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Union Budget 2015 - Changes in Service Tax - reg
April, 02nd 2015

                 F. No. 334/5/2015-TRU
                   Government of India
                    Ministry of Finance

                 Department of Revenue
                   (Tax Research Unit)

                                 ***

M. Vinod Kumar
Joint Secretary (Tax Research Unit)
Tel: 011-23093027; Fax: 011-23093037

e-mail: m.kumar58@nic.in

                               D.O.F. No. 334/5/2015-TRU
                 New Delhi, dated February 28th, 2015

Dear Madam/Sir,

     Subject: Union Budget 2015 - Changes in Service Tax - reg.

     The Finance Minister has, while presenting the Union Budget 2015-16,
introduced the Finance Bill in the Lok Sabha on the 28th of February, 2015.
Clauses 105 to 116 of the Bill cover the amendments made to Chapter V of the
Finance Act, 1994. Chapter VI of the Bill (clause 117) contains the enabling
provisions relating to levy Swachh Bharat Cess, which empowers the government
to impose Cess on all or any of the taxable services at the rate of 2% of the value
of taxable services. Changes are also proposed in,-

        · the Service Tax Rules, 1994 (STR);
        · the CENVAT Credit Rules, 2004(Cenvat Rules);

Other changes are being given effect to by inserting new entries, and
amending/omitting existing entries in notification Nos. 25/2012-ST, 26/2012-ST,
30/2012-ST and 31/2012-ST. Further, notification No. 42/2012-ST is being
rescinded.

Page | 1
2. It may be noted that changes being made in the Budget are coming into
effect on various dates, as indicated in the following paragraphs. These changes
are categorized below based on the above criterion:

       (i) Changes coming into effect immediately w.e.f. the 1st day of March,
               2015;

       (ii) Changes coming into effect from the 1st day of April, 2015 ;
       (iii) The amendments which will get incorporated in the Finance Act,

               1994 immediately on enactment of the Finance Bill, 2015;
       (iv) The amendments made in the Finance Act, 1994, including the

               change in service tax rate that will come into effect from a date to be
               notified by the Government in this regard after the enactment of the
               Finance Bill, 2015 ;
       (v) Certain fresh entries and amendments to existing entries in
               notification No. 25/12-ST, and certain amendments in the Service
               Tax Rules that will come into effect as and when the amendments in
               the Negative List and revised rate of Service Tax come into effect; and
       (vi) Chapter VI of the Finance Bill, 2015, regarding levy of Swachh Bharat
               Cess on all or any of taxable services that will come into effect from a
               date to be notified.

For ease of reference, the Table at para 14 summarises the changes being made
and indicates the dates on which these changes would come into effect.

The salient features of the changes being made are discussed below.

3. Service Tax Rate:

3.1 The rate of Service Tax is being increased from 12% plus Education Cesses to
      14%. The `Education Cess' and `Secondary and Higher Education Cess' shall
      be subsumed in the revised rate of Service Tax. Thus, the effective increase
      in Service Tax rate will be from the existing rate of 12.36% (inclusive of
      cesses) to 14%, subsuming the cesses.

3.2 In this context, an amendment is being made in section 66B of the Finance
      Act, 1994. Further, it has been provided vide clauses 179 and 187 respectively
      of the Finance Bill, 2015 that sections 95 of the Finance Act, 2004 and 140 of
      the Finance Act, 2007, levying Education Cess and Secondary and Higher
      Education Cess on taxable services shall cease to have effect from a date to
      be notified by the Government.

Page | 2
3.3 The new Service Tax rate shall come into effect from a date to be notified by
      the Central Government after the enactment of the Finance Bill, 2015.

