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AMBALAL PATEL & CO.

CHARTERED ACCOUNTANTS

Budget 2016-17

Indirect tax proposals

Ambalal Patel & Co

Chartered Accountants 1St Floor, Sapphire Business Centre

Above SBI Vadaj Branch, Usmanpura,

Ashram Road, Ahmedabad-380013

Email: [email protected]

Website: www.apcca.com

Blog: apcca.wordpress.com

Budget

2016-17

Ambalal Patel & Co.

Chartered Accountants

Union Budget 2016-17 – Service Tax Amendments & Proposals (For Clients only)

Dear Clients,

In continuation of our earlier update of Clause by Clause analysis of Direct tax

Proposals of the Union Budget 2016-17, we hereby forward you the Proposals of

Indirect Tax proposals which we hope will be of immense help to understand the

changes made by the Union Budget 2016-17.

On 29th February, 2016, Finance Minister has presented its budget. Here are

some changes with regards to Service Tax.

We have broadly classified Service tax proposals as under:

SR No. Particulars of Change

A Changes in Service tax Rate

B Changes in Negative List (Sec. 66D)

C Changes in Mega Exemption Notification No. 25/2012

D Changes in Abatement Notification No. 26/2012

E Changes in Reverse Charge Mechanism Notification No. 30/2012

F Changes in Point of Taxation Rules, 2011

G Changes in Service Tax Rules, 1994

H Changes in Finance Act, 1994

I Changes in CENVAT Credit Rules, 2004

J Other Changes

K Indirect Tax Dispute Resolution Scheme,2016

Please feel free to contact us to have more clarification of the issues in relation to

proposed changes.

Thanking you,

Team APCCA

Budget

2016-17

Ambalal Patel & Co.



A. Changes in Service tax Rate:

(W.E.F 01.06.2016)

a) There is no change in the rate of Service tax and SBC.

b) But it is proposed to introduce “KRISHI KALYAN CESS” (KKC) @ 0.5% of value

of taxable services from 01.06.2016 onwards ONLY ON THE SERVICES

PROVIDED AFTER THAT DATE( Rule 5- POT).

c) Hence the effective rate of Service tax will be 15% (incl. SBC & KKC)

w.e.f 01.06.2016.

d) Please note that, CENVAT credit of INPUT KKC can be taken to discharge the

liability of OUTPUT KKC as said by Finance Minister in his Speech but

corresponding change is not made in CENVAT Credit Rules.

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2016-17

Ambalal Patel & Co.



B. Changes in Negative List (Sec. 66D) Clause Current Position Proposed Changes Effective

date

l services by way of—

(i) pre-school education

and education up to

higher secondary school

or equivalent;

(ii) education as a part of

a curriculum for obtaining

a qualification recognized

by any law for the time

being in force;

(iii) education as a part of

an approved vocational

education course;

Omitted

As the same provisions are there in

Entry 9 of Exemption Notification-

25/2012.

This provisions are inserted as part of

definitions and Approved vocational

Education course is also now defined

in the Exemption Notification.

So Education service is STILL

EXEMPT.

( Made part of Notification instead of

ACT)

Enactment

of Finance

bill

o(i) Services by a stage

carriage (like GSRTC)

Omitted.

1) Services by Air Conditioned

stage carriage will be taxable.

2) But services Non Air

Conditioned stage carriage will

be exempt as per New entry in

notification No.25/2012.

01.06.2016

p(ii) Services by way of

transportation of goods

by

1) an aircraft or

2) vessel

from a place outside India

up to the customs station

of clearance in India

Omitted &

1) Services by way of Aircraft will

be exempt as per amended

notification No.25/2012-ST.

2) Service by way of Vessel will be

taxable. a) If Indian Shipping Line-

taxable on Forward Charge

b) If foreign Shipping Line-

Taxable on RCM

01.06.2016

Budget

2016-17

Ambalal Patel & Co.



C. Changes in Mega Exemption Noti. No. 25/2012

(Noti. No. 09/2016-ST dtd 01.03.2016)

Sr.

