- 4 new services has been brought in the tax net
a) Transport of goods through Water :- to any person, by any other person, in relation to transport of (i) coastal goods; (ii) goods through national waterway; or (iii) goods through inland water.
Explanation.— For the purposes of this sub-clause,—
(a) “coastal goods” has the meaning assigned to it in clause (7) of section 2 of the Customs Act, 1962;
(b) “national waterway” has the meaning assigned to it in clause (h) of section 2 of the Inland Waterways Authority of India Act, 1985;
(c) “inland water” has the meaning assigned to it in clause (b) of section 2 of the Inland Vessels Act, 1917;
b)Transport of goods by rail,
c) Cosmetic and plastic surgery service:- to any person, by any other person, in relation to cosmetic surgery or plastic surgery, but does not include any surgery undertaken to restore or reconstruct anatomy or functions of body affected due to congenital defects, developmental abnormalities, degenerative diseases, injury or trauma;
Explanation.—For the purposes of this sub-clause, “business entity” includes an association of persons, body of individuals, company or firm, but does not include an individual;’;
d) Services in relation to Advice, Consultancy or assistance in any branch of law, provided by any business entity not being an individual
Service provided in the field of law except in case where service provider or service recipient is an individual. Thus tax would be limited to services provided by a business entity to anotherbusiness entity and services provided by an individual advocate either to an individual or even to a business entity and by a corporate legal firm to an individual would be outside the purview of taxable service. Further service of appearance before any court of law or any statutory authority is also outside this levy.
Proposed clause is
“(zzzzm) to a business entity, by any other business entity, in relation to advice, consultancy or assistance in any branch of law, in any manner:
Provided that any service provided by way of appearance before any court, tribunal or authority shall not amount to taxable service.
Explanation.—For the purposes of this sub-clause, “business entity” includes an association of persons, body of individuals, company or firm, but does not include an individual;”
2. Scope of following services is being enhanced or modified
a. Jobwork services creating an excisable product will only be exempt under business auxiliary – earlier if the proauct satisfied the definition of manufacture was also exempt.
b. Major relief to Sub-brokers of shares – they are tax free now.
3. Major changes have been brought about in the refund procedures for exporters of goods and the budget has tried to make it simpler – 2 services have been brought in the completely exempt category for exporters – this means that the exporter does not have to pay tax on these services if the goods are being exported.
(a) Good Transport by road
(b)Commission agents services – in cases where the agent is resident outside India – However, present cap of 10% on commission agency charges is retained.
Thus there would be no need for the exporter to first pay the tax and later claim refund in respect of these services.
4. Powers of the Commissioner Service Tax or the Chief Commissioner to review orders passed by their sub-ordinates have been curtailed – now all orders will have to be sent to Commissioner (Appeals) – this is a major procedural relief as the review powers were seen to be used a lot in assessee favoured cases.
5. In case of composition scheme of works contract – the developer will have to declare the value of goods – he cannot avail the benefit of the scheme if he does not so declare (details awaited).
6. CENVAT credit rules have been amended to reduce the rates of tax payable on exempted goods (from 10% to 5%) and exempted services (from 8% to 6%) if the assessee chooses to take entire credit.
7. The luxury bus operators who transported passengers either inter state or intra state will now be tax free – many cases have already been lodged against them in the past.
8. Authority for Advance Rulings for Income tax – will now also take application on service tax – (details awaited).
9. Exemption from service tax being provided to inter-State or intra-State transportation of passengers in a vehicle bearing ‘Contract Carriage Permit’ with specified conditions.
10. Exemption from service tax (leviable under Banking and other financial services or under Foreign exchange broking service) being provided to inter-bank purchase and sale of foreign currency between scheduled banks.
11. Export Promotion Councils and the Federation of Indian Export Organizations (FIEO) to be exempt from service tax on the membership and other fees collected by them till 31st March 2010.
12. For other services received by exporters, service tax exemption to be operated through the existing refund mechanism based on self-certification of the documents where such refund is below 0.25 per cent of FOB value, and certification of documents by a Chartered Accountant for value of refund exceeding the above limit.