BUDGET 2015-AMENDMENTS IN DIRECT TAX

Section /Schedule	Head	Amendment/New Provision	Effective date
Part III to Schedule I	Advance taxes & TDS u/s 192	Advance taxes for the FY 2015-16 and TDS u/s 192 from salary shall be made at the following rates:   • In case of Individuals, HUF, AOP/BOI & Artificial juridical person:   Slab of Income Rate of Income tax Upto Rs. 250,000 [Basic exemption Limit Remains Same] Nil Rs. 250,001 to Rs. 500,000@ 10% RS. 500,001 to Rs. 10,00,000 20% Rs. 10,00,001 & above 30% Surcharge if total income exceeds Rs One Crore 12%   # In case of individual being woman resident in India and below the age of 60 years at any time during the PY, the basis exemption limit has been retained at Rs. 250,000 [in par with men assesses].   # In case of individual, being resident in India, who is age of 60 years or more but less than 80 Years at any time during the PY, the basic exemption limit is same i.e., Rs. 3,00,000.   @ In case of individual, being resident in India, who is age of 80 years or more at any time during the PY, the basic exemption limit is same at Rs. 5,00,000.   In case of Partnership firms [Including LLP], the rate of tax shall be 30%.   In case of companies, the rate of taxes shall be same as specified in the Finance Act 2014. Surcharge shall be levied @ 7% [earlier ​5​ %] [2% in case of non domestic company] in case of domestic companies if total income exceeds Rupees One Crore but does not exceed Rs 10 Crores. If Total Income exceeds Rupees Ten Crores, surcharge shall be levied @ 1 ​2​ % [5% in case of non domestic company]   Surcharge has been increased ​by 2%​(FROM 5% TO 7%)  in ​CASE of domestic company having income of more than RS One Crore but upto RS Ten Crore, Similarly It has been increased by 2%( From 10% to 12%) in case of Domestic Company Having Income of more than RS Ten Crore  subject to marginal relief.   Education cess and SHEC shall be continued to be levied in all cases.	1-4-2015
195	TDS on Payment to Non resident	•TDS on amount paid to Non Resident Person [other than Company] shall be increased by surcharge of 12% where the income paid or likely to be paid and subject to deduction exceeds one crore rupees.	1-4-2015
269SS	Loan accepted or taken	•Section 269SS has been amended so as to include the following:   -No Person shall take or accept from any other person any specified sum otherwise than by way of account payee cheque or account payee bank draft or use of electronic clearing system through a bank account-   - if such specified sum or aggregate amount of such sum so taken or accepted; AND   -any sum taken or accepted earlier by such person from the depositor and remaining unpaid as on the date of taking such specified sum,   Is Rs 20,000 or More   For the purposes of this section –   "Specified Sum" means any sum or money receivable, whether as advance or otherwise, in relation to transfer of an immovable property, whether or not the transfer takes place.	1-6-2015
269T	Repayment of Loan	• Section 269T has been amended so as to provide that no person shall repay any specified advance received by it otherwise than by way of account payee cheque or bank draft or by way of ECS, if the aggregate amount of specified advances including interest are Rs 20,000 or more   • The specified advance shall mean any sum of money in the nature of an advance, by whatever name called, in relation to transfer of an immovable property whether or not the transfer takes place.	1-6-2015
Chapter XA	GAAR	• Provisions relating to General Anti Avoidance Tax has been deferred and made applicable to Income of FY 2017-18	1-4-2015
32AD	Additional Investment Allowance	• Additional Investment Allowance of amount equal to 15% of the cost of new asset acquired and installed by the assessee if -   -he sets he sets up an undertaking or enterprise for manufacture or production of any article or thing on or after 1st April, 2015 in any notified backward areas in the State of Andhra Pradesh and the State of Telangana; AND   - the new assets are acquired and installed for the purposes of the said undertaking or enterprise during the period beginning from the 1st April, 2015 to 31st March, 2020   This deduction is available over and above the existing deduction available under Section 32AC of the Act.	1-4-2015
32(1) (iia)	Additional Depreciation	• Additional Depreciation @ 35% of the Cost of New Plant & Machinery shall be allowed to manufacturing undertaking or enterprise which is set up in notified backward area of State of Andhra Pradesh and Telangana.	1-4-2015
