The revised rate of 14% is applicable from 1-6-2015 instead of 12.36% hereto. In accordance with S.67A, rate of service tax is applicable on the value of taxable service, as may be in force at the time when such service is provided or agreed to be provided. Once the service or any portion thereof (under Continuous Supply of Service) is completed upto the appointed day i.e. 31-5-2015, the old rate would apply. However, as per R.4 of Point of Taxation Rules, 2011 (POTR), old rate of 12.36% shall apply in case the activity is carried on up to 31st May 2015 and either a bill is issued or payment received prior to that date. Thus, the POTR exceeds the provisions of the Act which may not be correct as the rules are sub-servant to the provisions of the Act. It may however be noted that taking this position may invite litigation.
The following is the chart depicting how the service tax rates would apply:
|
Sl. No. |
Description of taxable service |
Abatement /Compo- sition |
Conditions for availment of abatement |
Rate from 1-6-2015 onwards |
Reverse charge |
|
|
% of ST payable by provider |
% of ST payable by receiver |
|||||
| 1. |
Service of Goods Transport Agency in relation to transportation of goods |
70% |
Non availability of CENVAT on
• Inputs ; |
4.20% | NIL | 100% |
| 2. | Transportation of goods by rail | 70% |
Non availability of Cenvat on: • Inputs ; • Capital Goods • Input services*** |
4.20% | 100% | NIL |
| 3. | Transport of passengers with or without accompanied belongings by rail | 70% |
Non availability of Cenvat on: • Inputs ; • Capital Goods • Input services • There may be dual tax on transportation of passengers by rail as credit of input service in relation to transport of passengers will not be allowed. |
4.20% | 100% | NIL |
| 4 |
Transport of passengers by air with or without accompanied belongings in- (i) Economy class (ii) Other than economy class |
60% 40% |
Non availability of Cenvat on: • Inputs ; |
5.60% 8.40% |
100% 100% |
NIL NIL |
| 5. | Transport of goods in a vessel | 70% |
Non availability of Cenvat on: • Inputs ; Note: In nut shell all transportation of goods and passengers by way of road and rail is now subject to tax on 30% instead of different values with the condition of non availability of Cenvat credit on input, capital goods and input services used for providing the output services. |
4.20% | 100% | NIL |
| 6. | Chit Fund | Nil |
The services of foreman of chit fund is specifically brought into tax net. |
14% | 100% | NIL |
| 7. |
Construction of a complex, building, civil structure or a part thereof, intended for a sale to a buyer, wholly or partly except where entire consideration is received after issuance of completion certificate by the Competent authority: a) For residential unit satisfying both the following conditions namely;
i) The carpet area of the unit is less than 2000 sq. ft and ii) The amount charged for the unit is less than Rs. 1 Crore |
75% |
Non availability of Cenvat on: • Inputs |
3.50% | 100% | NIL |
| b) For other than the (a) above |
70% |
4.20% |
100% |
NIL |
||
| 8. |
Works Contract Service A. Original works |
60% |
Non availability of Cenvat on: • Inputs 8.652% |
5.60% | 50%(if service provider is Indi-vidual, HUF Proprie-tary or Partner-ship, AOP located in TT & receiver is a business entity – body corporate | 50% |
|
B. In case of works contract, not covered under sub-clause (A), including works contract entered into for, (i) Maintenance or repair or reconditioning or restoration or servicing of any goods; or (ii) Maintenance or repair or completion and finishing services such as glazing or plastering or floor and wall tiling or installation of electrical fittings of immovable property. |
30% | 9.8% | ||||
| 9. |
Renting of motor cab – a) Abated value. |
60% |
Please see note 1 below: |
5.60% |
NIL (if service provider is Individual, HUF Proprietary or Partnership, AOP located in TT & receiver is a business entity – body corporate |
100% |
| b) Non Abated value | – | – | 14% |
50% (if service provider is Individual, HUF Proprietary or Partnership, AOP located in TT & receiver is a business entity – body corporate |
50% | |
| 10. |
Transport of passengers, with or without accompanied belongings, by — (a) a contract carriage other than motorcab. (b) a radio taxi.] |
Non availability of Cenvat on: • Inputs • Input service Capital goods |
5.60% | NIL(if service provider is Individual , HUF Proprietary or Partnership, AOP located in TT & receiver is a business entity – body corporate | 100% | |
| 11. |
Restaurant Service: Service portion in an activity wherein goods, being food or any other article of human consumption or any drink (whether or not intoxicating) is supplied in any manner as a part of the activity, at an air conditioned or centrally heated restaurant |
60% |
Non availability of Cenvat on: • Inputs • Input service Capital goods |
5.60% | 100% | NIL |