No

Current Position Proposed Changes Effective

Date

6(b) Services provided by-

an individual as an

advocate or a

partnership firm of

advocates by way of

legal services to,

i) an advocate or

partnership firm of

advocates providing

legal services ;

(ii) any person other

than a business entity;

or

(iii) a business entity

with a turnover up to

rupees ten lakh in the

preceding financial

year

Services provided by-

a partnership firm of advocates or an

individual as an advocate other than a senior

advocate, by way of legal services to-

i) an advocate or partnership firm of

advocates providing legal services ;

(ii) any person other than a business entity; or

(iii) a business entity with a turnover up to

rupees ten lakh in the preceding financial year

Hence, Service provided by a senior advocate

to an advocate or partnership firm of

advocates is taxable as forward charge w.e.f

01.04.2016.

(Senior advocate has the meaning assigned to

it in section 16 of the Advocates Act, 1961)

01.04.2016

EXEMPT

TAXABLE

6(c) Services provided by-

a person represented

on an arbitral tribunal

to an arbitral tribunal;

Due to substitution of this clause there are

two changes

1) Now, service provided by a person

represented on an arbitral tribunal to an

arbitral tribunal is taxable.

2) Services provided by a senior advocate by

way of legal services to a person other

than a person ordinarily carrying out any

activity relating to industry, commerce or

any other business or profession;”

01.04.2016

TAXABLE

EXEMPT

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Ambalal Patel & Co.



Sr.

No


Date

9C New Entry Services of assessing bodies empanelled

centrally by Directorate General of Training,

Ministry of Skill Development and

Entrepreneurship by way of assessments

under Skill Development Initiative (SDI)

Scheme;

01.04.2016

EXEMPT

9D New Entry Services provided by training providers

(Project implementation agencies) under

Deen Dayal Upadhyaya Grameen Kaushalya

Yojana under the Ministry of Rural

Development by way of offering skill or

vocational training courses certified by

National Council For Vocational Training.

01.04.2016

EXEMPT

12A

New Entry Background :

The services specified in this entry service

were removed from the Entry No 12 of

Exemption Notification and they were taxable

after 01.04.2015.

Hence the services under ONGOING

CONTRACTS which were exempt prior to

01.04.2015 became taxable.

To overcome this Issue this New Entry 12A is

entered so to give relief to contracts entered

prior to 01.03.2015

Services provided to the Government, a local

authority or a governmental authority by way

of construction, erection, commissioning,

installation, completion, fitting out, repair,

maintenance, renovation, or alteration of –

(a) a civil structure or any other original works

meant predominantly for use other than for

commerce, industry, or any other business or

profession;

01.03.2016

EXEMPT for

contract

entered

before

01.03.2015

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Ambalal Patel & Co.



Sr.

No


Date

Entry 12A Cont…

(b) a structure meant predominantly for use

as (i) an educational, (ii) a clinical, or(iii) an art

or cultural establishment; or

(c) a residential complex predominantly meant

for self-use or the use of their employees or

other persons specified in the Explanation 1 to

clause (44) of section 65 B of the said Act;

The above exemption is available upto

01/04/2020.

If service tax is paid for the period from

01.04.2015 to 29.02.2016- refund can be

claimed within 6 months from the enactment

of Finance Bill.

13

New Clauses Inserted Services provided by way of construction,

erection, commissioning, installation,

completion, fitting out, repair, maintenance,

renovation, or alteration of:

(ba) 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” under the

Housing for All (Urban) Mission

/Pradhan Mantri Awas Yojana, only for

Existing slum dwellers.

(bb) a civil structure or any other original

works pertaining to the “Beneficiary-led

individual house construction /

enhancement” under the Housing for All

(Urban) Mission/Pradhan Mantri Awas

Yojana

01.03.2016

EXEMPT

EXEMPT

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Ambalal Patel & Co.



Sr.

