Transcript Diapositiva 1 - Nashik Branch of WIRC of ICAI

SEMINAR ON FINANCE BILL,2015
Organized by
Nashik Branch of WIRC OF ICAI
SERVICE
TAX
PROPOSALS
"After the government takes enough to balance the budget,
the taxpayer has the job of budgeting the balance."
Presented by
RAJIV LUTHIA
ECHO………..
• A recipe that will transform the
country….Vishal Sikha…CEO Infosys
• Sabka vikas…a great start to a long
linning…Anil Ambani…Chairman
Reliance Group
• Fiscal Arithmetic now seems to be
credible….Madhu Kela..Reliance Capital
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RUMBLES...............
• Registration procedure simplified
• Preservation of Records in electronic form
• Alignment of abatement for transport of
goods by Rail, road & vessel
• Penalty reduced substantially u/s 76 & 78
• Time Limit to take cenvat credit increased from 6
months to 1 year
• Partnership firm and Proprietorship firm eligible for
Advance Ruling.
TAX KICK SCORES A…………………..
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GOAL
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TUMBLES.................
• Hike in Rate of service tax to 14%
• Additional “Swacch Bharat Cess” @ 2%
on value of taxable service
• Services provided to Government
related to construction etc. Made
liable to tax.
• Withdrawal of many exemptions such as
transport of goods by rail/road,
performing artists etc.
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Not. 42/2012 RESCINDED……………… ….
[Not. 3/2015]
• Exemption granted of the service provided by a
commission agent located outside India to an exporter of
Goods located in India, is now rescinded.
• Amendment made in line with the amendment w.e.f. 1st
October,2014 in definition of “intermediary” under
PPSR,2012
• Extended the scope of services provided by intermediary
to “supply of goods”, whereby place of provision of service
is of the service provider i.e. outside the taxable territory.
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SIMPLIFICATION IN PROCEDURE OF ST REGISTRATION
….. Not. 5/2015 W.E.F. 1st March,2015
• Rule 4(9) inserted in STR,1994………… Order No. 1/2015
prescribed conditions, safeguards and procedure………
– Application in ST-1
– PAN Mandatory
– Email ID & Mobile no. to be submitted to department by existing
assessee also up to 30th April,2015.
– Registration in 2 days
– No requirement for signed RC
– Prescribed documents to be submitted in 7 days of filling ST1…… by registered post/speed post
– AC/DC has power to revoke RC in certain situations…… after
giving applicant opportunity to represent
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AUTHENTICATION BY DIGITAL SIGNATURE:
• Rule 4C under STR,1994 inserted
• any invoice, bill or challan issued
under Rule 4A or consignment note issued u/r 4B
• may be authenticated by means of a digital signature
subject to conditions, safeguards & procedure to be
prescribed by CBEC.
PRESERVATION OF RECORDS IN ELECTRONIC FORM:
• Rule 5(4) under STR,1994 inserted
• records required to be maintained u/r 5 may be preserved
in electronic form & every page of the record so preserved
shall be authenticated by means of digital signature subject
to conditions, safeguards & procedure to be prescribed by
CBEC.
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Services Involving “AGGREGATOR”…..
• ST Rule 2(aa) “aggregator” means a person,
– who owns & manages web based software application; &
– 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
• Rule 2(bca) defines brand name or trade name
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Services Involving “AGGREGATOR”..contd
• Person liable to pay ST for the services provided by
Aggregator….Rule 2(1)(d)(i)(AAA) of STR,1994
– Aggregator himself….
– If no physical presence in the taxable territory , person
representing him
– If no representative also, then he shall appoint a person to
pay ST on his behalf
•
100% of the service tax is to be paid by the aggregator of the
service, in respect of any service provided or agreed to be
provided by a person involving an aggregator in any manner.
[Amendment in Notification 30/2012 ……………….Notification
7/2015 ]
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ADVANCE RULING [NOT.9/2015]
• “Resident firm” is notified as a person who can seek AAR.
• “Firm” shall have the meaning assigned to it in section 4 of the
Indian Partnership Act,1932, and includes– the LLP as defined in clause (n) of sub-section (1) of the
section 2 of the Limited Liability Partnership Act, 2008 (6 of
2009); or
– LLP which has no company as its partner; or
– the sole proprietorship; or
– One Person Company.
• “Sole Proprietorship” means an individual who engages
himself in an activity as defined u/s 96A (a) of the FA,1994.
• “One Person Company” means as defined u/s 2(62) of the
Companies Act,2013.
