post

Refund of SAD

Refund of SAD

The intention of levying Special Additional Duty (‘SAD’) of Customs also known as Counter Value Duty (‘CVD’) U/s 3(5) of the Custom Tariff Act is to encourage domestic market and counter balance local sales tax/ Value Added Tax (‘VAT’) leviable on like products at the time of sale , which would have been levied if procured from domestic market.

However, where the imported goods are subsequently resold, exemption from 4% additional duty is provided in the form of refund vide Custom Notification No. 102/2007 dated 14.09.07, provided the conditions prescribed in the said notification is fulfilled.

The following conditions are required to be fulfilled:

1) all the applicable duties including additional duty has been paid at the time of import by importer;

2) at the time of issuing invoice, importer shall specifically indicate in invoice that no credit of additional duty shall be admissible;

3) the importer shall file refund claim of the said additional duty of customs paid on the imported goods with the jurisdictional customs officer;

4) the importer shall pay appropriate sales tax or VAT on sale of the said goods;

5) the importer shall, inter alia, provide copies of the following documents along with the refund claim:

(i) document evidencing payment of the said additional duty;

(ii) invoices of sale of the imported goods in respect of which refund of the said additional   duty is claimed;

(iii) documents evidencing payment of appropriate sales tax or value added tax, as the case may be, by the importer, on sale of such imported goods.

Procedure and clarification for claiming refund has been given in Circular No. 06/2008 Cus dated 28.04.2008 and Circular No. 16/2008 dated 13.10.2008 read with Notification No. 102/2007 Cus dated 14.09.2007.

Check list for filing refund application

S.No Particulars
1. Refund Application
2. Calculation/ Working sheet
3. Original Bill of Entry
4. Original TR-6 Challan
5. Copy of Import invoice/ packing list
6. Original Sales Invoices with declaration mentioning that no additional duty has been passed on
7. True copy of VAT/ CST challan and return
8. Authority letter
9. Ledger Account

Points to be cautious:

  1. Time limit for filing refund claim is one year from the date of payment of the additional duty of Customs. In view of the above, importer should be specific in filing refund claim within the stipulated time else the refund amount would lapse.
  2. Amount of SAD refund shall be restricted proportionate to sales made (quantity wise) and appropriate sales tax or VAT has been paid. Hence unsold stock would not be eligible for refund.
  3. The importer can file monthly claim irrespective of number of bill of entries. Single claim against a particular bill of entry is allowed and whereas refund claim for part quantity is not allowed except where necessary at the end of one year.
  4. One of the condition,inter-alia,requires that invoice should contain a declaration that no credit of the additional duty of customs levied under sub-section (5) of section 3 of the Customs Tariff Act, 1975 shall be admissible. In the absence of which, department rejecting the claim cannot be ruled out.
  5. Certificate from a statutory auditor / CA who certifies the final accounts, correlating VAT paymentvis-a-vis4% SAD amount and unjust enrichment. A certificate from any independent Chartered Accountant would not be acceptable.
post

Know Everything about Filing of Advance Ruling under Central Excise Act,1944

INTRODUCTION AUTHORITY FOR ADVANCE RULINGS CENTRAL EXCISE

Advance rulings enable foreign investors to know in advance into certainty their indirect tax duty liability on production and manufacture of goods in India.2. Relevant provisions for obtaining an advance ruling are contained in Chapter IIIA in the Central Excise Act, 1944;

2.1. The Central Excise (Advance Rulings) Rules, 2002 notified vide notification Nos. 28/2002-C.E. (N.T.) dated 23rd August, 2002 and amended vide notification Nos. 59/2003-C.E. (N.T.) dated 23rd July, 2003 and notification Nos. 16/2007-C.E. (N.T.) dated 6th March, 2007 provide for the format to be used for filing application.

2.2. Procedure Regulations of the Authority (AARUL CESTAT) have also been notified vide notification No. 1/2005-AAR dated 7th Jan., 2005.

  1. The scheme of Advance Rulings allows a non-resident investor setting up a joint venture in India in collaboration with a non-resident or a resident; or a resident setting up a joint venture in India in collaboration with a non-resident; or a wholly owned subsidiary Indian company, of which the holding company is a foreign company; or a joint venture in India; or a resident falling within any such class or category of persons as notified by the Government of India in this behalf , to seek in advance, a ruling from the Authority for Advance Rulings.
    Advance rulings can be sought in respect of –

(a) Classification of goods under the Central Excise Tariff Act, 1985;

(b) Principles of valuation under the Central Excise Act, 1944;

(c) Applicability, of notifications issued in respect of duties under the Central Excise Act, 1944 and Central Excise Tariff Act, 1985 and any duty chargeable under any other law for the time being in force in the same manner as duty of Central Excise leviable under the Central Excise Act.

(d) Admissibility of input-tax credit under Central Excise law.

(e) Determination of the liability to pay duties of excise on any goods under this Act.

