Budget Analysis - Service Tax

BUDGET ANALYSIS 2016-17
SERVICE TAX
Prepared & Presented by

CA SWAPNIL MUNOT &
TEAM S M MUNOT & ASSOCIATES,
CHARTERED ACCOUNTANTS
Cell : 90212 65137/91569 46463

Mail : munotswapnil@gmail.com
©All Rights Reserved

BUDGET ANALYSIS 2016-17 : CENTRAL EXCISE
CONTENT : Changes in
• Finance Act 1994

• Service Tax Rules 1994
• Exemption Notification
• Reverse Charge Mechanism
• Abatement Provisions
• Point of Taxation Rules
• Miscellaneous Provisions
Prepared By CA Swapnil Munot
Cell : +91 9012 65137/ Email : munotswapnil@gmail.com
Budget Analysis by S M MUNOT & ASSOCIATES CA Swapnil Munot
Cell : +91 90212 65137
Mail: munotswapnil@gmail.com
 SERVICE TAX RATE:

For the purposes of “Financing and promoting initiatives to improve agriculture”, additional Cess called as “Krishi Kalyan Cess” is to be levied on
all Taxable Services at 0.5% of value of service from 1st June 2016. Therefore Total Service Tax Rate will become 15%. For details, refer below
table:
TYPE OF SERVICE TAX RATE UPTO RATE FROM

31ST MAY 2016 1ST JUNE 2016
BASIC SERVICE TAX 14% 14%
SWACHH BHARAT CESS 0.5% 0.5%
KRISHI KALYAN CESS - 0.5%
TOTAL SERVICE TAX RATE 14.5% 15.0%
NOTE:
In Budget Speech, Honorable Finance Minister Shri Arun Jaitly categorically mentioned that “Input Tax Credit will be available for
payment of Krishi Kalyan Cess”. However required amendment in Cenvat Credit Rules 2004 is not yet made allowing utilization of
credit for payment of Krishi Kalyan Cess. Therefore one has to wait for Notification in this regards, so as to get clarity. But as assured
in budget speech, government will give credit utilization benefit for payment of Krishi Kalyan Cess
BUDGET ANALYSIS 2016-17: FINANCE ACT 1994 (SERVICE TAX PROVISIONS)

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 CHANGES MADE IN CHAPTER V OF FINANCE ACT 1994 ( SERVICE TAX PROVISIONS) BY FINANCE BILL 2016:
(EFECTIVE DATE: Except otherwise provided in this document, Provision of Finance bill 2016 will be applicable from the when President of India
gives ascent to same and Finance Act 2016 is enacted and same is published in official gazette)
TYPE OF
SECTION SUMMARY OF CHANGES ANALYSIS
AMENDMENT
Omitted Sec 66D deals with Negative List of Services i.e. However these services is now covered in
Sec 65B(11), Services which are out of purview of service. Exempted list of Services. ( For details, see
Sec 66D(l), our Analysis on Exempted Service )
Sec 66D(o)(i) Now Below services are removed from Negative List
Sec 66D (p)(ii) Services: Therefore on such services, there will not be
services tax. However in future if government
Services by way of : wish to make such services taxable, then it
can made by just issue of Notification and
a) pre-school education and education up to there will not be requirement of amendment
higher secondary school or equivalent to the Finance Act 1994.
b) Education as a part of a curriculum for
obtaining a qualification recognized by any law
for the time being in force
c) Education as a part of an approved vocational
education course
d) Transportation of passengers, with or without
accompanied belongings, by a stage carriage (
This clause is deleted with effect from
01.06.2015)
e) Transportation of goods by an aircraft from a
place outside India upto the customs station of
clearance in India. ( This clause is deleted with
effect from 01.06.2015)