• “Resident” shall have the meaning assigned to it u/s 2(42) of
the IT Act,1961 in so far as it applies to a resident firm.
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CENVAT CREDIT RULES,2004 [NOT.6/2015-CE(NT)]
CONDITION FOR AVAILING CENVAT CREDIT
• Vide 3rd /6th proviso to Rule 4(1) inserted w.e.f. 1st
September,2014 ….. provided that the manufacturer or the
service provider shall not take CENVAT Credit in respect of
inputs/input service after 6 months of the date of issue of any
eligible document.
• The proviso is amended to extend the time period from 6
months to 1 year.
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CENVAT CREDIT RULES,2004
Rule 6 : REVERSAL OF CENVAT CREDIT IN
CASE OF TAXABLE EXEMPTED GOODS MANUFACTURED :
• Explanation 1 inserted to Rule 6(1) …..
– exempted goods or final products as defined in rule 2(d) and
2(h) of rule 2 shall include non-excisable goods cleared for a
consideration from the factory.
• Explanation 2 ….. value of non-excisable goods for the purposes of
this rule, shall be
– the invoice value
– and where such invoice value is not available, such value shall
be determined by using reasonable means consistent with the
principles of valuation contained in the Excise Act and the
rules made there under
• Mumbai CESTAT….S.D.Fine Chem Ltd [(2012) 27 STR 106 ]……. CCR,
2004 covers only those goods which are “excisable” at the first place. Non
excisable goods cannot be treated as “exempted goods”.
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CENVAT CREDIT RULES,2004
RECOVERY OF CENVAT WRONGLY TAKEN : ( RULE 14)
BUT NOT UTILIZED
AND UTILIZED
Recovery shall be as
provided u/s 11A &
11AA or 73 & 75 of
CE Act / Finance Act
respectively
Recovery shall be as
provided u/s 11A or 73
of CE Act / Finance Act
respectively
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CENVAT CREDIT RULES,2004
MANNER OF UTILIZATION OF CENVAT CREDIT BALANCE
• For this Rule, credits taken during month shall be deemed to
have been taken on the last day of the month and the utilisation
thereof shall be deemed to have occurred in the following
manner: -
– Opening balance of month has been utilised first;
– credit admissible during month has been utilised next;
– credit inadmissible taken during month has been utilised
thereafter.”.
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Amendment in Not. 31/2012 …………..
W.E.F. 1st April,2015 [Not. 4/2015]
• Exemption to the GTA services provided for transport of
export goods by road from the place of removal to an ICDinland container depot, CFS- container freight station, a
port or airport
• Scope widened to include “Land Customs Station”
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Not. 6/2015..New entries in MEGA EXEMPTION
• Entry 2(ii)  Services provided by way of transportation of a
patient in an ambulance by any person are now exempted.
• Entry 43  Services by operator of Common Effluent
Treatment Plant by way of treatment of effluent are now
exempted
• Entry 44  Services by way of pre-conditioning, pre-cooling,
ripening, waxing, retail packing, labelling of fruits and
vegetables which do not change or alter the essential
characteristics of said fruits or vegetables are now exempted;
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Not. 6/2015….. W.E.F. 1st April,2015…new entries in
MEGA EXEMPTION
• Entry 45  Services by way of admission to a museum,
national park, wildlife sanctuary, tiger reserve or zoo are now
exempted;
• Entry 46  Service provided by way of exhibition of movie by
an exhibitor to the distributor or an association of persons
consisting of the exhibitor as one of its members; are now
exempted;
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Not. 6/2015….. W.E.F. 1st April,2015…EXEMPTION
WITHDRAWN
• Entry 12 (a) / (c) / (f) OMITTED : Construction, erection,
commissioning, installation, completion, fitting out, repair,
maintenance, renovation, or alteration services provided to
Government a local authority or a governmental authority
– a civil structure or any other original works meant
predominantly for use other than for commerce, industry, or
any other business or profession
– a structure meant predominantly for use as (i) an
educational, (ii) a clinical, or (iii) an art or cultural
establishment;
– a residential complex predominantly meant for self-use or
the use of their employees or other persons
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Not. 6/2015….. W.E.F. 1st April,2015…EXEMPTION
WITHDRAWN
• Entry 14 (a) : Exemption to Services by way of construction,
erection, commissioning, or installation of original works
pertaining to an airport, port withdrawn.
• Entry 16 amended : Exemption to services provided by an
artist by way of a performance in folk or classical art forms of (i)
music,(ii) dance, (iii) theatre, restricted to the consideration
charged for such performance upto Rs. 1 Lakh.
