Budget Indirect tax proposals

Transcription

1 AMBALAL PATEL & CO CHARTERED ACCOUNTANTS Budget Indirect tax proposals Ambalal Patel & Co 1 St Floor, Sapphire Business Centre Above SBI Vadaj Branch, Usmanpura, Ashram Road, Ahmedabad apcca@apcca.com Website: Blog:apcca.wordpress.com

2 Dear Clients In continuation of our earlier update of Clause by Clause analysis of Direct tax Proposals of the Union Budget, we hereby forwards you the Proposals of Indirect Tax proposals which we hope will be of immense help to under the changes made by the Budget. On 28 th February, 2015, new government has presented its first full budget. The tax rates in excise are not much increased but in the service tax it is proposed to increase the same by 1.64%., the reason put before by the government is that they want bring the GST effective from We have broadly classified Service tax proposals as under: SR Particulars of Change No i Changes in Service tax Rates Date to be Notified ii Changes Made effective from Iii Changes made effective from Iv Changes Effective from the date to be notified. Please feel free to contact us to have more clarification of the issues in relation to proposed changes. Thanking you Team APCCA Union Budget Service Tax Amendments & Proposals

3 i Changes in Service tax Rate: The Current rate of Service tax is 12.36% ( incl Cess). It is proposed to increase this rate to 14% including Cess. The rate of 14% will be effective from the date to be notified. Also there is a proposal for levy of Swachh Bharat Cess at the rate 2% on value of taxable service of all or any service as may be notified. So effectively service tax may rise to 16%. This will be effective from the date to be notified. Union Budget Service Tax Amendments & Proposals

4 ii Changes made effective from ii (1) Changes in Service tax Rules Rule 4 and RCM Not. No. 30/2012 Service provided by cabs being driven under the aggregator model (like Ola, Uber etc.) till date the service tax liability was of the individual cab owner. Now the service tax liability will shift on these aggregators and they will be the person liable to pay tax and the individual cab owner would not be required to pay tax. So Full RCM to be paid by Aggregator. aggregator means a person, who owns and manages a web based software application, and by means of the application and a communication device, enables a potential customer to connect with persons providing service of a particular kind under the brand name or trade name of the aggregator. Rule 4(9) Rule 4 is amended to provide that now Registration of single premises shall be issued within two days of filing of application. Rule 4C A provision for issuing digitally signed invoices is being added along with the option of maintaining of records in electronic form and their authentication by means of digital signatures. The conditions and procedure in this regard shall be specified by the CBEC. Union Budget Service Tax Amendments & Proposals

5 ii (2) Changes in Cenvat Credit Rules Rule 4(1) The period for taking Cenvat Credit is being extended from six months to one year from the date of invoice. Rule 6 For the purpose of Rule 6 (CENVAT credit with respect to exempted goods and services) exempted goods include non excisable goods and provision relating to reversal for CENVAT Credit in rule 6, would also applicable to non excisable goods value would be invoice value if not available then as per Valuation Rules. ii(3) Advance Ruling The facility of Advance Ruling is being extended to all resident persons by specifying such firms under section 96A (b)(iii) of the Finance Act, Union Budget Service Tax Amendments & Proposals

6 iii Changes made effective from iii(1) Changes in Mega ion Notification No 25/2012 Entry ion relates to Proposed Changes Remark No 2 Health Care Services Services provided by way of transportation of a patient in an ambulance; 12 Service provided to Govt, a) civil structure or any other local authority or govt original works meant authority by way of predominantly for a nonindustrial construction, or non commercial use; repairs..etc b) structure meant predominantly for use as (i) an educational, (ii) a clinical, or (iii) an art or cultural establishment; c) residential complex predominantly meant for self use or the use of their employees or other persons specified in the Explanation 1 to clause 44 of section 65 B of the said Finance Act; a) historical monument, archaeological site or remains of national importance, archaeological excavation, or antiquity specified under Ancient Monuments and Archaeological Sites and Remains Act, 1958 (24 of 1958); Taxable Union Budget Service Tax Amendments & Proposals

7 Entry No 12. cont ion relates to Proposed Changes Remark b) canal, dam or other irrigation works; c) pipeline, conduit or plant for (i) drinking water supply (ii) water treatment (iii)sewerage treatment or disposal; or 14(a) Service by way of construction, erection etc pertaining to Original Work Construction, erection, etc pertaining to Airport or Port will be taxable Taxable 16 Services provided by a performing artist in folk or classical art form of (i) music, or (ii) dance, or (iii) theater 20 (i) Services by way of transportation by rail or a vessel from one port in India to another of 21 (d) Services provided by a Goods Transport Agency by way of transportation in goods carriage by Road This service is exempt only if the amount charged is upto Rs.1 lacs per performance., Transportation of Tea, coffee, Jaggery, sugar, Milk Products, alcoholic beverages; or Transportation milk, salt and food grain including flours, pulses and rice Transportation tea, coffee, jaggery, Milk Product, sugar, alcoholic beverages; or Transportation milk, salt and food grain including flours, pulses and rice Taxable Taxable 26A Services of life insurance business provided under the Now Varishtha Pension Bima Yojana will not be taxable Union Budget Service Tax Amendments & Proposals

