Service Tax Law in India - Some not focused Changes

In this age of digital India, everything is moving pretty fast. You can see the working style, the jobs, the legal disputes, the marketing strategies etc. This has also starting affecting the government as well. We can Companies Act, 2013 has already been placed, Goods and Service tax (GST) is on a roll and Income tax Act, has already changed a lot. Though GST has not been passed yet, but our laws are constantly changing towards the GST Pattern.

Service tax is changing day by day and it is moving towards more paper less approach. It is more been moving towards more paper less approach. Let us under these changes and its effect on us:

One Person Company at par with Individuals: Government has introduced a new concept of One Person Company by Companies Act, 2013 and now government is treating at par with Individuals in a following way:

Quarterly Payment: Govt. has allowed the OPC with turnover up to 50 lakh to pay service tax on quarterly basis. This step is further to enhance the ease of doing business in India.

Annual Returns: As per Finance Bill, 2016 Government has proposed a concept of Annual return for individuals, Partnerships, and One Person Company with turnover up to Rs.50 lakh.

Cash Basis Payments: One Person Company, Individuals, and Limited Liability companies up to a gross receipt of INR 50 lakh can follow the cash basis system. This is as per the new rule. In other words, it means that they can pay the Service tax whenever they receive a payment. These will really a big step for small companies.

Residential Complex to Cost More: Government has provided the single abatement rate for residential complexes @70%. Earlier government has provided two rates of abatement based on carpet area. Due to this, small houses were cheaper as Service tax rate on them was lesser. Earlier, the abatement rates were 70% and 75% based on carpet area, but now the requirement of carpet area has been dispenses with and a single abatement rate of 70% is provided.

Service tax on senior advocate: Government has amended the provision for service tax and senior advocate were brought under its ambit. Also, this time the advocates are himself liable to pay service tax and not under the reverse charge mechanism.

Stage Carriage to be More Costlier: As per the current law, any transport service by stage carriage is out of service tax ambit. But now, as per the current rule, service will be levied on every air conditioned carriage. Hence, now the stage transport will be more costly.

Service Tax rate @15%: As per the new finance bill, the service tax has been increasedto 15% from the existing 14.5%. The new 0.5% addition is on account of Krishi Kalyan Cess.

There are still many other changes which are not unearthed and we will try to put more light in the coming articles.

Source: Latest Service Tax rate in India.

About the Author

CA Paras Mehra is an indirect tax specialist and a Service tax Consultant. He is also a founder of Hubco.in/Service tax.