CLARIFICATION OF RATE OF SERVICE TAX
THERE HAS BEEN PUBLISHED THE Circular No. 183 / 02 / 2015-ST FOR THE CLARIFICATION OF RATE OF SERVICE TAX ON 10/04/2015. PLEASE REFER THE GOVERNMENT CIRCULAR ON THE GOVERNMENT WEBSITE.
Circular No. 183 / 02 / 2015-ST
F. No. B-1 /1/2015-TRU
Government of India
Ministry of Finance
Department of Revenue
(Tax Research Unit)
***
Room No. 153, North Block, New Delhi.
Dated 10th April, 2015.
To
Chief Commissioner of Customs and Central Excise(All)
Chief Commissioner of Central Excise &
Service Tax (All)
Director General of Service Tax
Director General of Central Excise Intelligence
Director General of Audit Commissioner of
Customs and Central Excise (All)
Commissioner of Central Excise and Service Tax
(All)
Commissioner of Service Tax (All) Madam/Sir,
Dear Madam/Sir,
Subject:
Clarification on rate of service tax - regarding.
Doubts have been
expressed in various forums regarding the proposed increase in the rate of
service tax from 12.36% (including education cesses)
to 14% on the value of taxable service.
2. It
may be noted that changes proposed in the Budget have/are coming into effect on
various dates as already indicated in JS (TRU-II) D.O. letter dated 28th
February, 2015. Certain amendments made in the Finance Act, 1994, including the
change in service tax rate, will come into effect from a date to be notified by
the Government after the enactment of the Finance Bill, 2015.
3. In this regard your attention is invited
to clause 106 of the Finance Bill, 2015 and paragraph 3 of JS (TRU-II) D.O.
letter, which is reproduced 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.
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.”
4. The
paragraph reproduced above is self-explanatory and it is clear that 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. The date will
be notified in due course after the enactment.
5. Similarly,
certain doubts have been raised with regard to abatement on value of services
provided in relation to serving of food or beverages by a restaurant, eating
joint or a mess, having the facility of air-conditioning or central air-heating
in any part of the establishment, at any time during the year. Valuation of
services provided in relation to serving of food or beverages by a restaurant,
eating joint or a mess is determined as provided in rule 2C of the Service Tax (Determination of
Value) Rules, 2006.
5.1 In
the Union Budget, 2015, no change has been made in these rules; therefore, any
confusion is unwarranted. Further, as explained above, the rate of service tax
on the specified portion of the amount charged for such supply which is 40% continues
to be 12.36% (including cesses) at present i.e. 4.944
%. The rate of Service tax, as discussed above, will continue unchanged till a
date which will be notified in due course.
6. Wide publicity may be given so that the
assesses and public are aware of the above. All the major Industry/Trade
Associations may be informed accordingly.
Yours sincerely,
(Dr. Abhishek Chandra Gupta)
Technical Officer, TRU
Tel:
011-23095547
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