8 Entry ion relates to Proposed Changes Remark No 29 Service by way the following persons in respective capacity Mutual Fund agents, Distributor of mutual fund and selling agent of lottery ticket will now become taxable. However service tax in these cases will be payable by the Mutual fund or asset management or lottery ticket company (under RCM) and these agents will not be required to pay any tax. Taxable 32 Service by way of making telephone calls from. Services by way of making telephone calls from: Departmentally run public telephone Guaranteed public telephone operating only for local calls Free telephone at airport and hospital 43 New Entry Services by operator of Common Effluent Treatment Plant by way of treatment of effluent 44 New Entry Services by way of pre conditioning, pre cooling, ripening, waxing, retail packing, labelling of fruits and vegetables which do not change or alter the essential characteristics of the said fruits or vegetables 45 New Entry Services by way of admission to a museum, national park, wildlife sanctuary, tiger reserve or zoo; 46 New Entry Service provided by way of exhibition of movie by an exhibitor to the distributor or an association of persons consisting of the exhibitor as one of its members Taxable Union Budget Service Tax Amendments & Proposals

9 iii(2) Changes in Abatements Notification No 26/2012 SR No Abatement Related 7 Transport of Goods by Road Current Positions At present 25% of Transport amount taxable incase of transport of goods by Road. Effective rate is 3.09%(12.36% x 25%) Proposed It is proposed to make the 30% of Transport amount as taxable. So effective rate will be 3.708% (12.36% x 30%). And if rate becomes 14% then effective rate will be 4.20% ( 14% x 30%). iii(3) Changes in Reverse Charge Mechanism Notification No 30/2012 SR No Description of Service Current Position Proposed % Service tax to be paid by % Service tax to be paid by Provider Receiver Provider Receiver 1B Services provided by a mutual fund agent or distributor, to a mutual New Entry ( ) 0% 100% fund or asset management company 1C Service provided by a selling or marketing agent of lottery tickets to a lottery distributor or selling agent New Entry ( ) 0% 100% 8 Supply of Manpower or Security Service 11 Service provided or agreed to be provided by a person involving an aggregator in any manner Union Budget Service Tax Amendments & Proposals 25% 75% 0% 100% New ( ) Entry 0% 100%

10 iii(4) Rule 4(7) Changes in Cenvat Credit Rules Rule 4(7) is being amended to allow Cenvat Credit of Service Tax paid under partial reverse charge by the service receiver without linking it to the payment to the service provider Union Budget Service Tax Amendments & Proposals

11 iv Changes with effect from the date to be notified iv(1) Changes in Negative List Section 66D Clause Service not taxable of Proposed Changes a(iv) Support Service provided by Government or local authority to BUSINESS ENTITIES a) Definition of Support Service is deleted. b) All the 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. c) So all business entities are required to pay service tax on RCM if such services are taken from Government. d) Now Government is defined as per section 65B(26A). J Admission to entertainment events or access to amusement facilities This clause is deleted and hence following services will be taxable : a) 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. b) 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 for right to admission to such an event. Union Budget Service Tax Amendments & Proposals

12 iv(2) Entry No Changes in Mega ion Notification No.25/2012 ion relates to Proposed Changes Remark 47 New entry Services by way of right to admission to, (i) exhibition of cinematographic film, circus, dance, or theatrical performance including drama or ballet; (ii) recognised sporting event; (iii) award function, concert, pageant, musical performance or any sporting event other than a recognised sporting event, where the consideration for admission is not more than Rs 500 per person.. iv(3) Changes in Valuation of Taxable Service Section 67(1) Consideration for a taxable service shall include all reimbursable expenditure or cost incurred and charged by the service provider. So it is made clear that service tax will be payable on Reimbursement of expenses charged in the bill. iv(4) Other Changes a) It is also proposed to make changes in Penalty provisions relating to wrongly taken and utilization of CENVAT credit in Cenvat Credit rule 15. b) Changes in Recovery and Adjudication procedure c) Changes in Penalty provisions u/s 76 and 78 Union Budget Service Tax Amendments & Proposals