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TYPE OF
AMENDMENT
Sec 66E(j) Clause Inserted Sec 66E deals with declared list of Services. In order to avoid litigation, it is now provided
that “Assignment by the Government of the
Now below service is included in list of declared right to use the radio-frequency spectrum
services: and subsequent transfers thereof” will be
“Assignment by the Government of the right to use the service and service tax will be payable on the
radio-frequency spectrum and subsequent transfers same.
thereof”
Sec 67A(2) Sub Section Sec 67A deals with date of determination of rate of Point of Taxation Rule, 2011 have been
inserted service tax and value. Now below sub section is framed under provisions of Sec 94(2)(a) & Sec
inserted: 94(2)(hhh). Now specific powers is also
obtained under section 67A(2) to make rules
“(2) The time or the point in time with respect to the regarding point in time of rate of service tax.
rate of service tax shall be such as may be prescribed.” Thus, any doubt about the applicability of
service tax Rate or apparent contradiction
between section 67A and POTR would be
taken care of.
Sec 73 Amendment Sec 73 deals with recovery of service tax not levied/not Section 73 is being amended so as to increase
paid/short levied/short paid. the period of limitation from 18 month to 30
month in cases not involving fraud,
In case of ‘No fraud case’, service tax officer can serve suppression of facts, willful mis-statement,
notice for recovery of tax not paid within 18 months. etc.
Now said period of 18 months is amended to 30
months.
Sec 78A Explanation Sec 78A deals with penalty proceeding against Relief to Director/Manager/officer in charge.
added director, manger or other officer who knowing Now no need to pay penalty by said person, if
concerned with offences mentioned in Sec 78A. matter under litigation is concluded.
Now Explanation is added to clarify,

Where any Service tax not levied/not paid/short
levied/short paid/erroneously refunded and
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TYPE OF
AMENDMENT
proceeding in respect of such offence is completed (
i.e. issue of SCN & payment of duty), then proceedings
pending under Sec 78A against
director/manager/other officer for said offence shall
also be deemed to have been concluded
Sec 89 Amendment Sec 89 deals with penalty in case of prescribed So now for small amount of Offence which is
offences. It was provided that In case, amount of less than Rs 200 lakhs, there will not be
specified offence exceeds Rs 50 lakhs, then person imprisonment.
who committed offence was liable for Imprisonment
for a term which may extend to 3 years.
Now punishment of Imprisonment will be applicable if

amount of offence is greater than Rs 200 lakhs.
Sec 93A Amendment Sec 93A deals with power to grant rebate of service tax Amendment is made to allow government to
paid on input services for goods/services exported. issue Notification u/s 93A for grant of Rebate
Now it is provided that manner of such rebate will be

specified by notification

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 CHANGES MADE IN SERVICE TAX RULES 1994 BY NOTIFICATION NO 19/2016 ST DATED 1ST March 2016:
 All below explained amendment will be applicable from 1st April 2016
TYPE OF
RULE SUMMARY OF CHANGES ANALYSIS
AMENDMENT
Substitution This rule defines the person liable for paying service  Now senior advocate has to charge
tax. Below changes are made : service tax on its invoice.
 In last fiscal budget (Budget 2015-16),
Rule 1) Earlier it is provided that In case of service of it was provided that is case of services
2(1)(d)(i)(D)(II) Individual Advocate or Firm of advocate to of mutual fund agent/distributor to
Business entity, recipient of service is liable to Mutual Fund/Asset Management
pay service tax. Company, recipient of service will be
However now in case service are provided by liable to pay service tax.
senior advocate to business entity, then such However this amendment is exactly
advocate is supposed to charge and pay service opposite to what was incorporate in
tax to government. last budget.
 Consequent to above changes,
Rule 2) Earlier it was provided that in relation to necessary amendment is also made in
2(1)(d)(i)(EEA) service provided by a mutual fund agent or reverse charge Notification No
distributor to a mutual fund or asset 30/2012 through Notification No
management company, the recipient of the 18/2016 ST dt 1.3.16
service is liable to pay service tax
However now it is provided that henceforth
such agent/distributor will charge & pay service
tax to government
Proviso to Proviso It is now provided that,  HUF was unnecessarily deprived off
Rule 6(1) Substituted benefit of quarterly payment facility
1) quarterly service tax payment benefit is of service tax till date, unlike
available to: individual or Firm.
BUDGET ANALYSIS 2016-17: SERVICE TAX RULES 1994

