Analysis of Amendments in Service Tax provisions, Highlights of amendment made in Central Excise Act and Customs Act proposed in Union Budget, 2014.

3. SERVICE TAX-Amendments
Amendment in Negative List under Section 66D of the
Finance Act :
i. Service Tax @ 12.36% would be applicable on Selling of Space for
Advertisement (except Print Media).
ii. Service of all radio taxis or radio cabs is taxable@ 4.94%.
(w.e.f date to be notified)

4. Exemptions withdrawn / Service Tax scope increased
i. Tax on Renting of Immovable property services to an Educational
Institution @ 12.36%.
ii. Services of transport, catering, house keeping and security to
staff, student and faculty by approved Educational Institution is
exempt.
iii. Service Tax on Transportation of passengers in air- conditioned
contract carriage (e.g. Neeta Volvo from Mumbai to Ahmedabad)
@4.94%.

5. Exemptions withdrawn / Service Tax scope increased
iv. Services by Clinical Research Organization (CRO) of Testing of
newly developed drugs, vaccines and herbal remedies on human
participants is taxable.
v. Services provided to Government or Local Authority for water
supply, public health, sanitation, solid waste management or slum
improvement is exempt.
( w.e.f 11-07-2014)

6. New Exemptions granted / Service Tax scope reduced
i. Services of operators of Common Bio-medical Waste
Treatment Facility to a clinical establishment is exempt.
ii. Accommodation services having declared tariff less than Rs.
1,000/- per day is exempt.
iii. Approved Life micro-insurance schemes for poor if sum assured
is less than Rs. 50,000/- is exempt.
iv. Transportation of organic manure by vessel, rail or road (GTA) is
exempt.

7. New Exemptions granted / Service Tax scope reduced
v. Service of loading, unloading, packing, storage or warehousing,
transportation by vessel, rail or road (GTA) of cotton, ginned or
baled is exempt.
vi. Service to RBI from outside India of Foreign Exchange reserves
management is exempt.
vii. Service of tour operator to a foreign tourist for tour conducted
wholly outside India is exempt.
( w.e.f 11-07-2014)

8. Amendment in Valuation of Works Contract
 Category ‘B’ and ‘C’ with service portion of 70% and 60% is
merged, having taxable service portion of 70% and hence
effective rate is 8.652%.
( w.e.f 01-10-2014)

9. Amendment in Abatement
i. Abatement of 60% on services of air- conditioned contract
carriage taxable from 1-07-2014.
( w.e.f 11-07-2014)
ii. Abatement of 60% on services provided by radio taxis taxable
from a date to be notified.
(w.e.f date to be notified)
iii. Abatement in case of transport of gods by vessel to be increased
from 50% to 60%.
(w.e.f 01-10-2014)
(Effective Tax Rate for above services – 4.944%)

10. Retrospective Exemption :
 Services provided by Employees’ State Insurance Corporation
(ESIC) during the period prior to 01-07-2012 is exempt.

11. Increase in Rate of Interest on delayed payment of
Service Tax
A Concession of 3% to small service providers having
turnover of less than Rs. 60 Lakhs.
( w.e.f 1-10-2014)

12. Amendment in Reverse Charge Mechanism (RCM)
i. Banking Company or Financial Institutions or NBFCs to pay
100% tax on Recovery Agent services.
ii. Company and Body Corporate to pay 100% tax on services of a
director.
iii. Renting of motor vehicle, where abatement is not availed,
50% tax paid by service provider and 50% tax paid by service
receiver.
( w.e.f 11-07-2014)

13. Amendment in Point of Taxation Rules, 2011
 Rule 7 provides that point of taxation in case of reverse charge,
will be
i. the payment date or
ii. first day, after 3 months from the date of invoice,
whichever is earlier.
( w.e.f 01-10-2014)

14. Amendment in Place of Provision of Service Rules,
2012
i. In case of temporary imports of gods into India for repairs, Rule 4
will not apply. Provision of place or provision of repair services is
also omitted.
ii. Definition of ‘Intermediary’ includes intermediary of goods hence,
commission agent or consignment agent covered in rule 9(c) of
the POPR Rules.
iii. Services of hiring of Vessels (excluding yachts) and Aircraft is
excluded from Rule 9 (d) and hence covered by general Rule 3.
(w.e.f 01-10-2014)