3.4 Till the time the revised rate comes into effect, the `Education Cess' and
      `Secondary and Higher Education Cess' will continue to be levied in Service
      Tax.
                                                                      (Clause 106 of the Bill refers)

4. Enabling provision for levy of "Swachh Bharat Cess":

4.1 An enabling provision is being incorporated in the Finance Bill, 2014
      (Chapter VI/clause 117) to empower the Central Government to impose a
      Swachh Bharat Cess on all or any of the taxable services at a rate of 2% on
      the value of such taxable services. This cess shall be levied from such date as
      may be notified by the Central Government after the enactment of the
      Finance Bill, 2015. The details of coverage of this Cess would be notified in
      due course.
                                                      (Chapter VI/Clause 117 of the Bill refers)

5 Other Legislative changes:

5.1 Negative List - The changes proposed in the Negative List in Section 66 D
      are as follows:

      (i) The Negative List entry that covers "admission to entertainment event or
            access to amusement facility" is being omitted [section 66D (j)].
            Consequently, the definitions of "amusement facility" [section 65 B (9)]
            and "entertainment event" [section 65B(24)] are also being omitted.
            The implication of these changes are as follows,-

              (a) Service Tax shall be levied on the service provided by way of access
                    to amusement facility providing fun or recreation by means of
                    rides, gaming devices or bowling alleys in amusement parks,
                    amusement arcades, water parks and theme parks.

              (b) Service tax to be levied on service by way of admission to
                    entertainment event of concerts, pageants, musical performances
                    concerts, award functions and sporting events other than the
                    recognized sporting event, if the amount charged is more than
                    Rs. 500 for right to admission to such an event. However, the
                    existing exemption, by way of the Negative List entry, to service by
                    way of admission to entertainment event, namely, exhibition of
                    cinematographic film, circus, recognized sporting event, dance,

Page | 3
                    theatrical performance including drama and ballet shall be
                    continued, through the route of exemption. For this purpose a new
                    entry is being inserted in notification No. 25/12-ST. The term
                    recognized sporting event has been defined in the proposed
                    amendment in the said notification.

      (ii) The entry in the Negative List that covers service by way of any process
             amounting to manufacture or production of goods [section 66D (f)] is
             being pruned to exclude any service by way of carrying out any
             processes for production or manufacture of alcoholic liquor for human
             consumption. Consequently, Service Tax shall be levied on contract
             manufacturing/job work for production of potable liquor for a
             consideration. In this context, the definition of the term " process
             amounting to manufacture or production of goods" [section 65 B (40)]
             is also being amended, along with the Negative List entry [section 66D
             (f)], with a consequential amendment in S. No. 30 of notification No.
             25/12-ST, to exclude intermediate production of alcoholic liquor for
             human consumption from its ambit.

     (iii) Presently, services provided by Government or a local authority,
             excluding certain services specified under clause (a) of section 66D, are
             covered by the Negative List. Service Tax applies on the "support
             service" provided by the Government or local authority to a business
             entity. An enabling provision is being made, by amending section 66D
             (a)(iv), to exclude all services provided by the Government or local
             authority to a business entity from the Negative List. Consequently, the
             definition of "support service" [section 65 B (49)] is being omitted.
              Accordingly, as and when this amendment is given effect to, all
             services provided by the Government or local authority to a business
             entity, except the services that are specifically exempted, or covered by
             any another entry in the Negative List, shall be liable to service tax .
                                                         (Clauses 105 and 107 of the Bill refers)

            The above changes in the Negative List shall come into effect from a date
            to be notified later, after the enactment of the Finance Bill, 2015.

    5.2 Further amendments in Chapter V of the Finance Act, 1994:

      (i) Services, excluding a few specified services, provided by the government
            are included in the Negative List. Further, specified services received by
            the government are also exempt. Hitherto, the term "government" has
            not been defined in the Act or the notification. This has given rise to

Page | 4
            interpretational issues. To address such issues, a definition of the term
            "government" is being incorporated in the Act [section 65 B (26A)].