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TYPE OF
AMENDMENT
a) Individual / Proprietary Firm Late but finally HUF is now allowed
b) Partnership Firm quarterly payment facility.
c) HUF However HUF is still required to make
d) One Person Company, whose total taxable service tax payment on accrual basis
value of service in preceding year is less than as per Point of Taxation Rules and not
Rs 50 lakhs. as per cash basis.
 Boost to One Person Company (OPC)
Service Tax liability on cash basis ( that is Service Tax concept. Now OPC can also pay
will be payable, when payment for service is received service tax quarterly, provided his
and not on accrual basis) facility is now allowed to: turnover in preceding year is less than
Rs 50 lakhs.
a) Individual / Proprietary Firm Also OPC can pay service tax only after
b) Partnership Firm payment received for services.
c) One Person Company,
whose total taxable value of service in preceding
year is less than Rs 50 lakhs.
Rule 6(7a)(ia) Clause Inserted Insurer carrying on life Insurance Business shall have Service tax liability on single premium annuity
below additional option to pay tax: policies is being rationalized and the effective
alternative service tax rate is being prescribed
“In case of single premium annuity policies other than @ 1.4 % of the total premium charged.
(i) above, 1.4 percent of the single premium charged
from the policy holder”
Rule 7(3A), Sub-rule Inserted Rule 7 provides for service tax returns. Annual Service Tax Return is introduced as
(3B) step towards GST and in line with Excise
Now Annual Service Tax Return is incorporated in Annual Return Requirement.
service tax to be filed before 30th November of the
succeeding financial year. Form of Annual Return Form is yet to be
prescribed

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TYPE OF
AMENDMENT
Rule 7B(2) Sub-rule Inserted This Rule provides that revised Annual Return can be Revised Return facility is also allowed for
filed within one month from date of submission of Annual Return.
original Annual Return, provided original return is
submitted within due date.
Rule 7C(2) Sub-rule inserted This Rule provides that, if Annual Return is filed after Penalty for delayed filing of Annual Return is
due date, then penalty is payable as under: incorporated in line with ST 3 Return.
a) Rs 100 per day delay in filing of Annual Return
b) Subject to maximum of Rs 20,000/-

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 CHANGES MADE IN EXEMPTED LIST OF SERVICES IS AS UNDER:

(Amendment to Mega Exemption Notification 25/2012 ST is made vide Notification No 9/2016 ST dt 1 st March 2016)
TYPE OF Entry APPLICABLE

PARTICULARS OF SERVICE
CHANGE No. FROM
9B Service provided by the Indian institute of the Management to their students by way of education programs except 1st March 2016
Executive Development Program,
9C Services of assessing bodies empanelled centrally by Directorate General of Training, Ministry of Skill Development 1st April 2016
and Entrepreneurship by way of assessments under Skill Development Initiative (SDI) Scheme.
9D Services provided by training providers (Project implementation agencies) under Deen Dayal Upadhyaya Grameen 1st April 2016
Kaushalya Yojana by way of offering skill or vocational training courses;
12A Services provided to the Government, a local authority or a governmental authority by way of construction, erection, 1st March 2016
commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of –
1) a civil structure or any other original works meant predominantly for use other than for commerce, industry, or
any other business or profession;
NEW
2) a structure meant predominantly for use as (i) an educational, (ii) a clinical, or(iii) an art or cultural establishment;
EXEMPTIONS 3) a 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 Act;
Under a contract which is entered prior to 01.03.2015 and on which appropriate stamp duty as applicable is paid
prior to such date.
provided that nothing contained in this entry shall apply on or after the 1st April, 2020
(This exemption was withdrawn last year wide Notification No 06/2015 ST dtd 01.03.2015)
13(ba) Services provided by way of construction, erection, commissioning, installation, completion, fitting out, repair, 1st March 2016
& (bb) maintenance, renovation, or alteration of,-
1. (ba) 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, only for existing slum dwellers.
BUDGET ANALYSIS 2016-17: SERVICE TAX EXEMPTION