  1. The relevant provisions are as follows;-

PROVISIONS OF CENTRAL EXCISE ACT, 1944 ON ADVANCE RULINGS

CHAPTER IIIA OF CENTRAL EXCISE ACT, 1944

ADVANCE RULINGS

SECTION 23A.Definitions. In this Chapter, unless the context otherwise requires, –

(a) activity means production or manufacture of goods and includes any new business of production or manufacture proposed to be undertaken by the existing producer or manufacturer, as the case may be;

(b) advance ruling means the determination, by the authority of a question of law or fact specified in the application regarding the liability to pay duty in relation to an activity proposed to be undertaken, by the applicant;

(c) applicant means –

(i) (a) a non-resident setting up a joint venture in India in collaboration with a non-resident or a resident; or

(b) a resident setting up a joint venture in India in collaboration with a non-resident; or

(c) a wholly owned subsidiary Indian company, of which the holding company is a foreign company, or which, as the case may be, proposes to undertake any business activity in India;

(ii)a joint venture in India; or

(iii) a resident falling within any such class or category of persons, as the Central Government may, by notification in the Official Gazette, specify in this behalf, and which or who, as the case may be, makes application for advance ruling under sub-section (1) of section 23C;

Explanation. For the purposes of this clause, joint venture in means a contractual arrangement whereby two or more persons undertake an economic activity which is subject to joint control and one or more of the participants or partners or equity holders is a non-resident having substantial interest in such arrangement.

(d)application means an application made to the Authority under sub-section (1) of section 23C;

(e) Authority means the Authority for Advance Rulings, constituted under sub-section (1), or authorised by the Central Government under sub-section (2A), of section 28F of the Customs Act, 1962 (52 of 1962)];

(f)non-resident, Indian company and foreign company shall have the meanings respectively assigned to them in clauses (30), (26) and (23A) of section 2 of the Income-tax Act, 1961 (43 of 1961).

SECTION 23B.Vacancies, etc., not to invalidate proceedings. No proceeding before, or pronouncement of advance ruling by, the Authority under this Chapter shall be questioned or shall be invalid on the ground merely of the existence of any vacancy or defect in the constitution of the Authority.

SECTION 23C.Application for advance ruling. (1) An applicant desirous of obtaining an advance ruling under this Chapter may make an application in such form and in such manner as may be prescribed, stating the question on which the advance ruling is sought.

(2)The question on which the advance ruling is sought shall be in respect of, –

(a)classification of any goods under the Central Excise Tariff Act, 1985 (5 of 1986);

(b) applicability of a notification issued under sub-section (1) of section 5A having a bearing on the rate of duty;

(c) the principles to be adopted for the purposes of determination of value of the goods under the provisions of this Act;

(d) notifications issued, in respect of duties of excise under this Act, the Central Excise Tariff Act, 1985 (5 of 1986) and any duty chargeable under any other law for the time being in force in the same manner as duty of excise leviable under this Act;

(e) admissibility of credit of service tax paid or deemed to have been paid on input service or excise duty paid or deemed to have been paid on the goods used in or in relation to the manufacture of the excisable goods.

(f) determination of the liability to pay duties of excise on any goods under this Act.

(3)The application shall be made in quadruplicate and be accompanied by a fee of two thousand five hundred rupees.

(4)An applicant may withdraw an application within thirty days from the date of the application.

SECTION 23D.Procedure on receipt of application. (1) On receipt of an application, the Authority shall cause a copy thereof to be forwarded to the Commissioner of Central Excise and, if necessary, call upon him to furnish the relevant records :

Provided that where any records have been called for by the Authority in any case, such records shall, as soon as possible, be returned to the Commissioner of Central Excise.

(2)The Authority may, after examining the application and the records called for, by order, either allow or reject the application :

Provided that the Authority shall not allow the application where the question raised in the application is, –

(a)already pending in the applicants case before any Central Excise Officer, the Appellate Tribunal or any Court;

(b)the same as in a matter already decided by the Appellate Tribunal or any Court :

Provided further that no application shall be rejected under this sub-section unless an opportunity has been given to the applicant of being heard :

Provided also that where the application is rejected, reasons for such rejection shall be given in the order.

(3)A copy of every order made under sub-section (2) shall be sent to the applicant and to the Commissioner of Central Excise.

(4)Where an application is allowed under sub-section (2), the Authority shall, after examining such further material as may be placed before it by the applicant or obtained by the Authority, pronounce its advance ruling on the question specified in the application.

(5)On a request received from the applicant, the Authority shall, before pronouncing its advance ruling, provide an opportunity to the applicant of being heard, either in person or through a duly authorised representative.

Explanation. – For the purposes of this sub-section, authorised representative shall have the meaning assigned to it in sub-section (2) of section 35Q.

(6)The Authority shall pronounce its advance ruling in writing within ninety days of the receipt of application.

(7)A copy of the advance ruling pronounced by the Authority, duly signed by the Members and certified in the prescribed manner shall be sent to the applicant and to the Commissioner of Central Excise, as soon as may be, after such pronouncement.

