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Budget 2015
Service Tax
CA. Amish Khandhar
Khandhar Mehta and Shah
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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Exemption Withdrawn / ST Scope Expanded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
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Assessee
CENVAT Credit
Registration Process
Penalty
Department
Service Tax Rate
Government Construction
Abatement Rate
Budget in favour of
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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)
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Service Tax Rates
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Service Tax Rate
w.e.f. date to be notified
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Service Tax Rate – Swachh Bharat Cess
w.e.f. date to be notified
Swachh Bharat Cess
@
2% on VALUE OF TAXABLE SERVICE
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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?
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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%]
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Negative List
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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)
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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 ?
Negative List (w.e.f. date to be notified)
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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 ?
Negative List (w.e.f. date to be notified)
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Exemption Withdrawn / Scope Expanded
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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
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Exemption withdrawn – w.e.f. 01-04-2015
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?
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Exemption withdrawn – w.e.f. 01-04-2015
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
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Exemption withdrawn – w.e.f. 01-04-2015
Construction, erection, commissioning or installation of original works pertaining to
- Airport
- Port
LIABLE TO S TAX
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Exemption withdrawn – w.e.f. 01-04-2015
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
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Exemption withdrawn – w.e.f. 01-04-2015
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.
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New Exemptions / Scope Reduced
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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
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New Exemptions – w.e.f. 01-04-2015
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.
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New Exemptions – w.e.f. 01-04-2015
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.
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Abatements
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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
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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
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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
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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%
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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
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Reverse Charge Mechanism
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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.
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Reverse Charge – Changes in Notification No. 30/2012-ST
Ind / Firm / LLP / AOP
Body Corporate
Security Service
Manpower Service
[ RCM 100% ]
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Reverse Charge – Changes in Notification No. 30/2012-ST
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
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Reverse Charge – Changes in Notification No. 30/2012-ST
Rajput Securities Ltd, a security agency company is engaged in providing security
service to Mr. Mukesh Adani, who is an individual running trading business.
Whether Forward Charge or Reverse Charge would be applicable in the present
case and at what rate ?
EXAMPLE 2
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Reverse Charge – Changes in Notification No. 30/2012-ST
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.
Whether Forward Charge or Reverse Charge would be applicable in the present
case and at what rate ?
EXAMPLE 3
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Reverse Charge – Changes in Notification No. 30/2012-ST
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.
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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
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%
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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
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
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CENVAT Credit
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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.
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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
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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
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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
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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.
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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
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Pre-Deposit for filing of Appeal
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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
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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
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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
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Penalty Provisions
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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).
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Penalty Provisions – Rationalized
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
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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
Penalty Provisions – Rationalized
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
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Penalty Provisions – Rationalized
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).
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Penalty Provisions – Rationalized
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
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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
Penalty Provisions – Rationalized
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
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Interest Rates
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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)
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Due Date
Payment Date
Delay in Days
Int @ 18% for the period
Int @ 24% for the period
Int @ 30% 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
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Miscellaneous
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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)
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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
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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?
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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
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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
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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