Service Tax (Amendment) Rules, 2016, notified

Introducing significant changes to the Service Tax Rules, 1994, the Department of Revenue, Ministry of Finance, GoI has notified the Service Tax (Amendment) Rules, 2016 thereby including many entities under the service tax umbrella while exempting a few. Published dated 1st March, 2016, the notification manifests some of the announcements made by the Finance Minister in his budget speech:

  1. The Amendment introduces specific exemption for the Senior Advocates from the payment of service tax, while it continues to levy the same from a firm of advocates and individual advocates.
  2. Legal entities such as One Person Company and Hindu Undivided Family have been brought under the definition of “assessee”. However, the taxability of a One Person Company has been kept conditional to the valuation of its taxable services exceeding fifty lakh rupees.
  3. In a move towards encouraging single premium annuity policies, the composition rate of service tax rate applicable to such policies has been reduced from 3.5% to 1.4%.
  4. 30th day of November of the succeeding financial year has been declared as the deadline for the submission of annual return of service tax for every financial year.
  5. Upon a delay in filing the annual return, the Amendment requires a penalty at the rate of one hundred rupees per day, subject to a maximum of twenty thousand rupees.

Ministry of Finance

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  • the taxability of a One Person Company has been kept conditional to the valuation of its taxable services exceeding fifty lakh rupees.

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