SECTION 23E.Applicability of advance ruling. (1) The advance ruling pronounced by the Authority under section 23D shall be binding only –

(a)on the applicant who had sought it;

(b)in respect of any matter referred to in sub-section (2) of section 23C;

(c)on the Commissioner of Central Excise, and the Central Excise authorities subordinate to him, in respect of the applicant.

(2)The advance ruling referred to in sub-section (1) shall be binding as aforesaid unless there is a change in law or facts on the basis of which the advance ruling has been pronounced.

SECTION 23F.Advance ruling to be void in certain circumstances. (1) Where the Authority finds, on a representation made to it by the Commissioner of Central Excise or otherwise, that an advance ruling pronounced by it under sub-section (6) of section 23-D has been obtained by the applicant by fraud or misrepresentation of facts, it may, by order, declare such ruling to be void ab initio and thereupon all the provisions of this Act shall apply (after excluding the period beginning with the date of such advance ruling and ending with the date of order under this sub-section) to the applicant as if such advance ruling had never been made.

(2)A copy of the order made under sub-section (1) shall be sent to the applicant and the Commissioner of Central Excise.

SECTION 23G.Powers of Authority. (1) The Authority shall, for the purpose of exercising its powers regarding discovery and inspection, enforcing the attendance of any person and examining him on oath, issuing commissions and compelling production of books of account and other records, have all the powers of a civil court under the Code of Civil Procedure, 1908 (5 of 1908).

(2)The Authority shall be deemed to be a civil court for the purposes of section 195, but not for the purposes of Chapter XXVI of the Code of Criminal Procedure, 1973 (2 of 1974), and every proceeding before the Authority shall be deemed to be a judicial proceeding within the meaning of sections 193 and 228, and for the purpose of section 196, of the Indian Penal Code (45 of 1860).

SECTION 23H.Procedure of Authority. The Authority shall, subject to the provisions of this Chapter, have power to regulate its own procedure in all matters arising out of the exercise of its powers under this Act.

MINISTRY OF FINANCE
(Department of Revenue)

Notification No.28/2002-Central Excise (NT)
New Delhi, the 23rd August,2002

CENTRAL EXCISE (ADVANCE RULINGS) RULES, 2002

G.S.R.594 (E).- In exercise of the powers conferred under Section 37 read with sub-sections (1) and (3) of section 23C, sub-section (7) of section 23D of the Central Excise Act, 1944 (1 of 1944), the Central Government hereby makes the following rules, namely :

  1. Short , extent and commencement .

(1)These rules may be called the Central Excise (Advance Rulings) Rules, 2002.

(2)They extend to the whole of India

(3)They shall come into force on the date of their publication in the Official Gazette.

  1. Definitions- In these rules, unless the context otherwise requires,-

(a) “Act” means the Central Excise Act, 1944 (1 of 1944).

(b) Authority means the Authority for Advance Rulings(Central Excise, Customs and Service Tax) constituted under section 28F of the Customs Act, 1962 (52 of 1962).

(c) Form -Application for Advance Rulings (Central Excise) means the form appended to these rules.

(a) “Act” means the Central Excise Act, 1944 (1 of 1944).

(b) “??Authority” means the Authority for Advance Rulings(Central Excise, Customs and Service Tax) constituted under section 28F of the Customs Act, 1962 (52 of 1962).

(c) “Form -Application for Advance Rulings (Central Excise)’?? means the form appended to these rules.

(d) Words and expressions used and not defined herein but defined in the Act shall have the meanings respectively assigned to them in the Act.

3.Form and manner of application.

(1) An application for obtaining an advance ruling under sub-section(1) of section 23C of the Act shall be made in Form Application for Advance Rulings (Central Excise).

(2) The application referred to in sub-rule (1), the verification contained therein and all relevant documents accompanying such application shall be signed,-

(a) in the case of an individual, by the individual himself, or where the individual is absent from India, by the individual concerned or by some person duly authorized by him in this behalf; and where the individual is a minor or is mentally incapacitated from attending to his affairs, by his guardian or by any other person competent to act on his behalf;

(b) in the case of Hindu undivided family, by the Karta of that family and, where the Karta is absent from India or is mentally incapacitated from attending his affairs, by any other adult member of that family;

(c) in the case of company or local authority, by the principal officer thereof authorized by the company or the local authority, as the case may be, for such purpose;

(d) in the case of a firm, by any partner thereof, not being a minor;

(e) in the case of an association, by any member of the association or the principal officer thereof; and

(f) in the case of any other person, by that person or some person competent to act on his behalf.

(3) Every application shall be filed in quadruplicate and shall be accompanied by a fee of two thousand five hundred rupees.