No


Date

14

(a)

Clause (a) Amended

Services by way of

construction, erection,

commissioning, or

installation of original

works pertaining to,

railways, including

monorail or metro;

Taxability of Services by way of construction,

erection, commissioning, or installation of

original works pertaining monorail or metro

will be depend upon the contracts entered as

under:

1) For Existing contracts/ contracts

entered before 01.03.2016- Exempt

2) Contracts entered after 01.03.2016-

Taxable

01.03.2016

14

(ca)

New Clauses Inserted Services by way of construction, erection,

commissioning, or installation of original

works pertaining to, low cost houses up to a

carpet area of 60 square meters per house in

a housing project approved by the competent

authority under:

(i) the “Affordable Housing in Partnership”

component of the Housing for All (Urban)

Mission/Pradhan Mantri Awas Yojana;

(ii) any housing scheme of a State

Government.”

01.03.2016

14A New Entry Background :

The services specified in this entry service

were removed from the Entry No 14(a) of

Exemption Notification and they were taxable

after 01.04.2015.

Hence the services under ONGOING

CONTRACTS which were exempt prior to

01.04.2015 became taxable.

To overcome this Issue this New Entry 14A is

entered so to give relief to contracts entered

prior to 01.03.2015

01.03.2016

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Ambalal Patel & Co.



Sr.

No


Date

Entry 14A Cont…. Services by way of construction, erection,

commissioning, or installation of original

works pertaining to an airport or port

provided under a contract which had been

entered into prior to 1st March, 2015 and

on which appropriate stamp duty, where

applicable, had been paid prior to such date

But the exemption will be available up to

01/04/2020.

If service tax is paid for the period from

01.04.2015 to 29.02.2016- refund can be

claimed within 6 months from the enactment

of Finance Bill.

EXEMPT

16 Amendment in Entry

Services provided by a

performing artist in

folk or classical art in

form of (i)music, or (ii)

dance, or (iii) theatre if

the consideration

charged for such

performance is not

more than one lakh

rupees

Now Limit of One lakh is increased to one

lakh and fifty thousand rupees.

01.04.2016

23

(bb)

New Clauses Inserted Transport of passengers, with or without

accompanied belongings, by stage carriage

NON AIR CONDITIONED stage carriage

(like GSRTC).

But, if it is AIR CONDITIONED stage carriage,

Service Tax would be charged @ 5.6 % (40%

value taxable per Noti. No 26/2012 entry no

9A(c))

(Moved in Exemption list from Negative List)

01.06.2016

EXEMPT

TAXABLE

Budget

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Ambalal Patel & Co.



Sr.

No


Date

23

(c)

Clause Omitted

Transport of passengers, with or without

accompanied belongings, by ropeway, cable

car or aerial tramway;

Hence, this service is will be taxable.

01.04.2016

TAXABLE

26

(q)

New Clauses Inserted Services of General Insurance business

provided under Niramaya’ Health Insurance

Scheme implemented by Trust constituted

under the provisions of the National Trust for

the Welfare of Persons with Autism, Cerebral

Palsy, Mental Retardation and Multiple

Disabilities Act, 1999

01.04.2016

EXEMPT

26C New entry Services of life insurance business provided by

way of annuity under the National Pension

System regulated by Pension Fund Regulatory

and Development Authority of India (PFRDA)

under the Pension Fund Regulatory And

Development Authority Act, 2013

01.04.2016

EXEMPT

49 New entry Services provided by EPFO to persons

governed under the Employees‟ Provident

Funds and Miscellaneous Provisions Act, 1952

01.04.2016

EXEMPT

50 New entry Services provided by IRDA to insurers under

the IRDA Act, 1999

01.04.2016

EXEMPT

51 New entry Services provided by SEBI set up under the

SEBI Act, 1992 by way of protecting the

interests of investors in securities and to

promote the development of, and to regulate,

the securities market;

01.04.2016

EXEMPT

52 New entry Services provided by National Centre for Cold

Chain Development under Ministry of

Agriculture, Cooperation and Farmer‟s

Welfare by way of cold chain knowledge

dissemination;

01.04.2016

EXEMPT

53 New entry Services by way of transportation of goods by

an aircraft from a place outside India up to the

customs station of clearance in India.