                                                                      (Clause 105 of the Bill refers)

     (ii) The intention in law has been to levy Service Tax on the services
            provided by:
               (a) chit fund foremen by way of conducting a chit.
               (b) distributor or selling agents of lottery, as appointed or authorized
                     by the organizing state for promoting, marketing, distributing,
                     selling, or assisting the state in any other way for organizing and
                     conducting a lottery.
             However, Courts have taken a contrary view in some cases, while in
             some cases the levy has been upheld.
             An Explanation is being inserted in the definition of "service" to
             specifically state the intention of the legislature to levy Service Tax on
             activities undertaken by chit fund foremen in relation to chit, and
             lottery distributors and selling agents, in relation to lotteries [section
             65 B (44)]. Further, an explanation is being added in entry (i) of
             section 66D to specifically state that these activities are not covered by
             the Negative List.
                                                         (Clauses 105 and 107 of the Bill refers)

     (iii) Section 66F (1) prescribes that unless otherwise specified, reference to
             a service shall not include reference to any input service used for
             providing such services. An illustration is being incorporated in this
             section to exemplify the scope of this provision. As illustrated,
             reference to service provided by the Reserve Bank of India (RBI), in
             section 66D (b) does not include any agency service provided by other
             banks to RBI, as such agency services are input services used by RBI
             for provision of its main service. Accordingly, banks providing agency
             service to or in relation to services of RBI, are liable to pay Service Tax
             on the agency services so provided by virtue of the existing section 66F
             (1).
                                                                      (Clause 108 of the Bill refers)

     (iv) Section 67 prescribes for the valuation of taxable services. It is being
             prescribed specifically in this section that consideration for a taxable
             service shall include:
              (a) all reimbursable expenditure or cost incurred and charged by the
                    service provider. The intention has always been to include
                    reimbursable expenditure in the value of taxable service. However,
                    in some cases courts have taken a contrary view. Therefore, the
                    intention of legislature is being stated specifically in section 67.

Page | 5
              (b) amount retained by the distributor or selling agent of lottery from
                    gross sale amount of lottery ticket, or, as the case may be, the
                    discount received, that is the difference in the face value of lottery
                    ticket and the price at which the distributor or selling agent gets
                    such tickets.
                                                                      (Clause 109 of the Bill refers)

     (v) Section 73 is being amended in the following manner:
              (a) a new sub-section (1B) is being inserted to provide that recovery
                     of the Service Tax amount self-assessed and declared in the
                     return but not paid shall be made under section 87, without
                     service of any notice under sub-section (1) of section 73; and
              (b) sub-section (4A) that provides for reduced penalty if true and
                     complete details of transaction were available on specified
                     records, is being omitted.
                                                                      (Clause 110 of the Bill refers)

     (vi) Section 76 is being amended to rationalize the provisions relating to
             penalties, in cases not involving fraud or collusion or wilful mis-
             statement or suppression of facts or contravention of any provision of
             the Act or rules with the intent to evade payment of Service Tax, in the
             following manner,-

              (a) penalty not to exceed ten per cent. of Service Tax amount involved
                     in such cases;

              (b) no penalty is to be paid if Service Tax and interest is paid within
                     30 days of issuance of notice under section 73 (1);

              (c) a reduced penalty equal to 25% of the penalty imposed by the
                     Central Excise officer by way of an order is to be paid if the
                     Service Tax, interest and reduced penalty is paid within 30 days
                     of such order; and

              (d) if the Service Tax amount gets reduced in any appellate
                     proceeding, then the penalty amount shall also stand modified
                     accordingly, and benefit of reduced penalty ( 25% of penalty
                     imposed) shall be admissible if service tax, interest and reduced
                     penalty is paid within 30 days of such appellate order.
                                                                       (Clause 111 of the Bill refers)

     (vii) Section 78 is being amended to rationalize penalty, in cases involving
             fraud or collusion or wilful mis-statement of suppression of facts or
             contravention of any provision of the Act or rules with the intent to
             evade payment of Service Tax, in the following manner,-