194LD	TDS on Interest to FII and QFI	• Lower Withholding tax at the rate of 5% in case of interest payable to FII and QFI on their investments in Government Securities and Rupee denominated Corporate Bonds has been extended upto 30th June 2017	1-6-2015
115A	Tax on Royalty and Fees for Technical Services	• Tax on Royalty or Fees for technical services paid to non resident tax payer has been reduced to 10% of Gross Amount of Such Income	1-4-2015
80JJAA	Deduction for employment of new workmen	• Deduction @ 30% of additional wages paid to new regular workmen employed by Indian Company [deriving profits from manufacture of goods in a factory] shall be allowed for three AYs.   • Section is amended to as to extend the said benefit to all categories of assessees having manufacturing units   • Section is amended to provide benefit of deduction to small assessees employing 50 Workmen. [Additional Wages mean the wages paid to new regular workmen in excess of 50 Workmen employed during the previous year]	1-4-2015
Second Proviso to Section 32(1)	Depreciation	• If any new asset is acquired and put to use for less than 180 days during the year, additional depreciation shall be allowed @ 50% in year of acquisition and installation and balance 50% in immediately succeeding previous year	1-4-2015
9		• Recommendation of Shome Committee implements as regards taxability of income arising from transfer of capital asset being share or interest in a entity or company incorporated outside india where share or interest derives, directly or indirectly, its value from assets located in India.	1-4-2015
92BA	Specified Domestic Transaction	• The limit of aggregate of specified domestic transaction entered into by assessee in the previous year has been increased to Rs 20 Crores ​(earlier RS 5CRORE)​ for the transaction to be treated as 'Specified Domestic Transaction'	1-4-2015
2(15)	Definition of Charitable Activity	• Definition of Charitable Purpose has been amended to provide that the advancement of any other object of general public utility shall not be a charitable purpose, if it involves the carrying on of any activity in the nature of trade, commerce or business, or any activity of rendering any service in relation to any trade, commerce or business, for a cess or fee or any other consideration, irrespective of the nature of use or application, or retention, of the income from such activity, unless,-   (i) such activity is undertaken in the course of actual carrying out of such advancement of any other object of general public utility; and   (ii) the aggregate receipts from such activity or activities, during the previous year, do not exceed twenty percent. of the total receipts, of the trust or institution undertaking such activity or activities, for the previous year	1-4-2015
255(3)	Disposal Limits of Single Bench of ITAT	• A Bench constituting single member may dispose a case where total income of assessee as computed by AO does not excees Rs 15 Lakhs [Earlier Rs 5 Lakhs]	1-6-2015
	Wealth tax Act 1957	• Levy of Wealth tax under Wealth Tax Act, 1957 is abolished w.e.f. 1-4-2015   • It is also proposed that information relating to assets which is currently required to be furnished in the wealth-tax return shall be captured by suitably modifying income-tax return.	1-4-2015
80C	Deduction	• Any sum paid or deposited during the year in Sukanya Samriddhi Scheme in the name of any Girl Child of any individual or in the name of girl child for whom such individual is a legal guardian, shall be eligible for deduction under this section	1-4-2014 Retrospective
10(11A)	Exemption	• An payment from any account opened in accordance with the Sukanya Samriddhi Account Rules, 2014 shall not be included in the total income of the assessee. As a result, the interest accruing on deposits in, and withdrawals from any account under the scheme would be exempt.	1-4-2014 Retrospective
80D	Mediclaim	• Deduction Limit has been raised to Rs 20,000 for Individuals and HUFs and Rs 30,000 for Senior Citizens   • If Very Senior Citizens [being resident in India and aged 80 years or More] do not have any health Insurance and any medical expenditure is incurred in respect of very senior citizen, such expenditure not exceeding Rs 30,000 shall be allowed as deduction.	1-4-2015
80DDB	Deduction for medical treatment of certain chronic and protracted disease	• Relaxation has been given as regards obtaining a certificate from Doctors working in a Government Hospital. it is proposed to amend section 80DDB so as to provide that the assessee will be required to obtain a prescription from a specialist doctor for the purpose of availing this deduction.   • Further, a higher deduction of Rs 80,000 shall be allowed for expenses incurred on medical treatment of very Senior Citizen [being resident in India and aged 80 years or More]	1-4-2015
