Changes made in Service Tax

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Changes made in Service Tax

The Union Budget 2017-18 presented by Union Finance Minister Arun Jaitley. He has made amendments in the Service Tax. The changes that are effective from the date of the Presidential assent are as follows:

1) The activity involving “services by way of carrying out any process amounting to manufacture or production of goods excluding alcoholic liquor for human consumption” is moved from negative list to mega exemption.
Notification: Relevant definition of “Process amounting to manufacture” would be deleted from the provisions of Finance Act and inserted in mega exemption notification.

2) Further Research and Development Cess Act, 1986 (32 of 1986), levying R & D cess on import of technology, is proposed to be repealed.

3) Any amount collected as premium, salami, cost, price, development charges or by any other name by State Government industrial development corporations/ undertakings from industrial units for leasing plots for 30 years, to be retrospectively exempt from Service Tax.

4) With regards to valuation rule of Service Tax is retrospectively amended to clarify exclusion of land/undivided share land value for the purpose of calculating Service Tax on 40% value of contract.

5) The valuation rule of Service Tax is retrospectively amended to clarify inclusion of land/undivided share land value for the purpose of calculating Service Tax on 25 per cent /30 per cent value of contract, which is currently under notification 26/2012-ST dealing with abatement.
Changes under Service Tax w.e.f February 2, 2017: 1) The Service Tax exemption to services of life insurance provided by the Army, Naval and Air Force Group Insurance Funds with retrospective effect.

2) Earlier exemption was provided to IIM vide entry No 9B of mega exemption notification for residential post graduation programmes (PGP) is now extended even to non-residential post graduation programmes (PGP) courses as well.

3) With regards to exemption from Service Tax is being provided in respect of the amount of viability gap funding (VGF) payable to the selected airline operator for the services of transport of passengers, embarking from or terminating in a Regional Connectivity Scheme (RCS)
airport.

4) Further, banks and NBFCs should now consider the amount representing interest or discount as “exempted value” for calculating reversal of common
credits.

5) The Central Excise Officer shall transfer the balance of credit, within 3 months or extended period of 6 months on approval of Principal Commissioner, based on the application of transferor of the factory.

6) The Central Excise Officer shall decide on application for remission of duty within 3 months or extended period of 6 months on approval of next higher authority.

 

(The author is consultant and advisor of Customs, Central Excise, Service Tax and Goods and Services Tax)

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