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Changes in Union Budget 2015-16 with respect to CENVAT Credit Rules,2004 and Service Tax Rules,1994
April, 29th 2015
Changes in Union Budget 2015-16 with respect to CENVAT Credit Rules,2004 and Service Tax Rules,1994
By: Devam Sheth
April 29, 2015

“CENVAT Credit Rules, 2004 amended with announcement of Union Budget 2015-16”

CBEC by the virtue of Notification no. 6/2015-CE (N.T.) dated 01.03.2015 has amended the CENVAT Credit Rules, 2004 which are reproduced as under:

  • The CENVAT Credit in respect of inputs and capital goods may also taken on receipt of the inputs/ capitals goods in the premises of the job worker, where in case of goods are sent directly to the job worker on the direction of the manufacturer or the provider of output service (Rule 4).
  • Extended the time limit for availing CENVAT Credit on inputs and input services from the present 6 months to one year.
  • Time limit for the return of capital goods from job worker enhanced from the present 6 months to two years.
  • In case of CENVAT Credit on inputs may be availed even if inputs are directly sent to the premise of the job worker. The goods sent to the job worker can be moved to another job worker as well, however it shall be assured that the goods are received back by the manufacturer within 180 days from the date of sending such goods.
  • In situation, the goods are sent to job worker premises without first receiving into factory of the manufacturer , then 180 days shall be considered from the date of receipt of goods by job worker (Rule4(5))
  • Earlier CENVAT Credit to service receiver under partial reverse charge was eligible only if payment of provision of service has been made to the service provider, in the recent budget with effect from 01.04.2015, rule 4(7) has been amended to allow CENVAT Credit of Service Tax paid under partial reverse charge by the service receiver without linking it to the payment of the service provider.
  • Provision relating to reversal for CENVAT Credit , presently applicable to exempted goods and services, made applicable to non-excisable goods also (Rule 6)
  • With regard to CENVAT Credit wrongly availed but not utilised will also be recovered(Rule 14)

“Amendment with respect to Service Tax in the Union Budget 2015-16”

Transport of goods to Land Custom Station exempted

  • CBEC vide Notification No. 4/2015-ST dated 01.03.2015 has exempted services provided by goods transport agency (GTA) to an exporter for transport of goods in a goods carriage to any land customs station from where are exported. This is in addition to exemption granted for transport of goods to port or airports as exempted earlier vide Notification No. 31/2012-ST dated 20.06.2012.

Amendment s in Service Tax Rules, 1994

  • By the virtue of Notification No. 5/2015-ST dated 01.03.2015 has amended Service Tax Rule, 1994 which are as follows:
  1. With effect from 01.03.2015, with regard of any service provided under aggregator model, the aggregator or any of his representative office located in the taxable territory or an agent of aggregator is being made liable to pay Service Tax if the service is so provided using the brand name of the aggregator in any manner (Rule 2)
  2. In the Union Budget, CBEC the governing body for Excise and Service Tax, by way of an order will specify the conditions, safeguards and procedure for registration in service tax. In this regard Order No. 1/2015-ST, dated 28.02.2015 has been issued prescribing documentation, time limits and procedure for registration. Hence, registration for single premises shall be granted within two days of filing the application (Rule 4)
  3. Provision for issuing digitally signed invoices is being added along with the option of maintaining of records in electronic form and their authentication by means of digital signatures. The condition and procedure in this regard shall be specified by the CBEC. The changes are applicable with immediate effect (Rule 4, 4A and 5A)
  4. Rule 6(6A) dealing with recovery of service tax self assessed and declared in the return undersection 87 is being omitted consequent to the amendment in Section 73 of the Finance Actenabling such recovery. This change will made effective from the date of enactment of theFinance Bill, 2015.

Changed observed in Mega Exemption Notification No. 25/2012-ST dated 20.06.2012

  • With effect from 01.04.2015, vide Notification No. 6/2015-ST dated 01.03.2015 has amended the Mega Exemption Notification No. 25/2012-ST dated 20.06.2012 as follows:
  1. Exemption to any service provided by way of transportation of a patient to and from clinical establishment, all ambulances are covered within the scope of this exemption (Entry 2)
  2. Exemption presently available to specified services of construction, repair, maintenance, renovation or alteration service provided to the Government, a local authority, or government authority shall be restricted to :
  1. a historical monument, archaeological site remains of national importance, archaeological excavation or antiquity;
  2. canal, dam or other irrigation work; and
  3. pipeline, conduit or plant for (i) water supply (ii) water treatment, or (iii) sewage treatment or disposal.

