14% Service Tax not Now - CBEC Clarifies
DDT 2550-03 03 2015 observed, "What is the Service Tax rate? It was announced that Service Tax rate has been enhanced to 14% and there would be no Education Cess. We are told that some people have already started collecting 14% Service Tax as they believe it would have immediate effect under the Provisional Collection of Taxes Act. They were surprised when we told them, that the enhanced rate of Service Tax will be applicable only from a date to be notified after enactment of the Finance Bill. If excise duty is applicable immediately, why not service tax? We explained that Provisional Collection of Taxes Act does not apply to Service Tax. Strange and difficult to comprehend? It must be noted that 14% Service Tax will be applicable from a date to be notified later."
30 03 2015, carried a clarification from the Commissioner of Service Tax, Nagpur that the new rate is applicable from a date to be notified.
The Board was also activated and so the Board has now clarified that that the new Service Tax rate shall come into effect from a date to be notified by the Central Government after the enactment of the Finance Bill, 2015. The date will be notified in due course after the enactment.
People are so afraid of demands, interest, penalty and arrest that they are rushing in to pay the higher tax even before it is notified. The Board should ask Commissioners to put up big banners in their offices to the effect that the new rates are applicable from a future date. They should also advertise in visual media - already quite a damage has been done.
Service Tax on restaurants: Board clarifies that valuation of services provided in relation to serving of food or beverages by a restaurant, eating joint or a mess is determined as provided in rule 2C of the Service Tax (Determination of Value) Rules, 2006. In the Union Budget, 2015, no change has been made in these rules; therefore, any confusion is unwarranted. Further, the rate of service tax on the specified portion of the amount charged for such supply which is 40% continues to be 12.36% (including cesses) at present i.e. 4.944%. The rate of Service tax will continue unchanged till a date notified in due course.
Board wants Chief Commissioners and Commissioners to give wide publicity to the clarifications.
CBEC Circular No. 183/02/2015-ST., Dated: April 10 2015