"Penalty can be imposed under various sections. These provisions have been rationalised and harmonised to encourage voluntary payments," Assocham said in a statement quoting Principal Commissioner of Service Tax Satyavir Singh.
In case of voluntary payments along with interest, reduced penalty have been provided depending upon the stage of litigation i.E. Prior to issuance of show cause notice, after issuance of show cause notice but before adjudication or after adjudication.
"I would urge the trade to take maximum benefit from these amended provisions," Singh said.
"There is a significant change in increasing the service tax rate to 14 per cent from June 1. There will not be any Education Cess over and above it. This will provide a step wise approach for rationalisation of tax rate on goods and services under GST regime,"
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The tax is levied on all services, expect a small negative list.
"These are some examples to make a point that if we deal composite transactions with composite levy i.E. GST, then life will become simpler for tax payers as well as tax administrators," Singh said.
Jaitley had proposed to raise the service tax rate to 14 per cent to facilitate a smooth transition to the GST regime, which the government wants to roll out from April 2016.
Out of total indirect tax collection of Rs 5.46 lakh crore in 2014-15, nearly 30 per cent or Rs 1.68 lakh crore came from Service Tax. Service tax collections grew 8.6 per cent on an annual basis in the year ended March 2015, Singh said.
Services sector contributes nearly 57 per cent to the GDP and has 28 per cent share in employment.