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Tax Changes wef 1st June 2016

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 (team@simplifiedlaws.com). We would be delighted to be of your assistance.

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About CA Pavan Pal Sharma | B.Com, ACA

CA Pavan Pal Sharma | B.Com, ACA
He is a chartered accountant specializing in equity mobilization and financial structuring. He has secured All India 3rd Rank in CA Final Examination, 30th Rank in CA Intermediate Examination and 7th Rank in CA entrance Examination. He specializes in International Taxation, Entry India Strategies and Business consultancy services.He can be reached at team@simplifiedlaws.com