union Budget,2015

1. Finance Bill, 2015
28th February 2015

2. The Finance Bill, 2015 presented by the Finance Minister,
Mr. Arun Jaitely on 28th February, 2015 has brought with it
a whole new set of changes in the indirect taxes. The basic
purview taken by the government behind rationalizing the
transformations is to bring the current taxing provisions in
line with the proposed plan of Goods and Service Tax.
Overall, one can sense the good intentions behind the
budget provisions and the direction that it seeks to give to
the economy

3.  CENVAT Credit can be taken within 1year:
Time limit for availment of CENVAT Credit extended from six
months from date of invoice to 1 year from the date of invoice.
 Registration for single premises shall be granted within two
days of filing the application.
 Records can be maintained in Electronic form:
In order to encourage digitalization, Government has allowed
assesses to maintain records in the electronic form subject to
authentication by him with the use of digital signature. The
conditions and procedure in this regard shall be specified by
CBEC (rule 4, 4A and 5 of STR,1994)

4.  Now watching of movies will become cheaper:
Now watching of movies will become cheaper because Service provided by
way of exhibition of movie by the exhibitor (theatre owner) to the distributor or
an association of persons consisting of such exhibitor as one of its members is
being exempted.
 Benefit given to senior citizen:
Exemption is granted in respect of life insurance services provided by way of
Varishtha Pension Bima Yojna so that people can spend their old age life in a
better manner.
 Exemption for ambulance services:
Government has given specific exemption for transporting the patients through
ambulances so that financial cost on patient and family of patient can be
minimized to the some extent
Contd……

5.  Uniform abatement for transport by rail, road and vessel:
A uniform abatement is now being prescribed for transport by rail, road and vessel
thereby service Tax shall be payable on 30% of the value of such service subject to a
uniform condition of non-availment of CENVAT Credit on inputs, capital goods and
input services. (Earlier service tax was payable on 30%, 25% and 40% of the value of
rail transport of good & passenger, goods transport by road by GTA and goods
transport by vessels.)
 Air Transport will hit the pocket of High Class flights:
The government has reduced the abatement on business class flights. Now, travel in the
business class will become costlier as the abatement has been reduced to 40% from
60%.
 Construction of Government Schools and Buildings would become taxable.
 GTA service for transport of export goods-New exemption
Goods transport agency service provided for transport of export goods by road from the
place of removal to an inland container depot, a container freight station, a port or
airport is exempt from service tax vide notification No. 31/12-ST dated 20.6.2012.
Scope of this exemption is being widened to exempt such services when provided for
transport of export goods by road from the place of removal to a land customs station
(LCS).
Contd……

6. Reverse charge mechanism
 Manpower supply and security services when provided by an individual, HUF,
or partnership firm to a body corporate are being brought to full reverse
charge. Presently, these are taxed under partial reverse charge mechanism.
(Rule-2(1)(d) of Service tax rules,1994)
 New insertion under full reverse charge list:
Services provided by,-
(i) mutual fund agents, mutual fund distributors; and
(ii) agents of lottery distributor
are being brought under reverse charge consequent to withdrawal of the
exemption on such services. Accordingly, Service Tax in respect of mutual
fund agent and mutual fund distributor services shall be paid by the assets
management company or, as the case may be, by the mutual fund receiving
such services
 Cenvat Credit Rules,2004
Rule 4(7) is being amended to allow Cenvat Credit of Service Tax paid under
partial reverse charge by the service receiver without linking it to the payment
to the service provider

7.  Definition of the term ‘Government’ inserted
The term ‘Government’ defined under section 65B(26A) to mean Central
Government, State Government, Union territory and its departments. But it would
not include entities whose accounts are not required to be kept under Article 150 of
the Constitution of India
 Amendment to definition of ‘service’
Definition of the term ‘service’ under Section 65B(44) of Finance Act,1994
amended to include services provided by chit fund foreman for conducting a chit
and distributor/ selling agent of lottery for organizing/conducting a lottery
 Reimbursement made taxable under Service Tax
The government has clarified by amending the definition of ‘consideration’ under
Section 67 that the value of reimbursements of all expenses incurred during
provision of a taxable service shall be subject to Service tax levy,i.e, it shall form
part of consideration.

8.  Rate of Service Tax increased from 12.36% to 14%
Finance Minister has proposed to revise the rate of Service Tax from 12.36%
(inclusive of Education Cesses) to 14% (subsuming Education Cesses) to
facilitate transition to GST. In this context, an amendment is being made in
section 66B of the Finance Act, 1994
Till the time the revised rate comes into effect, the ‘Education Cess’ and
‘Secondary and Higher Education Cess’ will continue to be levied in Service
Tax
 Swachh Bharat Cess
Swachh Bharat Cess to be imposed on all or any of the taxable services (as
may be notified) at the rate of 2 per cent of the value of taxable services.
Contd……

9.  Amendments in Negative list (Section 66D)
 The Negative List entry that covers “admission to
entertainment event or access to amusement facility” is being
omitted [section 66D (j)]
 Services by way of contract manufacturing/job work
production of alcoholic liquor for human consumption for a
consideration would now become taxable
 All services provided by the Government or local authority to a
business entity, except the services that are specifically
exempted, or covered by any another entry in the Negative
List, shall be liable to service tax .

10.  Changes explained above are not intended to be exhaustive and are meant
only to draw attention to major changes. The text of the statutory provisions and
the wordings of the notifications should be read carefully for interpreting the
law
 Formations are requested to go through the changes made in the Budget
carefully
Hope you find this presentation useful for your professional endeavors
General
Best Regards
CA Rohan Chaturvedi
#9953318117
rohanchaturvedi08@gmail.com