BUDGETARY NOTIFICATIONS – SERVICE TAX

[Mr. M. GOVINDARAJAN]

Notification No. 8/2016-ST, dated 01.03.2016

This Notification seeks to make amendments in the Notification No. 26/2012-ST, dated 20.06.2012 which gives abatements to certain services subject to conditions prescribed given in the Table. 

Transport by Rail

Sl. No. 2 of the Table gives abatement 30%  to the ‘Transport of goods by rail’ subject to the condition that CENVAT credit on inputs and capital goods, used for providing the taxable service, has not been taken under the provisions of the CENVAT Credit Rules, 2004. 

Clause 1(a)(i)  of the Notification substitutes the Sl. No. 2.  As per the substitution the Transport of goods by rail (other than service specified at Sl.No. 2A) is entitled for 30% abatement subject to the condition that CENVAT credit on inputs and capital goods, used for providing the taxable service, has not been taken under the provisions of the CENVAT Credit Rules, 2004.  

Clause 1(a) (ii) inserts a new Sl. No. 2A below to Sl. No. 2.  The new Sl. No. 2A gives 40% abatement to ‘Transport of goods in containers by rail by any person other than Indian Railways’ subject to the condition that CENVAT credit on inputs and capital goods, used for providing the taxable service, has not been taken under the provisions of the CENVAT Credit Rules, 2004. 

Transport of passengers

Sl. No. 3 of the table gives abatement 30% to transport of passengers, with or without accompanied belongings by rail without any condition.  Clause 1(a)(iii) substitutes condition that CENVAT credit on inputs and capital goods, used for providing the taxable service, has not been taken under the provisions of  CENVAT Credit Rules, 2004.

Goods Transport Agency service

Sl. No. 7 of the table gives abatement 30% to the services of goods transport agency in relation to transportation of goods subject to the condition that CENVAT credit on inputs, capital goods and input services, used for providing the taxable service, has not been taken by the service provider under the provisions of the CENVAT Credit Rules, 2004.

Clause 1(a)(iv) substitute the name of service in sl.No. 7 – ‘Services of goods transport agency in relation to transportation of goods other than used household goods’.

Clause 1(a)(v) insert a new Sl.No. 7A after Sl. No. 7 which gives 40% abatement to the services of goods transport agency in relation to transportation of used household goods with the condition that CENVAT credit on inputs, capital goods and input services used for providing the taxable service  has not been taken by the service provider under the provisions of CENVAT Credit Rules, 2004..

Foreman of Chit Fund

Clause (1)(a)(v) insert another Sl. No. 8 which gives 70% abatement to the services provided by a foreman of chit fund in relation to chit with condition that CENVAT credit on inputs, capital goods and input services, used for providing the taxable service has not been taken under the provisions of the CENVAT Credit Rules, 2004.

Transport of passengers

Clause 1(a)(vi) inserts the entry (c) in Sl. No. 9A after item (b) which is ‘a stage carriage’.

Transport of goods in a vessel

Clause 1(a) (vii) substitutes the conditions which is that CENVAT credit on inputs and capital goods, used for providing the taxable service has not been taken under the provisions of CENVAT Credit Rules, 2004.

Services by a tour operator

Clause 1(a) (viii) seeks to substitute the existing provisions in relation to the services by a tour operator.  The new substitution gives two types of services by a tour operator.  The first one is services by a tour operator in relation to a tour only for the purpose of arranging or booking accommodation for any person for which 10% abatement is given subject to the conditions that-

• CENVAT credit on inputs, capital goods and input services other than input services of a tour operator, used for providing the taxable service, has not been taken under the provisions of the CENVAT Credit Rules, 2004;
• The invoice, bill or challan issued indicates that it is towards the charges for such accommodation;
• This exemption shall not apply in such cases where the invoice, bill or challan issued by the tour operator, in relation to a tour, includes only the service charges for arranging or booking accommodation for any person but does not include the cost of such accommodation.

