RATE OF SERVICE TAX:
- The rate of service tax is being increased from ten per cent. to twelve per cent.
- Consequent to change in the rate of service tax, changes are also being made in specific and compounding rates of tax for the following:
- a) Service in relation to purchase and sale of foreign currency including money changing;b) Service of promotion, marketing, organizing or in any manner assisting in organizing lottery;c) Works contract service;d) Reversal of cenvat credit under rule 6(3)(i).
- Life insurance service: Where the entire premium is not towards risk cover, the first year’s premium shall be taxed at the rate of three per cent. while subsequent premiam shall attract tax at the rate of 1.5 per cent. Availment of full cenvat credit is being allowed.
- Transport of passengers embarking in India for domestic and international journey by air : The dual rate structure of maximum service tax of Rupees 150 and Rupees 750 in case of economy class travel is being replaced by an ad valorem rate of twelve per cent. with abatement of sixty per cent. subject to the condition that no credit on inputs and capital goods is taken;
[The above changes will be applicable from 01.04.2012]
- The effective rate of excise duty of 10% on non-petroleum products is being increased to 12% with a few exceptions where exemptions/concessions have been given.
- Concessional rate of excise duty of 5% on non-petroleum products is being increased to 6%.
- The lower rate of 1% on non-petroleum products is being increased to 2%. However, precious metal jewellery, coal and fertilizers would remain at 1%.