4.Certification of copies of the advance rulings pronounced by the Authority A copy of the advance ruling pronounced by the Authority for Advance Rulings and duly signed by the Members to be sent to each of the applicant and to the Commissioner of Central Excise, under sub-section (7) of section 23D of the Act shall be certified to be true copy of its original by the Commissioner, Authority for Advance Rulings, or any other officer duly authorized by the Commissioner, Authority for Advance Rulings, as the case may be.

FORM- AAR (CE-I)

[Application for Advance Ruling (Central Excise)]

(See rule 3 of the Central Excise (Advance Rulings) Rules, 2002)

BEFORE THE AUTHORITY FOR ADVANCE RULINGS

(CENTRAL EXCISE, CUSTOMS AND SERVICE TAX)

NEW DELHI

(Form of application for seeking Advance Ruling under section 23C of the Central Excise Act,1944)

Application No.of.

1. Details of Applicant  
  (i) Full name  
(ii) Complete address  
(iii) Telephone number( with STD/ISD code)  
(iv) Fax number (with STD/ISD code)  
(v) E-mail address  
(vi) Postal address ( to be provided if different from (ii) above)  
2. Status of the Applicant(Tick whichever is applicable)  
i. (i) a non-resident setting up a joint venture in India in collaboration with,-  
ii. (a) a non-resident; or  
iii. (b) with a resident;  
iv. (ii) a resident setting up a joint venture in India in collaboration with a non-resident;  
v. (iii) a wholly owned subsidiary Indian company, of which the holding company is a foreign company;  
vi. (iv) a joint venture in India;  
  viii. (v) a resident falling within any such class or category of persons, as the Central Government may, by notification in the Official Gazette, specify in this behalf(mention notification number).  
3. Basis for claim as a proposed joint venture [ref. 2(i) & (ii) above] (furnish copy of following).  
  (a) Memorandum of Understanding; or  
  (b) Letter of Intent; or  
  (c) Articles of Association etc.; or  
  (d) Any other document.  
4. Details of proposed joint venture  
  (i) Full name  
  (ii) Complete address  
  (iii) Telephone number( with STD/ISD code)  
  (iv) Fax number (with STD/ISD code)  
  (v) E-mail address  
  (vi) Postal address( to be filled if different from (ii) above)  
5. Details of resident/non-resident party other than the applicant forming the Joint Venture  
  (i) Full name  
  (ii) Complete address  
  (iii) Telephone number( with STD/ISD code)  
  (iv) Fax number (with STD/ISD code)  
  (v) E-mail address  
  (vi) Postal address( to be filled if different from (ii) above)  
6. In case of a wholly owned Indian Subsidiary Company furnish the following details:-  
A. (i) Name of Foreign holding company  
(ii) Complete address  
(iii) Telephone number( with STD/ISD code)  
(iv) Fax number (with STD/ISD code)  
(v) E-mail address  
(vi) Postal address ( to be provided if different from (ii) above)  
B. Percentage of Foreign holding in the Indian Subsidiary Company.  
7. In case of a joint venture [ref. 2(iv) above]  
  (i) The persons forming the joint venture/ constitution of joint venture.  
  (ii) Status of constituent persons, i.e. resident/non-resident.  
  (iii) Existing activities if any.  
8. Nature of activity proposed to be undertaken.  
9. Present status of activity.  
10. Registration number of the applicant as mentioned at serial number 1 under rule 9 of the Central Excise Rules, 2002 (if any).  
11. Permanent Account Number (Income Tax) of the applicant (if any).  
12. Question of Law or fact on which Advance Ruling required (Tick whichever is applicable and provide details against ticked item):-  
  (i) classification of goods under the Central Excise Tariff Act, 1985( 5 of 1986);  
  (ii) applicability of a notification issued under sub-section (1) of section 5A of the Central Excise Act,1944, having a bearing on the rate of duty;  
  (iii) the principles to be adopted for the purposes of determination of value of the goods under the provisions of this Act;  
  (iv) notifications issued, in respect of duties of excise under the Central Excise Act,1944, the Central Excise Tariff Act, 1985 and any duty chargeable under any other law for the time being in force in the same manner as duty of excise leviable under this Act;  
  (v) admissibility of credit of excise duty paid or deemed to have been paid on the goods in or in relation to the manufacture of the excisable goods (CENVAT);  
  (vi) determination of liability to pay duties of excise under this Act.  
13. Statement of relevant facts having a bearing on the question(s) raised.  
14. Statement containing the applicants interpretation of law and/or facts, as the case may be, in respect of the aforesaid question(s) (i.e. applicants view point and submissions on issues on which the advance ruling is sought).  
15. Whether the question(s) raised is pending in the applicants case before any officer of Central Excise, Appellate Tribunal or any Court of Law? If so, provide details.  
16. Whether a similar matter as raised in the question(s) by the applicant has already been decided by the Appellate Tribunal or any Court?  
17. Concerned Commissioner(s) of Central Excise having jurisdiction in respect of the question referred at serial number 12.  
18. List of documents/statement attached, (attach the list on a separate sheet, if necessary.  
19. Particulars of account payee demand draft enclosed with the application  

 

(Applicants signature)

VERIFICATION

I, ____________________ (name in full and in block letters), son/daughter/wife of ___________________ do hereby solemnly declare that to the best of my knowledge and belief what is stated above and in the annexure(s), including the documents are correct. I am making this application in my capacity as ___________________ (designation) and that I am competent to make this application and verify it.