80DD and 80U	Deduction for Person with Disability	• Deduction Limits u/s 80U and 80DD has been increased from Rs 50,000 to Rs 75,000 for person with disability.   • Deduction Limit has been increased from Rs 1,00,000 to Rs 1,25,000 for persons with severe disability	1-4-2015
80CCC	Deduction for Annuity Plan of LIC	• Deduction Limit Increased from Rs 1,00,000 to Rs 1,50,000 within the overall limit prescribed us 80CCE	1-4-2015
80CCD	Contribution to NPS	• Deduction Limit has been increased from Rs 1,00,000 to Rs 1,50,000   • Additional Deduction of Rs 50,000 provided in respect of any amount paid for contribution made by any individual assessees to NPS	1-4-2015
203A	TAN	• Section 203A amended to provide that the requirement of obtaining and quoting TAN shall not apply to notified deductors and collectors.	1-6-2015
80G	Deduction for donations made	•100% deduction allowed for donation made to National Fund for Control of Drug Abuse	1-4-2015
80G	Deduction for donations made	• 100% Deduction allowed for donations made by DOMESTIC DONORS to Clean Ganga Fund [Any sum paid by way of CSR u/s 135 of Companies Act, 2013 will not be eligible for deduction.   • 100% Deduction allowed for donations made by anu Donor to Swacch Bharat Kosh [Any sum paid by way of CSR u/s 135 of Companies Act, 2013 will not be eligible for deduction[	1-4-2014 Retrospective
9	Interest to Non Residents	• in the case of a non-resident, being a person engaged in the business of banking, any interest payable by the permanent establishment in India of such non-resident to the head office or any permanent establishment or any other part of such non-resident outside India shall be deemed to accrue or arise in India and shall be chargeable to tax in addition to any income attributable to the permanent establishment in India and the permanent establishment in India shall be deemed to be a person separate and independent of the non-resident person of which it is a permanent establishment and the provisions of the Act relating to computation of total income, determination of tax and collection and recovery would apply	1-4-2015
11	Accumulation of Income by Charitable Trusts	• Accumulation of income other than 15% shall be allowed provided prescribed Form 10 is filed before due date of filing return of income.   • Benefit of accumulation of 15% of Income shall not be available if return of income is not filed within due date of filing of return of income	1-4-2015
115JB	• MAT	• Share of a Member of AOP, in the income of the AOP, on which no income–tax is payable in accordance with the provisions of section 86 of the Act, shall be excluded while computing the MAT liability of the member [Company] under 115JB of the Act   • The expenditures, if any, debited to the profit and loss account, corresponding to such income (which is being proposed to be excluded from the MAT liability) are also proposed to be added back to the book profit for the purpose of computation of MAT.	1-4-2015
151	Saction for Notice for Reassessment	• No Notice u/s 148 shall be issued by any AO upto Four Years from the end of relevant assessment year without the approval of Joint Commissioner   • No Notice u/s 148 shall be issued by any AO beyond Four Years from the end of relevant assessment year without the approval of Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner	1-6-2015
263	Revision	• The amendment provides that an order passed by the Assessing Officer shall be deemed to be erroneous in so far as it is prejudicial to the interests of the revenue, if, in the opinion of the Principal Commissioner or Commissioner,—   (a) the order is passed without making inquiries or verification which, should have been made;   (b) the order is passed allowing any relief without inquiring into the claim;   (c) the order has not been made in accordance with any order, direction or instruction issued by the Board under section 119; or   (d) the order has not been passed in accordance with any decision, prejudicial to the assessee, rendered by the jurisdictional High Court or Supreme Court in the case of the assessee or any other person.	1-6-2015