15. Amendment in CENVAT Credit Rules, 2004
Amendment Effective
Date
i. Credit have to be availed within 6 months of the
date of invoice or challan.
01-09-2014
ii. In full reverse charge, condition of payment of
invoice value for availing Credit is withdrawn.
Hence, Credit can be taken on payment of Service
Tax only.
11-07-2014
iii. Re-credit of credit reversed on non-receipt of
exports proceeds, is allowed, if received within one
year.
11-07-2014
iv. In GTA services, service receiver may avail
abatement, without the condition of non-availment
by service provider.
11-07-2014

16. Amendment Effective
Date
v. Credit is allowed on services received by a Rent-
a-cab operator from sub-contractor.
01-10-2014
vi. Credit is allowed on services received by a Tour
operator from Sub-contractor.
01-10-2014
vii. Rule 7 viz. Input Service Distribution allow
distribution of Credit, whether such services are
used or not, in the ratio of their turnover of the
previous period to total turnover of al the units.
01-10-2014
Amendment in CENVAT Credit Rules, 2004

17. Amendments in Finance Act, 1994
i. Section 73 prescribe time limit for completion of
adjudications.
ii. The power to waive 50% penalty is amended under Section
80.
iii. Section 87 empowers to recover dues of a predecessor from
the assets of a successor.
iv. Company and Body Corporate to pay service tax as a on
services received by a director.
( w.e.f date of Presidential Assent)

18. Central Excise Provisions made applicable to Service
Tax
i. Section 5A(2): Clarification on the scope or applicability of any
Notification shall have effect from the date of issue of such
notification.
ii. Section 15A: It stipulate that third party sources should furnish
periodic information.
iii. Section 15B: Failure to provide information under section 15A
would attract penalty.
( w.e.f 11-07-2014)

19. Central Excise Provisions made applicable to Service
Tax
iv. Section 35F: This section prescribes mandatory pre-
deposit as under:
( w.e.f 1-07-2014)

20. SEZ Provisions simplified

21. Other Amendments
i. Advance Ruling - The resident Private Limited Company is eligible
to make an application for Advance Ruling.
(w.e.f 11-07-2014)
ii. E-Payment of service tax is mandatory for all the assesses
notwithstanding the Tax amount.
(w.e.f 01-10-2014)

22. CENTRAL EXCISE – AMENDMENTS
All changes come into effect immediately unless
otherwise specified.
• Education cess and secondary and higher education cess
(customs component) is exempted on goods cleared by an
EOU into DTA.
• Insertion of Section 15B:
• Section 15B provides for imposition of penalty if the
information return is not submitted.

23. AMENDMENT IN CENTRAL EXCISE RULES, 2002:
 E-payment is being made mandatory for all assessees .
Assistant Commissioner or the Deputy Commissioner allow
an assesses to pay duty by any other way.
[w.e.f. 01.10.2014]
(Notification No. 19/2014, Central Excise (N.T.))

24. AMENDMENT IN CENTRAL EXCISE VALUATION
(DETERMINATION OF PRICE OF EXCISABLE GOODS)
RULES, 2000:
• Proviso to Rule 6 of the Valuation Rules - where price is not
the sole consideration for sale and goods are sold at a price
less than cost and profit, value shall be transaction value.
[w.e.f. 11.07.2014]
(Notification No. 20/2014, Central Excise (N.T.))

25. Customs – Amendments Highlights
 Mandatory pre-deposit to the extent of 7.5% of the amount
involved (at first appeals level ) and 10% (at second stage
level ) subject to Rs. 10 crores in case of appeal.
This substituted provisions would not be applicable to pending
appeals and stay applications.
 Customs duty on certain goods rationalized
 Reduced dependency on imports

26.  Advance ruling option made available to resident private
limited companies.
• Free baggage allowance increased from Rs. 35k to Rs. 45K

35. Thank You