In today’s scenario, every business entity has to make multiple kinds of payment to the Government or local authority. While making these payments, it is now important for these business entities to realize the repercussions of these payments from a service tax point of view as well. This is because a number of services provided by Government or local authority have been brought within the ambit of Service Tax on reverse charge basis with effect from 01/04/2016. Ever since this amendment, there are a number of apprehensions across trade and industry as to which are the services which would be covered under the tax net and what would be the provisions relating to Cenvat Credit, Point of Taxation, Valuation etc. An endeavor has been made to put together most of these questions at one place and answer them on the basis of the relevant Service tax provisions
Any service provided by Government or a local authority to a business entity has been made taxable w.e.f. 1St April 2016. Post Budget 2016, representations have been received from several quarters including business and industry associations in respect of various aspects pertaining to the taxation of such services. Accordingly, few clarifications are issued vide circular No. 192/02/2016-Service Tax dated 13th April 2016 issued by Government of India, Ministry of Finance, Department of Revenue (Tax Research Unit), F.No. 334/8/2016-TRU.
TCS provisions have been made applicable to all the goods and services wef 01-06-2016. While the provisions are intended to frame a system of reporting high value transactions to curb black money, the law framed by the parliament in this regard is plagued by number of doubts and issues which can clog the very implementation of provisions. The author has made a humble attempt to consolidate the issues involved in this taxation as under:
The Real Estate ( Regulation and Development ) Act, 2016 defines Allottee as the person to whom a plot, apartment or building , as the case may be , has been allotted, sold( whether as freehold or leasehold) or otherwise transferred by the promoter. It also includes person who subsequently acquires the said allotment through sale, transfer or otherwise. But the definition of Allottee does not include a person to whom land or apartment is give on rental basis.
After Collecting cess in the name of Education, Higher Education, Cleanliness (Swachh Bharat Cess) now the government is also keen to put burden of welfare of the Farmers on all of us (Including from the farmers for any service availed by them. Imagine person paying Tax for his own welfare which might not ultimately reach to him !!!!!) so all the person availing any services on or after 1st June,2016 or making any payment for the Services after 1st June,2016 need to make payment of additional 0.5% Cess on the value of Services. It is a move towards reaching neutral rate of GST (Goods & Service Tax) as proposed by the committee of 16% – 18% which most likely as per current situation. (So Government is trying to ensure that people absorb increase in rate in slower installments rather than sudden jump to 16% or 18% which may have practically difficulty in implementation and to reduce oppose at that point of time). Nevertheless to mention the fact that Swachh bharat Cess can be increased upto 2% as passed and provided by the Finance Act,2015. So that hanging sword may hit at any point of time as government may deemed fit and increase our burden more towards Clean India Campaign.