194C(6)	TDS on Payment to Transporters	• Relaxation from non deduction of TDS shall be allowed only to payment made to such transporters who are engaged in the business of transport and who is eligible to compute income as per provisions of Section 44AE of the Act [i.e., a person who is not owning more than 10 goods carriage at any time during the previous year] AND who has given a declaration to this effect along with his PAN.   • TDS has to be deducted in all other cases of payments made to transporters [Whether payment made by person engaged in business of transport or otherwise	1-6-2015
194A	TDS on Interest	• The definition of Time Deposit has been amended to include Recurring Deposit within its purview.   • TDS to be deducted if Interest payment on Time Deposit exceeds Rs 10,000   • Co Operative Banks shall be required to deduct tax at source on Interest Payment on Time Deposits of its members.   • Computation of Interest Income for the purposes of deduction of tax under Section 194A of the Act shall be made with reference to income credited or paid by the banking company or co operative bank or public company which has adopted core banking solutions. The threshold limit of interest per payee for the purposes of TDS shall be computed bank wise and not branch wise.   • Deduction of tax on interest paid on compensation amount awarded by the Motor Accident Claim Tribunal shall be made only AT THE TIME OF PAYMENT if the amount of payment or aggregate of such payments exceeds Rs 50,000	1-6-2015
200A	Processing of TDS Returns	• Section amended to provide computation of fee payable under Section 234E of the Act at the time of processing of TDS Statement under Section 200A of the Act	1-6-2015
206C	TCS	• Section amended to allow collector of tax at source to furnish TCS Correction Statement	1-6-2015
195	TDS on Payment to Non resident	• Penalty of Rs 1,00,000 shall be levied in case of non furnishing of information or furnishing of incorrect information of prescribed sum except where reasonable cause is shown	1-6-2015
6	Residence of Person	A person being a company shall be resident in India in any previous year, if-   -it is an Indian Company; or   -its place of effective management, at any time in that year, is in India   • place of effective management to mean a place where key management and commercial decisions that are necessary for the conduct of the business of an entity as a whole are, in substance made.   • In due course, a set of guiding principles to be followed in determination of POEM would be issued for the benefit of the taxpayers as well as, tax administration.	1-4-2015
288	Auditor Disqualification	• Section 288 of the Act is amended to provide that an Chartered Accountant who is not eligible to be appointed as auditor of a company as per the provisions of sub-section (3) of section 141 of the Companies Act, 2013 shall not be eligible for carrying out any audit or furnishing of any report/certificate under any provisions of Income Tax Act in respect of that company.   • In case of Non Companies, a Chartered Accountant shall not be eligible for carrying out any audit or furnishing of any report/certificate in following cases –   -In case assessee is HUF, if he is a member of such HUF   -In case assessee is AOP, if he is a member of such AOP   -In case assessee is a Firm, if he is a partner of such firm   -In case assessee is a trust or institution, if he is amongst any person referred to in clause (a), (b),(c) and (cc) of Section 13(3);   -If he is relative of any person enlisted hereinbefore   -If he is officer or employee of any assessee   -If he is a partner, or in employment, of any officer or employee of the assessee   -If he has any business relation of prescribed nature, whether directly or indirectly, with the assessee   -If he has become insolvent   -if he has been convicted by a court for any offence involving fraud   -If he has been convicted by a court of an offence involving fraud and a period of ten years has not elapsed from the date of such conviction.   -If he or his relative or partner-   1. Is holding any security of, or interest in, the assessee [Exemption of Value of Rs 1,00,000 provided to a RELATIVE ONLY].   2. Is indebted to the assessee [Exemption of Value of Rs 1,00,000 provided to a RELATIVE ONLY].   3. Has given any guarantee or provided any security in connection with the indebtedness of any third person to the assessee. [Exemption of Value of Rs 1,00,000 provided to a RELATIVE ONLY].	1-6-2015
271	Penalty for concealment of income	• "Amount of Tax Sought to be evaded" shall be sum of tax sought to be evaded under general provisions and tax sought to be evaded under Section 115JB or 115JC.	1-4-2015