(Moved in Exemption list from Negative List)

01.06.2016

EXEMPT

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En

try

No

Current Position

Proposed Changes

Conditions for availing benefit of

abatement Service Name Taxa

ble

Service Name Taxa

ble

2 Transport of

goods by rail

30% Transport of goods

by Indian Railways

(other than SI 2A)

30% CENVAT

Credit of

Current Proposed

Input X X

Input

Services

X

Capital

Goods

X X

2A New entry - Transportation of

goods in containers

by rail by any

person other than

Indian Railways

(like Containers

Train Operators )

40% CENVAT

Credit of

Current Proposed

Input

N.A

X

Input

Services

Capital

Goods

X

3 Transport of

Passengers by

Rail

30% Transport of

Passengers by Rail

30% CENVAT

Credit of

Current Proposed

Input X X

Input

Services

X

Capital

Goods

X X

7 Services of

goods transport

agency in

relation to

Transportation

of goods.

30% Services of goods

transport agency in

relation to

transportation of

goods other than

used household

goods

30% CENVAT

Credit of

Current Proposed

Input X X

Input

Services

X X

Capital

Goods

X X

D. Changes in Abatement Notification

No.26/2012 (Amended by Noti. 08/2016 dtd.

01.03.2016) (W.E.F 01.04.2016)

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Ambalal Patel & Co.



En

try

No

Current Position

Proposed Changes

Conditions for availing benefit of abatement

Service Name Taxa

ble

Service Name Taxa

ble

8 New entry - Services provided

by a foreman of

chit fund in

relation to chit

70% CENVAT

Credit of

Current Proposed

Input

N.A

X

Input

Services

X

Capital

Goods

X

9A

(c)

New entry

(W.E.F

01.06.2016)

- Transport of

passengers by a

Air Conditioned

stage carriage

(like GSRTC)

40% CENVAT

Credit of

Current Proposed

Input

N.A

X

Input

Services

X

Capital

Goods

X

10 Transport of

goods in a

vessel

30% Transport of goods

in a vessel

30% CENVAT

Credit of

Current Proposed

Input X X

Input

Services

X

Capital

Goods

X X

11 Services by a

tour operator in

relation to,-

i) a package tour

25%

Services by a tour

operator in

relation to,-

(i) a tour, only for

the purpose of

arranging or

booking

accommodation

for any person

10%

(i) CENVAT credit on inputs, capital

goods and input services other than

input services of a tour operator, used

for providing the taxable service, has

not been taken

(ii)The invoice, bill or challan issued

indicates that it is towards the charges

for such accommodation.

(iii)This exemption shall not apply

where the invoice, bill or challan issued

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En

try

No

Current Position

Proposed Changes

Conditions for availing benefit of abatement

Service Name Taxa

ble

Service Name Taxa

ble

12 Construction of

a complex,

building, civil

structure or a

part thereof,

i) For all

commercial

construction &

High end

Residential

Units

iI) For other

than (i) above

30%

25%

Construction of a

complex, building,

civil structure or a

part thereof.

(Old 2 categories

are merged into

one category in the

proposed change)

30%

(i)

(ii) The value of land is included in the

amount charged from the service

receiver.

CENVAT

Credit of

Current Proposed

Input X X

Input

Services

Capital

Goods

Explanation “BA” is inserted in this Notification for Sr. No. 9 ( for Rent a Cab Service):

For the purposes of abatement, the amount charged shall be the total of the amount charged for

the service including the fair market value of all goods (including fuel) and services supplied by

the recipient in or in relation to the service, whether or not supplied under the same contract or

any other contract.

Para 2 Point b : Pursuant to Sr. No. 11 (for Service by Tour Operator)

The definition of “Package Tour” is omitted from this notification

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SR No Description of Service Current Position Proposed

% Service tax to be

paid by

% Service tax to be

paid by

Provider Receiver Provider Receiver

1B Services provided by a mutual fund

agent or distributor, to a mutual

fund or asset management

company

0% 100% Will be taxable as

forward charge

(Omitted from this

Noti.)

5 Services provided by a firm of

advocates or an individual advocate

other than a senior advocate by

way of legal services.

Hence, Service by Senior Advocate

will be taxable as forward charge.

0% 100% 0% 100%

6 Services by Government or Local

Authority to business entities

(the word “by way of support

services‟ is deleted w.e.f 01.04.16)

0% 100% 0% 100%

E.

