Dr. Sanjiv Agarwal
For those of readers who do not know the status of Budget proposals, let me update that the Finance Bill, 2012 proposals have become statutory provisions now and the bill has become Finance Act, 2012 with President of India signing the same on 28th May, 2012. Thus, most of the changed provisions in income tax and Excise / Service Tax have become applicable.
So far as Service Tax is concerned, the new regime of Service Tax is still not applicable as the taxation of all services under the negative list approach shall be applicable only from the date these are notified and not from 28th May, 2012. A date is yet to be notified. Some of the changes which have become effective are -the period of filing appeals in Service Tax has been reduced from 3 months to 2 months; the period for issue of show cause notice gets increased from 12 months to 18 months; waiver of penalty in cases of delayed payment of tax in case of renting of immovable property and so on.
In case of renting of property, because of ongoing litigation in various high courts, many landlords have not deposited Service Tax in time or not deposited any Service Tax at all. Now, a provision has been brought in whereby any body who pays his Service Tax arrears within six months from 28 May, 2012, i.e. by 28th November, 2012 alongwith interest, shall be entitled to full waiver of penalty which could be as high as the tax amount. If it is not paid by 28th November, 2012, this immunity will lapse.
Also, Service Tax exemption has been granted retrospectively w.e.f. 16 June 2005 for repairs of roads and non-commercial government buildings to avoid ongoing litigation and subsequent exemptions granted in recent past.
While notifications are expected any time now, it would be advisable for all service providers to atleast get a feel of changes made by Finance Act, 2012 as once these are made effective, non compliance shall cost in terms of penalties which are very harsh in Service Tax, unlike income tax. In all likelihood, the taxing provisions are expected to be made applicable from July 1, 2012 but exact date will be known only on issuance of notifications. For new assessees, registration would be mandatory and all service providers except those falling under negative list shall have to charge and deposit Service Tax.
Unlike the present system where one needs to identify the service under which tax is to be paid, henceforth, one will have to determine whether he falls in negative list or not. It not, Service Tax would be payable – Looks simple but it may not be so.