  1. I also declare that the question (s) on which the advance ruling is sought is/are not pending in my case before any Central Excise Authority, Appellate Tribunal or any Court.
  2. Verified this.day..of.200 at .

(Applicants signature)

ANNEXURE I

Statement of the relevant facts having a bearing on the question(s) on which the advance ruling is required

Place ..

Date

(Applicants signature)

ANNEXURE II

Statement containing the applicant”s interpretation of law and/or facts, as the case may be, in respect of the questions(s) on which advance ruling is required

Place ..

Date

(Applicants signature)

Notes:

1. The application must be filled in English or Hindi, in quadruplicate.
2. The application must be accompanied by an account payee demand draft of Indian Rupees two thousand five hundred drawn in favour of Authority for Advance Rulings(Central Excise, Customs & Service Tax), payable at New Delhi. Particulars of the draft should be entered in the column pertaining to item number 19.
3. The number and year of receipt of the application will be filled in by the office of the Authority for Advance Rulings.
4. If the space provided for answering any item in the application is found insufficient, separate sheets may be used for this purpose. Each sheet must be signed at the bottom by the applicant.
5. In reply to item number 2 the applicant must state its status i.e. whether an individual, Hindu undivided family firm, company, firm association of persons, wholly owned subsidiary, Joint Venture or any other person.
6. For item number 5, the reply must be given in the context of the provisions regarding “residence” in India, non resident, Indian Company, and Foreign Company as per the Income Tax Act, 1961(43 of 1961).
7. In reply to item number 9, the applicant must state the present status of the business activity in respect of which advance ruling has been sought i.e. the stage to which it has progressed.
8. Regarding item number 12, the question(s) should be based on the activity proposed to be under taken; hypothetical questions will not be entertained.
9. In respect of item number 13, the applicant must state in detail the relevant facts and also disclose the nature of proposed activity and the likely date and purpose of the proposed activity(s). Relevant facts reflected in document submitted along with the application must be included in the statement of facts and not merely incorporated by reference.
10. For item number 14, the applicant must clearly state his interpretation of law or facts in respect of the question(s) on which the advance ruling is being sought.
11. The application, the verification appended thereto, the Annexures to the application and the statements and documents accompanying the Annexures 1 and 2 must be signed on each page by the applicant.
post

Full /Partial Reverse Mechanism Service Tax Chart wef 01.06.2016

Reverse Mechanism and Partial Reverse Mechanism in Service Tax was First Introduced Vide Principal Notification No. 30/2012-Service Tax Dated- 20th June, 2012  and subsequently been amended vide Corrigendum Notification [F. No.334/1/2012 -TRU], dated 29-6-2012Notification No. 45/2012-Service Tax, dated 7th August, 2012 , Notification No. 10/2014-Service Tax Dated- 11th July, 2014, Notification No.7/2015-Service Tax, Dated- 1st March, 2015 and Notification No. 18/2016-Service Tax Dated : 01/06/2016

After considering all these Notifications we have Compiled The Reverse and Partial Reverse Mechanism Chart as Applicable from 01.06.2016

 

Reverse and Partial Reverse Mechanism Rate Chart with effect from 01.06.2016  and The extent of service tax payable thereon by the person who provides the service and any other person liable for paying service tax for the taxable services. List been compiled after considering Amendments made by Budget 2016, Swachh Bharat &  Krishi Kalyan Cess

Table

Sl. No. Description of a service Percentage of service tax payable by the person providing service Percentage of service tax payable by any person liable for paying service tax other than the service provider % of Service Tax Payable By
Service Provider Service Receiver
(1) (2) (3) (4) (5) (6)
1 in respect of services provided or agreed to be provided by an insurance agent to any person carrying on insurance business Nil 100% Nil 15%
1A in respect of services provided or agreed to be provided by a recovery agent to a banking company or a financial institution or a non-banking financial company (Effective from 01.04.2015) Nil 100% Nil 15%
1B. in respect of services provided or agreed to be provided by a mutual fund agent or distributor, to a mutual fund or asset management company (Effective from 01.04.2015)

Omitted vide Notification No. 18/2016-ST dated 01.03.2016 wef 01.04.2016

 

NOT APPLICABLE

1C. in respect of services provided or agreed to be provided by a selling or marketing agent of lottery tickets in relation to lottery in any manner to a lottery distributor or selling agent of the State Government under the provisions of the Lottery (Regulations) Act, 1998 (17 of 1998)

(inserted vide Notification No.7/2015-Service Tax, Dated- 1st March, 2015WEF 01.04.2016 )

