The Service Tax laws enacted under Chapter V of the Finance Act, 1994 have been amended vide Union Budget 2016-17. Set out below are the amendments effective from 1 April 2016:

Service Tax Law (Finance Act, 1994)

  • Senior Advocates shall be liable to pay Service Tax on legal services.
  • Transport of passengers, with or without belongings, by ropeway, cable car or aerial tramway shall now attract Service Tax.
  • Agents and distributors of Mutual Funds shall be liable to pay Service Tax.

Service Tax Rules, 1994

  • One Person Companies (OPC) with a turnover of up to INR 50 Lacs in the previous year shall be entitled to:
    1. Quarterly payment of Service Tax; and
    2. Payment of Service Tax on receipt basis.
  • HUFs shall be entitled to pay Service Tax on quarterly basis.

CENVAT Credit Rules, 2004

  • Invoices issued by service providers for removal of inputs and capital goods shall be construed to be valid documentation for availing CENVAT Credit.
  • CENVAT Credit of Service Tax paid on upfront charges for assignment of natural resources such as Mining Rights, spectrum sale etc. shall be available periodically over the period of assignment.

Reverse Charge Payment

  • All the services, except certain specified services rendered by Government or local authorities have now been brought under the reverse charge mechanism.

Abatement

  • Abatement for tour operators, solely engaged in arranging booking of accommodation has been retained at 90%. Abatement for other tour operators, has been kept at 70%.
  • Abatement in relation to foreman of chit funds has been kept at 30% of the value subject to them not availing CENVAT credit on inputs, input services and capital goods.
  • A uniform abatement of 70% for construction of complex is now applicable.
  • Railways permitted to avail CENVAT Credit of input services while payment continues on abated value.
  • CENVAT Credit of input services for transportation of goods by vessels is permitted, while payment continues on abated value.
  • Abatement of 60% has been prescribed for transportation of household items by Goods Transport Agency (GTA), as against general abatement of 70%.