Service Tax Amendments In Budget 2015

Ist Full Year Budget of New Government has been introduced in Parliament on 28th February, 2015. This Article intends to outline key amendments made in Service Tax.

 

A. Changes effective from enactment of Finance Bill

 

I. Rate of service tax

 

Present rate: 12.36% (12% + 3% as Education Cess)

 

Revised rate: Consolidated 14% (subsuming Education & Secondary Education Cess)

 

Impact: Cost of all services to get costlier viz. food, flats, insurance, mobile, transport to name a few.

   

II. Enabling Provision for Swachh Bharat Cess (Date to be notified)

 

An enabling provision is being incorporated to empower the Central Government to impose a Swachh Bharat Cess on all or any of the taxable services at 2% on the value of such taxable services.

 

As per Budget Speech by FM, the same shall be notified, if required.

 

III. Negative List compressed and consequent change in Exemptions.

 

1. Admission to Entertainment events etc. in service tax net

 

Present: Clause 'admission to entertainment event or access to amusement facility' is at present exempted under Negative List.

 

Proposed: The same is being omitted and exemption is being provided under Mega Exemption Notification 25/2012 on certain specific events viz. Theatrical/cinematographic events, recognised sports event and award functions/concerts/musical performance (in case consideration upto Rs. 500 per head).

 

Impact: Service Tax shall be levied on the service provided by way of access to amusement facility providing fun or recreation by means of rides, gaming devices or bowling alleys in amusement parks, amusement arcades, water parks and theme parks.

 

2. Manufacture of alcoholic liquor for human consumption under service tax.

 

Present: Clause 'any process amounting to manufacture or production of goods' is covered in negative list

 

Proposed:

 

i. The same is being amended to exclude service by way of carrying out any processes for production or manufacture of alcoholic liquor for human consumption.

 

ii. Consequently, Notification 25/2012 is being amended to exclude intermediate production of alcoholic liquor for human consumption from its ambit.

 

Impact: Service Tax shall be levied on contract manufacturing/job work for production of potable liquor for a consideration.

 

3. Not only Support Services, but all services by Government taxable

 

Present: Presently, services provided by Government or a local authority, excluding certain services specified under clause (a) of section 66D, are covered by the Negative List. Service Tax applies on the "support service" provided by the Government or local authority to a business entity.

 

Proposed: An enabling provision is being made to exclude all services provided by the Government or local authority to a business entity from the Negative List. Consequently, the definition of "support service" is being omitted. Further to address confusion, term 'Government' is being defined in Finance Act.

 

Impact: As and when this amendment comes into effect, All services provided by the Government or local authority to a business entity, except the services that are specifically exempted, or covered by any another entry in the Negative List, shall be liable to service tax.

 

4. Activities in respect of Chit funds and lotteries taxable

 

On account of contrary views by Courts, Government has clarified by way of explanation in Definition of Service and Negative List to levy Service Tax on the services provided by:

 

(a) chit fund foremen by way of conducting a chit.

 

(b) 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.

 

IV. Other Amendments in Finance Act, 1994

 

1) Reimbursable Expenditure includable in value of taxable service

 

An amendment is being made in Section 67 to include following as part of consideration for value of taxable services:-

 

i. all reimbursable expenditure or cost incurred and charged by the service provider.

 

ii. amount retained by the distributor or selling agent of lottery from gross sale amount of lottery ticket, or, as the case may be, the discount received, that is the difference in the face value of lottery ticket and the price at which the distributor or selling agent gets such tickets.

 

Impact:- This will nullify landmark judgment of Delhi High Court in case of Intercontinental Consultants & Technocrats Pvt. Ltd. wherein HC has quashed Rule 5(1) of Service Tax Rules, 1994 which provide for inclusion of expenditure or costs incurred by the service provider in the taxable value.

 

2) Section 73 is being amended in the following manner:

 

(a) a new sub-section (1B) is being inserted to provide that recovery of the Service Tax amount self-assessed and declared in the return but not paid shall be made under section 87, without service of any notice under sub-section (1) of section 73; and

 

(b) sub-section (4A) that provides for reduced penalty if true and complete details of transaction were available on specified records, is being omitted.

