RULE 4 v/s Section 67A
Finance Bill 2015 received the President’s assent on 14.05.2015. Now the new rate of 14% will be effective from 1.06.2015. Education cess and Secondary and higher education cess have now been subsumed in the new rate, i.e., now EC and SHEC, which were earlier charged at the rate of 2% and 1% respectively, will not be charged separately on the value of the services.
TREATMENT OF THE UNUSED BALANCE OF EC AND SHEC
The New Finance Act, 2015 has subsumed the two cess – Education cess and Secondary Higher and Education Cess in service tax. Consequently, now no EC and SHEC needs to be paid on any service, but only service tax will be charged a flat rate of 14% instead of 12.36% which was charged earlier. This amendment has become effective from 1st June, 2015.
The Government has brought this amendment to bring more simplification in the service tax calculation and better compliance with the provisions of law. The removal of the chargeability of Education Cess and Secondary Higher Education Cess has led to the confusion amongst the assesses about the treatment of the balance EC and SHEC that were paid before 1-06-2015 and are still lying in the books of accounts.
Amendments Introduced In Finance Act 2015
To Promote Investments In Notified Backward Areas
INVESTMENTS IN NEW PLANT AND MACHINERY IN NOTIFIED BACKWARD AREAS IN CERTAIN STATES:
1) As per Section 32AD of the Income Tax Act, 1961 an assessee who sets up an undertaking or an enterprise for manufacture of an article or a thing on or after 1st April 2015 in any backward area as notified by Central Government in this behalf in the States of Telangana / Bihar / Andhra Pradesh / West Bengal and installs any new asset for the said undertaking during the period beginning from 1st April,2015 and ending before the 1st day of April,2020 in the said backward area, then such assessee shall be allowed a deduction of a sum equal to fifteen percent of the actual cost of such new asset for the assessment year relevant to the previous year in which such new asset is installed.