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31 Mar 2016

Amendments vide Finance Bill, 2016 applicable wef. 1st April. 2016

The Finance Bill, 2016 which was brought into by the Union Budget, 2016-17 come out with no. of amendments applicable from varied dates. Changes which were effective from the 1st day of April, stands imbibed are listed as follows:-

A. Changes relating to Mega Exemption Notification

Exemptions Withdrawn

  • Exemption in respect of Services provided by a senior advocate to an advocate or partnership firm of advocates withdrawn

  • Services of transport of passengers by ropeway, cable car or aerial tramway withdrawn

Exemptions Introduced

  • Services of assessing bodies empanelled centrally by Directorate General of Training, Ministry of Skill Development & Entrepreneurship

  • Services provided by way of skill/vocational training by Deen Dayal Upadhyay Grameen Kaushalya Yojana training partners

  • The threshold exemption limit of consideration charged for services provided by a performing artist in folk or classical art forms of music, dance or theatre, increased from Rs 1 lakh to Rs 1.5 lakh per performance.

  • Services of life insurance business provided by way of annuity under the National Pension System (NPS) regulated by Pension Fund Regulatory and Development Authority (PFRDA) of India

  • Services of general insurance business provided under “Niramaya” Health Insurance scheme launched by National Trust for the Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation and Multiple Disability in collaboration with private/public insurance companies.

  • Services provided by Employees’ Provident Fund Organisation (EPFO) to employees.

  • Services provided by Insurance Regulatory and Development Authority (IRDA) of India.

  • Services provided by Securities and Exchange Board of India (SEBI) set up under 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.

  • Services provided by National Centre for Cold Chain Development under Department of Agriculture, Cooperation and Farmer’s Welfare, Government of India, by way of knowledge dissemination

  • Services provided by Biotechnology Industry Research Assistance Council (BIRAC) approved biotechnology incubators to the incubatees.

B. Changes wrt. Reverse Charge mechanism

  • Services by Mutual Fund Agents to Asset Management Co. put under reverse charge

  • Liability to pay service tax on any service provided by Government or a local authority to business entities shall be on the service recipient.

C. Amendments wrt. Abatement Notification no. 26/2012-ST vide Notification no. 08/2016-ST dt. 01.03.2016

  • Transport of Goods by Rail:- No change in Rates ; CENVAT Credit wrt. Input service now being allowed

  • Transport of goods in containers by rail by any person other than Indian Railways:- Newly introduced; abatement @ 60% ; Credit allowed for input services

  • Transport of passengers, with or without accompanied belongings by rail: CENVAT credit of input services being allowed now

  • Services of goods transport agency in relation to transportation of goods other than used household goods:- Substituted for “Services of goods transport agency in relation to transportation of goods”.

  • Services of goods transport agency in relation to transportation of used household goods:- Newly Inserted; abatement @ 60 % without allowing any credit

  • Services provided by a foreman of chit fund in relation to chit:- Newly inserted entry, however, earlier said entry existed which was omitted wef. 1st April, 2015; abatement @ 30% without availment of any credit

  • Transport of Passengers, with or without accompanied belongings, by- - a stage carriage: Added now, earlier not existed in this abated entry

  • Transport of goods in a vessel:- Credit of input services could be availed now

  • Services by a tour operator:- Only two abatement rates introduced @ 90% and 70% for the purposes of booking accommodation & for other services, respectively. Definition of package Tour deleted

  • Construction of a complex, building, civil structure or a part thereof:- Uniform abatement @ 70% is now being prescribed, subject to fulfillment of the existing conditions.

D. Changes to Service tax Rules, 1994

  • Benefit of (a) quarterly payment of service tax being extended to OPC and HUF and (b) payment on receipt basis being extended to OPC.

  • Service tax liability on single premium annuity (insurance) policies is being rationalized and the effective alternate service tax rate (composition rate) now being prescribed at 1.4% of the total premium charged

E. Changes in CENVAT Credit Rules, 2004

  • Change in the 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

  • CENVAT credit on inputs and capital goods used for pumping of water, for captive use in the factory, is being allowed

  • Capital goods having value up to Rs. ten thousand per piece are being included in the definition of inputs

  • 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 CENVAT Credit for radio-frequency spectrum, mines etc.

  • Provisions related to calculation of CENVAT Credit attributable to exempted services has been redrafted

  • Change in manner of distribution of CENVAT Credit by Input Service Distributor (ISD) Insertion of new Rule 7B for multiple manufacturing units to maintain a common warehouse for inputs.

  • Change in method for determining whether a particular credit has been utilized vide Rule 14(2) of CCR, 2004

  • Annual Return prescribed for manufacturer of final products or provider of output services vide Rule 9A