Nil 100% Nil 15%
2 in respect of services provided or agreed to be provided by a goods transport agency in respect of transportation of goods by road to Company, Partnership Firm, Registered Factory, Registered Society, co-operative society, AOP, LLP, Person Registered Under Central Excise Act, 1944 including Excise Dealers Nil 100% Nil 15%
3 in respect of services provided or agreed to be provided by way of sponsorship to anybody corporate or partnership firm Nil 100% Nil 15%
4 in respect of services provided or agreed to be provided by an arbitral tribunal to any Business entity Nil 100% Nil 15%
5 in respect of services provided or agreed to be provided by a firm of advocates or an individual advocate other than a senior advocate by way of legal services

(substituted vide Notification No. 18/2016-ST dated 01.03.2016 wef 01.04.2016))

Nil 100% Nil 15%
5A in respect of services provided or agreed to be provided by a director of a company or a body corporate to the said company or the body corporate Nil 100% Nil 15%
6  in respect of services provided or agreed to be provided by Government or local authority [OMITTED – by way of support servicesexcluding,- (1) renting of immovable property, and (2) services specified in sub-clauses (i), (ii) and (iii) of clause (a) of section 66D of the Finance Act,1994

(the words “by way of support services” has been omitted vide Notification No. 18/2016-ST dated 01.03.2016 wef 01.04.2016)

Nil 100% Nil 15%
7 (a) in respect of services provided or agreed to be provided by way of renting of a motor vehicle designed to carry passengers on abated value to any person who is not engaged in the similar line of business by individual, HUF, firm or AOP to Body Corporate Nil 100% Nil After availment of 60% abatement:

 

6%

(b) in respect of services provided or agreed to be provided by way of renting of a motor vehicle designed to carry passengers on non abated value to any person who is not engaged in the similar line of business by individual, HUF, firm or AOP to Body Corporate (Revised wef 01.10.2014) 50% 50% Without availment of 60% abatement:

 

7.50 %

Without availment of 60% abatement:

 

7.50%

8. in respect of services provided or agreed to be provided by way of supply of manpower for any purpose or security services by individual, HUF, firm or AOP to Body Corporate Nil 100% Nil 15%
9. in respect of services provided or agreed to be provided in service portion in execution of works contract by individual, HUF, firm or AOP to Body Corporate    
In case of Original work 50% 50% After availment of 60% abatement

 

3%

After availment of 60% abatement

 

3%

In all other cases 50% 50% After availment of 30% abatement:

 

5.25%

After availment of 30% abatement:

 

5.25%

 

10 in respect of any taxable services provided or agreed to be provided by any person who is located in a non-taxable territory and received by any person located in the taxable territory Nil 100% Nil 15%
11. in respect of any service provided or agreed to be provided by a person involving an aggregator in any manner to any Business Entity(Effective from 01.03.2015) Nil 100% Nil 15%

 

Explanation-I. – The person who pays or is liable to pay freight for the transportation of goods by road in goods carriage, located in the taxable territory shall be treated as the person who receives the service for the purpose of this notification.

Explanation-II. – In works contract services, where both service provider and service recipient is the persons liable to pay tax, the service recipient has the option of choosing the valuation method as per choice, independent of valuation method adopted by the provider of service.

Service Tax Abatement Rate Chart from 1st June 2016

Abatement in Service Tax was First Introduced Vide Principal Notification No. 26/2012-Service Tax, dated 20th June 2012 and subsequently been amended vide Notification No. 2/2013 – Service Tax, dated the 1st March, 2013Notification No. 9/2013 – Service Tax, Dated: May 8, 2013Notification No. 08/2014 – Service Tax Dated-11th July, 2014 , Notification No. 8/2015-ST, Dated: March 01, 2015,, Notification No. 13/2015-ST, Dated: May 19, 2015 Notification No. 8/2015-ST, Dated: March 01, 2015.

Vide Union Budget 2016 government has made several changes to Service Tax Abatement Provisions and Abatement rates. Some of the changes were applicable from 01.04.2016 and some were applicable from 01.06.2016. in this Article we have compiled the abatement rate on Table Services, Taxable Value and Tax Rate after applying the abatement  as applicable from 01.06.2016

Service Tax Abatement Rate Chart as Applicable from 01.06.2016 updated with Changes Made Vide Budget 2016   and after imposition of Krishi Kalyan Cess (KKC), for  ready reference of our readers

Table

Sl. No. Description of taxable service Percentage Net Tax Rate % wef 01.06.2016 Conditions
Taxable Value Abatement
(1) (2) (3) (4) (5) (6)
1 Services in relation to financial leasing including hire purchase (Refer Note-1) 10 90 1.50% Nil.
2 Transport of goods by rail 30 70 4.50% CENVAT credit on inputs, capital goods and input services, used for providing the taxable service, has not been taken under the provisions of the CENVAT Credit Rules, 2004
2A Transport of goods in containers by rail by any person other than Indian Railway

