Sandeep Ahuja & Co.

Established in the year 1986, we are a leading chartered accountancy firm based in Delhi & NCR rendering comprehensive professional services which include statutory audit, internal audit, direct tax, transfer pricing, GST, bank audit, propriety audit, cost accounting, internal financial controls and risk advisory.

Wednesday, April 1, 2015

Rates of Service Tax: Budget 2015

*New Rate - 14%  (inclusive EC and SHEC)
Old Rate – 12.36% (inclusive EC and SHEC)

*Applicable from the date of enactment of the Finance Bill 2015.

Swachh Bharat Cess @2% is proposed to be levied on all or certain services, gradually as and when notified.
     
After the enactment of the Finance Bill, a date will be notified for bringing into effect the above provisions. After such change, Service Tax will be charged @ 14% + Swachh Bharat Cess @2% (if applicable)

The effect of increase in rate of service tax will be triggered by Rule 4 of the Point of Taxation Rules. There are 3 events in service tax:
  • Providing of Taxable Service
  • Issue of Invoice
  • Receipt of Payment

If any 2 of the above events occur before the date to be notified after enactment of Finance Bill, then the old rate i.e. 12.36% will be applicable. Otherwise, the new rate i.e. 14% will be applicable.

Alternative service tax rates have been provided under Rule 6 of Service Tax Rules, 1994 with respect to the services provided by Air Travel Agents, Insurance Service, Money Charging, Lottery Distributor & Selling Agents. Consequent to the increase in rate of service tax, alternative rate will also be increased proportionately. This will also come into effect when the new rates of service tax come into effect.

New rate of service tax on Air Travel Agent will be as follows:
  • 0.7% of the basic fare in the case of domestic bookings.
  • 1.4% of the basic fare in the case of international bookings.

Rate of service Tax on Life Insurance business will be as follows:
  • 3.5% of the premium charged from policy holder in the first year and
  • 1.75% of the premium charged from policy holder in the subsequent years.

Rate of Service Tax on purchase and sale of Foreign Currency.

The rate of service tax on purchase and sale of foreign currency has been also been increased proportionately and the slab-wise rate chart is as follows:

Amount of Currency exchanged
Rate of Service Tax
0 – 1,00,000
0.14% of the currency exchanged minimum Rs. 35/-
1,00,000 – 10,00,000
0.07% of the currency exchanged plus Rs. 140/-
Exceeding 10,00,000
0.014% of the currency exchanged plus Rs. 770/-
However, in any case service tax payable cannot exceed Rs.7,000/-. Therefore, maximum service tax payable per transaction in case of currency exchange is Rs. 7,000/-.

Rate of Service Tax on promotion, marketing, organizing or in any other manner assisting in organizing lottery will be as follows.

The rate of service tax on promotion, marketing, organizing or in any other manner assisting in organizing lottery has been increased proportionately and the new slab-wise rate chart is as follows.

Condition
Rate of Service Tax
If the lottery or lottery scheme is one where the guaranteed prize payout is more than 80%
Rs. 8200/- on every Rs. 10 Lakh (or part of Rs. 10 Lakh) of aggregate face value of lottery tickets printed by the organizing State for a draw
If the lottery or lottery scheme is one where the guaranteed prize payout is less than 80%
Rs. 12800/- on every Rs. 10 Lakh (or part of Rs. 10 Lakh) of aggregate face value of lottery tickets printed by the organizing State for a draw

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