Page | 6
              (a) penalty shall be hundred per cent of Service Tax amount involved
                     in such cases;

              (b) a reduced penalty equal to 15% of the Service Tax amount is to be
                     paid if Service Tax, interest and reduced penalty is paid within
                     30 days of service of notice in this regard;

              (c) a reduced penalty equal to 25% of the Service Tax amount,
                     determined by the Central Excise officer by an order, is to be paid
                     if the Service Tax, interest and reduced penalty is paid within 30
                     days of such order; and

              (d) if the Service Tax amount gets reduced in any appellate
                     proceeding, then the penalty amount shall also stand modified
                     accordingly, and benefit of reduced penalty (25%) shall be
                     admissible if Service Tax, interest and reduced penalty is paid
                     within 30 days of such appellate order.
                                                                      (Clause 112 of the Bill refers)

     (viii) A new section 78 B is being inserted to prescribe, by way of a
             transition provision, that,-

              (a) amended provisions of sections 76 and 78 shall apply to cases
                     where either no notice is served, or notice is served under sub-
                     section (1) of section 73 or proviso thereto but no order has been
                     issued under sub-section (2) of section 73, before the date of
                     enactment of the Finance Bill, 2015; and

              (b) in respect of cases covered by sub-section (4A) of section 73, if no
                     notice is served, or notice is served under sub-section (1) of
                     section 73 or proviso thereto but no order has been issued under
                     sub-section (2) of section 73, before the date of enactment of the
                     Finance Bill, 2015, penalty shall not exceed 50% of the Service
                     Tax amount.
                                                                      (Clause 113 of the Bill refers)

     (ix) Section 80, that provided for waiver of penalty in certain
             circumstances, is being omitted.
                                                                      (Clause 114 of the Bill refers)

     (x) Section 86 is being amended to prescribe that remedy against the order
             passed by Commissioner (Appeal), in a matter involving rebate of
             Service Tax, shall lie in terms of section 35EE of the Central Excise Act.
             It is also being provided that all appeals filed in Tribunal after the date
             the Finance Act, 2012 came into effect and pending on the date when
             the Finance Bill, 2015 receives assent of the President shall be

Page | 7
             transferred and dealt in accordance with section 35EE of the Central
             Excise Act.

                                                                      (Clause 115 of the Bill refers)

     (xi) Certain changes have been made in the provisions relating to
             Settlement Commission. These provisions, contained in the Central
             Excise Act, 1944, are made applicable to Service Tax, through section
             83 of the Finance Act, 1994. For details, the D.O. letter of J.S. (TRU-I)
             may please be referred to.

     The above stated changes in the Finance Act, 1994, shall get incorporated in
     the said Act on the day the Finance Bill, 2015 is enacted.

6 Review of Exemptions :

6.1 Exemption presently available on specified services of construction, repair,
      maintenance, renovation or alteration service provided to the Government,
      a local authority, or a governmental authority ( vide S. No. 12 of the
      notification No. 25/12-ST ) shall be limited only to,-
           (a) a historical monument, archaeological site or remains of national
                 importance, archeological excavation or antiquity;
           (b) canal, dam or other irrigation work; and
           (c) pipeline, conduit or plant for (i) water supply (ii) water treatment, or
                 (iii) sewerage treatment or disposal.
        Exemption to other services presently covered under S. No. 12 of
        notification No. 25/12-ST is being withdrawn.

6.2 Exemption to construction, erection, commissioning or installation of
      original works pertaining to an airport or port is being withdrawn (S. No 14
      of the notification No. 25/12-ST). The other exemptions covered under S.
      No. 14 of notification No. 25/12-ST shall continue unchanged.

6.3 Exemption to services provided by a performing artist in folk or classical art
      form of (i) music, or (ii) dance, or (iii) theater, will be limited only to such
      cases where amount charged is upto Rs 1,00,000 for a performance (S. No
      16 of notification No. 25/12-ST).