(Entry inserted vide NN 8/2016-ST dated 01.03.2016 w.e.f 01.04.2016)

40 60 6% CENVAT credit on inputs and capital goods, used for providing the taxable service, has not been taken under the provisions of the CENVAT Credit Rules, 2004
3 Transport of passengers, with or without accompanied belongings by rail 30 70 4.50% i) CENVAT credit on inputs and capital goods, used for providing the taxable service, has not been taken under the provisions of the CENVAT Credit Rules, 2004.

ii) Cenvat credit on input  services shall be allowed

4 Bundled service by way of supply of food or any other article of human consumption or any drink, in a premises ( including hotel, convention center, club, pandal, shamiana or any other place, specially arranged for organizing a function) together with renting of such premises (Refer Note-2) 70 30 10.50% (i) CENVAT credit on any goods classifiable under Chapters 1 to 22 of the Central Excise Tariff Act, 1985 (5 of 1986) used for providing the taxable service, has not been taken under the provisions of the CENVAT Credit Rules, 2004.
5 Transport of passengers by air, with or without accompanied belongings in CENVAT credit on inputs and capital goods, used for providing the taxable service, has not been taken under the provisions of the CENVAT Credit Rules, 2004.
(i) economy class 40 60 6%
(ii) other than economy class 60 40 9%
6 Renting of hotels, inns, guest houses, clubs, campsites or other commercial places meant for residential or lodging purposes. 60 40 9% Same as above.
7 Services of goods transport agency in relation to transportation of goods other than used household goods 30 70 4.50% CENVAT credit on inputs, capital goods and input services, used for providing the taxable service, has not been taken by the service providerunder the provisions of the CENVAT Credit Rules, 2004.
7A Services of goods transport agency in
relation to transportation of used household
goods.(Entry inserted vide NN 8/2016-ST dated 01.03.2016  )
40 60 6% CENVAT credit on inputs, capital goods and input services, used for providing the taxable service, has
not been taken by the service provider under the rovisions of the CENVAT Credit Rules, 2004.
8 Services provided by a foreman of chit fund in relation to chit

(Entry inserted vide NN 8/2016-ST dated 01.03.2016 w.e.f. 01.04.2016, earlier omitted vide NN 08/2015-ST dated 01.03.2015.)

70 30 10.50% CENVAT credit on inputs, capital goods and input services, used for providing the taxable service has not been taken under the provisions of the CENVAT Credit Rules, 2004
9 Renting of motor cab 40 60 6% (i) CENVAT credit on inputs and capital goods, used for providing the taxable service, has not been taken under the provisions of the CENVAT Credit Rules, 2004;

(ii) CENVAT credit on input service of renting of motorcab has been taken under the provisions of the CENVAT Credit Rules, 2004, in the following manner:

(a) Full CENVAT credit of such input service received from a person who is paying service tax on forty percent of the value; or

(b) Up to forty percent CENVAT credit of such input service received from a person who is paying service tax on full value;

(iii) CENVAT credit on input services other than those specified in (ii) above, has not been taken under the provisions of the CENVAT Credit Rules, 2004.

9A Transport of passengers, with or without accompanied belongings, by-

a. a contract carriage other than motorcab.

b. a radio taxi.

c.  a stage carriage

(Also refer Note-5)

40 60 6% CENVAT credit on inputs, capital goods and input services, used for providing the taxable service, has not been taken under the provisions of the CENVAT Credit Rules, 2004.
10 Transport of goods in a vessel  30 70 4.50% CENVAT credit on inputs and capital goods, used for providing the taxable service, has not been taken under the provisions of the CENVAT Credit Rules, 2004.
11 Services by a tour operator in relation to,-

(i) a tour, only for the purpose of arranging or booking accommodation for any person

(Refer Note-4)

10 90 1.50% (i) CENVAT credit on inputs, capital goods and input services other than input services of a tour operator, used for providing the taxable service, has not been taken under the provisions of the CENVAT Credit
Rules, 2004.(ii) The invoice, bill or challan issued indicates that it is towards the charges for such accommodation.(iii) This exemption shall not apply in such cases where the invoice, bill or challan issued by the tour operator, in relation to a tour, includes only the service charges for arranging or booking accommodation for any person but does not include the cost of such accommodation.
(ii) tours other than (i) above 30 70 4.50% (i) CENVAT credit on inputs, capital goods and input services other than input services of a tour operator, used for providing the taxable service, has not been taken under the provisions of the CENVAT Credit Rules, 2004.

(ii) The bill issued for this purpose indicates that it is inclusive of charges for such a tour and the amount charged in the bill is the gross amount charged for such a tour.

