New Delhi: Finance minister Arun Jaitley on Saturday announced in his 2015-16 Budget a series of steps to broaden the tax base to garner more receipts. These included service tax, which was increased from 12 per cent plus education cesses to 14 per cent.
The new service tax rate will subsume the education cess and secondary and higher education cess, Mr Jaitley said. In addition, the service tax negative list was also modified, and will now include even services provided by way of access to amusement.
Even all services provided by the government to business entities, unless specifically exempt, will also be taxable.
The general exemption under service tax was reviewed. Exemption to construction, erection, commissioning or installation of original works at airports or ports is being withdrawn.
Exemptions to transportation of “foodstuff” by rail or road will be limited to foodgrains like rice and pulses, flours, milk and salt. Transport of agricultural produce is separately exempt, which will continue.
Service Tax will be levied on service by way of carrying out any processes as work for production or manufacture of alcoholic liquor for human consumption. Exemption to services provided by a performing artiste in folk or classical art forms will be limited only to such cases where amount charged is up to Rs 1 lakh per performance (except brand ambassador).
Exemptions are also being withdrawn on the following services: services provided by a mutual fund agent to a mutual fund or assets management company, distributor to a mutual fund or AMC, selling or marketing agent of lottery ticket to a distributor of lottery, Department-run public telephone, guaranteed public telephone operating only local calls and service by way of making telephone calls from free telephone at airport and hospital where no bill is issued. Moreover, higher class air travellers would find flying costlier from the next fiscal.
