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Synopsis of Budget-2014 Impact on Service Tax

Particulars Present Provision Budget Provision Remarks Effective Tax Rate W.e.f.

Category Specific Amendments

Advertisement- Sale of Space Advertisement in websites, conveyance, hoardings , print media not taxable Only Print media non-taxable Print media means Newspapers and Books 12.36% 01-Oct-14
Broker Services-Cross-border transactions Before amendment, Goods broker was liable on basis of location of client unlike location of broker as in case of services Change in Place of Provision of Rules NA 01-Oct-14
Director Services Like a Company, now Director of a Body Corporate also covered under reverse charge Does not cover employee-director 12.36% 11-Jul-14
Education Following is now taxable : Renting of immovable property to educational institution; Conducting entrance test, providing places and faculty for examination 12.36% 11-Jul-14
GTA Services Clarified : Cenvat available under reverse charge even if abatement of 75% claimed by Service Recipient Cenvat disallowed to GTA if abatement claimed 3.09% 11-Jul-14
Lodging Boarding Charges Exemption to any commercial premises where room rent < 1,000/- day Exemption to any room incl. dharamshala etc.  where declared tariff is < 1,000/- day   7.416% 11-Jul-14
Recovery Agent Services Service Provider liable Service Receiver liable Now Banks , Financial Institutions will directly pay tax under reverse Charge 12.36% 11-Jul-14
Repair of Goods (after Import) Goods imported for repair and re-exported without put to use in India: Non-taxable Change in Place of Provision of Rules NA 01-Oct-14
Technical testing for drug trials Exemption to Clinical Research Organization withdrawn 12.36% 11-Jul-14
Works Contract: Value of Service Portion Original Works : 40%, Maintenance/ repair of goods 70%, others 60% Original Works : 40%, Others 70% Valuation Rate clubbed Multiple rates 01-Oct-14
Passenger Transportation by Contract Carriage All exempted AC contract carriage taxable   4.944% 11-Jul-14
Radio Taxi Auto, metered taxi radio taxi not taxable Radio Taxi Now taxable Radio Taxi : Fitted with GPS/GPRS 4.944% 01-Oct-14
Rent-a-Cab No cenvat allowed if abatement Cenvat of another taxi operator allowed Cenvat restricted to 40% of tax on total value 4.944% 11-Jul-14
Tour Operator No cenvat allowed if abatement Cenvat of another tour  operator allowed   Multiple rates 11-Jul-14

Cenvat Credit

Time limit for availment  Inputs: May be taken immediately
Inputs Service: On receipt of Invoice
Within 6 months of date of invoice / challan Earlier no specific time limit to take credit 01-Sep-14
Credit availment in case of Reverse Charge To avail credit, payment of both invoice and service tax necessary; Now only payment of service tax  necessary Provision not applicable to partial reverse charge liability 01-Sep-14
Exports :Proportionate reversal Exports proceeds not received in time, Credit to be reversed If proceeds received within one year of stipulated time, credit reversed can be taken again. Rule 6(8) of CCR, 2004 01-Sep-14

Penal amendments

Interest 18% p.a 18% for delay upto 6 months, 24% for next 6 months and 30% beyond one year Rate increased 01-Oct-14
E-Payment via internet banking Only if tax in prev. year > 1 lac Compulsory for ALL Relief by AC/DC on a case to case basis 01-Oct-14
Penalty Compulsory, 100% of tax, where records were not proper Now upto 50% compulsory where suppression made , even though records proper Suppression case : Mandatory Penalty  06-Aug-14

Procedural amendments

Point of Taxation-Reverse Charge Which ever is earlierL: a) Payment b) if not paid in 6 months as per date of invoice Which ever is earlier: a) Payment b) if not paid in 3 months then immediately after 3 mths. Service Recipient liable under Reverse Charge 01-Oct-14
Adjudication : Time limit No time limit stipulated in law SCN within normal period of limitation (18 months) : within 6 months;
SCN for extended time (5 years) : Within one year)
Though the provision is not mandatory, yet it will ensure timely disposal of cases 06-Aug-14
Appeals: Pre-deposit Not compulsory  % of tax in case demand of tax or tax +penalty and % of penalty in case demand only of penalty:
First Appeal (before Comm(A) or CESTAT): 7.5%; Second Appeal  before CESTAT: 10%
Information seeking Newly introduced excise provisions as applicable to service tax provides for calling information from a)assessee, b) banks, c) Tax authorities, d) Collectors and others. If info. not provided in time, penalty of Rs. 100/- day 06-Aug-14
Advance Ruling Now facility applicable to Resident Private Limited Company also 06-Aug-14