6.4 Exemption to transportation of food stuff by rail, or vessels or road will be
      limited to food grains including rice and pulses, flour, milk and salt.
      Transportation of agricultural produce is separately exempt, and this
      exemption would continue (S. Nos. 20 and 21 of notification No. 25/12-ST).

Page | 8
6.5 Exemptions are being withdrawn on the following services:
          (a) services provided by a mutual fund agent to a mutual fund or assets
               management company,
          (b) distributor to a mutual fund or AMC,
          (c) selling or marketing agent of lottery ticket to a distributor.

      Service Tax on these services shall be levied on reverse charge basis.
                                                        (S. No 29 of notification No. 25/12-ST).

6.6 Consequent to imposition of Service Tax levy on service by way of
      manufacture of alcoholic liquor for human consumption, an amendment is
      being made in the entry at S. No. 30 of notification No. 25/12-ST to exclude
      carrying out of intermediate production process of alcoholic liquor for
      human consumption on job work from this entry.
                                                        (S. No 30 of notification No. 25/12-ST).

6.7 Exemption is being withdrawn on the following service,-
          (a) Departmentally run public telephone;
          (b) Guaranteed public telephone operating only local calls;
          (c) Service by way of making telephone calls from free telephone at
               airport and hospital where no bill is issued.
                                                       (S. No. 32 of notification No. 25/12-ST).

6.8 Existing exemption, vide notification No. 42/12-ST dated 29.6.2012, to the
      service provided by a commission agent located outside India to an exporter
      located in India is being rescinded with immediate effect. This exemption
      has become redundant in view of the amendments made in law in the
      previous budget, in the definition of "intermediary" in the Place of Provision
      of Services Rules, making the place of provision of a service provided by such
      agents as outside the taxable territory.

The above changes in notification No. 25/12-ST, except the change mentioned in
para 6.6, shall come into effect from the 1St day of April 2015. The change
mentioned at para 6.6 shall come into effect from a date to be notified after the
enactment of the Finance Bill, 2015. The change mentioned at S. No. 6.8 comes
into effect immediately.

7 New Exemptions:

7.1 Hitherto, any service provided by way of transportation of a patient to and
        from a clinical establishment by a clinical establishment is exempt from
        Service Tax. The scope of this exemption is being widened to include all
        ambulance services.
              (Amended in the entry at S. No. 2 of notification No. 25/12-ST refers).

Page | 9
7.2 Life insurance service provided by way of Varishtha Pension Bima Yojna is
        being exempted.
             (Amendment in entry at S. No. 26A of notification No. 25/12-ST refers)

7.3 Service provided by a Common Effluent Treatment Plant operator for
        treatment of effluent is being exempted.
                                    (New entry at S. No. 43 of notification No. 25/12-ST).

7.4 Services by way of pre-conditioning, pre-cooling, ripening, waxing, retail
        packing, labeling of fruits and vegetables is being exempted.
                                    (New entry at S. No. 44 of notification No. 25/12-ST).

7.5 Service provided by way of admission to a museum, zoo, national park,
        wild life sanctuary and a tiger reserve is being exempted. These services
        when provided by the Government or local authority are already covered
        by the Negative List.
                                    (New entry at S. No. 45 of notification No. 25/12-ST).

7.6 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 it's members is being exempted.
                                    (New entry at S. No. 46 of notification No. 25/12-ST).

7.7 Goods transport agency service provided for transport of export goods by
        road from the place of removal to an inland container depot, a container
        freight station, a port or airport is exempt from Service Tax vide
        notification No. 31/12-ST dated 20.6.2012. Scope of this exemption is
        being widened to exempt such services when provided for transport of
        export goods by road from the place of removal to a land customs station
        (LCS).
                                          (Amendment in notification No. 31/12-ST refers).

All the above New Exemptions shall come into effect from the 1st day of April,
2015.

