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Service Tax Amendment by union budget 2015

Today we discuss in details Service Tax Amendment by union budget 2015. what are the  impact of the service tax  amendment made in union budget 2015. In that we will discuss the change in  service tax rate by union budget 2015 and when it will be effective. in this blog we will also discuss changes made in the definition of service tax, government, amendment in valuation of taxable service.

What will the service tax rate in union budget 2015?

After Service tax Amendment by union budget 2015 service tax rate will be 14% including education cess and secondary and higher education cess. Now no cess needs to charge on invoice separately.

When new rate of service tax will be implemented?

Rate of service tax will change to 14% from 12.36% only with effect from a datet to be notified by government later

Is swachh bharat cess included in service tax rate?

 Currently no swatch bharat cess has been levied by the government on any service

The central government may  impose a “swachh bharat cess” on all or any of the taxable services at a rate of 2% on the value of such taxable services (effective rate 16%). The details of coverage of this cess would be notified later by the government.

Amendment in definition of invoice by union budget 2015

 Now no need to maintain the hard copy of the invoice, an service tax assessee can issued digitally signed invoices and maintain records electronically. Effective date of amendments applicable is 1st march, 2015.

What is definition of “government” as per service tax?

At present, the term “government” is not defined under service tax Rule.

In union budget 2015 definition has been described as follow ”government” means central government, state government, union territory and the departments of all the three, but excludes any entity which has been

Created by a statute and which is not required to keep its accounts in accordance with article 150 of the constitution or the rules framed there under.

Amendment in definition of “service” by union budget 2015

After Service tax Amendment by union budget 2015,  the definition of “service” will include

(a) The service provided by a foreman of a chit fund or

(b) The service of lottery distributor/ selling agent

Amendment in valuation of taxable services by union budget 2015

After Service Tax Amendment by union budget 2015,  the definition of the term “consideration” for taxable service and shall include:-

Value of all “reimbursable expenses” or cost incurred and recovered

By the service provider in the course of providing or agreeing to provide

A taxable service except the expenses incurred as pure agent.

Example an chartered accountant raised an invoice of Rs 5,000 for professional fees and 2000 for out of pocket expenses for traveling, hotel etc , now service tax will be levied on total service value  Rs 7000/- .

If an chartered accountant paid some tax (service tax, income tax, vat etc) on behalf of client than he can recover the amount from the client without imposing service tax.

This amendment has negated the ruling of hon’ble delhi high court in

“M/s intercontinental consultant & technocrats Pvt ltd. 2013

Consideration should include amount retained or discount received by the distributor /

Selling agent of lottery from gross sale amount of lottery ticket,

Discount received – Difference in the face Value of lottery ticket and the price at which the distributor or selling Agent purchase such tickets.


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One comment

  1. Thanks sir……. for sharing such an useful information…….before reading this article there is a confusion regarding applicability of service tax rate @ 14%…but after reading this article all doubts cleared

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