Budget 2016 has imposed cess called Krishi Kalyan Cess @ 0.5% on all taxable services. The effective Service tax rate is 15%. The rate of Service Tax was increased from 12% plus Education Cesses to 14%. The ?Education Cess? and ?Secondary and Higher Education Cess? should be subsumed in the revised rate of Service Tax. Thus, the effective increase in Service Tax rate was from the existing rate of 12.36% (inclusive of cesses) to 14%, subsuming the cesses. On November 15, 2015, the Government of India made an announcement that it has imposed Swachh Bharat Cess at the rate of 0.5% of the taxable service. This means the new service tax would be 14.5%. Swachh Bharat Cess is levied on the entire taxable amount of the service under a separate head in invoices. Now in Budget 2016 the service tax rate has been increased to 15%.
(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, 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.
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
As per section 66B of the Finance Act, 1994, service
tax should be levied on all services except the
services which are specified in Section 66D of the
said Act. Negative list of Service Tax for 2013-14
as per Section 66D revised as per latest budget is
give below. There are currently 17 heads of Services
which are given in the ?negative list?. Every
activity not covered under this list is chargeable
to Service Tax. So the Negative List is Very
Important.
Prior to the amendment as per Finance Bill 2015
the Negative list of Service Tax is comprised of
following 17 heads. They are:
1) Services by Government or a local authority
excluding the following services to the extent they
are not covered elsewhere:
a) Services by the Department of Posts by way of
speed post, express parcel post, life insurance, and
agency services provided to a person other than
Government;
b) services in relation to an aircraft or a vessel,
inside or outside the precincts of a port or an
airport;
c) transport of goods or passengers; or
d) Support services, other than services covered
under clauses (i) to (iii) above, provided to
business entities.
2) Services by the Reserve bank of India;
3) Services by a foreign diplomatic mission located in India.
4) Services relating to agriculture or
agricultural produce by way of -
a) agricultural operations directly related to
production of any agricultural produce including
cultivation, harvesting, threshing, plant protection
or seed testing;
b) supply of farm labour;
c) processes carried out at an agricultural farm
including tending, pruning, cutting, harvesting,
drying, cleaning, trimming, sun drying, fumigating,
curing, sorting, grading, cooling or bulk packaging
and such like operations which do not alter
essential characteristics of agricultural produce
but make it only marketable for the primary market;
d) renting or leasing of agro machinery or vacant
land with or without a structure incidental to its
use;
e) loading, unloading, packing, storage or
warehousing of agricultural produce;
f) agricultural extension services;
g) Services by any Agricultural Produce Marketing
Committee or Board or services provided by a
commission agent for sale or purchase of
agricultural produce.
5) Trading of goods.
6) Any process amounting to manufacture or production of goods.
7) Selling of space or time slots for advertisements other than advertisements broadcast by radio or television.
8) Service by way of access to a road or a bridge on payment of toll charges.
9) Betting, gambling or lottery.
10) Admission to entertainment events or access to amusement facilities.
11) Transmission or distribution of electricity by an electricity transmission or distribution utility.
12) Services by way of -
a) Pre-school education and education up to
higher secondary school or equivalent;
b) Education as a part of a curriculum for
obtaining a qualification recognized by law;
c) Education as a part of an approved vocational
education course.
13) Services by way of renting of residential
dwelling for use as residence;
14) Services by way of -
a) extending deposits, loans or advances in so far
as the consideration is represented by way of
interest or discount;
b) inter-se sale or purchase of foreign currency
amongst banks or authorized dealers of foreign
exchange or amongst banks and such dealers;
15) Service of transportation of passengers,
with or without accompanied belongings, by -
a) a stage carriage;
b) railways in a class other than - (A) first class;
or (B) an air conditioned coach;
c) metro, monorail or tramway;
d) inland waterways;
e) public transport, other than predominantly for
tourism purpose, in a vessel between
f) places located in India; and
g) metered cabs, radio taxis or auto rickshaws;
16) Services by way of transportation of
goods
a) by road except the services of -
i) a goods transportation agency; or
ii) a courier agency;
b) by an aircraft or a vessel from a place outside
India up to the customs station of clearance in
India; or
c) by inland waterways;
17) Funeral, burial, crematorium or mortuary
services including transportation of the deceased.
Extra services included in Negative list
There are two more services included in the
negative list:
a) Vocational courses offered by institutes
affiliated to the State Council of Vocational
Training; and,
b) testing activities in relation to agriculture and
agricultural produce.