budget 2015 service tax - top ca firms in india · service upto 31.03.2015 from 01.04.2015 % of st...

Budget 2015

Service Tax

CA. Amish Khandhar

Khandhar Mehta and Shah

Service Tax Rates

Negative List

Exemption Withdrawn / ST Scope Expanded

New Exemptions / ST Scope Reduced

Abatements

Reverse charge mechanism

CENVAT Credit

Pre-deposit for filing of Appeal

Penalty Provisions

Interest Rates on late Payment of Service Tax

Miscellaneous

Contents

Assessee

CENVAT Credit

Registration Process

Penalty

Department

Service Tax Rate

Government Construction

Abatement Rate

Budget in favour of

Statistics – Tax Revenue in India

Revenue 2011-12 2012-13 2013-14(Actual)

2014-15(Revised)

2015-16(Estimated)

Gross Tax

Revenue

8,89,176 10,36,234 11,38,734 12,51,391 14,49,491

Corporation

Tax3,22,816 3,56,326 3,94,678 4,26,079 4,70,628

Income Tax 1,70,342 2,01,486 2,42,857 2,78,599 3,27,367

Customs 1,49,328 1,65,346 1,72,085 1,88,713 2,08,336

Central Excise 1,45,608 1,76,535 1,70,197 1,85,480 2,29,809

Service Tax 97,509 1,32,601 1,54,778 1,68,132 2,09,774

(Rs. In Crores)

Service Tax Rates

Service Tax Rate

w.e.f. date to be notified

Service Tax Rate – Swachh Bharat Cess

w.e.f. date to be notified

Swachh Bharat Cess

@

2% on VALUE OF TAXABLE SERVICE

Service Tax Rate – Swachh Bharat Cess

ISSUE

Whether Abatement / Exemption can also be availed by service provider for

Swachh Bharat Cess?

Whether CENVAT Credit can be availed / utilized of Swachh Bharat Cess?

Service Tax Rate – Real Estate Sector

Sr. No.

Nature of Service ST Rate

Existing Rate w.e.f. notifieddate

1. Construction of Residential Flats 3.09%[12.36% * 25%]

3.50%[14% * 25%]

2. Construction of High End Residential flats 3.708%[12.36% * 30%]

4.20%[14% * 30%]

3. Construction of Commercial Complexes 3.708%[12.36% * 30%]

4.20%[14% * 30%]

4. Works Contract Servicesa) Original works

b) Maintenance, Repair work in relation togoods and immovable property

4.944%[12.36% * 40%]

8.652%[12.36% * 70%]

5.60%[14% * 40%]

9.80%[14% * 70%]

Negative List

Admission to entertainment event or access to amusement facility – TAXABLE

Entry Fees charged by Water Kingdom – Liable to ST @ 14%

Negative List (w.e.f. date to be notified)

Manufacture or production of alcoholic liquor for human consumption – TAXABLE

Thus, manufacturing & intermediate process relating to manufacture – Liable for ST

Manufacturing of Alcohol is State Levy ---Whether Cent. Govt. can charge ST ?


All service provided by government to business entity - TAXABLE

Business Entity liable to pay ST onservices provided by Governmentunder Reverse Charge

E.g. License fees paid for 3G by telecom operators – Liable ?


Exemption Withdrawn / Scope Expanded

Exemption withdrawn – w.e.f. 01-04-2015

Services provided to Government, a local authority or a Governmental Authority forconstruction, erection, repair, maintenance, renovation, or alteration of:

- any civil structure or any other original works predominantly used for noncommercial purpose.

- structure meant for use as educational, clinical, art or cultural establishment

- residential complex of Government employees and specified persons.

EXEMPTION WITHDRAWN

Service to Government in relation to Canal, Dams, Irrigation works, Water Supply,

Water/Sewerage treatment – Still Exempt


M/s. PQR Ltd. is engaged in the construction business. M/s. PQR was awarded contract

for renovation of Income Tax Department building. The work commenced in the month

of December, 2014 and would continue for 2 years.

ISSUE : Whether ST would be levied for the service provided upto March, 2015 & post

March, 2015?


