The Service Tax laws enacted under Chapter V of the Finance Act,
1994 have been amended vide Union Budget 2016-17. Set out below are
the amendments effective from 1 April 2016:
Service Tax Law (Finance Act, 1994)
Senior Advocates shall be liable to
pay Service Tax on legal services.
Transport of passengers, with or
without belongings, by ropeway, cable car or aerial tramway shall
now attract Service Tax.
Agents and distributors of Mutual
Funds shall be liable to pay Service Tax.
Service Tax Rules, 1994
One Person Companies (OPC) with a
turnover of up to INR 50 Lacs in the previous year shall be
Quarterly payment of Service Tax;
Payment of Service Tax on receipt
HUFs shall be entitled to pay Service
Tax on quarterly basis.
CENVAT Credit Rules, 2004
Invoices issued by service providers
for removal of inputs and capital goods shall be construed to be
valid documentation for availing CENVAT Credit.
CENVAT Credit of Service Tax paid on
upfront charges for assignment of natural resources such as Mining
Rights, spectrum sale etc. shall be available periodically over the
period of assignment.
Reverse Charge Payment
All the services, except certain
specified services rendered by Government or local authorities have
now been brought under the reverse charge mechanism.
Abatement for tour operators, solely
engaged in arranging booking of accommodation has been retained at
90%. Abatement for other tour operators, has been kept at 70%.
Abatement in relation to foreman of
chit funds has been kept at 30% of the value subject to them not
availing CENVAT credit on inputs, input services and capital
A uniform abatement of 70% for
construction of complex is now applicable.
Railways permitted to avail CENVAT
Credit of input services while payment continues on abated
CENVAT Credit of input services for
transportation of goods by vessels is permitted, while payment
continues on abated value.
Abatement of 60% has been prescribed
for transportation of household items by Goods Transport Agency
(GTA), as against general abatement of 70%.
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Cummins Inc. is a foreign company, rendering services in respect of desktop/laptop software license and internet mail facilities to its Indian associated enterprises, i.e. CIL and CSSL which were paying IT charges provided by the taxpayer.
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