On May 19, the Finance Ministry notified the increased
service tax rate of 14 per cent effective from June 1, 2015
onwards. In the Budget 2015-16, the Government had hiked the
service tax to 14 per cent from the current 12.36 per cent. Finance
Minister Arun Jaitley had remarked that the hike was "to
facilitate a smooth transition to levy of tax on services by both
the Centre and the states."
This clarification brings a much needed end to all the
speculation with regards to the levy of the Service Tax. The change
in rate had caused quite a commotion as service providers had
started charging 14% service tax from recipients.
With the notification, Finance Ministry also announced that
Educational Cess & Secondary Higher Cess would no longer be
levied. Various other amendments have been announced, which have
been summarized below:
June 1, 2015 appointed as the date on
which rate of Service Tax is being increased from 12% to 14%
From June 1, 2015, provisions w.r.t.
Education Cess & Secondary and Higher Secondary Education Cess
would cease to exist.
However, Swachh Bharat Cess at 2% or
lower on value of taxable services, and exemption to all services
provided by Govt / local authority to business entity has not been
Clarifies that service provided in
relation to amusement facility and other recreational facilities by
means of rides / gaming devices / bowling alleys in addition to
service provided by way of admission to entertainment events would
be taxable from June 1, 2014
Service tax is also leviable on
contract manufacturing or job work for production of potable liquor
for a consideration
Service provided by air travel agent,
insurance service and service provided by lottery distributor and
selling agent, shall be paid at an alternative rate, which are
revised proportionately consequent to the upward revision in
Service Tax rate.
Services provided by Government or a
local authority shall also be exigible to service tax. The date is
yet to be notified.
Services provided by distributor or
selling agents of lottery, as appointed or authorized by the
organizing state for promoting, marketing, distributing, selling,
or assisting the state in any other way for organizing and
conducting a lottery are also to be taxed
Amendments have also been made to the
provisions relating to closure of proceedings in sections 76, 78
and 78B for imparting greater clarity and aligning the service tax
provisions with those in Central Excise.
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