As a result of this amendment, services provided for following Government constructions shall

be taxable w.e.f. 01.04.2015

GSPHCL / Police Station

R & B Department

Government Hospital / School

Municipality buildings

Government Staff Quarters

Court Buildings


Construction, erection, commissioning or installation of original works pertaining to

- Airport

- Port

LIABLE TO S TAX


Pre 31.03.2015

Services by performing artist in

folk or classical art form of

dance, music, theatre – No

threshold limit for exemption

w.e.f. 01.04.2015

Services by performing artist in

folk or classical art form of

dance, music, theatre where

the amount charged is < Rs.

1,00,000/- Threshold limit

prescribed for exemption


Exemption to transportation of Foodstuff by Road / Vessel / Rail is limited to

foodgrain including rice, pulses, milk and salt. ---- Thus, transportation of any other

foodstuff like tea, edible oil, Sugar, Jaggery, milk products etc. would be taxable.

Exemption given to Departmentally run public telephone, free telephone at airport/

hospital, etc. is withdrawn.

Exemption to services by agent / distributor to mutual fund or AMC; and services by

agent of lottery ticket to distributor or selling agent is withdrawn.

New Exemptions / Scope Reduced

New Exemptions – w.e.f. 01-04-2015

Upto 31.03.2015

Ambulance services provided

by clinical establishment /

medical practitioner /

paramedics was only exempt

w.e.f. 01.04.2015

Ambulance service provided on

a standalone basis is also

exempted


Life insurance service provided under Varishtha Bima Yojana exempted

Pre-Conditioning, pre-cooling, ripening, waxing, retail packing, labeling of fruits and

vegetables exempted

Service by exhibition of movie by exhibitor to distributor or AOP consisting of exhibitor

is exempted

GTA service for export goods upto ICD, CFS, port or airport was exempt. The said

exemption is also granted from Place of Removal to LCS.


Admission to museum, zoo, national park, wild life sanctuary, tiger reserve is

exempted. [New entry is pursuant to deletion of negative list entry]

Exemption is provided to services by way of right to admission to:

- exhibition of cinematographic film, circus, dance, or theatrical performance

including drama or ballet;

- recognized sporting event;

- award function, concert, pageant, musical performance or any sporting event other

than a recognised sporting event, where admission fee is not more than Rs. 500 per

person.

Abatements

A uniform rate is been prescribed for transport by rail, road, and vessel

Abatement (w.e.f. April,1 2015)

30%

without

credit

Transport of Goods by

Old Taxability

Rail 30% with Credit

Vessel 40% without Credit

Road (GTA) 25% without Credit

Abatement (w.e.f April,1 2015)

Transport by air Old Taxability

•Passenger with or without accompanied belongings

40% without Credit

40% Economy Class without credit

60% Higher Class without credit

Abatement (w.e.f April,1 2015)

Particulars Old Taxability New Taxability*

Service provided by ChitFund Foremen in relation toChit

70% 100%

* CENVAT credit now allowed to be taken

Abatement Table – New

Sr.

No.Name of Service

Abatement

(w.e.f. 1.4.15)

ST Rate @ 14%

(notified. dt.)

1 Financial leasing including Hire purchase 90% 1.40%

2 Transport of goods/passenger by rail 70% 4.20%

3Bundled service by way of supply of food or any drink, in a

premises together with renting it 30% 9.80%

4

Transport of Passengers by Air

(i) Economy Class 60% 5.60%

(ii) Other 40% 8.40%

5Renting of hotels, inns, guest houses, clubs, campsites or other

commercial places meant for residential or lodging purposes 40% 8.40%

6 Services of GTA in relation to transportation of goods 70% 4.20%

7 Renting of Motor cab 60% 5.60%

Sr.

No.Name of Service

Abatement

(w.e.f. 1.4.15)

ST Rate @ 14%

(notified. dt.)

8

(i) Transport of passengers by a contract carriage 60% 5.60%

(ii) Transport of passengers by a radio taxi 60% 5.60%

9 Transport of goods in vessel 70% 4.20%

10

Services by a tour operator in relation to-

(i) Packaged Tour 75% 3.50%

(ii) Only arranging, booking, accommodation 90% 1.40%

(iii) Services other than (i) & (ii) 60% 5.60%

Abatement Table – New

Reverse Charge Mechanism

Reverse Charge – Changes in Notification No. 30/2012-ST

Sr. No.

