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BUDGET – I (Service Tax – Proposed dates)

The budget has introduced several changes in Service Tax laws. These changes aimed at widening the tax base and to pave the path for smooth implementation of GST. The amendments are categorized as under:-

i. Changes coming into effect immediately w.e.f 1st March 2015

ii. Changes coming into effect from the 1st day of April 2015.

iii. The amendments which will get incorporated in the Finance Act 1994 immediately on enactment of the Finance Bill 2015.

iv. The changes to be made effective from the date notified by the government.

v. Levy of cess on all or certain taxable services will come into effect from a ate to be notified.

Amendments / Propose dAmendments

(1)  With effect from 01.03.2015

Shifting the liability of payment of service tax on aggregator of service where service is provided under the brand name of the aggregator

Amendments in rules 4, 4A and 5 of the Service Tax Rules 1994

Certain amendments in the Cenvat Credit rules

Rescinding notification No 42/2012 – ST

Extending scope of advance rulings to resident firms

(2)  With effect from 01.04.2015

Rationalization of certain exemptions under Mega Exemption Notification at entry 12,14,16,20,21 and 29

Certain new exemptions

Omissions in the exemption notification

Changes in abatement and its conditions

Amendment in reverse charge mechanism

Certain amendments in Cenvat Credit Rules

(3) With effect from the enactment of Finance Bill 2015

New definition of government

New explanation to 65B(44)

Insertion of illustration in section 66F

Changes is the definition of consideration

Amendments in sections 73, 76 and 78 of the Finance Act 1994

Insertion of transition provision

Omission of section 80

Amendment in section 86

Amendment in the provisions of Settlement Commission

Omission of rule 6(6A) of the Service Tax Rules

(4)  With effect from the notified date

Amendment in Negative List

Certain amendments in Mega Exemption Notification

Insertions in Mega Exemption Notification

Amendments in alternative rates as mentioned in Service Tax Rules

BUDGET – II (Amendments from 01.03.2015)

Changes in Service Tax to be made effective from 1st March 2015.

1. As the amendment took place in the definition of “intermediary” clause (f) of Rule 2 of Place of Provision of Service Rules 2012 with effect from 01.10.2014, the relevance of the Notification No 42/2012 dated 29.06.2012 was lost. Hence this notification is thus rescinded with effect from 1st March 2015.

2. In respect of any service provided under aggregator model, the aggregator, or any of his representative office located in India, is being made liable to pay Service Tax if the service is so provided using the brand name of the aggregator in any manner. If an aggregator does not have any presence, including that by way of a representative, in such a case any agent appointed by the aggregator shall pay the tax on behalf of the aggregator. In this regard appropriate amendments have been made in Rule 2 of the Service Tax Rules, 1994 and notification no 30/2012 dated 20.06.2012.

Notification No 5/2015 dated 01.03.2015

The notification describes the meaning of aggregator as “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”

Brand name has been defined “means a brand name, or trade name, whether registered or not that is to say, a name or a mark, such as an invented word or writing, or a symbol, monogram, logo, label, signature, which is used for the purpose of indicating, or so as to indicate a connection, in the course or trade, between a service and some person using the name or mark with or without any indication of the identity of that person.”

Further changes have taken place in the reverse charge notification no 30/2012 vide notification no 07/2015 dated 01.03.2015 with effect from 01.03.2015 that in respect of any service provided or agreed to be provided by a person involving an aggregator in any manner, the service receiver is liable to pay 100% of the tax liability.

3. The process of registration has been changed with immediate effect. Accordingly registration certificate will be issued immediately within two days subject to such conditions as specified in Order issued by the Board in this regard. The process of registration has been dealt separately in Budget – III.

4. The provision has been introduced for issue of digitally signed invoices and their records are required to be kept accordingly. Further CBEC is to notify the conditions, safeguards and procedures to be followed in this regard.

5. Scope of advance rulings have been made effective for resident firms also and the same is defined in Notification No 09/2015 – ST dated 01.03.2015.

Changes in CENVAT credit rules 2004

i. The time period of claiming of CENVAT credit has been increased form six months to one year vide notification No 06/2015 CE (NT) dated 01.03.2015.

ii. The earliest period of claiming CENVAT Credit is the receipt of inputs immediately in the premises of job worker in case goods are sent to the job worker on the direction of the manufacturer or the provider of output service, as the case may be. Similar condition is also specified for Capital goods.

Besides there are other changes in the CENVAT Credit rules which will be discussed with the changes in the CENVAT itself.

This is just for your reference. It does not constitute our professional advise or recommendation.

CA Akash Phophalia

ca.akashphophalia@gmail.com

Office No 3

Second Floor

Amrit Kalash

Residency Road

Near Bombay Motor Circle

Jodhpur – 342001

Rajasthan


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