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CHANGE No. FROM
2. (bb) a civil structure or any other original works pertaining to the Beneficiary-led individual house
construction / enhancement.
14(ca) Services by way of construction, erection, etc., of original works pertaining to low cost houses up to a carpet area of 1st March 2016
60 sq.mtr. 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 are being exempted from service
tax.
14A Services by way of construction, erection, commissioning, or installation of original works pertaining to an airport or 1st March 2016
port provided under a contract which had been entered into prior to 1st March, 2015 and on which appropriate
stamp duty, where applicable, had been paid prior to such date:
provided that Ministry of Civil Aviation or the Ministry of Shipping in the Government of India, certifies that the
NEW
contract had been entered into before the 1st March, 2015:
EXEMPTIONS
provided further that nothing contained in this entry shall apply on or after the 1st April, 2020;”
23(bb) Transport of passengers, with or without accompanied belongings, by Stage carriage other than air-conditioned 1st June 2016
stage carriage
26(q) Services of general insurance business provided under “Niramaya‟ Health Insurance Scheme implemented by 1st April 2016
Trust constituted under the provisions of the National Trust for the Welfare of Persons with Autism, Cerebral
Palsy, Mental Retardation and Multiple Disabilities Act, 1999 (44 of 1999).”
26C Services of life insurance business provided by way of annuity. 1st April 2016
49 Services provided by Employees‟ Provident Fund Organization (EPFO) to persons governed under the 1st April 2016
Employees‟ Provident Funds and Miscellaneous Provisions Act, 1952 (19 of 1952);
50 Services provided by Insurance Regulatory and Development Authority of India (IRDA) to insurers under the 1st April 2016
Insurance Regulatory and Development Authority of India Act, 1999 (41 of 1999)

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CHANGE No. FROM
NEW 51 Services provided by Securities and Exchange Board of India (SEBI) set up under the Securities and Exchange 1st April 2016
EXEMPTIONS Board of India Act, 1992 (15 of 1992) by way of protecting the interests of investors in securities and to promote
the development of, and to regulate, the securities market;
52 Services provided by National Centre for Cold Chain Development under Ministry of Agriculture, Cooperation 1st April 2016
and Farmers Welfare by way of cold chain knowledge dissemination
53 Services by way of transportation of goods by an aircraft from a place outside India upto the customs station of 1st June 2016
clearance in India.
EXEMPTION 23(c) Transport of passengers, with or without accompanied belongings, by ropeway, cable car or aerial tramway; 1st June 2016
WITHDRAWN
6(b) A Partnership firm of advocates or individual advocate other than a senior advocate, by way of legal services to- 1st April 2016
(i) an advocate or partnership firm of advocates providing legal services;
(ii) any person other than a business entity; or
(iii) a business entity with a turnover up to rupees ten lakh in the preceding financial year; or
6(c) A senior advocate by way of legal services to a person other than a person ordinarily carrying out any activity relating 1st April 2016
to industry, commerce or any other business or profession;”;
EXEMPTION 14(a) Services by way of construction, erection, commissioning, or installation of original works pertaining to railway 1st March 2016
excluding monorail and metro
AMENDED
Explanation.-The services by way of construction, erection, commissioning or installation of original works pertaining
to monorail or metro, where contracts were entered into before 1st March, 2016, on which appropriate stamp duty,
was paid, shall remain exempt.”
16 "Services by an artist by way of a performance in folk/classical art forms of (i) music, or (ii) dance, or (iii) theatre, if 1st April 2016
the consideration charged for such performance is not more than one lakh and fifty thousand rupees,
Provided that the exemption shall not apply to service provided by such artist as a brand ambassador"