– The above exemption not applicable if service provided
as Brand Ambassador.
• Entry 20(i) / 21(d) amended : Exemption provided to
transportation of goods by Rail / Road restricted to milk, salt
and food grain including flours, pulses and rice , instead of all
foodstuff, Tea, coffee, jaggery, sugar, milk products, edible oil.
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Services Provided by Mutual Fund
Agent ….W.E.F. 1st April,2015
• Entry 29(c) of Mega Exemption Notification 25/2012
omitted [Not. 6/2015] ………….Services provided by Mutual
Fund Agent to a Mutual Fund or asset management company
• Person liable to pay ST in relation to service provided or agreed
to be provided by a mutual fund agent or distributor to a mutual
fund or asset management company, the recipient of the
service…………Rule 2(1)(d)(i)(EEA) of STR,1994 [Not. 5/2015]
• Extent of ST payable by recipient of service = 100%
…………….Amendment in Not. 30/2012 [Not.7/2015]
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Services Provided by Selling/Marketing Agent
of Lottery Tickets….W.E.F. 1st April,2015
• Entry 29(e) of Mega Exemption Notification 25/2012
omitted [Not. 6/2015] ………….Services provided by selling or
marketing agent to a distributor or selling agent of lottery
tickets.
• Person liable to pay ST in relation to service provided or agreed
to be provided by a selling / marketing agent to a lottery
distributor
selling
agent,
the
recipient
of
the
service…………Rule 2(1)(d)(i)(EEB) of STR,1994 [Not. 5/2015]
• Extent of ST payable by recipient of service = 100%
…………….Amendment in Not. 30/2012 [Not.7/2015]
Tax Regime gets closer to GST
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REVERSE CHARGE
[NOT. 7/2015]
SERVICES OF MANPOWER SUPPLY & SECURITY:
• Presently, Service Tax in respect of services by way of
Manpower Supply or Security rendered by any individual, HUF
or partnership firm including AOP, located in the taxable
territory to a business entity registered as body corporate,
located in the taxable territory, service tax is required to be
discharged by both Service Provider & Service Receiver in the
ratio of 25% & 75% respectively.
• The said provisions are amended to provide for 100% of the
tax to be paid by the service recipient only.
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AMENDMENTS
IN
ABATEMENT NOTIFICATION
26/2012………………
W.E.F.
1st
APRIL,2015
[Notification 8/2015]
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Nature of Services
Proposed Amendment
Erstwhile Provision
Transport of goods by Condition : No Cenvat No such condition
rail---70% abatement
Credit has been taken on
inputs, input services,
capital goods
Transport of passengers,
with
or without
accompanied belongings
by air
Same as above
Same as above
Transport of passengers Economy
Class
: No such bifurcation of
by air, with or without Abatement @ 60%
class of tickets
accompanied belongings Other than economy
class : Abatement @
40%
Services of GTA in Abatement
@
relation to transportation taxable 30%
of goods.
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70%, Abatement
@
taxable 25%
75%,
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Nature of Services
Services provided
relation to chit
Proposed Amendment
in Abatement omitted
Transport of goods in a Abatement @
vessel
taxable @ 30%
Erstwhile Provision
--
70%, Abatement @
taxable @ 40%
60%,
 Uniformity in the abatement rates for all the modes of transport services
i.e. by rail, road, vessel
FM reiterates his promise for
rolling out GST w.e.f 1st April, 2016
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CENVAT CREDIT RULES,2004
[NOT.6/2015-CE (NT)]
CONDITIONS FOR ALLOWING CENVAT OF SERVICES FALLING
UNDER PARTIAL REVERSE CHARGE :
• Presently, credit is allowed only after making payment of
value of input service along with service tax.
•
Amendment…. Credit shall now be allowed of the of the extent
of service tax payable by service receiver , after such service
tax is paid.
ADHURA KAAM PURA
HUA….!!!
Last year’s above amendment
for credit of services under full
reverse charge extended to
partial reverse charge.
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SERVICES RENDERED TO RBI:
• Section 66D (b) covers services by the RBI under the ambit
of Negative List.
