Changes in Service Tax Rules, 1994 Vide Notification No. 5/2015-ST dated 01-03-2015

Changes in Service Tax Rules, 1994 Vide Notification No. 5/2015-ST dated 01-03-2015 (Effective From 01-03-2015 Unless Otherwise Stated):-

Under Rule 2 of the Service Tax Rules, 1994:

• · In respect of any service provided under aggregator model, the aggregator, or any of his representative office located in India, is being made liable to pay Service Tax if the service is so provided using the brand name of the aggregator in any manner. If an aggregator does not have any presence, including that by way of a representative, in such a case any agent appointed by the aggregator shall pay the tax on behalf of the aggregator. In this regard appropriate amendments under the Notification No. 30/2012-ST dated 20.6.2012 This change comes into effect immediately i.e., w.e.f. 1st March, 2015. Further, definition of the terms ‘aggregator’ and ‘brand name or trade name’ has been specifically defined in Rule 2 of the Service Tax Rules, 1994;
• · The term ‘support’ has been omitted from the Clause (E) providing for liability of service receiver to pay Service tax under Reverse Charge in relation to support services provided or agreed to be provided by Government or Local authority;
• · Services provided by mutual fund agents, mutual fund distributors to a mutual fund or asset management company and agents of lottery tickets to a lottery distributor or selling agent has also been included in Rule 2(1)(d) making mutual fund/ asset management company and lottery distributor/ selling agent liable for payment of Service tax under Reverse Charge vide the Notification No. 30/2012-ST dated 20.6.2012.

Under Rule 4 of the Service Tax Rules, 1994:

· Rule 4 Service Tax Rules, 1994 has been amended to provide that the CBEC shall, by way of an order, specify the conditions, safeguards and procedure for registration in service tax.

In this regard Order No. 1/15-ST dated February 28, 2015, effective from March 1, 2015 has been issued, prescribing documentation, time limits and procedure for registration for single premises. It has also been prescribed that henceforth registration for single premises shall be granted within 2 days of filing of application;

New Rule 4C has been inserted after Rule 4B of the Service Tax Rules, 1994 – Corresponding changes made in Rule 5 thereof:

· Provision for issuing digitally signed invoices, bill or challan has been added along with the option of maintaining of records in electronic form and their authentication by means of digital signatures.

It is further provided that the conditions and procedure in this regard shall be specified by the CBEC.

Under Rule 6 of the Service Tax Rules, 1994:

1. Rule 6(6A) of the Service Tax Rules has been omitted which provided for recovery of Service tax self-assessed and declared in the return in the manner prescribed under Section 87 of the Finance Act, 1994.
2. The same has been done consequent to the amendment brought in Section 73 of the Finance Act, 1994 enabling such recovery. This change will come into effect from the date of enactment of the Finance Bill, 2015.
3. Consequent to the upward revision in Service tax rate, the composition rate is proposed to be revised proportionately under Rule 6(7), 6(7A), 6(7B) and 6(7C) of the Service Tax Rules, 1994 on specified services, namely, 

• - Air Travel Agent: From “0.6%” and “1.2 %”, to “0.7 per cent.” and “1.4 per cent of Basic fares in the case of domestic bookings and international bookings respectively.
• - Life insurance service: From “3%” and “1.5%”, to “3.5%” of the premium charged from policy holder in the first year and “1.75% in the subsequent year”.
• - Money changing service provided by banks or authorized dealers: and 
• - Service provided by lottery distributor and selling agent

The stated amendments shall come into effect as and when the revised Service tax rate comes into effect.