8. New entries being incorporated in notification No. 25/12-ST, to
continue exemption to certain activities that are presently covered by
the Negative List entries which are being omitted:

8.1 Service by way of right to admission to,-
        i. exhibition of cinematographic film, circus, dance, or theatrical
             performances including drama or ballet.

Page | 10
       ii. recognized sporting events.
       iii. concerts, pageants, award functions, musical performances or sporting

             events not covered by S. No. ii, where the consideration for such
             admission is upto Rs. 500 per person.
       (New entry 46 of notification No. 25/2012-ST and clause (zab) of definitions
       in the said notification)

These changes shall be made effective from the date the amendments being made
in the Negative List concerning the service by way of admission to entertainment
events come into effect.

9. Abatements:

9.1 At present, service tax is payable on 30% of the value of rail transport for
        goods and passengers, 25% of the value of goods transport by road by a
        goods transport agency and 40% for goods transport by vessels. The
        conditions prescribed also vary. A uniform abatement is now being
        prescribed for transport by rail, road and vessel and Service Tax shall be
        payable on 30% of the value of such service subject to a uniform condition
        of non-availment of Cenvat Credit on inputs, capital goods and input
        services.

9.2 At present, Service Tax is payable on 40% of the value of air transport of
        passenger for economy as well as higher classes, e.g. business class. The
        abatement for classes other than economy is being reduced and Service Tax
        would be payable on 60% of the value of such higher classes.

9.3 Abatement is being withdrawn from services provided in relation to chit.
        Consequently, Service Tax shall be paid by the chit fund foremen on the
        full consideration received by way of fee, commission or any such amount.
        They would be entitled to take Cenvat Credit.

The proposed rationalization in abatements shall come into effect from the 1st day
of April, 2015.

10. Reverse Charge Mechanism

10.1 Manpower supply and security services when provided by an individual,
        HUF, or partnership firm to a body corporate are being brought to full
        reverse charge. Presently, these are taxed under partial reverse charge
        mechanism.

Page | 11
10.2 Services provided by,-
        (i) mutual fund agents, mutual fund distributors; and
        (ii) agents of lottery distributor
        are being brought under reverse charge consequent to withdrawal of the
        exemption on such services. Accordingly, Service Tax in respect of mutual
        fund agent and mutual fund distributor services shall be paid by the assets
        management company or, as the case may be, by the mutual fund receiving
        such services. In respect of agents of lottery, Service Tax shall be paid by
        the distributor of lottery.

 This above changes in reverse charge mechanism will come into effect from the
 1st day of April, 2015.

11. Service Tax Rules

11.1 In respect of any service provided under aggregator model, the aggregator,
        or any of his representative office located in India, is being made liable to
        pay Service Tax if the service is so provided using the brand name of the
        aggregator in any manner. If an aggregator does not have any presence,
        including that by way of a representative, in such a case any agent
        appointed by the aggregator shall pay the tax on behalf of the aggregator.
        In this regard appropriate amendments have been made in rule 2 of the
        Service Tax Rules, 1994 and notification No. 30/2012-ST dated 20.6.2012
        This change comes into effect immediately i.e., w.e.f. 1st March, 2015.

11.2 Rule 4 is being amended to provide that the CBEC shall, by way of an
        order, specify the conditions, safeguards and procedure for registration in
        service tax. In this regard Order No. 1/15-ST, dated 28.2.2015, effective
        from 1.3.2015 has been issued, prescribing documentation, time limits and
        procedure for registration. It has also been prescribed that henceforth
        registration for single premises shall be granted within two days of filing
        the application.

11.3 A 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 conditions and
        procedure in this regard shall be specified by the CBEC (rule 4, 4A and 5).

11.4 Rule 6 (6A) which provided for recovery of service tax self-assessed and
        declared in the return under section 87 is being omitted consequent to the
        amendment in section 73 for enabling such recovery. This change will
        come into effect from the date of enactment of the Finance Bill, 2015.