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 DEFINITIONS INSERTED/AMEDNED W.R.T EXEMPTION NOTIFICATION:
Approved vocational (i) A course run by an industrial training institute or an industrial training Centre affiliated to the National Applicable from
education course means Council for Vocational Training or State Council for Vocational Training offering courses in designated date when
trades notified under the Apprentices Act, 1961 (52 of 1961); or Finance Bill
(ii) A Modular Employable Skill Course, approved by the National Council of Vocational Training, run by a receive ascent
person registered with the Directorate General of Training, Ministry of Skill Development and of President of
Entrepreneurship India
Educational Institution (i) Pre-school education and education up to higher secondary school or equivalent; Applicable from
means education as a part of a curriculum for obtaining a qualification 4recognized by any law for the time date when
being in force; Finance Bill
(ii) Education as a part of an approved vocational education course;”; receive ascent
of President of
India
Senior Advocate means It has the meaning assigned to it in section 16 of the Advocates Act, 1961 (25 of 1961) 1st April 2016

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 CHANGES MADE IN REVERSE CHARGE PROVISION ( NOTIFICATION NO 30/2012 ST) BY NOTIFICATION NO 18/2016 ST DT 1ST March
2016
(Below provisions are effective from 1st April 2016)
 Service of Mutual Fund Agent/ distributor: Now in case services provided by Mutual Fund Agent / distributor to Mutual Fund or Asset
Management Company, then reverse charge is not applicable. Accordingly such agent/distributor will charge service tax on its invoices
for services provided to Mutual Fund / Asset Management Company.
 Services of Lotter Agents:
Provisions upto 31st March 2016 Provisions from 1st April 2016 Analysis
Reverse charge is applicable in case of :- Reverse charge is applicable in case of:- Now reverse charge is applicable
- In relation to lottery in any manner.
Service provided or agreed to be provided Services provided or agreed to be provided by a - Such service is provided by agent to
by a selling or marketing agent of lottery selling or marketing agent of lottery tickets in Lotter distributor/selling agent of
tickets to a lottery distributor or selling relation to a lottery in any manner to a lottery the State Government under the
agent distributor or selling agent of the State provisions of the Lottery
Government under the provisions of the Lottery (Regulations) Act, 1998
(Regulations) Act, 1998 (17 of 1998)
 Services of Advocate:
Provisions upto 31st March 2016 Provisions from 1st April 2016 Analysis
Reverse charge is applicable in case of :- Reverse charge is applicable in case of:- Now in case of services of Senior Advocate
to Business entity, reverse charge is not
Service is provided or agreed to be provided Service is provided or agreed to be provided by applicable.
by Individual Advocate or Firm of advocate Firm of advocate or Individual Advocate OTHER
by way of legal services to any business THAN SENIOR ADVOCATE by way of legal
entity located in Taxable Territory. services to any business entity located in Taxable
Territory.
BUDGET ANALYSIS 2016-17: REVERSE CHARGE MECHANISM UNDER SERVICE TAX

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 CHANGES MADE IN NOTIFICATION NO. 26/2012 ST ( ABATEMENT NOTIFICATION) OF SERVICE TAX BY NOTIFICATION NO 8/2016 DT
1ST MAR 2016 :
(All below provisions are EFFECTIVE FROM 1ST April 2016 unless otherwise provided in this document)
SR. NO IN DESCRIPTION OF TAXABLE ABATED CONDITION

