Budget- Amendment in Abatement Notification

[CA Akash Phophalia]

CHANGES IN ABATEMENT IN BUDGET 2016-17

With the budget announced on 29-02-2016, following changes were introduced in the abatement notification no 26/2012-ST dated 20.06.2012. The changes have been introduced vide notification no 08/2016-ST dated 01-03-2016. All the following changes will come into effect from 01-04-2016

Nature of Service	Present Provision	Proposed Provision	Analysis/Remark
Transport of goods by rail	Abatement of 70% without any CENVAT credit.	Abatement of 60% for transport of goods by rail by any person other than Indian railways. Abatement of 70% for transport of goods by rail other than as stated above.	Presently  no CENVAT was available, however as a manner of rationalization CENVAT credit of service tax paid on input services will now be allowed. Further, difference in abatement rates seems to meet the vision of Indianisation.
Transport of passengers by rail	Abatement of 70% without any CENVAT credit.	Abatement of 70% with CENVAT credit of tax paid on input services.	CENVAT credit is allowed to avoid cascading effect.
Services of GTA in relation to transport of goods by road	Abatement of 70% without any CENVAT credit.	Abatement of 70% on services of goods transport agency in relation to transport of goods other than used household goods without CENVAT credit. Abatement of 60% on services of goods transport agency in relation to transportation of used household goods without CENVAT credit.	It seemed that government is finding more revenue in reselling of household goods considering the popularity of quickr and olx.
Service provided by a foreman of chit fund in relation to chit fund	Omitted resulting into no abatement and full CENVAT credit.	Abatement of 30% without CENVAT credit.
Transport of passengers with or without belongings	Transport of passengers, with or without accompanied belongings, by (a) a contract carriage other than motorcab. (b) a radio taxi. No CENVAT credit was admissible.	Transport of passengers, with or without accompanied belongings, by (a) a contract carriage other than motorcab. (b) a radio taxi. (c) a stage carriage. No CENVAT credit was admissible.	This amendment will come into effect from 01-06-2016. Simultaneous change is introduced in negative list. However, such services by a non-air-conditioned stage carriage will continue be exempted.
Transport of goods by vessel	Abatement of 70% without any CENVAt credit	Abatement of 70% with CENVAT credit on input services.	Rationalization to avoid double taxation.
Services by a tour operator	Presently three kinds of abatement rates were available for – (a) arranging or booking accommodation (Abatement of 90%) (b) packaged tour (Abatement of 75%) (c) any other service other than above two (Abatement of 60%)	Now there are two categories – (a) arranging or booking accommodation (Abatement of 90%) (b) any other related service (Abatement of 70%)	This is rationalized and conditions remained same as earlier. However, the concept of packaged tour is now no more in existence.
Construction of complex, building, civil structure or a part thereof.	There are two provisions of abatement- (a) abatement of 75% in case of a residential unit having carpet area of less than 2000 sq feet and costing less than ₹ 1 crore (b) abatement of 70% in other cases.	Now uniform abatement of 70% is proposed.	The other conditions remained same as earlier.
Renting of motor cab services	Abatement of 60%.	Abatement of 60%. A new explanation is introduced.	The cost of fuel should be included in the consideration charged for providing renting of motor-cab services for availing of the abatement.