SERVICE TAX

• Reduction in number of levies: Education Cess and Secondary & Higher Education Cess on taxable services have been subsumed in Service Tax with effect from 01.06.2015. [Sections 153, 159 of the Finance Act, 2015 read with notification No.14/2015-Service Tax, dated 19.05.2015 refers].

• Registration in two days: Registration in Service Tax to be granted within two working days.

[ORDER No. 1/2015-SERVICE TAX dated 28.02.2015 refers].

•Time limit for taking CENVAT: Time limit for taking CENVAT Credit of duty/tax paid on inputs and input services has been extended from six months to one year.

[Notification No.6/2015-Central Excise (N.T.), dated 01.03.2015 refers].

•Simplification in procedure for availment of Cenvat Credit in certain cases: For availment of CENVAT credit of service tax paid under reverse charge mechanism, the condition of having made the payment of consideration to the service provider has been done away with.

[Notification No.6/2015-Central Excise (N.T.), dated 01.03.2015 refers].

• Rationalisation of penal provisions: Penalty provisions in Service Tax have been rationalized to encourage compliance and early dispute resolution. [Sections 113, 114, 115 of the Finance Act, 2015 refer].

•Digital signature and preserving records in electronic form: Service Tax assesses have been allowed to issue digitally signed invoices and maintain other records electronically.

[Notification No.18/2015-Central Excise (N.T.), dated 06.07.2015 refers].

• Withdrawal of Prosecution in certain circumstances: Instructions have been issued providing for withdrawal of prosecution where a noticee has been exonerated in the quasi-judicial proceedings and such order has attained finality.

[Circular No.998/05/2015-CX dated 28.02.2015 refers].

• If the export proceeds are not received within the prescribed time period, the exporterhas to reverse the Cenvat Credit. Re-credit of such reversed Cenvat credit has beenallowed, if such export proceeds are received within one year from the specified period.

[Notification No.6/2015-Central Excise (N.T.), dated 01.03.2015 refers].

•To bring certainty in the determination of point of taxation in case of reverse charge mechanism, it has been provided that point of taxation will be the payment date or three months from the date of invoice, whichever is earlier. [Notification No.13/2014-Service Tax, dated 11.07.2014 refers].

B. Industry specific measures:

• Uniform abatement of 70% from gross value prescribed for transport by rail, road and vessel. Service Tax in all these cases will now be charged on 30% of the gross value of such service subject to non-availment of Cenvat Credit on inputs, capital goods and input services.

[Notification No.26/2012-Service Tax dated 20.06.2012, as amended by the notification No.8/2015-Service Tax dated 01.03.2015 refers].

• To avoid disputes, exemption in respect of services provided to Government or local authority or governmental authority, by way of water supply, public health, sanitation conservancy, solid waste management or slum improvement and upgradation has been made more specific.

[Notification No.25/2012-Service Tax dated 20.06.2012, as amended by the notification No.6/2014-Service Tax dated 11.07.2014 refers].

• Categories of works contracts have been rationalized to reduce litigation and improve compliance with a uniform service tax of 14% on 70% of the gross value of service.

[Notification No.11/2014-Service Tax dated 11.07.2014 refers]. 

 

Service tax reform streamlines compliance and credit rules, simplifying registration, credit claims, penalties, and sectoral abatements. Service tax reforms subsume prior cesses into the main levy, mandate two day registration, extend Cenvat credit timelines and permit re credit for subsequently received export proceeds; they remove payment precondition for reverse charge credit, fix point of taxation for reverse charge by earlier of payment or a specified invoice period, rationalise penalties, allow digital invoicing and electronic records, provide for prosecution withdrawal after final quasi judicial exoneration, and introduce industry measures including uniform transport abatement, clarified public service exemptions, and works contract rationalisation.