July 2014

Union Budget 2014 - Indirect Tax Proposals

Service Tax Amendments to be effective from a date to be notified

Service tax levy on sale of space and time for advertisements to be extended to include online
and mobile advertisements. Advertisements in print media continue to be exempt.

Services provided by radio taxis/cabs to be taxable at abated rates applicable to rent-a-cab

operator services.

Service Tax Amendments to be effective from 11 July 2014

Exemption from service tax has been withdrawn on the following services:
o air conditioned contract carriages other than for the purpose of tourism, conducted tour,
charter or hire
o technical testing or analysis of newly developed drugs on human participants by a clinical
research organisation
o Services in relation to renting of immovable property to educational institutions
o Consultancy, designing etc. provided to Government or local authority

Exemption to auxiliary educational services received by an educational institution replaced

with a specific list of services received by an educational institution such as transportation of
students, staff, etc, catering, security, cleaning, etc.

Value of service portion in works contract relating to movable and immovable property aligned
to 70% (effective from 1 October 2014)

Exemption from service tax with effect from 11 July 2014 on the following services:
o Services provided by a tour operator to a foreign tourist in relation to tour conducted wholly
outside India
o Life micro-insurance schemes for the poor, approved by IRDA, where sum assured does not
exceed rupees fifty thousand
o Transportation of organic manure, cotton by vessel, rail or road
o Loading, unloading, packing, storage or warehousing, transport by vessel, rail or road, of
cotton, ginned or baled
o Services provided by common bio-medical waste treatment facility operators to clinical
establishments
o Received by RBI from outside India in relation to management of foreign exchange reserves
o Retrospective exemption to services provided by Employees State Insurance Corporation
(ESIC) during the period prior to 1 July 2012

With effect from 1 October 2014, variable interest rates (18% to 30%) to be applicable for delay
in payment of taxes

E-payment of service tax mandatory from 1 October 2014

Reverse charge mechanism extended to include recovery agent services provided to banks,
NBFC's and other financial institutions;

Proportion of service tax payable under reverse charge by a service recipient of rent-a-cab

services (non-abated) increased to 50% (effective 1 October 2014)

Concept of intermediary which hitherto was restricted to services is extended to goods.

Intermediaries covers brokers, agents or any other person who arranges or facilitates a
transaction;

Point of taxation as per Rule 7 on reverse charge to be amended to be the date of payment or the
date subsequent to end of three months from the date of invoice, whichever is earlier. (Effective
for invoices issued on or after 1 October 2014)

Abatement rate to be revised to 60% in case of transport of goods by vessel (effective from 1
October 2014)

Advance Ruling option extended to resident private limited companies

Cenvat Credit

Cenvat credit on inputs and input services to be availed within a period of six months from the
date of issue of invoice (effective from 1 September 2014)

Condition of payment of service tax under full reverse charge for availing cenvat credit
withdrawn

Re-credit of cenvat credit reversed on account of non-receipt of export proceeds within the
specified period permitted if received within one year from such specified period

CENVAT credit of services provided by one rent-a-cab scheme operator to another and by one
tour operator to another tour operator allowed (effective 1 October 2014)

Rule for determination of rate of exchange to be prescribed

Procedure for exemption in case of SEZ units simplified

Mandatory pre-deposit of 7.5% / 10% of tax demand or penalty or both for filing appeals

Excise Duty

If goods are sold at a price less than the manufacturing cost including profit, and if no additional
consideration is flowing from the buyer, then transaction value will be adopted

Restriction on transfer of credit by a LTU from one unit to other

Discretionary powers of the Tribunal to refuse admission of appeals increased from INR 50K to
INR 2 Lacs

Mandatory fixed pre-deposit of 7.5% of the duty demanded (including penalty) for filing appeal
with the Commissioner (Appeals) or the Tribunal at the first stage and 10% for filing second
stage appeal before the Tribunal (subject to a total ceiling of INR 10 crores)

Matters in relation to determination of any question having a relation to rate of duty to be

heard before the Supreme Court directly after Tribunal order

If an assessee fails to pay duty within a period of one month from the due date, penalty is
payable at the rate of 1% of the duty not paid for each month.

Exemption introduced from excise duty on types of drugs and diagnostic equipment required for
the national AIDS control programme funded by the Global fund to fight AIDS, TB and malaria

Exemption to machinery/ components for initial setting up of power generation projects using
non-conventional materials extended to generation of compressed bio-gas

Customs Duty

Advance ruling facility extended to private limited companies

Powers of Settlement Commission expanded to specified exports through post or courier

Mandatory pre-deposit of 7.5% of duty and penalty at the first stage appeal to Commissioner

(Appeals) or Tribunal
If your interest lies in a specific area or subject, do advise us so we can send you only the relevant
alerts. For any additional information, please reach out to your PwC relationship manager or write
in to pwctrs.knowledgemanagement@in.pwc.com
With Best Regards
PwC TRS Team

About PwC
PwC helps organisations and individuals create the value theyre looking for. Were a network of firms in 157
countries with more than 184,000 people who are committed to delivering quality in Assurance, Tax and
Advisory services. Tell us what matters to you and find out more by visiting us at www.pwc.com.
In India, PwC has offices in these cities: Ahmedabad, Bangalore, Chennai, Delhi NCR, Hyderabad, Kolkata,
Mumbai and Pune. For more information about PwC India's service offerings, visit www.pwc.in
PwC refers to the PwC network and / or one or more of its member firms, each of which is a separate legal
entity. Please see www.pwc.com/structure for further details.
Follow us on Facebook, Linkedin, Twitter and YouTube.
2014 PricewaterhouseCoopers Private Limited. All rights reserved. In this document, PwC refers to PricewaterhouseCoopers Private
Limited (a limited liability company in India having Corporate Identity Number or CIN : U74140WB1983PTC036093), which is a member
firm of PricewaterhouseCoopers International Limited (PwCIL), each member firm of which is a separate legal entity.
Transfer Pricing
Regulatory
M&A
Our Tax & Regulatory Services Direct Tax Indirect Tax
Tax Controversy and Dispute Resolution

Financial Services

NOTE : If you wish to unsubscribe receiving communications, please send in a blank email as reply to this mail with subject line "Unsubscribe".