| 12. |
Catering Service: Service portion in outdoor catering wherein goods, being food or any other article of human consumption or any drink (whether or not intoxicating) is supplied in any manner as a part of such outdoor catering. |
40% |
Non availability of Cenvat on: • Inputs |
8.40% | 100% | NIL |
| 13. | Renting of hotels, inns, guest houses, clubs, campsites or other commercial places meant for residential or lodging purposes. | 40% |
Non availability of Cenvat on: • Inputs |
8.40% | 100% | NIL |
| 14. | Bundled service by way of supply of food or any other article of human consumption or any drink, in a premises (including hotel, convention centre, club, pandal, shamiana or any other place, specially arranged for organising a function) together with renting of such premises. | 30% |
Non availability of Cenvat on: • Inputs • Capital goods |
9.80% | 100% | NIL |
| 15. | Service of insurance agent {Rule 2(d)(i)} | – |
Non availability of Cenvat on: Inputs |
14% | NIL | 100% |
| 16. |
Services of recovery agent |
– | – | 14% |
NIL (if service provider is recovery agent |
100% (if service receiver is banking company |
| 17. |
Sponsorship services |
– | – | 14% | NIL |
100% (If body corporate or partnership firm located in taxable territory |
| 18. |
Services of arbitral tribunal |
– | – | 14% | NIL | 100% (If receiver is business entity) |
| 19. |
Legal service of advocate or advocate firms |
– | – | 14% | NIL |
100% ( if business entity having turnover exceeding Rs.10L pa, located in taxable territory |
| 20. | Services of director to company or body corporate (the word body corporate are added w.e.f. 11-7-2014) | – | – | 14% | NIL | 100% (if receiver is company or body corporate) |
| 21. |
Supply of manpower for any purpose or security service |
– | – | 14% | NIL (if service provider is Individual, HUF Proprietary or Partnership, AOP located in taxable territory) | 100%( if business entity registered as body corporate located in the taxable territory) w.e.f 01.04.2015 100% ST is payable by the receiver |
| 22. | Services received from non-taxable territory (import of service) | – | – | 14% |
NIL (SP located in Non taxable territory) |
100% (SR located in taxable territory) |
| 23. |
Services by a tour operator in relation to – (i) a package tour |
75% |
Non availability of Cenvat on: • Inputs • Capital goods |
3.5% | 100% | NIL |
| (ii) a tour, if the tour operator is providing services solely of arranging or booking accommodation for any person in relation to a tour | 90% | 1.236% | 1.4% | 100% | NIL | |
| (iii) any services other than specified at (i) and (ii) above. | 60% | 4.944% | 5.60% | 100% | NIL | |
| 24. | Services in relation to financial leasing including hire purchase | 90% |
Non availability of Cenvat on: • Inputs • Capital goods |
1.4% | 100% | NIL |
| 25. |
Booking of air tickets by air travel agent |
– | – |
Domestic booking – 0.7% Inter-national bookings – 1.4% |
100% | NIL |
| 26. |
Life insurance service |
– | – | First year – 3.5% Subse-quent year – 1.75% | 100% | NIL |
| 27. |
Money changing service (i) Gross amt of currency exchanged for an amt up to Rs. 100000/- |
– | – | 0.14% or Minimum Rs. 35/- | 100% | NIL |
| (ii) Gross amt of currency exchanged for an amt of rupees exceeding Rs. 100000/- and up to Rs. 10,00,000/- | – | – | Rs. 140/- and 0.07% | 100% | NIL | |
| (iii) Gross amt of currency exchanged for an amt of rupees exceeding Rs. 10,00,000/- | – | – | Rs. 770 and 0.014% or maximum of Rs. 7,000/- | 100% | NIL | |
| 28. | Mutual fund agent or distributor | – | – | 14% | NIL | 100% |
| 29. | Selling or marketing agent of lottery tickets | – | – | 14% | NIL | 100% |
| 30. | Service providers providing services under the brand name of aggregator | – | – | 14% | NIL | 100% |
| 31. | All services except those mentioned above. | – | – | 14% | 100% | NIL |
*** There may be dual tax on transportation of goods by rail as credit of input service in relation to transport of goods by rail, road or air will not be allowed.
Note 1: In relation to renting of motor cab on abated value the cenvat credit will be allowed on the following conditions:
(i) CENVAT credit on inputs and capital goods, used for providing the taxable service, has not been taken under the provisions of the CENVAT Credit Rules, 2004;
(ii) CENVAT credit on input service of renting of motorcab has been taken under the provisions of the CENVAT Credit Rules, 2004, in the following manner :
(a) Full CENVAT credit of such input service received from a person who is paying service tax on forty per cent of the value; or
(b) Up to forty per cent CENVAT credit of such input service received from a person who is paying service tax on full value;
(iii) CENVAT credit on input services other than those specified in (ii) above, has not been taken under the provisions of the CENVAT Credit Rules, 2004.]
J. D. Nankani
National President