The second one is services provided by a tour operator other than a tour, for the purpose of arranging or booking of accommodation for any person for which 30% abatement is given subject to the conditions that-

• CENVAT credit on inputs, capital goods and input services other than input services of a tour operator, used for providing the taxable service, has not been taken under the provisions of the CENVAT Credit Rules, 2004;
• The bill issued for this purpose indicates that it is inclusive of charges for such a tour and the amount charged in the bill is the gross amount charged for such a tour.

Construction of complex

Clause 1(a)(ix) of the Notification seeks to substitute the existing one.  The newly substituted service is construction of a complex, building, civil structure or a part thereof, intended for a sale to a buyer, wholly or partly except where entire consideration is received after issuance of completion certificate by the competent authority.  30% abatement is given for this service subject to the following conditions:

• CENVAT credit on inputs used for providing the taxable service has not been taken under the provisions of the CENVAT Credit Rules, 2004;
• The value of land is included in the amount charged from the service receiver.

Explanation

Clause 1(b) seeks to insert the para BA after the para B which provides that for the purposes of exemption at Sl. No.9 (Renting of motor cab) the amount charged shall be the sum of total of the amount charged for the service including the fair market value of all goods (including fuel) and services supplied by the recipient(s) in or in relation to the service, whether or not supplied under the same contract or any other contract.  The proviso to this explanation BA provides that the fair market value of goods and services so supplied may be determined in accordance with the generally accepted accounting principles.

Package Tour

Clause 1© seeks to omit clause (b) of para 2 which defines the term ‘package tour’.          

Notification No. 9/2016- ST, dated 01.03.2016

Vide Notification No.9/2016, the Board brought amendments to mega exemption as notified in Notification No.25/2012-ST, dated 20.06.2012.    The following exemptions are withdrawn by this Notification:

• Services provided by a senior advocate to an advocate or partnership firm of advocates; and
• A person represented on an arbitral tribunal to an arbitral tribunal;
• Exemption on transport of passengers, with or without accompanied belongings by ropeway, cable car or aerial tramway;
• Construction, erection, commissioning or installation of original works pertaining to mono rail or metro;

The new exemptions as detailed below are inserted in Notification No. 25/2012-ST:

• The services of life insurance business provided by way of annuity under the National Pension System regulated by Pension Fund Regulatory and Development Authority of India;
• Services provided by SEBI by way of protecting the interests of the investors in securities and to promote the development of, and to regulate, the securities market;
• Services provided by Employees’ Provident Fund Organization to employees;
• Services provided by Biotechnology Industry Research Assistant Council approved biotechnology incubators to the incubates;
• Services provided by National Centre for Cold Chain Development under Development of Agriculture, Cooperation and Farmer’s Welfare, Government of India, by way of knowledge dissemination;
• Services provided by Insurance Regulatory and Development Authority of India;
• Services of general insurance business provided under ‘Nirmaya’ Health Insurance scheme launched by National Trust for the Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation and Multiple Disability in collaboration with private/public insurance companies;
• The threshold exemption limit of consideration charged for services provided by a performing artist in folk or classical art forms of music, dance or theatre, is increased from ₹ 1 lakh toRs.1.5 lakh per performance;
• Services provided by way of skill/vocational training by Deen Dayal Upadhyay Grameen Kaushalya Yojana training partners;
• Services of accessing bodies empanelled Centrally by Directorate General of Training, Ministry of Skill Development & Entrepreneurship;
• Services by way of construction, erection etc., of a civil structure or any other original works pertaining to the ‘In-situ Rehabilitation of existing slum dwellers using land as a resource through private participation’ component of Housing for All Mission/Pradhan Mantra Awas Yojana except in respect of such dwelling units of the projects which are not constructed for existing slum dwellers;
• Services by way of construction, erection etc., of a civil structure or any other original works pertaining to the ‘Beneficiary-led individual house construction/enhancement’ component of Housing for All Mission/Pradhan Mantri Awas Yojana;  (with effect from 01.04.2016); (with effect from 01.04.2016)
• Services by way of construction, erection etc., or original works pertaining to low cost houses up to a carpet area of 60 sq.m per house in a housing project approved by the competent authority under the ‘Affordable housing in partnership’ component of PMAY or any housing scheme of a State Government; (with effect from 01.04.2016)
• Services provided by the Indian Institutes of Management by way of 2 year full time Post Graduate Program in Management, admissions to which a re made through Common Admission Test conducted by IIMs, 5 year integrated program in Management and Fellowship program in Management;(with effect from 01.04.2016)