Changes in Reverse Charge Mechanism

Noti. No 30/2012 (Amended by Noti. No.

18/2016-ST dtd. 01.03.2016)

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1 Explanation is inserted in Rule 5 of POT Rules (Rule for Payment of tax in case of new

services ) which states that this rule shall also apply in case of new levy of tax.

Hence, Rule 5 will also apply for “Krishi Kalyan Cess” and hence KKC will be applicable

only on the services rendered after 01.06.2016

2 Another explanation is inserted stating that in case of new levy other than two

situation specified in Rule 5, the new levy or tax shall be payable.

Sr.

No Changes made in Service Tax Rules Effective

Date

1 Benefit of quarterly payment of Service tax is extended to HUF.

01.04.2016

2

For One Person Company (OPC) :

Sr.

No. Taxable T/O of

Previous Fin.Year

Basis for

Payment of S.T

Time limit for

Payment of S.T

1 Upto Rs. 50 lacs Option to Pay on

Receipt Basis

Upto T/O of Rs 50

lac in Current Fin.

Year

Option to pay

on Quarterly

Basis

2 More than Rs 50 lac Accrual Basis Monthly Basis

01.04.2016

3 For Single Premium Annuity Policies, an insurer carrying on life insurance

business shall be liable to pay Service Tax @ 1.40% (earlier @ 3.5%) of

the single premium charged from the policy holder.

01.04.2016

4 Service tax Assesse above a certain threshold limit as may be notified

will be required to file an Annual Return on or before 30/11/2016.

This Annual return can be revised within a period of one month from the

date of filling of said return.

01.04.2016

5 Late fees of Rs. 100 per day subject to maximum limit of Rs. 20,000 will

be required to be paid for delay in filling of Annual Service Tax Return.

01.04.2016

F. Changes in Point of Taxation Rules,2011 :

G. Changes in Service Tax Rules,1994 :

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Sr.

No

Changes made in Finance Act, 1994

(w.e.f. date of enactment of Finance Bill, 2016)

1 Section 65B(44)- Definition of Service

Explanation 2 is proposed to be amended to clarify that activity carried out by a

lottery distributor or selling agents of the State Government under the provisions of

the Lotteries (Regulation) Act, 1998 (17 of 1998), is leviable to service tax.

2 Section- 66E- Declared Services:

Assignment by the Government of the right to use the radio-frequency spectrum and

subsequent transfers thereof is proposed to be declared as a service, so as to make it

clear that assignment by Government of the right to use the spectrum as well as

subsequent transfers of assignment of such right to use is a service leviable to service

tax and not a sale of intangible goods.

3 The normal time limit for issue of Show Cause Notice for recovery of service tax not

levied or paid or short- levied or short paid or erroneously refunded is to be enhanced

from 18 months to 30 months.

4

Changes made in Rate of Interest for Delay in Payment of Service tax ,Excise &

Customs :

Sr No Situation T/O More

than 60 lacs

T/O Less

than 60 lacs

1 S.T separately collected & not paid 24% 24%

2 S.T not collected separately 15% 12%

5 The monetary limit for filing complaints for punishable offences under section 89 is

proposed to be enhanced from Rs. 50 Lakhs to Rs. 2 Crores.

6

Power to arrest is proposed to be restricted only to situations where the tax payer has

collected the tax but not deposited it with the exchequer and amount of such tax

collected but not paid is above Rs 2 Crores.

7 Penalty for offences by director, etc. of company shall be deemed to be closed in

cases where the main demand and penalty proceedings have been closed under

section 76 or section 78 of the Act.

H. Changes in Finance Act, 1994:

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Sr.

No



8 Section 93A of the Finance Act,1994 has been amended so as to enable allowing of

rebate of Service Tax by way of notification as well as rules.

9 Services provided to the Governmental Authority (i.e. not set up by the Act of

Parliament or State Legislature like SSNNL) by way of construction, repair,

maintenance of canal, dam or other irrigation works will also be exempted for the

period from 01.07.2012 to 29.01.2014.