Description of Service

Upto 31.03.2015

From 01.04.2015

% of ST by SP

% of ST by SR

% of ST by SP

% of ST by SR

1 Manpower Services 25% 75% Nil 100%

2. Security services 25% 75% Nil 100%

Note: Reverse Charge is applicable only if service provider is individual / HUF / AOP / Firm / LLP and

service receiver is body corporate.


Ind / Firm / LLP / AOP

Body Corporate

Security Service

Manpower Service

[ RCM 100% ]


Ramesh Enterprise, a partnership firm is engaged in providing manpower service to

Anand Infrastructure LLP who is engaged in providing construction service.

Whether Forward Charge or Reverse Charge would be applicable in the present

case and at what rate ?

EXAMPLE 1


Rajput Securities Ltd, a security agency company is engaged in providing security

service to Mr. Mukesh Adani, who is an individual running trading business.



EXAMPLE 2


Rathod Security, a partnership firm engaged in providing security service to Star

Fisheries Ltd. Invoice of Rs. 50,000/- is raised by Rathod Security in the month of

June, 2015 for security services provided in month of May, 2015.



EXAMPLE 3


In above example 3, what will be the taxability if Invoice is issued in month of

March, 2015 & payment is received in April, 2015?

Note - Rule 7 of PoTR (point of taxation determining in case of RCM) is

notwithstanding to Rule 3, 4, 8 of PoTR.


Sr. No.


Upto 31.03.2015

From 01.04.2015

% of ST by SP

% of ST by SR

1 Service by Mutual Fund Agent /

Distributor to Mutual Fund / AMC

Exempt

[NN. 25/2012]

Nil 100%

2. Service by Selling or Marketing agent to

lottery distributor / selling agent

Exempt

[NN. 25/2012]

Nil 100%


Sr. No.


Upto 31.03.2015

From 01.04.2015

% of ST by SP

% of ST by SR

1 Service provided by person involving an

Aggregator in any manner

X Nil 100%

OLA / Taxi for Sure / Easy Cabs liable to pay service Tax @ 12.36% on service

provided to the customers

CENVAT Credit

CENVAT Credit

W.e.f. 01.03.2015, time limit for availment of CENVAT Credit on inputs / input services has

been extended from period of 6 months to 12 months from the date of issue of invoice /

challan.

Time Limit of 1 year – Applies to the first time availment of CENVAT Credit.

Thus, CENVAT Credit of input service for invoice dated 10.03.2014, can be availed post this

amendment.

CENVAT Credit - Chart

CC on Input Service

YES

NO

CC can be availed

Avail CC –Invoice is recd.

Availment > 1 year from dt. of invoice

CC lapses forever

CENVAT Credit - Chart

Payment within 90 days of dt. of invoice

YES

NO

CC availed remains valid

CC to be reversed

Payment within 1 yr from dt. Of invoice

NOCC to be availed at the

time of payment in future

CC availed on the date of payment

YES

CENVAT Credit

CENVAT Credit Conditions

Upto

31.03.2015

From

01.04.2015

Service Tax paid under

Partial Reverse Charge

On payment of

VALUE & TAX

On payment of

TAX

CENVAT Credit under Partial RCM

CENVAT Credit – Utilization Manner

The manner of utilization of CENVAT credit in case wrongly taken credits has now been

specified as under:

opening balance of the month will be deemed to be utilized first;

credit admissible in terms of these rules taken during the month has been utilized next;

credit inadmissible in terms of these rules taken during the month has been utilized

thereafter.

CENVAT Credit Utilization- Illustration

Particulars April, 2015 May, 2015

Opening Balance 110 40

Cr. availed during the month 50 90

Ineligible credit 20 0

Total Credit 180 130

Credit Utilised 140 100

Closing Balance 40 30

Inadmissible Cr. Of Rs. 20 utilised in May, 2015 – Interest to be paid

Pre-Deposit for filing of Appeal

Sr.