• A view was being taken that services rendered by banks as
an agent of RBI are also covered under the Negative List
and hence not liable to Service Tax
• An illustration is inserted in this Section 66F to clarify that
banks providing agency service to or in relation to
services of RBI, are liable to pay Service Tax on the
agency services so provided
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TAX ON REIMBURSEMENT OF EXPENSES:
• Hon’ble Delhi High Court - Intercontinental Consultants &
Technocrats Pvt. Ltd. Vs UOI (2012) TIOL 966 (WP)
– Rule 5 (1) of the Service Tax (Determination of Value) Rules, 2006
which provides for inclusion of the expenditure or costs incurred by
the service provider in the course of providing the taxable service in
the value for the purpose of charging service tax is ultra vires Section
66 and 67 of the Finance Act, 1994 and travels much beyond the
scope of those sections.
• To overcome this decision and to clarify the intention of levying
Service Tax on reimbursement of expenses,
Explanation to Section 67 is amended to provide that “consideration”
includes any reimbursable expenditure or cost incurred by the
service provider and charged, in the course of providing or agreeing
to provide a taxable service, except in such circumstances, and
subject to such conditions, as may be prescribed
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PENALTIES FOR REASONS OTHER THAN FRAUD, COLLUSION
Present
u/s 76
Said penalty is reduced
to 10% of ST
Provision
In case of failure to pay
ST, penalty is payable :
 Rs.100/- per day of
default; or
 1% of Service Tax
pm
whichever is higher
subject to 50% of the
Service Tax payable.
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No penalty , if ST & interest
paid within 30 days of the
service of notice u/s 73(1)
Post
Amendment
If ST & interest paid within
30 days of order u/s 73(2),
then penalty reduced to
25% of penalty, provided
the same is paid within 30
days
Where there is modification in
amount by CCE(A), tribunal or
court, penalty is also modified
& benefit of reduced penalty
also available , provided it is
paid within 30 days of the
receipt of order.
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PENALTIES FOR REASONS OF FRAUD, COLLUSION , ETC
Present Provision u/s 78
Where Tax has not been
levied/paid/short
levied/short
paid
or
erroneously refunded by
reasons
 Fraud
 Collusion
 Willful-misstatement
 Suppression of facts
etc.
Penalty = 100% of ST.
 True
&
complete
details of transaction
available in specified
records,
penalty
reduced to 50% of ST
7th March,2015
Penalty reduced to 15% , if
ST & interest paid within 30
days of the service of
notice u/s 73(1)
Post
Amendment
If ST & interest paid within
30 days of order u/s 73(2),
then penalty reduced to
25% of penalty, provided
the same is paid within 30
days
Where there is modification in
amount by CCE(A), tribunal or
court, penalty is also modified
& benefit of reduced penalty
also available , provided it is
paid within 30 days of the
receipt of order.
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• Section 80 providing that no penalty shall be imposable U/s.76
or 77 if the assessee provides that there was reasonable cause for
the said failure is OMITTED
• TRANSITORY PROVISIONS (78B):
• Service Tax has not been levied/paid/short levied/short paid or
erroneously refunded and no notice has been served U/s.73(1) or
under the proviso thereto, before the enactment of Finance
Bill,2015; or
• Service Tax has not been levied/paid/short levied/short paid or
erroneously refunded and a notice has been served U/s. 73(1) or
under the proviso thereto, but no order has been passed
U/s.73(2), before the enactment of Finance Bill,2015.
TOWARDS AIM OF …………………………………..
“MINIMUM GOVERNMENT, MAXIMUM GOVERNANCE”
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APPEAL TO APPELLATE TRIBUNAL:
• Section 86 amended to provide that no appeal shall lie before the
Appellate Tribunal where an order, relating to a service which is
exported, has been passed by Commissioner (Appeals) U/s. 85 and
matter relates to grant of rebate of service tax on input services,
or rebate of duty paid on inputs, used in providing such service.
• Such order shall be dealt with in accordance with the provisions of
Section 35EE of the Central Excise Act, 1944 which provides for
revision by Central Government.
• All appeals filed before the Appellate Tribunal in respect of above
matters, after Finance Act, 2012 came into force and pending
before it up to the date of enactment of Finance Bill,2015, shall be
transferred and dealt with in accordance with the provisions of
section 35EE of the Central Excise Act, 1944.
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• Hike in Service Tax Rate from 12% to 14%
Pay a Little
more to eat,
ride & fly
• Additional Swachh Bharat Cess @ 2% also levied as Service
Tax on all or any of the taxable services on the value of such
services making effective levy of 16%.
• Amendment in section 66D(a) (negative List) : services
rendered by Government
– sub-clause (iv) is amended to omit the term “support
services”…..