Page | 12
11.5 In respect of certain services like money changing service, service provided
        by air travel agent, insurance service and service provided by lottery
        distributor and selling agent, the service provider has been allowed to pay
        service tax at an alternative rate subject to the conditions as prescribed
        under rule 6 (7), 6(7A), 6(7B) and 6(7C) of the Service Tax Rules, 1994.
        Consequent to the upward revision in Service Tax rate, the said alternative
        rates shall also be revised proportionately. Amendments to this effect have
        been proposed in the Service Tax Rules.

        The amendments specified in para 11.5 shall come into effect as and when
        the revised Service Tax rate comes into effect.

12. Cenvat Credit Rules, 2004

12.1 Rule 4(7) is being amended to allow Cenvat Credit of Service Tax paid
        under partial reverse charge by the service receiver without linking it to the
        payment to the service provider. This change will come into effect from
        1.4.2015.

12.2 The period for taking Cenvat Credit is being extended from six months
        from the date of invoice to one year from the date of invoice.

12.3 Certain other changes are being made in the provisions of the Cenvat
        Credit Rules, 2004, which, inter-alia, include allowing Cenvat Credit on
        input and capital goods received directly by job workers, defining "export
        goods" for the purposes of rule 5, defining "exempt goods" for the purposes
        of rule 6, making applicable the provision of rule 9(4) to importer dealers,
        authorizing imposition of restrictions on registered dealers under rule
        12AAA, and provisions relating to recovery of credit wrongly taken and
        imposition of penalty. For details, the D.O. letter of J.S (TRU-I) may please
        be referred to.

13. Advance Rulings:

        The facility of Advance Ruling is being extended to all resident firms by
        specifying such firms under section 96A (b)(iii) of the Finance Act, 1994.

                                        (Notification No. 9/2015-ST, dated 1.3.2015 refers)

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14. Summary of changes being made and the dates on which they

would come into effect:

          Subject                                                   Refer Para

With immediate effect (from 1.3.2015)
    (i) Shifting the liability of payment of service tax on 11.1
            aggregator of a service where service is provided
            under the brand name of the aggregator

(ii) Amendments in rules 4, 4A and 5 of the Service Tax 11.2 and 11.3
        Rules, 1994

(iii) Certain amendments in the Cenvat Credit Rules                 12.2 and
                                                                    12.3

(iv) Rescinding of notification No. 42/2012-ST                      6.8

(v) Extending the scope of advance rulings to resident 13
        firms

With effect from the 1st day of April, 2015
    (i) Rationalization of exemptions at S. Nos. 12, 14, 16, 6.1 to 6.5
            20, 21 and 29 of notification No. 25/2012-ST

(ii) Omitting the entry at S. No. 32 in notification No. 6.7
        25/2012-ST

(iii) New exemptions for,-                                          7.1 to 7.7

· Precondition, pre-cooling, ripening, waxing,

retail packing, labeling of fruits and vegetables

· Service by a Common Effluent Treatment Plant

operator

· Varistha Bima Yojana

· Ambulance services

· Admission to a museum, zoo, national park, wild

life sanctuary, and a tiger reserve

· Service provided by exhibitor of movie to a

distributor or an AOP consisting of exhibitor as

one of its member

· Transport of export goods by road from the place

of removal to a land customs station

             (iv) Change in abatement rates and conditions thereof

Page | 14
           for transport of passengers and goods by train;       9.1 to 9.3
           transport of goods by road by a GTA; transport of
           goods by vessels; executive/business class travel by
           air; and withdrawal of abatement on services
           provided in relation to chit

           (v) Amendment in reverse charge mechanism,-                          and
                   · To prescribe full reverse charge on manpower 10.1
                       supply and security service provided by 10.2
                       individual, HUF, partnership firm to a body
                       corporate
                   · Prescribing reverse charge on service provided
                       by a mutual fund agent, mutual fund distributor
                       and agents of lottery distributor

