Budget V- Snapshot of changes from 01.04.2015

[CA Akash Phophalia]

Exemptions

1. The exemption presently available on specified services of construction, repair, maintenance, renovation or alteration services provided to the government, a local authority, or a govt. Authority has been reduced to certain extent.
2. Exemption to construction, erection, commissioning or installation of original works pertaining to an airport or port is being withdrawn.
3. Exemption to services provided by a performing artist in folk or classical art form of (i) music, or (ii) dance or (iii) theatre, will be limited only to such cases where amount charged up to ₹ 1,00,000 for a performance.
4. Exemption to transportation of food stuff by rail, or vessels or road will be limited to food grains including rice and pulses, flour, milk and salt. Transportation of agricultural product is separately exempt and this exemption would continue.
5. Exemption are being withdrawn on the following services:

1. Services provided by mutual fund agent to a mutual fund or assets management company ;
2. Distributor to a mutual fund or AMC;
3. Selling or marketing agent of lottery ticket to a distributor.

Service tax on these services shall be levied on reverse charge basis.

6. Exemption is being withdrawn on the following services:-

1. Departmentally run public telephone;
2. Guaranteed public telephone operating only local calls;
3. Services by way of making telephone calls from free telephone at airport and hospital where no bill is issued.

7. Certain new exemption have been introduced.

1. The scope of health care services is being widened to include all ambulance services.
2. Life insurance service provided by way of Varishtha Pension Bima Yojna is being exempted.
3. Services provided by a Common Effluent Treatment Plant operator for treatment of effluent is being exempted.
4. Service by of pre-conditioning, pre-cooling, ripening, waxing retail packing, labelling of fruits and vegetables is being exempted.
5. Service provided by way of admission to a museum, zoo, national park, wild life sanctuary and a tiger reserve is being exempted. These services when provided by the government or local authority are already covered by the Negative list.
6. Service provided by way of exhibition of movie by exhibitor (theatre owner) to the distributor or an association of person consisting of such exhibitor as one of it’s members, is being exempted.

8. The Scope of this exemption under Notification No. 31/12- ST Dated 20.6.2012 is being widened to exempt such services when provided for transport of export goods by road from the place of removal to a land customs station (LCS).

Abatements

9. The abatement rate for transport of goods by rail, road and vessel has been rationalized and a uniform rate of abatement is given at 70%. The conditions prescribed are also modified and uniform condition of non-availment of CENVAT credit on inputs, input services and capital goods is made effective.
10. The abatement of 60% has been reduced to 40% for air transport of passengers for classes other than economy class.
11. Abatement on service related to Chit has been withdrawn and now chit fund foreman have to pay full rate of service tax. However, he can claim CENVAT credit as per rules.

Reverse Charge Mechanism

12. Partial reverse charge on manpower supply and security services have been shifted to full reverse charge.
13. Mutual fund distributors, mutual fund agents and agents of lottery distributor are brought into service tax net and simultaneously brought into the reverse charge net also. The mutual fund or assets management company or the distributor of lottery, as the case may be, are liable to pay service tax under reverse charge as the service receiver.

CENVAT Credit

14. CENVAT Credit of Service Tax paid under partial reverse charge by the service receiver is allowed without linking it to the payment to the service provider.

This is just for your reference. It does not constitute our professional advise or recommendation.

CA Akash Phophalia

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