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2015

Service Tax Rate 14% — UPDATES

Changes in Service Tax…!!!

  • Please note that the increase in rate of Service Tax from 12% (plus cesses) to 14% (including cesses) as proposed in Union Budget – 2015–16 will come effect from 1st June 2015. Accordingly the provisions levying Education Cess and Secondary and Higher Education Cess would also cease to have effect from 1st June, 2015. [Notification No.14/2015-Service Tax, dated 19th May, 2015]
  • Further the following amendments proposed in Union Budget – 2015–16 would also be effective from 01-06-2015:
    • Service Tax shall be levied on the service provided by way of access to amusement facility providing fun or recreation by means of rides, gaming devices or bowling alleys in amusement parks, amusement arcades, water parks and theme parks.
    • Service tax shall be levied on service by way of admission to entertainment event of concerts, pageants, musical performances concerts, award functions and sporting events other than the recognized sporting event, if the amount charged is more than Rs. 500 per person for the right to admission to such an event. However, the existing exemption, by way of the Negative List entry, to service by way of admission to entertainment event, namely, exhibition of cinematographic film, circus, recognized sporting event, dance, theatrical performance including drama and ballet shall be continued
    • Service Tax shall be levied on contract manufacturing/job work for production of potable liquor for a consideration;
    • An entry in the Negative list covers betting, gambling or lottery [Section 66D (i)]. This entry has been amended by section 109 (3) of the Finance Act, 2015 so as to include an explanation that betting, gambling or lottery shall not include the activity carried out by a lottery distributor or selling agent in relation to promotion, marketing, organising, selling of lottery or facilitating in organising lottery of any kind, in any other manner. The objective of making these exclusions was to make it explicitly clear that while lottery per se is not subject to service tax, aforesaid services in relation to lottery will be taxable;
    • The alternative Service Tax rates prescribed for services such as money changing service, service provided by air travel agent, insurance service and service provided by lottery distributor and selling agent has been proportionately revised considering the upward revision in Service Tax Rates;
  • Date of effect of the following provisions are yet to be notified
    • Presently, services provided by Government or a local authority, excluding certain services specified under clause (a) of section 66D, are covered in the Negative List. An enabling provision has been made, by amending section 66D (a) (iv), to exclude all services provided by the Government or local authority to a business entity from the Negative List [section 109(1) of Finance Act, 2015] i.e. 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; and
    • Swachh Bharat Cess on all or any of the taxable services at a rate of 2% or lower on the value of such taxable services.
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