After Swachh Bharat Cess(SBC), Govt has proposed Krishi Kalyan Cess (KKC)of 0.5% on all taxable services from June 1, 2016. This cess is for the purposes of financing and promoting initiatives to improve agriculture. The difference between SBC and KKC is that credit of KKC will be available whereas credit of SBC is not available. This means the effective rate of Service Tax will be 15% from 01.06.2016.
One welcome change is that for delay in payment of Service Tax, there was a slab-wise interest rates based on delay of days. Now these different rates of interest, being 18%, 24% and 30% are reduced to 15%. Only, in cases where the Service Tax has been collected, but not paid, the applicable rate would be 24%.
Another welcome step in direction to free the judiciary, the monetary limit Single Member Bench of CESTAT is hiked to Rs.50 lakhs. Also, 11 more Benches for CESTAT will be opened to reduce the burden on existing benches.
The Cenvat Credit Rules are streamlined and the Rule 6 has been totally revamped to make it more rational.
The normal period for issue of Show Cause Notices in cases where there is no suppression, fraud etc., is proposed to be raised to 30 months in place of 18 months. Thus, the Department can make demand for 2.5 years even when there is no malafide intention.
In Central Excise also one new cess termed as An Infrastructure Cess, is being imposed on certain motor vehicles. It will be in range of 1% to 4% and no credit of this Cess would be available under the Cenvat Credit Rules, 2004.
Declared services are amended to include assignment by the Government of the right to use the radio-frequency spectrum and subsequent transfers. The power to arrest in service tax law is proposed to be restricted only to situations where the tax payer has collected the tax but not deposited it with the exchequer, and amount of such tax collected but not paid is above the threshold of Rs 2 crore.
One of the major changes in Central Excise is that Articles of jewellery and Branded Ready Made Garments are brought under Central Excise Net.