Levy of additional income tax of 30% on income distributed by debt funds to persons other than individuals or HUF. Now the additional income tax payable by the mutual fund will be as under:

Services Brought under the Net:

• Services provided air-conditioned restaurants having license to serve alcoholic beverages in relation to serving food / beverages.
• Short Term Accommodation provided for less than three months by any hotel, inn, guesthouse, club or campsite or any other similar establishment.

Scope of Services Changed.

• ‘Life Insurance Service’ to include ‘all’ services provided by an insurer. Also, composition scheme rate increased from 1% to 1.5%.
• ‘Club or Association Service’ expanded to include service provided to non-members also.
• ‘Authorised Service Station Services’ expanded to service provided ‘by any person’ and ‘for all vehicles except goods carriers and auto rickshaws. Also ‘decoration to vehicle services’ included.
• ‘Business Support Service’ to include services provided by way of operational or administrative assistance in any manner.
• ‘Legal Consultancy Service’ to include service by business entity to an individual, representative services by any person to a business entity and arbitration services.
• ‘Commercial Training or Coaching Centre’ services to include all unrecognized courses also.
• ‘Health Services’ to include all services including diagnostic services in a centrally or partially air-conditioned hospital of 25 bed or more, all diagnostic services by clinical establishment with aid of laboratory and by any doctor – whether employee or not – from a clinical establishment.

Exemptions Granted

• Provided by an organizer in connection with business exhibition held outside India. To come into effect from 1.3.2011.
• Abatement of 25% from taxable goods through costal and inland shipping.
• Works Contract in relation to ‘Jawaharala Nehru National Urban Renewal Mission’ and ‘Rajeev Awaas Yojna’
• ‘Rashtriya Swasthya Bima Yojna’ To come into effect from 1.3.2011.
• Value of air freight included in assessable value for Customs Duty. To come into effect from 1.4.2011.
• Services related to transportation of goods outside India. To come into effect from 1.4.2011.
• Modified Scheme is introduced for refund of Service Tax in SEZ. To come into effect from 1.3.2011.

Withdrawal of Exemptions.

Service Tax on Air Travel. To come into effect from 1.4.2011

• Limit of Adjustment of Excess tax paid earlier is raised to Rs. 2,00,000 /- from Rs. 1,00,000 /-
• If any amount of service tax is self assessed and not paid, there is no requirement to send notice and follow the due procedure under Section 73 but the same can be recovered from any other dues payable to the assessee or through bank attachment without any enquiry under Section 87.
• With effect from 1.3.2011, credit of tax on input services will be restricted to 40% of tax paid in case of works contract in ‘Erection, Commissioning & Installation’, ‘Commercial or Industrial Construction’ and ‘Construction of Complex’ services.
• Section 73 (1A) and provisions to Section 73(2) have been omitted, thereby benefit of reduction of penalty on payment of part of tax will not be available to tax evaders.
• New Subsection 4A is added to Section 73. As per this subsection, penalty of 1% per month of default (subject to maximum of 25%) will be levied for service tax accepted by the assesses who have evaded the tax.
• Penalty for delayed payment reduced from 2% to 1% per month or Rs. 100 /- per day of default whichever is higher.
• Maximum penalty is reduced to 50% from 100%.
• Maximum penalty from contravension of rules is increased to Rs. 10,000 /- from Rs. 5,000 /-.
• Penalty under section 78 for suppressing value of taxable service will be mandatory and is 100% of evaded tax. But penalty is reduced to up to 25% if tax dues and interest is paid within one month (90 days in case of assessees having turnover up to Rs. 60,00,000 /-) of determination.
• Interest rate for tax collected in excess and for delayed payment is rduced by 3% for assessees having turnover up to Rs. 60,00,000 /-.
• Maximim penalty for delay in filing returns increased to Rs. 20,000 /- from Rs. 2,000 /-. However, for first 15 days, the penalty will be Rs. 500 /-, for next 15 days will be Rs. 1,000 /- and Rs. 100 /- per day beyond that.
• Power to waive penalty is amended. Penalties under section 76 (for failure to pay tax) and under section 77 (for contravension of rules where no penalty is provided) are being retained. Penalty under section 78 (for suppressing value of taxable service) can be waived only if transaction os captured in specified. records.
• Power to issue search warrant is given to joint commissioner.
• New Section 88 introduced to create first charge on property for recovery of Service Tax.
• Reintroduction of Provisions relating to prosecution under section 89 for:
  • Provision of service without invoice.
  • Utilize CENVAT Credit without receipt of inputs / input service.
  • Submitting false information.
  • Non-payment of collected amount of Service Tax for a period of more than six months.