           (vi) Amendment in rule 4(7) of the Cenvat Credit Rules 12.1
                   to allow credit of service tax paid by recipient of
                   service in partial reverse charge immediately on
                   payment of tax

Changes in the Finance Act, 1994 that would get incorporated on
enactment of the Finance Bill 2015

           (i) Insertion of new definition to specify the term 5.2(i)
                   "government" [section 65 B (26A)]

           (ii) Insertion of a new Explanation in the definition of 5.2 (ii)
                   service [section 65 B(44)]

           (iii) Insertion of an illustration in sub-section (1) of 5.2(iii)
                   section 66F(1) to explain the scope of this sub-
                   section

           (iv) Amendment in the definition of the terms 5.2 (iv)
                   "consideration" in section 67

           (v) Amendments in sections 73, 76 and 78.             5.2(v) to (vii)

           (vi) Insertion of transition provision by way of section 5.2 (viii)
                   78B

           (vii) Omitting section 80                             5.2 (ix)

Page | 15
           (viii) Amendments in section 86                        5.2(x)

           (ix) Amendments in the provisions relating to 5.2 (xi)
                   Settlement Commission

           (x) Omitting of rule 6 (6A) of the Service Tax Rules   11.4

With effect from a date to be notified after the enactment of the

Finance Bill, 2015 in respect of each provision

New Service Tax rate                                              3

Swachh Bharat Cess                                                4

Amendments in the Negative List (section 66D) and

definitions (section 65B), namely,-

           (i) Omitting the definitions of  the terms             5.1 (i)

           "amusement facility"[section 65 B (9)],

           "entertainment event" [section 65 B(24)], and entry

           (j) in section 66D

           (ii) Amendments in the definition of terms 5.1 (ii)
                   "process amounting to manufacture or production
                   of goods" [section 65 B (40)] and entry (f) in section
                   66D

    (iii) Omitting the definition of the terms                    5.1 (iii)
            "support service"[section 65 B (49)], and             6.6
            amendment in section 66D(a) (iv)

Amendment in S. No. 30 of notification No. 25/12-ST to
exclude job work in relation to alcoholic liquor for human
consumption from the scope of this exemption

Insertion of a new entry at S. No. 47 of notification No. 25/12-  8.1
ST to exempt services by way of (i) right to admission to
exhibition of film, circus, dance or theatrical performances
including drama, or ballet; (ii) recognized sporting event; and
(iii) admission to other events where the consideration for
admission is upto Rs. 500;

Amendments in alternative rates of service tax provided for 11.5
air travel agent, insurance service, money changing service
and service provided by a lottery distributor and selling agent
in rule 6(7), 6(7A), 6(7B) and 6(7C) of the Service Tax Rules.

Page | 16
15. General
15.1 Changes explained above are not intended to be exhaustive and are meant
only to draw attention to major changes. The text of the statutory provisions and
the wordings of the notifications should be read carefully for interpreting the law.
15.2 Field formations are requested to go through the changes made in the
Budget carefully. Any issues or doubts which may arise or any omission/error
observed may kindly be brought to the notice of the undersigned, or Dr. Abhishek
Chandra Gupta, Technical Officer at abhishek.gupta81@nic.in as soon as
possible.

        I would like to express my appreciation of the pre-budget suggestions and
 inputs received from field formations. I would also thank the officers in TRU
 who had worked as a cohesive team during the Budget exercise. A special word
 of thanks to Shri G. D. Lohani who, though promoted as Commissioner mid-way
 through the exercise, continued to work as a part of the team with unabated
 enthusiasm.

                         With regards,
                                                                                        Yours sincerely,

                                                                                    (M. Vinod Kumar)
To:

        All Chief Commissioners / Director Generals
        All Principal Commissioners/Commissioners of Service Tax
        All Principal Commissioners/Commissioners of Central Excise

Page | 17

 
 
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