 

3) Rationalisation of Penalties - Section 76 & 78

 

	Section 76	Section 78
When applicable	Cases other than fraud, suppression etc.	Fraud, Collusion, wilful misrepresentation Suppression,
Maximum	10% of Service Tax	100% of Service Tax
In case ST+ Interest+ Penalty(sec 78) paid within 30 days of Show Cause Notice	No Penalty	15% of Service tax
In case ST+ Interest+ Penalty paid within 30 days of Order of CE Officer	25% of penalty imposed	25% of Service tax
In case ST amount subsequently reduced in Appellate Order	Benefit of reduced penalty (25%) available if ST+ Interest +Reduced Penalty paid within 30 days of such order.

 

A transition provision by way of Section 78B is being provided in respect of pending cases.

 

4) Section 80 struck off

 

The most beneficial Section 80 of Finance Act, 1994 which provides for waiver of penalty in certain bonafide circumstances is being omitted. It is surprising that no reasonable justification has been provided in the Budget where it is being frequently used by Courts to waive penalty in unreasonable demands. This ensures penalty for every non-payment of service tax whatever is the reason.

 

5) Appeals in respect of issue pertaining to rebate of service tax on input services or inputs used in export of service shall be lied before Central Government as Revision Application as against present before CESTAT.

 

6)  The facility of Advance Ruling is being extended to all resident firms by specifying such firms under section 96A (b)(iii) of the Finance Act, 1994        

 

B. Changes effective from 01.04.2015 unless specified otherwise.

 

V. Review of Exemptions (Mega Exemption Notf. No. 25/2012)

 

Several major exemptions have been withdrawn in this Budget tabulated as under:

 

Sr. No.	Service	Exemption withdrawn /limited
12	Construction related service provided to the Government, a local authority or a governmental authority	a. a civil structure or  any other original works meant predominantly for  use other than for commerce, industry, or any other business or profession;   b. a structure meant predominantly for use  as (i) an educational, (ii) a clinical, or  (iii) an art or cultural establishment   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;
14	Construction related services	Construction related works pertaining to anairport or port
16	services provided by a performing artist in folk or classical art form of (i) music, or (ii) dance, or (iii) theatre	Exempt upto Rs 1,00,000 for a performance
20& 21	Transport by Road/Rail/Vessel	Exemption withdrawn on all activities except transportation of food grains including rice and pulses, flour, milk and salt and agriculture produce
29	Sub-Contract Services	(a) a mutual fund agent to a mutual fund or assets management company,   (b) distributor to a mutual fund or AMC,   (c) selling or marketing agent of lottery ticket to a distributor.
32	Telephone related service	(a) Departmentally run public telephone;   (b) Guaranteed public telephone operating only local calls;   (c) Service by way of making telephone calls from free telephone at airport and hospital where no bill is issued

 

New Exemptions introduced as under:

 

Sr. No.	Service
2	Transportation of a patient in an ambulance
26A	Life insurance service provided by way of Varishtha Pension Bima Yojna
43	Service provided by a Common Effluent Treatment Plant operator for treatment of effluent
44	Pre-conditioning, pre-cooling, ripening, waxing, retail packing, labeling of fruits and vegetables
45	Admission to a museum, zoo, national park, wild life sanctuary and a tiger reserve
46	Exhibition of movie by the exhibitor (theatre owner) to the distributor or an association of persons consisting of such exhibitor as one of it's members
*	transport of export goods by road from the place of removal to a land customs station (LCS)

*By amendment in Notf. No. 31/2012.

 

VI. Change in Abatement rates and conditions

 

Particulars	Present taxable rate	Proposed taxable rate
Transport by   (a) Road (Goods) (b) Rail(Goods + Passenger) (c) Vessel(Goods)	25% 30% 40%	30% 30% 30%   Subject to condition that no Cenvat on inputs, input services and capital goods is allowed.**
Air Transport of Passenger other than in Economy Class	40%	60%
Services provided in relation to chit	70%	100%

 

**Earlier in case of transport by rail, there was no restriction on Cenvat credit, now aligned for all modes of transport.