Notification No.10/2016-ST, dated 01.03.2016

The Point of Taxation Rules, 2011 have been framed under provisions of Section 94 (1)(a) and (hh), now specific powers is also being obtained under Section 67A to make rules regarding point in time of rate of  service tax.  Thus, any doubt about the applicability of service tax rate of apparent contradiction between Section 67A and POTR would be taken care of.  Therefore consequent modifications have been done in POTR.

Rule 5 of POTR applies when a new service comes into the service net. Although in the case of new levy, provisions of Chapter V of the Finance Act, 1994 and the rules made there under, are invariably made applicable in relation to the levy and collection of the new levy. However, doubts have been raised regarding it’s applicability in case of new levy.  Therefore an explanation is being inserted in Rule 5 stating that the same is applicable in case of new levy on services.  Further in rule 5 of POTR, it is provided that two specified situations the new levy would not apply.  Another Explanation is being inserted therein stating that in situations other than those specified where new levy or tax is not payable, the new levy or tax shall be payable.

This Notification came into effect from 01.03.2016.

Notification No. 11/2016-ST, dated 01.03.2016

Vide this Notification, the Central Government exempts service in relation to Information Technology Software leviable to service tax under Section 66B read with Section 66E of the Act when such Information Technology service is recorded on a media under Chapter 85 of I Schedule to Central Excise Tariff Act, 1985 on which it is required under the provisions of Legal Metrology Act or the rules made there under or under any other law for the time being in force, to declare on package of such media thereof, the retail sale price, from whole of the service tax.  This exemption is subject to the conditions that-

• The value of the package of such media domestically produced or imported, for the purposes of levy of the duty of central excise or the additional duty of customs leviable under Section 3(1) of the Customs Tariff Act, 1975, if imported, as the case may be, has been determined under Section 4A of the Central Excise Act, 1944; and
• (a) the appropriate duties of excise on such value have been paid by the manufacturer, duplicator or the person holding the copyright to such software, as the case may be, in respect of such media manufactured in India; or

(b) appropriate duties of customs including the additional duty of customs on such value, have been paid by the importer in respect of such medial which has been imported into India;

• A declaration made by the service provider on the invoice relating to such service that no amount in excess of the retail sale price declared on such media has been recovered from the customer.

Notification No. 12/2016-ST, dated 01.03.2016

 

Notification No. 32/2012-ST, dated 20.06.2012 provides exemption to the services provided by Technology Business Incubator (TBI) or a Science and Technology Entrepreneurship Park (STEP) recognized by the National Science and Technology Entrepreneurship Development Board (NSTEDB) of the Department of Science and Technology, Government of India.

 

Notification No. 12/2016-ST, dated 01.03.2016 extends the said exemption to ‘bio-incubators recognized by the  Biotechnology Industry Research Assistance Council, under Department of Biotechnology, Government of India’.This Notification comes into effect from 01.04.2016.

Notification No. 13/2016-ST, dated 01.03.2016

                     
                        Vide this Notification, the Central Government, in supersession of earlier orders, fixed the rate of simple interest per annum for the following:

• Collection of any amount as service tax but failing to pay the amount so collected to the credit of the Central Government on or before the date on which such payment becomes due – 24%;
• Other than in situations covered above – 15%.

This notification will come into force on the day the Finance Bill, 2016 receives the consent of the President.

Notification No. 14/2016-ST, dated 01.03.2016

Notification No.8/2006-ST, dated 19.04.2006 has fixed the interest @ 15% per annum for the purposes of Section 73B (Interest on amount collected in excess).  This interest rate has been amended to 18% which will come into force on the day the Finance Bill, 2016 receives the assent of the President.

