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Budget 2017 - Amendments in mega exemption notification at a glance

MOHAMMAD SALIM 
on 07 February 2017

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Although the Finance Minister said in its speech while presenting the Union Budget, 2017 that “I have preferred not to make many changes in current regime of Excise & Service Tax because the same are to be replaced by GST soon.” But still some changes have been made in the Service Tax Law. Out of these changes one of the change is in regard to amendment in the mega exemption notification No 25/2012-ST dated 20th June 2012 in regard to exemption of services, which can be stated to be on beneficial side as the exemptions have been widened.

The amendments have been made in mega exemption notification by means of Notification No 7/2017-Service Tax dated 2nd February 2017. Some of such amendments are effective from 2nd February 2017 and some will be applicable from the date on which Finance Bill, 2017 receives assent of the President.

For ready reference the said amendments are tabulated as under:-


Entry  No of mega exemption notification

Existing exemption

Proposed exemption

Remarks

Amendment is effective from

9B, in item (a)

“9B. Services provided by the Indian Institutes of Management, as per the guidelines of the Central Government, to their students, by way of the following educational programmes, except Executive Development Programme, -

(a)  two year full time residential Post Graduate Programmes in Management for the Post Graduate Diploma in Management, to which admissions are made on the basis of Common Admission Test (CAT), conducted by Indian Institute of Management;

“9B. Services provided by the Indian Institutes of Management, as per the guidelines of the Central Government, to their students, by way of the following educational programmes, except Executive Development Programme, -

(a)  two year full time Post Graduate Programmes in Management for the Post Graduate Diploma in Management, to which admissions are made on the basis of Common Admission Test (CAT), conducted by Indian Institute of Management;

The word “residential” has been omitted and therefore now even the “non residential programmes” of IIM would also enjoy exemption from service tax subject to fulfillment of other conditions.

02/02/2017

New Entry No 23A

 No such entry exists.

“23A. Services provided to the Government by way of transport of passengers, with or without accompanied belongings, by air, embarking from or terminating at a Regional Connectivity Scheme Airport, against consideration in the form of Viability Gap Funding (VGF):"Provided that nothing contained in this entry shall apply on or after the expiry of a period of one year from the date of commencement of operations of the Regional Connectivity Scheme Airport as notified by the Ministry of Civil Aviation.";

Currently these services are taxable, but now these would be exempt.

02/02/2017

New Entry 26D

No such entry exists.

“26D. Services of life insurance business provided or agreed to be provided by the Army, Naval and Air Force Group Insurance Funds to members of the Army, Navy and Air Force, respectively, under the Group Insurance Schemes of the Central Government;”

Currently these services are taxable, but would now be exempt.

02/02/2017

30.

Carrying out an intermediate production process a job work in relation to -

(a)  agriculture, printing or textile processing;

(b)  cut and polished diamonds and gemstones; or plain and studded jewellery of gold and other precious metals, falling under Chapter 71 of the Central Excise Tariff Act, 1985 (5 of 1986);

(c)  any goods excluding alcoholic liquors for human consumption, on which appropriate duty is payable by the principal manufacturer; or

(d)  processes of electroplating, zinc plating, anodizing, heat treatment, powder coating, painting including spray painting or auto black, during the course of manufacture of parts of cycles or sewing machines upto an aggregate value of taxable service of the specified processes of one hundred and fifty lakh rupees in a financial year subject to the condition that such aggregate value had not exceeded one hundred and fifty lakh rupees during the preceding financial year;”.

Services by way of carrying out,-

(i) any process amounting to manufacture or production of goods excluding alcoholic liquor for human consumption; or

(ii) any intermediate production process as job work not amounting to manufacture or production in relation to –

(a)  agriculture, printing or textile processing;

(b)  cut and polished diamonds and gemstones; or plain and studded jewellery of gold and other precious metals, falling under Chapter 71 of the Central Excise Tariff Act, 1985 (5 of 1986);

(c)  any goods excluding alcoholic liquors for human consumption, on which appropriate duty is payable by the principal manufacturer; or

(d)  processes of electroplating, zinc plating, anodizing, heat treatment, powder coating, painting including spray painting or auto black, during the course of manufacture of parts of cycles or sewing machines upto an aggregate value of taxable service of the specified processes of one hundred and fifty lakh rupees in a financial year subject to the condition that such aggregate value had not exceeded one hundred and fifty lakh rupees during the preceding financial year;”.

This amendment is consequential of the proposed omission of clause (f) of section 66D of the Act [Negative List] which states about any process amounting to manufacture or production of goods.

Further in paragraph 2, after clause (y) of mega exemption notification the following clause is proposed to be inserted which is reproduced below:-

“(ya) "process amounting to manufacture or production of goods" means a process on which duties of excise are leviable under section 3 of the Central Excise Act, 1944 (1 of 1944), or the Medicinal and Toilet Preparation (Excise Duties) Act, 1955(16 of 1955) or any process amounting to manufacture of opium, Indian hemp and other narcotic drugs and narcotics on which duties of excise are leviable under any State Act for the time being in force;".

The above is replica of Section 65B(40) of FA, 1994 which is proposed to be omitted by Finance Bill, 2017.

The amendments in mega exemption notification as well as Sec 65B(40) and 66D are effective from the date on which Finance Bill, 2017 receives assent of the President.


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