You will get to know about changes proposed in Finance Budget 2016 in India with respect to service tax provisions and its impact on the industry.

1. SERVICE TAX PROPOSALS IN
BUDGET 2016

2. Krishi Kalyan Cess on all taxable services at a rate of 0.5% on the value of all taxable services.
K.K. Cess on all Taxable Services w.e.f. 01-06-16
Credit of K.K. Cess will be allowed & can be use for the payment of K.K. Cess only.
Provisions relating to refunds, exemptions, interest, penalty shall apply mutatis mutandis
as applied in relation to tax levied or collected on taxable services.
Proceeds from
K.K. Cess

3. Services to be Taxable Now
Sr. Advocate will now have to pay tax
w.e.f. 01-04-16 on the Legal Services
provided to any person except those
not carrying out any activity relating
to a business or profession.
Construction, erection or installation of original works
for monorail or metro will be taxable w.e.f 01-03-2016.
However, contracts entered for such service before
01.03.2016 shall remain be exempted.
Transportation of passengers, with or without
accompanied belongings by Ropeway, Cable Car or
Aerial Tramway will be taxable w.e.f. 01-04-16
Who is Sr. Advocate?
An adv. who in the
opinion of SC or a HC by
virtue of his/her special
knowledge & experience
deserves to be.

4. List of Declared Services will include:
Services by way of Assignment by the
Government of right to use the Radio-
frequency Spectrum and subsequent
transfers thereof.
Services to be Taxable Now
Definition of “Service”
includes activities carried out
by a lottery distributor or
selling agents of the State
Government.
Services, to be Taxable w.e.f. 01-06-2016, by way of Transportation of:
Passengers, with or
without belongings,
in an air
conditioned stage
carriage.
Tax on 40% value
without availing
Cenvat credit.
Goods by vessel
from a place outside
India up to customs
station of clearance
in India. Service
Receiver will pay tax
if service provided
by foreign vessel.
Clarification on taxability of following services where tax shall be paid by Service
Receiver :

5. Services to be Exempted w.e.f 01-03-16
Services by IIM to their students by way of:
Management Courses (5yr integrated, 2yr residential or Fellow programme)
except Executive Development Programme
Service by Training Providers under DDUGKY:
Skill or Vocational training courses certified by NCVT
Services of assessing bodies by way of:
Assessment under Skill Development Initiative scheme by bodies
empanelled by DGT

6. Services to be Exempted w.e.f. 01-03-16
• 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’ or ‘Beneficiary led
individual house construction / enhancement’
under the Housing for All (Urban) Mission/PMAY
Services by way
construction,
renovation, erection,
installation, renovation,
repair & maintenance
of
• Original works pertaining to a low cost houses
upto carpet area of 60 sq mt in a housing scheme
approved by competent authority under scheme
of PMAY any housing scheme of State Govt.
Services by way
construction,
renovation, erection,
installation of

7. Services to be Exempted w.e.f. 01-04-16
Following services shall be exempted provided by:
 EPF Organisation to person governed under EPF Act.
 IRDA to insurers under the IRDA Act.
 SEBI by way of protecting the interest of investors in securities and to promote
the development & to regulate the securities market.
 National Centre for Cold Chain Development by way of cold chain knowledge
dissemination.
Threshold exemption limit increased from Rs. 1 lakh to Rs. 1.5 Lakhs per performance
charged for services provided by a performing artist in folk or classical art form of (i)
music, or (ii) dance, or (iii) theatre.

8. Changes in CCR, 2004 w.e.f 01-04-16
 Cenvat Credit on Inputs and Capital goods used for pumping water, for captive use in the
factory, is being allowed even where such goods were installed outside factory.
 Invoice issued by service provider for clearance of Input or Capital goods will be an eligible
invoice for claiming CENVAT Credit.
 No Credit of Infrastructure Cess levied on cars will be available
 Provision related to filling of Annual Return is also provided in CCR.
• To include equipment and appliance used in an
office located within a factory.Capital Goods
• To include all capital goods having value up to
Rs.10000 which would allow Cenvat in the year of
its receipt.
Inputs
• To exclude the service of transportation of goods by
vessel from a custom station in India to a place
outside India
Exempted
Service
Following definitions amended:

9.  Option to maintain separate accounts of receipt, use and inventory of inputs or use of input
services for Taxable & Exempted Goods or Services is deleted. Now only following two options
left:
 Pay 7% of the exempted value of service subject to a maximum of total Credit taken in a
particular month. Earlier it was 6%.
 Compute reversible CENVAT on common input or input services based on the ratio of
exempted service to total service applied on the total CENVAT availed in a month.
 Reversal of Cenvat Credit is also required where common input or input services have been used for
providing taxable service and an activity which is not a service.
Changes in Rule 6 of CCR w.e.f. 01-04-16
Procedure to pay or reverse Cenvat credit where exempted and taxable goods or
services are provided is simplified in following manner.
In case of failure to intimate the jurisdictional officer in prescribed format before applying
the option given under Rule 6(3), assessee may be allowed by the officer to follow the
procedure under this rule subject to payment of 15% interest.