ANALYSIS OF AMENDMENT
NOTIFICATION TAXABLE SERVICE VALUE VALUE
2 Transport of Goods by 30% 70% Earlier credit of Input service was also not
Rail( other than service allowed along with Inputs & Capital Goods.
specified below) However now Cenvat credit of Input
Service is allowed
2A Transport of goods in 40% 60% This is newly inserted entry.
Cenvat Credit of Input &
containers by rail by any
Capital Goods used for
person other than Indian
providing the said service is
Railways not availed
3 30% 70% Earlier credit of Input service was also not
Transport of passengers, allowed along with Inputs & Capital Goods.
with or without However now Cenvat credit of Input
accompanied belongings, Service is allowed
by rail
7 Services of goods 30% 70% Cenvat Credit of Input, Input Earlier this is applicable for “Services of
transport agency in Service & Capital Goods used goods transport agency in relation to
relation to transportation for providing the said service is transportation of goods”. So, all goods
of goods OTHER THAN not availed including household goods were covered.
USED HOUSEHOLD Now same is omitted from this Entry &
GOODS separate entry No 7A is provided for the
same.
7A Services of goods 40% 60% Cenvat Credit of Input, Input This is newly inserted entry.
transport agency in Service & Capital Goods used
relation to transportation for providing the said service is
not availed
BUDGET ANALYSIS 2016-17: SERVICE TAX ABATEMENT

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of USED HOUSEHOLD
GOODS
8 Services provided by a 70% 20% Cenvat Credit of Input, Input This is newly inserted entry.
foreman of chit fund in Service & Capital Goods used
relation to chit for providing the said service is (This entry was there earlier. However was
not availed omitted by Notification No 8/2015 ST dt
01.03.2015)
9 Transport of passengers, 40% 60% Cenvat Credit of Input, Input New Clause (c) at Entry No 9 is inserted
with or without Service & Capital Goods used
accompanied belongings, for providing the said service is This new clause is effective from 1st June
by- not availed 2016
a) a contract carriage
other than motor cab.
b) a radio taxi
c) a Stage carrier
10 Transport of goods in a 30% 70% Cenvat Credit of Input & Capital Earlier credit of Input service was also not
vessel Goods used for providing the allowed along with Inputs & Capital Goods.
said service is not availed However now Cenvat credit of Input
Service is allowed
12 Construction of a 30% 70% (i) CENVAT credit on inputs This entry was earlier also in existence,
complex, building, civil used for providing the taxable however it includes categories such case
structure or a part service has not been availed. carpet area less than 2000 sq ft or more
thereof, intended for a (ii) The value of land is included than that etc.
sale to a buyer, wholly or in the amount charged from the
partly except where service receiver. However now these categories are
entire consideration is removed and such taxable service is
received after issuance of charged at 30% of total value.
completion certificate by
the competent authority

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11 Services by a tour (i) CENVAT credit on inputs, CG
operator in relation to,- & input services other than
input services of a tour
(i) a tour, only for the 10% 90% operator, used for providing
purpose of arranging or the taxable service is not
booking accommodation availed.
for any person (ii) The invoice issued indicates
that it is towards the charges
for such accommodation.
(iii) This exemption shall not
Earlier there were three category in Tour
apply in such cases where the
Operator Services for the purpose of
invoice issued by the tour
deriving taxable value.
operator includes only the
service charges for arranging
However category Package Tour is omitted
accommodation but does not
& accordingly definition of package tour is
include cost of such
also deleted.
accommodation.
Now there is exist only two category in
ii) Tours other than (i) 30% 70% (i) CENVAT credit on inputs,
case of service of tour operator.
above capital goods and input services
other than input services of a
tour operator, used for
providing the taxable service is
not availed.
(ii) The invoice 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.
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Explanation No BA in inserted for SERVICES OF RENTING OF MOTOR CAB ( Entry No 9 in Notification No 26/2012), which is
mentioned below:
“For the purposes of exemption at Serial number 9, the amount charged shall be the sum 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
Provided that the fair market value of goods and services so supplied may be determined in accordance with the generally
accepted accounting principles.”

