Amendments in tax laws from 01-June-2016 [Changes proposed by Finance Act 2016]
The Finance Act 2016 has proposed certain changes that come into effect from 01-June-2016. The changes are important as they may impact the way in which you transact with your customers / vendors & may require a modification to your billing system
Changes in Indirect Taxes
- A new service tax levy in the form of Krishi Kalyan Cess (KCC) has been introduced at the rate of 0.5%. The overall service tax rate shall now stand at 15%. Unlike Swach Bharat Cess, service providers can avail input credit of KCC and this can be used only to pay output KCC.
- If payment for services has been received before 01-June, KCC need not be charged if an invoice for such services is raised by 14-June.
- Interest on delay in payment of service tax vis-a-vis service fee invoiced, but not collected from the customer, shall be 15%. On the other hand, interest on delayed payment of service tax vis-a-vis service fee invoiced and collected shall be 24%. (w.e.f. 14-May-2016)
- Period of limitation for recovery of service tax has been enhanced from 18 months to 30 months.
Changes in Direct Taxes
- Equalisation Levy at the rate of 6% shall apply on payments in connection with online advertising made to non-residents. This amount needs to be deducted and paid to the government by the 7th of each succeeding month.
- No tax shall be deducted in the following cases
- Withdrawals from Provident Fund less than Rs. 50,000
- Payment to contractors, where the payment made in the year does not exceed Rs. 100,000
- Payment in the form of commission or brokerage less than Rs. 15,000.
- Taxes shall be deducted on commission and brokerage at 5%.
- 1% tax shall be collected on the sale of motor cars of value exceeding Rs. 10 lakhs.
- 1% tax shall also be collected on sale of services or goods of value more than Rs. 2 lakhs, if the consideration is collected in cash.
- Non-residents shall, subject to certain conditions, be exempt from furnishing PAN u/s 206AA.
- Self-declaration in Form 15G / 15H for non-deduction of tax at source now permitted for rental payments as well.
For full list of amendments or in case of any questions, do feel free to write to us ([email protected]). We would be delighted to be of your assistance.