Clause by Clause analysis of Service Tax provisions in Finance (No.2) Bill, 2014
Budget 2014 seems to be a mix bag for meeting multiple objectives. The budget aims to serve rectification which cannot be undone, planning for “achhe din” in long term, in short term a budget of introduction of remedial measures by stroke of pen and a budget infusing confidence in government policies by Indian citizens and investors across globe. To the surprise of all, Finance Minister has brought in changes more than expected. While everyone thought it to be a status quo kind of budget, the new government has made it clear in its very first budget that every year counts and there shall be no rest till the objective is achieved. The budget seems to address certain much requisite changes while bringing in stronger provisions to push compliance amongst subjects. Amongst other taxes, Finance Minister has brought about a number of changes in Service Tax as well. Changes range from reduction in exemptions, to curtailment of power of relief by Appellate authorities to plugging of procedural lapses. Even the Budget Circular to this effect explains the basis of changes as “The main focus in service tax at the present juncture is to widen the tax base and enhance compliance.” In a simple gist:
- Advertisement and travel by radio cabs and air-conditioned contract carriages withdrawn got costlier
- All commission earned from outside India is now taxable
- Carrying cost of cotton and organic manure reduced
- Relief to rent a cab operators and tour operators from cascading effect of taxes
- Scope of exemption to Education related services narrowed to few specified services
- Recovery from Successor made possible under Service Tax
- Mandatory stay deposit
- Penalty relief in case of extended period no longer available to assessee. Thus, penalty seems to have become automatic.
We shall now discuss the important changes as brought in by the Budget in detail.