India: major new changes to service tax system

New changes to India's service tax system: here are all the details that Italian exporting companies will also have to consider starting June 1, 2015.

The Indian government has recently announced some important changes in relation to Taxation on Services: many of them came into effect as of June 1, 2015, while others may be considered effective only in the following months. These measures also affect all Italian companies operating directly in the Subcontinent.

Below are the main provisions issued by New Delhi that entered into force as early as June 1, 2015:

• The service tax rate has increased to 14% from the previous 12.36%;
• the Primary education cess and the secondary and higher secondary cess They no longer exist;
• in general, the services provided in relation to entertainment events/activities or access to entertainment facilities are now subject to taxation, with the exception of certain ones that will continue to be exempt;
• Services relating to events/entertainment activities such as concerts, shows, musical performances, award ceremonies, and sporting events (other than recognized sporting events) are subject to taxation if the ticket price exceeds 500 Rupees (7 Euros) for admission rights to such event/activity;
• services related to service contracts / employment contracts regarding the production of alcoholic beverages are taxed;
• the“alternate rates”, for the payment of the currency exchange tax, for services provided by air travel agencies, for insurance services, and for services provided by lottery distributors and sales agents, have consequently been modified in a proportional manner;
• the tax rate for the payment of Service Tax under reverse charge has increased to 7% (from the previous 6%) in all cases where the producer of goods or services subject to duty provides tax-exempt services.

All companies on service taxation in India who would like further information or clarification on this issue are invited to contact us via email at the following address [email protected] or at our telephone number 059.9770184.

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