10. Changes in Abatements w.e.f. 01-04-16
Sr. No Item New Clause / Amendment
2 & 3 Transportation of Passengers and Goods by Rail CENVAT credit on input services allowed
with same abatement.
2A Transportation of Goods in Container by Rail other
than Indian Railways.
60% abatement with credit of input
services only.
7A Service of GTA by transportation of used
household goods.
60% abatement without CENVAT credit.
8 Service by Foreman to a Chit Fund 30% abatement without CENVAT credit.
9A Transportation of Passengers in an AC stage
carriage.
60% abatement without CENVAT credit.
Effective from 01-06-16
10 Transport of Goods in a Vessel CENVAT credit on input services allowed
with same abatement.
12 Construction of Complex for Sale before
Completion
70% for all types of units in complex
11 Service by Tour Operator other than for a tour
where service provided for accomodation only.
70% with CENVAT on input services of a
Tour operator
It is clarified that cost of fuel should be added in the value of service by way of renting of
motor cab for availing abatement of 60%.

11.  Services provided by mutual fund agents/distributor to a mutual fund or asset
management company are now liable to pay tax directly.
 One Person Company having taxable turnover up to Rs.50 Lacs in the previous year
can pay service tax quarterly and can also pay tax on receipt basis.
 Single premium insurance policies will be taxed at 1.4% of the total premium
charged.
Changes in Service Tax Rules w.e.f. 01-04-16
Provisions for filling Annual Return introduced as under:
To be filled by certain assessees by 30th Nov of the
succeeding year.
Can be revised within one month of date of filling
Delay will attract penalty of Rs.100 per day up to
maximum of Rs.20000

12.  Time Limit under section 73 is proposed to be extended from 18 months to 30 months.
Now service tax can be recovered or SCN may be issued within 30 months in the cases
not involving fraud, collusion, suppression etc.
 However, limitation period in case of fraud or suppression has not been changed from 5
years.
 Rate of interest on delayed payment of Service tax has been reduced in the following
manner:
 Reduced rate of interest @21% or @12% in case of assessees, whose value of taxable
services in the preceding year or years covered by the notice is less than Rs.60 Lakhs.
Changes in Finance Act, 1994 w.e.f. Date of Enactment
Serial
No.
Situation Rate of simple
interest
1. Service Tax Collected but not deposited
within due date.
24%
2. Other than in situations covered above. 15%

13. Section
101
• From 01-07-12 to 29-01-14 for services of construction, renovation or maintenance
of canal, dam or other irrigation work provided to entities set up by Government.
Section
102
• Services provided to Govt., a Local or a Govt. Authority by way of construction or
commissioning of a civil structure to be use other than for commercial purpose or use as
educational or clinical establishment or for self residence or of their employees, for the
contracts entered before 01-03-2015.
Section
103
• Services provided by way of construction or commissioning and installation of
original work pertaining to an Airport or Port, for the contracts entered before 01-
03-2015.
Exemptions restored retrospectively which were withdrawn earlier by inserting new sections:
Limit enhanced from Rs.50 Lac to Rs.1 crore for filling complaints for punishable offence.
Power to arrest restricted to the cases where Tax has been collected but not deposited and
such tax exceeds Rs.2 crore.
Changes in Finance Act, 1994 w.e.f. Date of Enactment

14. Entries shifted from Negative List to Mega Exemption:
 Section 66D(l) covers Education services viz. services by way of pre-school or higher secondary
school education or education as a part of an approved vocational education course. Effective
from the enactment of Bill.
 Section 66D(o)(i) of the Act covers “Service of transportation of passengers, with or without
accompanied belongings, by a stage carriage”. Effective from 01-06-2016.
 Section 66D(p)(ii) of the Act covers “Services by way of transportation of goods by an aircraft or
a vessel from a place outside India up to the customs station of clearance”. Effective from 01-06-
2016.
N. No. 30/2012 amended so as to provide that Tax on all the Services provided by the
Government or Local Authority shall be discharged by the service receiver i.e. Business Entity.
Earlier it was only on “Support Services”.
Point of Taxation for a New Levy on Taxable Services viz SB or KK Cess shall be govern by the
same rule which governs the POT for introduction of new taxable service i.e. Rule 5.
Introduction of Dispute Resolution Scheme, 2016 – It will cover cases pending before
Commissioner Appeals as on 01-03-2016 under Central Excise, Customs or Service Tax
provisions. Eligible Assessees can make declaration between 01-06-2016 to 31-12-2016 and
can be concluded by paying disputed tax along with interest and 25% of penalty levied under
the impugned order.
Miscellaneous Amendments

15. PREPARED BY:-
CA ASHISH GUPTA
B-57-58, Ist Floor, Amar Colony,
Lajpat Nagar-IV, New Delhi
(M) +91-9891670570
(E) info@ashishca.com
(W) www.ashishca.com
Disclaimer: This presentation is provided purely for your
information and knowledge. Information provided in this
presentation do not purport or should not be treated as
legal opinion in the fact specific situations that may effect
you and your business.