22 May 2015

New Service Tax rate of 14% applicable from 1st June, 2015

Service Tax levied in India on all services, except a few as listed in the negative list of services, will be applicable at the rate of 14%, instead of 12%, with effect from 1st of June, 2015. However, both the Education Cesses, i.e. Education Cess and Secondary & Higher Education Cess, have been abolished, from such date in respect of all the services.
The proposal to enhance the rate was made in this year’s Budget, presented in the Indian Parliament in February. The Finance Bill, 2015 received the Presidential assent on 14-5-2015 and now Notifications have been issued by the Ministry of Finance to provide 1st of June as the date for certain changes in the Service Tax provisions also, other than the rate of tax.


Right to admission to certain entertainment events

 Service Tax will be payable on right to admission to certain entertainment events or access to amusement facilities. Exemption however has been provided to right to admission to exhibition of cinematographic film, circus, dance, or theatrical performance including drama or ballet and to a recognised sporting event. Exemption to right to admission to award function, concert, pageant, musical performance or any sporting event other than a recognised sporting event, would however be available only if the consideration for such right is less than Rs. 500.


Production or manufacture of alcoholic liquor

Service by way of carrying out any processes for production or manufacture of alcoholic liquor for human consumption will also be liable for Service Tax with effect from 1st June. Exemption notification has also been amended to exclude intermediate production of alcoholic liquor for human consumption from the ambit of the exemption.


Lottery distributor or selling

 Activity carried out by a lottery distributor or selling agent in relation to promotion, marketing, organising, selling of lottery or facilitating in organising lottery of any kind, in any other manner will be liable to Service Tax from such date.

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