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 CHANGES MADE IN POINT OF TAXATION RULES 2011 (POTR) BY NOTIFICATION NO 10/2016 ST DATED 1ST March 2016:
TYPE OF Applicable
AMENDMENT w.e.f
Opening Amendment Now opening paragraph of POTR is read as under: POTR , 2011 have been framed under provisions 1 st March
Paragraph of Sec 94(2)(a) & Sec 94(2)(hhh), now specific 2016
“In exercise of the powers conferred under sub- powers is also obtained under section 67A to
section (2) of section 67A and clause (a) and clause make rules regarding point in time of rate of
(hhh) of subsection (2) of section 94 of the Finance service tax. Thus, any doubt about the
Act, 1994, the Central Government hereby makes applicability of service tax Rate or apparent
the following rules for the purpose of collection of contradiction between section 67A and POTR
service tax and determination of rate of service tax would be taken care of.
Rule 5(b) Explanation Rule 5 deals with Point of Taxation in case of New 1st March
Inserted service taxed first time. Now In rule 5, after clause 2016
(b), below Explanation is added to bring clarity  Rule 5 of POTR applies when a new service is
taxed first time. Although in the case of new
 Explanation 1- This rule shall apply mutatis levy, service tax is applicable, however in
mutandis in case of new levy on services. past, doubts have been raised regarding its
applicability in case of new levy. Therefore,
an Explanation is being inserted.
 Explanation 2- New levy or tax shall be payable  It is provided in Rule 5 that, in two specified
on all the cases other than specified above. situations the service tax is not applicable in
case of new levy.
Now Explanation is inserted stating that,
service tax will be applicable on all cases
except two specified cases given in Rule 5.
BUDGET ANALYSIS 2016-17: POINT OF TAXATION RULES 2011

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 CHANGES MADE IN INTEREST RATE FOR DELAYED PAYMENT OF SERVICE TAX BY NOTIFICATION NO 13/2016 ST & 14/2016 ST
DATED 1ST March 2016:
NOTIFICATION TYPE OF APPLICABLE

SUMMARY OF CHANGES ANALYSIS
NO. AMENDMENT FROM
Notification Amendment Earlier Notification No 12/2014 ST read with Sec Welcome move and great relief to Industry Applicable from the
13/2016 ST 75 of FA 1994, provides service tax Interest rate as Interest rate of 30% was very much high day when Finance
of 18% / 24% & 30% in case of delayed payment Bill 2016 receives
of service tax. the Ascent of
President of India.
However Now, Interest rates on delayed
payment of tax made uniform at 15%
Except in case of service tax collected but not
deposited with the Central Government, in which
case the rate of interest will be 24% from the
date on which the service tax payment became
due.
Notification Amendment Notification No 8/2006 ST read with Sec 73B Welcome move Applicable from the
14/2016 CT provides for Interest in case of amount collected day when Finance
in excess will be 18%. Bill 2016 receives
the Ascent of
President of India.
Now such interest rate is reduced to 15%.
BUDGET ANALYSIS 2016-17: SERVICE TAX INTEREST RATE

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 CLARIFICATION BROUGHT IN ‘INFORMATION TECHNOLOGY SOFTWARE’ W.R.T LEVY OF EXCISE DUTY OR SERVICE TAX BY
NOTIIFCATION NO 11/2016 ST DT 1.3.16 & NOTIFICATION NO 11/2016 CE DT 1.3.16
SUMMARY OF ABOVE NOTIFICATION IS EXPLAINED AS UNDER:
CASE (I) In such case, EXCISE DUTY IS APPLICABLE subject to

