Any Services provided by Government to Business Entity will be liable to Service Tax from 01.04.2016 onwards
Finance Act (No. 20), 2015 had substituted the words ‘support services’ provided by Government or a local authority to a business entity by the words ‘any services’ under Negative List. Now all services provided by the Government or local authority to a business entity, except the services that are specifically exempted, or covered by any another entry in the Negative List, shall be liable to service tax w.e.f. 01.04.2016.
[Notification No. 06/2016-Service Tax, dated February 18, 2016]
Insertion of New Entry under Notification No.25/2012-Service Tax (Mega Exemption)
After entry No. 47, a new entry has been inserted (No. 48) under Notification No.25/2012-Service Tax, dated 20th June, 2012 (Mega Exemption) providing that services provided by Government or a local authority to a business entity with a turnover up to Rs. 10 lacs in the preceding financial year will be out of the purview of service tax from01.04.2016 onwards.
[Notification No. 07/2016-Service Tax, Dated: February 18, 2016]
Comment: Small user of Government support services spared from RCM. { reverse charge mechanism] Now services provided by Government to the Business Entity liable to be taxed under Reverse Charge* in cases where turnover of the business entity exceeding Rs.10 Lacs in the preceding financial year. [*Date yet to be notified]