Refund of service tax paid will be allowed and application for such refund shall be

made within a period of six month from the date on which Finance Bill, 2016 receives

the assent of the President.

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Sr.

No

Amendmen

t in Rule



1 Rule 2

Clause (a)

Sub-clause(A)

Definition of Capital Goods:

Wagons of sub heading 8606 92 of the Central excise Tariff and

equipment and appliance used in an office located within a factory are

being included in the definition of “capital goods” so as to allow CENVAT

credit on the same.

2 Rule 2

Clause (a)

Sub-clause(A)

& Clause (k)

Sub-clause(ii)

CENVAT credit on inputs and capital goods used for pumping of water,

for captive use in the factory, is being allowed even where such capital

goods are installed outside the factory.

3 Rule 2

Clause (k)

Change in Definition of Input:

All capital goods having value up to Rs. 10,000/- per piece are included in

the definition of “inputs”.

Hence 100% credit on such capital goods can be taken in the year of

Purchase.

4 Rule 2

Clause (e)

Service by way of transportation of goods by a vessel from customs

station of clearance in India to a place outside India is being excluded

from the definition of “exempted service‟.

This would allow shipping lines to take credit on inputs and

input services used in providing the said service.

5 Rule 4(5) (b) Manufacturer of final products is being allowed to take CENVAT credit on

tools of Chapter 82 of the Central Excise Tariff in addition to credit on jigs,

fixtures, moulds & dies, when intended to be used in the premises of job-

worker or another manufacturer who manufactures the goods as per

specification of manufacturer of final products.

It is also being provided that a manufacturer can send these goods

directly to such other manufacturer or job-worker without bringing the

same to his premises.

I. Changes in CENVAT Credit Rules, 2004 :

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6 Rule 4(6) A manufacturer of the final products are allowed to send inputs or

partially processed inputs outside his factory to a job-worker and

clearance there from on payment of duty.

The time limit for the same is increased from 1 year to 3 year.

7 Rule 4(7) It is being provided that CENVAT credit of Service Tax paid on amount

charged for assignment by Government or any other person of a natural

resource such as radio-frequency spectrum, mines etc. shall be spread

over the period of time for which the rights have been assigned.

8 Rule 6 a) Rule 6(1) :

CENVAT credit shall not be allowed on such quantity of input and input

services as is used in or in relation to manufacture of exempted goods

and exempted service.

The rule then directs that the procedure for calculation of credit not

allowed is provided in sub-rules (2) and (3), for two different situations.

b) Rule 6(2) :

Option to Maintain separate books of accounts for inputs and input

services and taking credit as per this rule is NOT AVAILABLE NOW.

This rule is redrafted as under:

A person who EXCLUSIVELY manufactures exempted goods or provides

exempted services shall not be eligible for credit of any inputs and

input services used.

c) Rule 6(3) :

If a person Manufacturers both Taxable and Non Taxable goods or a

Service Provider provides both Taxable and Nontaxable Services, then

he has two options :

1) Reversal of credit to the extent of 6% of the value of exempted

goods or 7% of the value of exempted service.

The amount of reversal cannot exceed the total credit taken.

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2) Proportionate Credit reversal Under Rule 6(3A)

Under this second options CENVAT Credit of only common inputs /

input services will have to be reversed.

d) Rule 6(3A) - Calculation of Proportionate Reversal of Credit :

Step Action Amount

1 Total Credit 100

2 Less: Credit of Inputs or Input Services used

for Exempted Goods or Exempted Services

(10)

3 Less: Credit of Inputs or Input Services used

for Taxable Goods or Taxable Services

(30)

4 Common Credit (1-2-3) 60

Reversal of credit will be

60 x ( T/o of Exempted Goods+ Services)

Total Turnover

Figures of turnover are of Previous FY

Final reconciliation and adjustments are provided for after close of

financial year by 30th June of the succeeding financial year.

e) Rule 6(3AA) (New sub rule inserted) :

Manufacturer or provider of output service who has failed to give

prior intimation, may be allowed by a Central Excise officer to

follow Proportionate reversal option and pay the amount along

with interest @ 15% per annum from the due date of each month

till payment date.