– Any service rendered by Government, other than covered
under sub - clauses (i) to (iii) rendered to business entities
would be outside the purview of Negative List and hence
would be liable to Service Tax.
– Consequently, the definition of “support services” U/s.65B
(49) is omitted.
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PROCESS AMOUNTING TO MANUFACTURE:
• Presently, “any process amounting to manufacture or
production of goods” is covered under Negative List U/s.66D (f)
hence not liable to Service Tax.
• The said entry is amended to exclude manufacture or
production of alcoholic liquor for human consumption.
• Consequently, the definition of “process amounting to
manufacture or production of goods” U/s.65B (40) is amended
to omit the reference of “alcoholic liquors for human
consumption”.
It is not Big, But it’s Full a BANG
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ENTRY TO ENTERTAINMENT EVENT & AMUSEMENT FACILITY
• Presently, Section 66D (j) covers “admission to entertainment
events or access to amusement facilities” within the ambit of
Negative List. The said entry is omitted.
• Consequently, the definitions of “amusement facility” U/s.65B
(9) & “entertainment event” U/s.65B (24) are omitted.
• Simultaneously, Entry No.47 inserted to grant exemption to
services by way of right to admission to,– exhibition of cinematographic film, circus, dance, or theatrical
performance including drama or ballet;
– recognised sporting event;
– award function, concert, pageant, musical performance or any
sporting event other than a recognised sporting event, where the
consideration for admission is not more than Rs 500 per person.”.
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SERVICES OF CHIT
• Section 65B (23A) is inserted to define “foreman of chit fund”
read with Section 2(j) of the Chit Funds Act,1982 means the
person who under the chit agreement is responsible for the
conduct of the chit and includes any person discharging the
functions of the foreman under section 39.
• Explanation 2 to Section 65B(44) defining “Service” is amended
to provide that the expression “transaction in money or
actionable claim” shall not include “any activity carried out, for a
consideration, in relation to, or for facilitation of, a transaction
in money or actionable claim, including the activity carried out
by a foreman of chit fund for conducting or organising a chit in
any manner”.
• The above amendment is brought to reverse the decision of
Hon’ble Delhi High Court in the case of Delhi Chit Fund
Association Vs UOI (2013) 32 Taxmann.com 332
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CHANGE IN RATES OF SERVICE TAX UNDER
COMPOSITION SCHEMES…:
Description
Service
Air Travel Agents
Life Insurance
7th March,2015
of Existing Rate
Revised Rate
0.6% of basic fare in
case of domestic
bookings
0.7%
1.2% of basic fare in
case of international
booking
1.4%
3% of premium in 1st
year
3.5%
1.5% of premium in
subsequent years
1.75%
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CHANGE IN RATES OF SERVICE TAX UNDER COMPOSITION
SCHEMES:
Description Existing Rate
Revised Rate
of Service
Forex
Broking &
Money
Changing
7th March,2015
Where gross amount of currency
exchanged is upto Rs.1 Lacs,
0.12% of gross amount subject
to a minimum tax of Rs.30/-.
Where gross amount of currency
exchanged
is
between
Rs.1,00,001/- & Rs.10 Lacs, Rs.
120 + 0.06% of gross amount of
currency exchanged in excess of
Rs.1,00,000/-.
Rs. 660 + 0.012% of gross
amount of currency exchanged in
excess of Rs.10,00,000/CA RAJIV LUTHIAsubject
to a maximum tax of Rs. 6,000/-.
0.14%
subject
minimum Rs.35/-
to
Rs.140/- + 0.07%
Rs.770/- + 0.014%
subject maximum of
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CHANGE IN RATES OF SERVICE TAX UNDER COMPOSITION
SCHEMES:
Description of Existing Rate
Service
Revised Rate
Rs. 7,000 on every Rs. 10 Lakh (or part
Distributor or thereof) of aggregate face value of Lottery
selling agent of tickets printed by the organising State for a
lottery
draw if the lottery or lottery scheme is one
where the guaranteed prize payout is more
than 80%
Rs.8,200/-
Rs. 11,000 on every Rs. 10 Lakh (or part Rs.12,800/thereof) of aggregate face value of Lottery
tickets printed by the organising State for a
draw if the lottery or lottery scheme is one
where the guaranteed prize payout is less than
80%
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IN NUTSHELL
Budget for
GROWTH
&
-
COMPETITIVENESS
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FM Fires
up
MAKE IN
INDIA
engine
44
7th March,2015
R. J. Luthia & Associates
Chartered Accountants
Ph : 2564 1553/2569 4989
Email: [email protected]
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