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Former Member

New service tax rate in tax codes

Dear Experts,

Section 66B of the Finance Act, 1994 has been amended by Section 108 of the Finance Act, 2015. The rate of Service Tax is being increased from 12% to 14% (including Cesses). This change will come into effect from 1st of June, 2015. We are having more than 100 tax codes configured. Is there any possibility of working the above change through date validity option to avoid creation of new tax code? or suggest the best industry procedures.

Thanking you in advance.

Regards,

C. Sudhir

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3 Answers

  • May 27, 2015 at 07:53 AM

    Hi Sudhir,

    You do not need to create new tax codes. You can extend the validity for the tax code with new tax rate.

    Regards,

    Mukthar

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  • May 27, 2015 at 07:07 AM

    Dear,

    Hope for service tax codes in tax procedure ZTXINN have validity periods.I suggest you to have new tax structure for 14% service tax code.

    Because you need to check for point of taxation based on your scenario of service supply for this as follows:

    1. Service Provision is complete till 31.05.2015 and Invoice raised till 31.05.2015 but Payment received on or after 01.06.2015- 12.36% applicable.

    1. Service complete till 31.05.2015, Invoice raised on or after 01.06.2015 but Payment is received till 31.05.2015 - 12.36%

    1. Service Provision complete till 31.05.2015 and Invoice raised on or after 01.06.2015 and Payment also received after 01.06.2015- 14%

    1. Invoice raised till 31.05.2015 in advance and some part of total consideration has been paid till 31.05.2015 but Service Provision is being done on or after 01.06.2015 -12.36% for such part payment, 14% for balance to be recd.

    1. Entire consideration received till 31.05.2015 but no invoice raised till 31.05.2015 and no service provided -14%

    1. Even if entire service has been provided on or after 01.06.2015 but both payment as well as invoicing has been done till 31.05.2015 then -12.36%

    To summarize above parameters ,to make it simple- there are three parameters-

    1. Service provided
    2. Payment received
    3. Invoice raised.

    If two parameters before 1.6.2015 then old rate. If two after 1.6.2015 then new rate.

    I suggest better have new service tax codes and amend all the pipe line P.Os with new tax codes.

    This service tax hits only at the time of MIRO.

    Hope this information may help you  little bit.

    Regards,

    Pardhu

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    Former Member
    Aug 01, 2015 at 02:25 PM

    Hi Gurus,

            We are using TAXINN, Due to Service tax changed from 12.36% to 14% we made a control in FV11 as per validity period (i.e) from till 31.05.2015 as 12.36% and 01.06.2015 to 31.12.9999 as 14%. In Receivable case the service calculation is not calculating at the time of Service Entry Sheet, In Non-Receivable case it is happening. also in MIRO level both Rec and Non-Rec is working fine.

         Kindly provide some solution regarding my issue.

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