Important Changes in Service Tax Applicable w.e.f. 1st October, 2014

Finance Act, 2014 has made certain changes in Service Tax, which are applicable from 1st October, 2014. Team DYN has made an attempt to summarise these changes. These changes are:

    1. Service Tax is applicable on Radio Taxi (the abatement presently available to rent-a-cab service would also be made available to radio taxi service, to bring them on par);
    2. Advertisements in internet websites, out-of-home media, on film screen in theatres, bill boards, conveyances, buildings, cell phones, Automated Teller Machines, tickets, commercial publications, aerial advertising, etc. (sale of space for advertisements in newspapers, book other than business directories/yellow pages/trade catalogues would continue to be non-taxable) are leviable to Service Tax;
    3. Introduction of variable Rates of Interest:
      Extent of delay Simple interest rate per annum (Revised) Simple interest rate per annum (Existing)
      Up to six months 18% 18%
      More than six months & upto one year 18% for first six months, and 24% for the period of delay beyond six months 18%
      More than one year 18% for first six months, 24% for second six months, and 30% for the period of delay beyond one year 18%


    1. Mandatory E-payment for every assessee;
    2. Partial Reverse Charge Mechanism In Renting of motor vehicle, where the service provider does not take abatement, the portion of service tax payable by the service provider and service receiver is modified as 50% each;
    3. Rate of Exchange for value of taxable service shall be the applicable rate of exchange as per the generally accepted accounting principles on the date when point of taxation arises in terms of the Point of Taxation Rules, 2011;
    4. Service Tax on service portion in Works Contract – In Rule 2A of the Service Tax (Determination of Value) Rules, 2006, category B and C of works contracts are proposed to be merged into one single category, with percentage of service portion as 70%;
    5. Place of Provision of Services rules, 2012:
      Rule Applicable Changes
      Rule 4
      • Provision for prescribing conditions for determination of place of provision of repair service carried out on temporarily imported goods is being omitted.
      Rule 9
      • The definition of intermediary is being amended to include the intermediary of goods in its scope.
      • Service consisting of hiring of Vessels (excluding yachts) and Aircraft is being excluded from rule 9(d).


  1. Point of Taxation in respect of reverse charge will be the payment date or the first day that occurs immediately after a period of three months from the date of invoice, whichever is earlier;
  2. Abatement provisions:
    • Taxable portion in respect of transport of goods by vessel is being reduced from 50% to 40%.
    • For Renting of any motor vehicle designed to carry passengers, the word motor cab will be substituted for the word motor vehicle.
    • CENVAT credit of input service of renting of motor cab is allowed to a Rent a Cab Service provider taking the benefit of abatement scheme subject to conditions mentioned in Notification 08/2014-ST.
    • CENVAT credit of Tour Operator Service is allowed to a Tour Operator taking the benefit of abatement scheme subject to conditions mentioned in Notification 08/2014-ST.

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