No.Filing of Appeal

Mandatory Pre-Deposit *

Duty or (Duty + Penalty) Only Penalty

1 Before CCE (A) 7.5% of the Duty 7.5% of the Penalty

2 Before CESTAT Addn. 2.5% of duty Addn. 2.5% of Penalty

SCN for demand <= ` 50 Lacs

* Mandatory pre-deposit shall not exceed ` 10 Crores

Pre-Deposit for Filing Appeal

Sr.

No.Filing of Appeal

Mandatory Pre-Deposit*

Duty or (Duty + Penalty) Only Penalty

1 Before CESTAT 7.5% of the Duty 7.5% of the Penalty

* Mandatory pre-deposit shall not exceed ` 10 Crores

Pre-Deposit for Filing Appeal

SCN for demand > ` 50 Lacs

Pre-Deposit for filing Appeal

ST Demand : Rs. 1 crore

Penalty : Rs. 1 crore

Order by Commissioner

Appeal before CESTAT

Pre-Deposit = 15 Lacs. (7.5% of 1 cr.)

Order by Jt. Commissioner

Appeal before CCE(A)

Pre-Deposit = 1.5 Lacs(7.5% of 20 Lacs)

Appeal before CESTAT

Further Pre-Deposit Rs. 0.5 L (2.5%)

ST Demand : Rs. 20 Lacs

Penalty : Rs. 20 Lacs

Penalty Provisions

Penalty Provisions – Rationalized

Section 76 is amended as under:

a. to be applicable only in cases NOT INVOLVING fraud or collusion or willful mis-statement or suppression of facts

b. penalty can be imposed only upto 10% of Service Tax involved (against 50% atpresent)

c. no penalty is to be paid if service tax and interest is paid within 30 days ofservice of Show Cause Notice (SCN) issued under Section 73 (1).

d. penalty shall be reduced to 25% of penalty imposed in case service tax, interestand penalty are paid within 30 days of receipt of order issued under Section 73(2).


Penalty

u/s 76

Max 10%

of ST

If ST+ Int. paid within 30 days of service of notice

Nil Penalty

If ST + Int + Penalty paid within 30 days of receipt

of order

25 % of penalty imposed

1% per month

Or

Rs. 100 per day

EXISTING PROPOSED

ST + Int paid before 5.7.15

Penalty - Nil

No

OIO recd. on 11.11.15

ST + Int + Penalty paid by 12.12.15

Max. Penalty =Rs. 5,00,000/-

Yes


SCN of Rs. 50,00,000/- was issued on 5th June, 2015 for the period of 2014-15 levying penalty u/s. 76 of Rs. 5,00,000/- (10% max.)

YesPenalty –

1,25,000/-

No


Section 78 is amended as under:

a. to be applicable only in cases INVOLVING fraud or collusion or willful mis-statement or suppression of facts

b. penalty not to exceed 100% of Service Tax involved.

c. penalty shall be reduced to 15% of Service Tax involved if service tax, interestand penalty is paid within 30 days of service of Show Cause Notice issued underSection 73 (1).

d. penalty shall be reduced to 25% of Service Tax involved in case service tax,interest and penalty are paid within 30 days of receipt of order issued underSection 73 (2).


Penalty

u/s. 78

100% of

ST

If ST+ Int+ penalty paid within 30 days of service of

notice

15% of ST

If ST + Int + penalty paid within 30 days of receipt of

order

25 % of ST

EXISTING PROPOSED

ST + Int + Penalty paid before 5.7.15

Penalty = Rs. 7,50,000/-

No

OIO recd. on 11.11.15

ST + Int + Penalty paid by 12.12.15

Max. Penalty =Rs. 50,00,000/-

Yes


SCN of Rs. 50,00,000/- was issued on 5th June, 2015 for the period of 2011-12 to 2014-15 levying penalty u/s. 78 of Rs. 50,00,000/- (100% max.)