Exemption to other services covered in the Entry No.12 of notification no. 25/2012-ST is introduced to the purview of Service Tax

  1. Exemption to construction, erection, commissioning or installation of original works pertaining to an airport or ports provide vide entry no. 14 is being withdrawn. However the other exemptions covered under the same entry will continue to be exempted.
  2. Exemption to Life Insurance service provided by way of Varishtha Pension Bima Yojna (Entry 26A)
  3. Exemptions are being withdrawn and service tax payable under reverse charge on the following services:
  1. Services provided by a mutual fund agent to a mutual fund or asset management company (AMC),
  2. Distributor to a mutual fund or AMC,
  3. Selling or marketing agent of lottery to a distributor (Entry 29)
  1. Exemption to services provided by performing artist in folk or classical art form of (i)music, (ii)dance, (iii) theatre, will be limited only to such cases where amount charged is upto ₹ 1,00,000/- for a performance(Entry 16)
  2. Exemption to transportation of food stuff rail, or vessels or road will be limited to food grains including rice and pulses, flour, milk, and salt. However transportation of agricultural produce is separately exempt and this exemption continues (Entry 20 and 21)
  3. Exemption to services for carrying out of intermediate production process of alcoholic liquor for human consumption on job work is introduced to the ambit of service tax and made liable to same. The change shall come into effect from date to be notified after enactment of theFinance Bill, 2015 (Entry 30)
  4. Exemption is being withdrawn on the following services:
  1. Departmentally run public telephone;
  2. Guaranteed public telephone operating only local calls;
  3. Services by way of making telephone calls from free telephone at airport and hospital where no bill is issued (Entry 32)
  1. Exemption to service provided by a Common effluent treatment plant operator for treatment of effluent( Entry 43)
  2. Exemption to services by way pre-conditioning, pre-cooling, ripening, waxing, retail packing, labelling of fruits and vegetables (Entry 44)
  3. Exemption to service provided by way of admission to a museum, zoo, national park, wild life sanctuary and a tiger reserve. These services when provided by Government or local authority are covered under Negative List(Entry 45)
  4. Exemption to service provided by way of exhibition of movie by the exhibitor (theatre owner) to the distributor or an association of persons consisting of such exhibitor as one of its members (Entry 46)
  5. Exemption to service by way of right to admission to-
  1. Exhibition of cinematographic film, circus, dance, or theatrical performance including drama or ballet,
  2. Recognised sporting events,
  3. Concerts, pageants, award functions, musical performances, or sporting events not covered above, where the consideration for such admission is upto ₹ 500/ person(Entry 47)

Amendments to Reverse charge Notification No. 30/2012-ST dated 20.06.2012

  • With effect from 01.04.2015 vide Notification No. 7/2015-ST dated 01.03.2015 has amended the reverse charge as follows:
  1. In relation to manpower supply and security services provided by an individual, HUF, or partnership firm (includes LLP) to body corporate, the person liable to pay service tax will be the body corporate under complete reverse charge mechanism instead of 75% of the taxable value in the earlier regime.
  2. Service tax in respect of mutual fund agent and mutual fund distributor services shall be paid by the assets management company or by the mutual fund receiving such services.
  3. Distributor of lottery is required to pay service tax in respect of agents of lottery under 100% reverse charge.

Amendments in Abatement Notification No. 26/2012 dated 20.06.2012

  • With effect from 01.04.2015 vide Notification No. 8/2015-ST dated 01.03.2015 has amended as under:
  1. The taxable portion of service of transportation by rail, road and vessel shall be 30% subject to a uniform condition of non-availment of CENVAT Credit on inputs, inputs service and capital goods.
  2. The taxable portion of value of air transport of passenger for higher classes shall be 60% as against economy class for which Service Tax is payable on 40% of the value.
  3. Abatement is withdrawn for services provided in relation to chit and Service tax is payable by chit fund foremen on the full consideration received by way of fee, commission or any such amount with a facility to avail CENVAT Credit on the same.
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