Notification No. 15/2016-ST, dated 01.03.2016

Section 107(h) of Finance Act, 2015 proposed to omit Section 65B(49) with effect from such date the Central Government may, by Notification in the Official Gazette, may appoint.  This Notification appoints 01.04.2016 for this omission of Section 65B (49) which define the ‘support services’.

Notification No. 16/2016-ST, dated 01.03.2016

Vide Notification 30/2012-ST, dated 20.06.2012, para 1(A)(iv)(C) defines the taxable services provided or agreed to be provided by Government or local authority ‘by way of support services’ for the purpose of reverse charge mechanism. Notification No.7/2015-ST, dated 01.03.2015 proposes to omit the expression ‘by way of support services’ with effect from such date as the Central Government may, by notification in the Official Gazette, appoint. 

Vide this Notification the Central Government appoints 01.04.2016 for the omission of the above expression.

Notification No. 17/2016-ST, dated 01.03.2016

Rule 2(1)(d) provides the person liable to pay service tax.  Rule 2(1)(d)(i)(E) discusses in relation to ‘support’ services provided or agreed to be provided by the Central Government or local authority, the recipient of service is liable to pay service tax.   The word ‘support’ was proposed to be omitted vide para 2(a)(iii)(II) of Notification No. 05/2015-ST, dated 01.03.2015 from such date as the Central Government may, by a notification in the Official Gazette, appoint.

Vide Notification No. 17/2016-ST, dated 01.03.2016 the Central Government appoints 01.04.2016 for the above purpose.

Notification No. 18/2016-ST, dated 01.03.2016

Notification No. 30/2012-ST, dated 20.06.2012 deals with reverse charge payment details.  Notification 18/2016-ST, dated 01.03.2016 proposed to make some amendments to Notification No. 30/2012-ST, dated 20.06.2012.  This notification will come into effect from 01.04.2016.

Para 1(a)(i)  of the Notification proposes to omit para 1 (A) (ib) which deals with the taxable service provided or agreed to be provided by a mutual fund agent or distributor, to a mutual fund or asset management company.

Para 1(a)(ii) of the Notification proposes to insert after para 1(A)(ia) the para (ic) which provides that taxable services provided or to be provided by a selling or marketing agent of lottery tickets in relation to a lottery in any manner to a lottery distributor or selling agent of the State Government under the provisions of the Lottery (Regulations) Act, 1998 (17 of 1998).

Para 1(a)(iii) of the Notification proposes to substitute in para 1(A)(iv) item B, the words ‘a firm of advocates or an individual Advocate other than senior advocate, by way of legal services, or” for the words ‘an individual advocate or a firm of advocates by way of legal services, or’

Para 1(b)(i) of the Notification proposes to omit the Sl. No.1B in the Table.  Sl. No. 1B deals with in respect of services provided or agreed to be provided by a mutual fund agent or distributor, to a mutual fund or asset management company.

Para 1(b)(ii) of the Notification proposes to substitute the words in Sl.No.  1C of the Table - in respect of service provided or agreed to be provided by a selling or marketing agent of lottery tickets to a lottery distributor or selling agent”.  The said expressions have been replaced by newly substituted – in respect of services provided or agreed to be provided by a selling or marketing agent of lottery tickets in any matter to a lottery distributor or selling agent of the State Government under the provisions of Lottery (Regulations) act, 1998 (17 of 1998)’

Para 1(b) (iii) of the Notification proposes to substitute the words in Sl. No. 5 – in respect of services provided or agreed to be provided by a firm of advocates or an individual advocate other than a senior advocate by way of legal services’ for the expression - “in respect of services provided or agreed to be provided by individual advocate or a firm of advocates by way of legal services”

Discussions to this article

[Balasubramanian Natarajan]

Thanks for providing all the changes in one place . I find that the taxable value % is wrongly mentioned as abatement in the article . I should be % for taxable value or abated value and % of abatement