Service in relation to Information Technology Software condition that:
o which is recorded on media and o Value of package of such media has been determined
o coming under chapter 85 of First Schedule of CETA 1985 under Sec 4A of CEA 1944 for the purpose of payment
and of Excise Duty or Custom Duty in case of imported
o on which it is required to declare Retail Sale Price ( under software media.
Legal Metrology Act, 2009) o Appropriate Duties of Excise/Custom is paid
o Declaration is made by service provider on invoice
( In nutshell, it means, Packaged Software) that No amount in excess of RSP mentioned on media
is recovered.
CASE (II) In such case, SERVICE TAX IS APPLICABLE subject to

Service in relation to Information Technology Software condition that:
o which is recorded on media and o Person liable to pay service tax is registered under
o coming under chapter 85 of First Schedule of CETA 1985 service tax
and o Such person shall make declaration to Principal
o on which it is NOT required to declare Retail Sale Price ( Commissioner or Commissioner or Central Excise in
under Legal Metrology Act, 2009) Annexure I ( Format given in Notification) regarding
value of software recorded in media which is liable to
( In nutshell, it means, Customized Software / Tailor-made Service Tax
Software )
BUDGET ANALYSIS 2016-17: INFORMATION TECHNOLOGY SOFTWARE RECORDED ON MEDIA

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• Finance Act 1994

 SERVICE TAX RATE:

TYPE OF SERVICE TAX RATE UPTO RATE FROM

BUDGET ANALYSIS 2016-17: FINANCE ACT 1994 (SERVICE TAX PROVISIONS)

BUDGET ANALYSIS 2016-17: FINANCE ACT 1994 (SERVICE TAX PROVISIONS)

Now Explanation is added to clarify,

Now punishment of Imprisonment will be applicable if

Now it is provided that manner of such rebate will be

BUDGET ANALYSIS 2016-17: FINANCE ACT 1994 (SERVICE TAX PROVISIONS)

BUDGET ANALYSIS 2016-17: SERVICE TAX RULES 1994

BUDGET ANALYSIS 2016-17: SERVICE TAX RULES 1994

BUDGET ANALYSIS 2016-17: SERVICE TAX RULES 1994

 CHANGES MADE IN EXEMPTED LIST OF SERVICES IS AS UNDER:

TYPE OF Entry APPLICABLE

BUDGET ANALYSIS 2016-17: SERVICE TAX EXEMPTION

TYPE OF Entry APPLICABLE

BUDGET ANALYSIS 2016-17: SERVICE TAX EXEMPTION

TYPE OF Entry APPLICABLE

BUDGET ANALYSIS 2016-17: SERVICE TAX EXEMPTION

 DEFINITIONS INSERTED/AMEDNED W.R.T EXEMPTION NOTIFICATION:

BUDGET ANALYSIS 2016-17: SERVICE TAX EXEMPTION

 Services of Lotter Agents:

BUDGET ANALYSIS 2016-17: REVERSE CHARGE MECHANISM UNDER SERVICE TAX

SR. NO IN DESCRIPTION OF TAXABLE ABATED CONDITION

BUDGET ANALYSIS 2016-17: SERVICE TAX ABATEMENT

SR. NO IN DESCRIPTION OF TAXABLE ABATED CONDITION

BUDGET ANALYSIS 2016-17: SERVICE TAX ABATEMENT

SR. NO IN DESCRIPTION OF TAXABLE ABATED CONDITION

BUDGET ANALYSIS 2016-17: SERVICE TAX ABATEMENT

BUDGET ANALYSIS 2016-17: POINT OF TAXATION RULES 2011

NOTIFICATION TYPE OF APPLICABLE

BUDGET ANALYSIS 2016-17: SERVICE TAX INTEREST RATE

SUMMARY OF ABOVE NOTIFICATION IS EXPLAINED AS UNDER:

CASE (I) In such case, EXCISE DUTY IS APPLICABLE subject to

CASE (II) In such case, SERVICE TAX IS APPLICABLE subject to

BUDGET ANALYSIS 2016-17: INFORMATION TECHNOLOGY SOFTWARE RECORDED ON MEDIA

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