NN 8/2016-ST dated 01.03.2016 w.e.f. 01.04.2016: Abatement rates in respect of services by a tour operator in relation to a tour other than (i) has been rationalised from 75% (package tour) and 60% (others) to 70%. Consequently, the category of “package tour” stands deleted w.e.f. 01.04.2016
12. Construction of a complex, building, civil structure or a part thereof, intended for a sale to a buyer, wholly or partly except where entire consideration is received after issuance of completion certificate by the competent
authority (Also Refer Note-3)
30 70 4.5% (i) CENVAT credit on inputs used for providing the taxable service has not been  taken under the provisions  of the CENVAT Credit Rules, 2004.

(ii) The value of land is  included in the amount  charged from the service  receiver.

Effective from 01.04.2016, a uniform abatement at the rate of 70% is prescribed for services of construction of complex, building, civil structure, or a part thereof, subject to fulfilment of the existing conditions.

 

 

Note-1 For the purposes of exemption at Serial number 1 –

(i) The amount charged shall be an amount, forming or representing as interest, i.e. the difference between the installments paid towards repayment of the lease amount and the principal amount contained in such installments;

(ii) the exemption shall not apply to an amount, other than an amount forming or representing as interest, charged by the service provider such as lease management fee, processing fee, documentation charges and administrative fee, which shall be added to the amount calculated in terms of (i) above.

Note-2. For the purposes of exemption at Serial number 4 –

The amount charged shall be the sum total of the gross amount charged and the fair market value of all goods and services supplied in or in relation to the supply of food or any other article of human consumption or any drink (whether or not intoxicating) and whether or not supplied under the same contract or any other contract, after deducting-

(i) the amount charged for such goods or services supplied to the service provider, if any; and

(ii) the value added tax or sales tax, if any, levied thereon:

Provided that the fair market value of goods and services so supplied may be determined in accordance with the generally accepted accounting principles.

Note-3. For the purposes of exemption at Serial number 12 –

The amount charged shall be the sum total of the amount charged for the service including the fair market value of all goods and services supplied by the recipient(s) in or in relation to the service, whether or not supplied under the same contract or any other contract, after deducting-

(i) the amount charged for such goods or services supplied to the service provider, if any; and

(ii) the value added tax or sales tax, if any, levied thereon:

Provided that the fair market value of goods and services so supplied may be determined in accordance with the generally accepted accounting principles.

Note-4 “tour operator” means any person engaged in the business of planning, scheduling, organizing, arranging tours (which may include arrangements for accommodation, sightseeing or other similar services) by any mode of transport, and includes any person engaged in the business of operating tours,

Note-5 For the purposes of exemption at Serial number 9, the amount charged shall be the sum total of the amount charged for the service including the fair market value of all goods (including fuel) and services supplied by the recipient(s) in or in relation to the service, whether or not supplied under the same contract or any other contract.

Provided that the fair market value of goods and services so supplied may be determined in accordance with the generally accepted accounting principles.

Restoration Of Service Tax Codes

  • Negative List based comprehensive approach to taxation of services came into effect from the first day of July, 2012. Accounting code for the purpose of payment of service tax under the Negative List approach [“All Taxable Services” – 00441089] was prescribed vide Circular 161/12/2012 dated 6th July, 2012.
  • Subsequent to the issuance of the Circular, suggestions were received from the field formations that the service specific old accounting codes should be restored, for the purpose of statistical analysis; also it was suggested that list of descriptions of services should be provided to the taxpayers for obtaining registration. These suggestions were examined and a decision has been taken to restore the service specific accounting codes. Accordingly, a list of 120 descriptions of services for the purpose of registration and accounting codes corresponding to each description of service for payment of tax is provided in the annexure to this Circular.
  • Descriptions of taxable services given in the annexure are solely for the purpose of statistical analysis. On the advice of the office of the C & AG, a specific sub-head has been created for payment of “penalty” under various descriptions of services. Henceforth, the sub-head “other receipts” is meant only for payment of interest payable on delayed payment of service tax. Accounting Codes under the sub-head “deduct refunds” is not to be used by the taxpayers, as it is meant for use by the field formations while allowing refund of tax.
  • Registrations obtained under the positive list approach continue to be valid. New taxpayers can obtain registrations by selecting the relevant description/s from among the list of 120 descriptions of services given in the Annexure. Where registrations have been obtained under the description ‘All Taxable Services’, the taxpayer should file amendment application online in ACES and opt for relevant description/s from the list of 120 descriptions of services given in the Annexure. If any applications for amendment of ST-1 are pending with field formations, seeking the description ‘all taxable services’, such amendment may not be necessary and the officers in the field formations may provide necessary guidance to the taxpayers in this regard. Directorate General of Systems will be making necessary arrangements for display of the list of 120 descriptions of services and their corresponding Accounting Codes in Form ST-1 and Form ST-2 as may be necessary.

What is Service Tax?

the Govt.t is a tax which is payable on services provided by the service provider. Just like Excise duty is payable on goods which are manufactured, similarly Service Tax is payable on Services provided.

This Tax is payable by the provider of Service to the Govt. of India. However, the Service Provider can collect this Tax from the Consumer of Service (also referred to as Recipient of Service) and deposit the same with the Govt.