YesPenalty –

12,50,000/-

No

Interest Rates

Interest Rates on late payment of Service Tax

Period of delay Assessee having Taxable Turnover more than Rs. 60 lacs

Assessee having Taxable Turnover up to Rs. 60 lacs

Up to 6 months 18 % 15 %

More than 6 months – Up to 1

Year

18 % (for first 6 months) plus

24 % (for delay beyond 6 months)

15 % (for first 6 months) plus

21 % (for delay beyond 6 months)

More than 1 Year 18 % (for first 6 months) plus

24 % (for delay beyond 6 mnt. to 1 yr.) plus

30 % (for delay beyond 1 year)

15 %(for first 6 months) plus

21 % (for delay beyond 6 mnt. to 1 yr.) plus

27 % (for delay beyond 1 year)

Due Date

Payment Date

Delay in Days

Int @ 18% for the period



06.10.14 31.03.15 176 07.10.14 to

31.03.15- -

06.08.14 31.03.15 237 07.08.14 to

06.02.1507.02.15 to

31.03.15-

06.01.13 31.03.15 814 Upto 30.09.14 -01.10.14 to

31.03.15

06.01.14 31.03.15 449 Upto 30.09.1401.10.14 to

05.01.150.01.15 to 31.03.15

Interest - Example

Miscellaneous

Miscellaneous

Single premise registration certificate to be issued online within 2 working days. Certificate

downloaded from ACES website requires no attestation by department.

[Order no. 01/2015-ST dated 28.02.15 ] (w.e.f. 01.03.2015)

Assesses allowed to maintain record electronically. Digitally signed invoices and consignment

notes considered to be acceptable. (w.e.f. 01.03.2015)

The term ‘consideration’ amended to include ‘reimbursable expenditure’ or ‘cost incurred’

charged by Service Provider [s. 67 of the Act] (w.e.f. date to be notified)

Firms / LLPs / Proprietory Concern / One Person Company are eligible to make an application for

Advance Ruling in ST (w.e.f. date to be notified)

Miscellaneous

Rate revision consequent to revising in service tax rate-

Air travel agents

Domestic booking - 0.6% to 0.7% of basic fare

International booking - 1.2% to 1.4% of basic fare

Life Insurance

3.0% to 3.5% of premium charged in first year

1.5% to 1.75% of premium charged in subsequent years

Similar amendment:

Foreign Exchange dealers and

Lottery ticket distributors/selling agents

Miscellaneous – Special Economic Zone

Rule 18 of Central Excise amended the definition of ‘Exports’ as follows:

“export”, with its grammatical variations and cognate expressions, means taking goods outof India to a place outside India and includes shipment of goods as provision or stores foruse on board a ship proceeding to a foreign port or supplied to a foreign going aircraft.”.

Rule 5 of CENVAT Credit amended to include definition of ‘Exports Goods ’ as follows:

“(1A) "export goods" means any goods which are to be taken out of India to a place outside India.”.

Pursuant to the above amendment –

‘Whether goods supplied to SEZ cannot be construed as export and benefit of rebate u/r. 18 can be denied?

Goods & Service Tax

GST is to be implemented w.e.f. 01.04.2016

Different taxies levied by Centre and States will get subsumed under GST model

122nd Constitutional amendment bill to be passed

50% of the states must agree for implementation.

Petroleum products out of ambit of GST for 3 years

•Excise

•Service Tax

•CVD & SAD

•CST, Surcharges & Cesses

Centre

•VAT

•Entertainment Tax

• Luxury Tax

•Entry Tax

State

Goods and Service Tax -World Wide

Country Implementation Date Current Rate of GST(%)

United Kingdom # 01-Jan-1973 20%

France # 01-01-1976 19.6%

New Zealand 01-Oct-1986 15%

Canada # 01-Jan-1991 5%

South Africa # 01-Jan-1991 14%

Singapore 01-Apr-1994 7%

Australia 01-Jul-2000 10%

Germany 01-Jan-1968 19%

Japan 01-Jan-1989 5%

Sweden 01-Jan-1969 25%

Pakistan 01-Apr-1990 18%

Malaysia 01-Apr-2015 6%

# Known as VAT

Khandhar Mehta and Shah3rd Floor, Devpath Complex

Behind Lal Bunglow

Off C G Road

Ahmedabad – 380 009Tel: 079-2646 1526

Email: [email protected]

Thank You

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