 

VII. Changes in Reverse Charge Mechanism

 

1. Manpower supply and security services in full reverse charge

 

Present: Partial Reverse Charge is applicable in case of Manpower Supply and Security Service i.e. 50%  payable by Service provider and balance 50% by Service Receiver when provided by an individual, HUF, or partnership firm to a body corporate

 

Proposed: The same is being brought to full reverse charge i.e. entire service tax payable by Service Receiver.

 

Impact: This will reduce unnecessary compliance burden on small contractors and agencies.

 

2. Following Services have been brought under full reverse charge consequent to withdrawal of the exemption on such services -

 

(i) Service provided by mutual fund agents, mutual fund distributors; and

(ii) Service provided by agents of lottery distributor.

 

3. Aggregator or Representative made liable to pay service tax

 

In case of service provided or agreed to be provided by a person involving an aggregator in any manner, the aggregator or representative office located in India is being made liable to pay service tax if the service is so provided using the brand name of the aggregator in any manner under reverse charge scheme. If an aggregator does not have any presence, including that by way of a representative, in such a case any agent appointed by the aggregator shall pay the tax on behalf of the aggregator.

 

The term "aggregator" has been defined to means a 'person, who owns and manages a web based software application, and 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'.

 

VIII. Amendments in Rules (w.e.f. 01.03.2015):

 

A.  Service Tax Rules, 1994

 

(1) To move towards ease of doing business, it has been prescribed to grant registration for single premises within 2 days of filing of application. The modalities of the same have been issued by Order No. 1/15-ST, dated 28.2.2015 w.e.f. 01.03.2015.

 

(2) A provision for issuing digitally signed invoices is being added along with the option of maintaining of records in electronic form and their authentication by means of digital signatures.

 

(3) To align with revised general service tax rate, alternative rates of service tax under optional scheme for following services have been revised as under (effective on enactment of Finance Bill):

 

Service	Present	Revised
Air Travel Agent	Domestic- 0.6% International- 1.2%	Domestic- 0.7% International- 1.4%
Life Insurance Service	Ist Year- 3% Subsequent Years-1.5%	Ist Year- 3.5% Subsequent Years-1.75%
Money Changers' Services	Upto Rs. 1 Lac- 0.12% subject to max. Of Rs. 30 1 Lac-10 Lac: 0.06% Above 10 Lac: 0.012%	Upto Rs. 1 Lac- 0.14% subject to max. Of Rs. 35 1 Lac-10 Lac: 0.07% Above 10 Lac: 0.014%
Service of organizing Lottery	Guaranteed payout>80%:Rs. 7000 Guaranteed Payout<80%: Rs. 11000	Guaranteed payout>80%:Rs. 8200 Guaranteed Payout<80%: Rs. 12800

 

B. Cenvat Credit, 2004

 

1. Cenvat Credit allowed on service tax payment in partial reverse charge

 

Present: In cases where partial reverse charge is applicable, Service Recipient can avail the credit only after payment of the value of input service and service tax (unlike Full reverse charge where credit is allowed on payment of service tax).

 

Proposed: The provision has been aligned to allow Cenvat Credit in such cases on payment of service tax.

 

2. Time period for availment of credit extended to one year

 

Present: The time period for availment of Cenvat credit is 6 months from the date of invoice (introduced in Budget 2014.

 

Proposed: Now it has been extended from 6 months to 1 year.

 

Impact: It is a major relief for all manufacturers and service providers.

 

(3) Certain other changes are being made in the provisions of the Cenvat Credit Rules, 2004, which, inter-alia, include allowing Cenvat Credit on input and capital goods received directly by job workers, defining "export goods" for the purposes of rule 5, defining "exempt goods" for the purposes of rule 6, making applicable the provision of rule 9(4) to importer dealers, authorizing imposition of restrictions on registered dealers under rule 12AAA, and provisions relating to recovery of credit wrongly taken and imposition of penalty.