Budget highlights Penal interest beats the off-market rates

Penal Interest – Are you a service tax payer? Is there any delay in payment of taxes to the Government? If so, there is real bad news. The Government, through this budget has increased the penal interest applicable from 1st Oct 2014

  • If the delay is up to 6 months – 18% p. a
  • Delay is more than 6 months up to 12 months – 24%
  • Delay beyond one year – 30%

E- Payment of service tax is made mandatory with effect from 1st Oct 2014. So those who are not having net banking facility may get it activated soon.

Reverse Charge Mechanism

Service provided by a Director to a body corporate is being brought under the reverse charge mechanism; service receiver, who is a body corporate, will be the person liable to pay service tax.

Similarly, Services provided by Recovery Agents to Banks, Financial Institutions and NBFC is being brought under the reverse charge mechanism; service receiver will be the person liable to pay service tax.

Any service provided for transport of passenger by air-conditioned contract carriage including which are used for point to point travel, will attract service tax, with immediate effect

Services to Education Institutions

At present, all services provided by educational institutions [providing educational services specified in the negative list] to their students, faculty and staff are exempted from tax

The service received by education institutions are exempt in specified cases only such as (i) transportation of students, faculty and staff of the eligible educational institution; (ii) catering service including any mid-day meals scheme sponsored by the Government; (iii) security or cleaning or house-keeping services in such educational institution; (iv) services relating to admission to such institution or conduct of examination


A manufacturer or a service provider shall take credit on inputs and input services within a period of six months from the date of issue of invoice, bill or challan w.e.f. 1st September 2014

Employee Provident Fund (EPF) the wage ceiling covering organized sector workers under EPF scheme has been raised to Rs.15000 per month from existing Rs.6500. Secondly, the government has also proposed to launch the ‘Uniform Account Number (UAN) service for contributing members to facilitate portability of Provident Fund accounts.  (I will write about EPF in a separate article during next week)

About other points in the budget – The other points in the budget such as setting up smart cities, setting up debt recovery tribunal, advance ruling, REIT and INVIT etc require a full page write up. So, I am not covering those aspects here.

Similarly, the most important aspect of the budget – the macro analysis requires at least 2-3 separate articles. During the coming week I will publish articles on each of these aspects.

Hope these articles are of some help to you. Kindly leave your views in the comment section provided at the end of this page. You can also subscribe to this so that you will get regular mails from us.

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About B E Kumar Prasad

B E Kumar Prasad
He is a Practicing Chartered Accountant in Bengaluru, India. He has 25+ years of experience in income tax, business setup, and NRI matters. He is also an Insolvency Professional and Registered Valuer (F&SA).Prasad welcomes your comments and questions. Please email him at simplifiedlaws20@gmail.com

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