The Assessee can check the latest changes related to Service Tax in Union Budget 2016. Here you can find the detailed information about Union Budget 2016 and changes relating to Service Tax. The Finance Minister Mr. Arun Jaitley recently on 29th February 2016 has introduced the Finance Bill 2016 in Lok Sabha. Read the article below for the list of Latest Service Tax Amendments in Budget 2016 and click here for Highlights of Union Budget 2016-2017.
Latest Service Tax Amendments
Following exemptions with respect to erection, installation, construction or commissioning of original works pertaining to monorail or metro in respect of contracts entered into on or after 01.03.2016 has been withdrawn.
- Services provided by a person represented on an arbitration tribunal to an arbitral tribunal and services to a senior advocate to an advocate or partnership firm of advocates providing legal service.
- Service tax would be payable under forward charge on such services like transport of passengers, with or without accompanied belongings by ropeway cable car or aerial tramway.
These are new Exemption that has been provided with respect to the following services:
- Services provided by SEBI (Securities and Exchange Board of India) by way of protecting the interests of investors in securities and to promote the development of, and to regulate the securities market.
- Services of life insurance business provided by way of the annuity under the National Pension System (NPS).
- Services provided by Biotechnology Incubators approved by BIRAC (Biotechnology Industry Research Assistance Council) approved biotechnology incubators to the incubatees.
- Services provided by (EPFO) Employee Provident Fund Organisation to employees.
- Services provided by (IRDA) Insurance Regulatory and Development Authority of India.
- Services provided by Biotechnology Incubators approved by Biotechnology Industry Research Assistance Council (BIRAC) approved biotechnology incubators to the incubatees.
- Services provided by NCCD (National Centre for Cold Chain Development) by way of knowledge dissemination.
- Services of general insurance business provided under Niramaya Health Insurance scheme launched by National Trust for the Welfare of Persons with Cerebral Palsy, Autism, Mental Retardation, and Multiple Disabilities in collaboration with Private or Public Insurance Companies.
- Services provided by way of skill or vocational training by DDU- GKY (Deen Dayal Upadhyay Grameen Kaushalya Yojana) training partners.
- Services of assessing bodies empanelled centrally by Directorate General of Training, Ministry of Skill Development and Entrepreneurship.
- Services in respect of housing projects under Housing For all HFA (Housing and Finance Agency) or Urban Mission or PMAY (Pradhan Mantri Awas Yojana).
- Services in respect of low-cost houses up to a carpet area of 60 M2 in a housing project under Affordable Housing in Partnership Scheme, which is a component of PMAY.
- Services in respect of low-cost houses up to a carpet area of 60 M2 in a housing project under any housing scheme of the State Government.
- Services provided by the IIM (Indian Institutes of Management) to their students, by way of the specified Educational Programmes.
Amendments in existing exemptions
Hitherto (until the point in time under discussion) service tax payable on a performance in folk/ classical art forms of music or dance or theater is exempt provided the consideration there for exceeds Rs. 1, 00,000/-. This limit has been increased to Rs. 1, 50,000/-.
Rationalisation of Abatement
- Abatement at the existing rate of 70% will continue to be available on the transport of passengers & goods by rail and on the transport of goods by a vessel with the CENVAT credit of input services now to be allowed. At present, the credit of input services is not allowed with the abatement being claimed.
- A lower rate of abatement of 60% for transport of goods in containers by rail or by any person other than Indian railway, with the CENVAT credit of input services being allowed.
- Uniform rate of abatement of 70% on services by way of construction of residential complex, building, civil structure, or a part thereof, irrespective of the carpet area of the units and amount charged for such units.
- Abatement on services by a tour operator in respect of a tour only for the purpose of arranging or booking accommodation for any person, retained at the existing rate of 90%. However, abatement in respect of any other tour is rationalised from 75% and 60% to 70%.
- Abatement of 70% on services of a foreman to a chit fund restored, without CENVAT credit on inputs, input services, and capital goods.
- A lower rate of abatement of 60% on shifting of used household goods by a GTA (Goods Transport Agency) without CENVAT credit on inputs, input services, and capital goods.
Amendments in Service Tax Rules, 1994
- With respect to services provided by mutual fund distributor or agents to an asset management company or to a mutual fund the service tax to be payable under forward charge provisions that means the service provider is liable to pay service tax.
- Rule 6 of the Service Tax Rules, 1994 to be amended to extend the benefit of quarterly payment of service tax to OPC (One Person Company) whose aggregate value of services provided is up to Rs. 50 lakh in the previous financial year and a Hindu Undivided Family. Further, the payment of service tax on receipt basis is also extended to such One Person Company.
- Rule 6(7A) of the Service Tax Rules, 1994 to be amended to provide that an insurer carrying on life insurance business to have an option to pay tax at 1.4% of the total premium charged on single premium annuity insurance policies, in cases where the amount allocated for investment or savings on behalf of policyholder is not intimated to such policyholder at the time of providing of service.
- With effect from 01.04.2016, any service not only support services provided by Government or local authorities to business entities are leviable to service tax. Consequently, service tax would be payable on any and not only support services service by the service recipient on reverse charge basis from the said date.
Amendments to be effective from 01.06.2016
Krishi Kalyan Cess
- It is proposed to levy a Krishi Kalyan Cess on any or all the taxable services at the rate of 0.5% of the value of taxable services. It is important to note here that unlike Swachh Bharat Cess, service provider shall be allowed to utilize the CENVAT credit of Krishi Kalyan Cess paid on input services for payment of such cess on the output service provided by it.
- Service tax proposed to be levied on transportation of passengers, with or without accompanied belongings, by a stage carriage by amending Negative List of services. However, transportation of passengers by non-air conditioned stage carriage are being exempted vide mega exemption notification.
- Service tax proposed to be levied on transportation of goods by an aircraft or a vessel from a place outside India up to the customs station of clearance by omitting the negative list entry to said effect. However, said services are being exempted vide mega exemption notification.