Service Tax Taxable Services: Abatement Value (%), Taxable Value (%), Effective Rate (%), New Service Tax in Special Cases. (By.Shyam Makwana)

The below mentioned table show the effective service tax rate wherein different types of abatements are available,

Sl No.	Descriptions of Taxable Services	Service Tax	Abatement Value %	Taxable Value %	Effective Rate
1	Mandap keeper service	14%	30%	70%	9.80%
2	Tour operator services
	Solely of arranging/booking accommodation	14%	90%	10%	1.40%
	Package tour	14%	75%	25%	3.50%
	Other than both above	14%	60%	40%	5.60%
3	Rent-a-cab scheme operator services	14%	60%	40%	5.60%
4	Transport of goods by road/goods transport agency service	14%	70%	30%	4.20%
5	Construction services other than residential complex,including commercial/industrial buildings or civil structures	14%	70%	30%	4.20%
6	Construction of residential complex service
	Carpet area is less than 2000 sq.ft. & Amt charged less  than 1 crore	14%	75%	25%	3.50%
	Others	14%	70%	30%	4.20%
7	Transport of passengers embarking on domestic/international journey by air
	Economy class	14%	60%	40%	5.60%
	Other than economy	14%	40%	60%	8.40%
8	Transport of goods by rail including transport of goods in containers by rail (for the present, transport of passengers by rail in air-conditioned class/first class also may be paid under this description/accounting code)	14%	70%	30%	4.20%
9	Works contract service
	Original works	14%	60%	40%	5.60%
	Maintenance or repair or reconditioning or restoration or servicing	14%	30%	70%	9.80%
10	Services in relation to financial leasing including hire purchase	14%	90%	10%	1.40%
11	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	14%	30%	70%	9.80%
12	Renting of hotels, inns, guest houses, clubs, campsites or other commercial places meant for residential or lodging purposes.	14%	40%	60%	8.40%
13	Transport of goods in a vessel	14%	70%	30%	4.20%
14	Other than above services (Full Rate on Full Value)	14%	0%	100%	14.00%

Service Tax has been increased to 14% (including all “Cesses”) from 12.36% earlier from 01.06.2015 , hence service tax is to be charged/collected and paid @ single rate. The payment code to be used will be basic code only and codes related to “Education Cess Code – 00440298” & “ Higher Education Cess Code – 00440426” is not to be used for all liabilities from June 1st 2015.

Service Tax Rate	Basic Rate	Edu. Cess	H.Edu.Cess	Codes
12.36% Till 31.05.2015	12%	2%	1%	Basic Code (Respective Services)
				Edu. Cess   - 00440298
				H. Edu. Cess - 00440426
14% w.e.f. 01.06.2015	14%	---	---	Only Basic Code
				(Respective Services)
				(Inclusive of all Cesses)

The below mentioned table show the effective service tax rate in special cases as per Service Tax Rules, 1994,

Sl No	Nature of Services	Old Rate	New Effective Rate
1	Domestic Air Booking	0.60%	0.70%
2	International Air Booking	1.20%	1.40%
3	Life Insurance
	First Year Premium	3%	3.50%
	Subsequent Premiums	1.50%	1.75%
4	Money Changing Services
	Amount of currency exchanged upto INR 0.1 million	0.12% (minimum of INR 30)	0.14% (minimum of INR 35)
	Amount of currency exchanged exceeding INR 0.1 million and upto INR1 million	Rs.120 and 0.06%	Rs.140 and 0.07%
	Amount of currency exchanged exceeding INR1 million	Rs.660 and 0.012% (maximum of Rs.6,000)	Rs.770 and 0.014% (maximum of Rs.7,000)
5	Lottery
	Where guaranteed prize payout is more than 80%	Rs.7,000	Rs.8,200
	Where guaranteed prize payout is less than 80%	Rs.11,000	Rs.12,800

 As per the “Point of Taxation Rules”, “Rule 4” takes care of taxation when there is change in rate of taxation, the table below shows that effect on applicable rate from 01.06.2015, what would be the position before change in rate and after change in rate of service tax from 12.36% to 14%.

Sr.No	Rendering service	Invoice Issued	Payment Received	Rate %
1	Before Rate Changes	Before Rate Changes	After Rate Changes	12.36
2	Before Rate Changes	After Rate Changes	After Rate Changes	14
3	Before Rate Changes	After Rate Changes	Before Rate Changes	12.36
4	After Rate Changes	After Rate Changes	Before Rate Changes	14
5	After Rate Changes	Before Rate Changes	After Rate Changes	14
6	After Rate Changes	Before Rate Changes	Before Rate Changes	12.36

“Swachh Bharat Cess”, which is being proposed to be levied @2% from the date notified, is not yet notified so the same would not be applicable as of now.

Shyam Makwana
Service Tax Practitioner
M - 09033822400