f) Rule 6(3AB) (New sub rule inserted) : Transitional Provision

Existing rule 6 of CCR would continue to be in operation upto

30.06.2016, for the units who are required to discharge the obligation

in respect of financial year 2015-16

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g) Rule 6(3B) :

Banks and other financial institutions are allowed to reverse credit of

exempted services either as per rule 6(3) or as per current option of

50% reversal of credit.

h) Explanations 3 & 4 for Rule 6(1) :

Explanation is inserted so as provide for reversal of CENVAT Credit on

Inputs / input services which have been commonly used in providing

taxable output service and an activity which is not a “service” under

the Finance Act, 1994.

i) Rule 6(4) :

Time limit for utilization of CENVAT Credit of Capital Goods used for

manufacture of exempted goods or provision of exempted service is

restricted to 2 Years from the date of commencement of commercial

production or provision of service.

This time limit will also be applicable for Capital goods installed after

the date of commencement of commercial production or provision of

service.

j) Rule 6 (7) :

Shipping lines are allowed to take credit of inputs and input services

used in providing a service by way of “transportation of goods by a

vessel from customs station of clearance in India to a place outside

India”

Above credit will be used to pay service tax on the services of

transportation of goods by a vessel from outside India to the customs

station of clearance in India, which would become taxable w.e.f 1st

June 2016 after enactment of Finance Bill 2016.

9 Rule 7 Input Service Distributor :

Changes are also being made in the provisions relating to input service

distributor, including extension of this facility to transfer input services

credit to outsourced manufacturers, under certain circumstances.

Budget

2016-17

Ambalal Patel & Co.



The amendments in these rules will also enable manufacturers with

multiple manufacturing units to maintain a common warehouse for

inputs and distribute inputs with credits to the individual manufacturing

units.

10

Rule 9 (a) (i) Presently, an invoice issued by a manufacturer for clearance of inputs or

capital goods is a valid document for availing CENVAT credit.

It is being provided that an invoice issued by a service provider for

clearance of inputs or capitals goods shall also be a valid document for

availing CENVAT credit.

Budget

2016-17

Ambalal Patel & Co.



Sr.

No Changes / Amendment related to :

1 Amendment in notification No. 32/2012-ST :

Services provided by Biotechnology Industry Research Assistance Council (BIRAC)

approved biotechnology incubators to the incubates are being exempted from

service tax.

2 Amendment in notification No. 41/2012-ST :

Above Notification is amended by Notification No.1/2016-ST so as to, allow refund

of service tax on services used beyond the factory etc. for the export. This

amendment is being made effective from 1st July 2012.

This will come into effect from the date of enforcement of Finance Bill 2016.

3 Exemptions in relation to Information Technology Software :

• Service tax on the services of Information Technology Software on media

bearing Retail Sale Price (RSP) is being exempted from Service Tax with effect

from 1st March, 2016 provided Central Excise duty is paid on RSP in

accordance with Section 4A of the Central Excise Act.

• For Information Technology Software Service, in respect of software recorded

on media “NOT FOR RETAIL SALE”, the value on which Service tax is paid, will

be exempt from Excise Duty.

J. Other changes :

Budget

2016-17

Ambalal Patel & Co.



Sr.

No Scheme at a Glance:

(Applicable w.e.f. date of enactment of Finance Bill, 2016)

1 With the intention to reduce the litigation, this scheme has been introduced w.e.f

01.06.2016 to to the declarations made till 31.12.2016.

2 Any person would be eligible to opt for this scheme if the appeal is pending with

Commissioner (Appeals) i.e where the demand of tax or duty is less than Rs. 50

Lakhs.

3 He shall pay tax due along with the interest and penalty equal to 25% of Tax &

proceedings against the assessee will be closed and he will also get immunity from

prosecution. 4 But this scheme will not be applicable in following cases :

a) where prosecution has already been launched

b) involving narcotics & psychotropic substances

c) involving detention under COFEPOSA

K. Indirect Tax Dispute Resolution Scheme,2016

indirect tax proposals - wordpress.comindirect tax proposals which we hope will be of immense help...

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