CA Naveen Rajpurohit

The Union Budget 2012-13 presented by the Finance Minister Shri Pranab Mukherjee in LokSabha on 16.03.2012 has made an effort to widen the service tax base, strengthen its enforcement and bring it as close as possible to the central excise. Clauses 143 to 145 of the Finance Bill, 2012 cover the legislative changes relating to Service Tax. Changes have also been made in the rules as well as exemptions.

All services will now attract service tax, except those listed in the negative list / exempted / excluded from the definition of service. Service tax rate is being increased from 10 per cent to 12 per cent, with consequential change in rates for services that have individual tax rates. These changes can be broadly divided into two parts – one existing provision and the other new provisions which are captured in this report.

The proposed amendments indicated in the article would be effective from 01.04.2012 or from the date the bill receives the presidential assent or such specific dates that it may be made effective from.

Salient features of proposed Finance Bill, 2012 relating to service tax

A. Taxable service

Service any activity carried out by a person for another for consideration; and

includes a declared service.

Excludes:

Specific services excluded from the definition (Refer Annexure 1);

Negative list (Refer Annexure 1);

Exempted by virtue of notification (Refer Annexure 1).

Declared Service The following services shall be construed to be declared services:

Renting of immovable property;

Construction of a complex, building, civil structure or a part thereof, including a complex or building intended for sale to a buyer, wholly or partly, except where the entire consideration is received after issuance of completion-certificate by the competent authority;

Temporary transfer or permitting the use or enjoyment of any intellectual property right;

Development, design, programming, customisation, adaptation, up-gradation, enhancement, implementation of information technology software;

Agreeing to the obligation to refrain from an act, or to tolerate an act or a situation, or to do an act;

Transfer of goods by way of hiring, leasing, licensing or in any such manner without transfer of right to use such goods;

Activities in relation to delivery of goods on hire purchase or any system of payment by instalments;

Service portion in the execution of a works contract;

Service portion in an activity wherein goods, being food or any other article of human consumption or any drink (whether or not intoxicating) is supplied in any manner as a part of the activity.

B. Rates of Tax / Abatement

All Services 12%
Works contract – composition scheme 4.8% (Effective from 01.04.2012)
Foreign Currency exchange The person liable to pay service tax in relation to purchase or sale of foreign currency, including money changing is now required to pay tax at the enhanced rate i.e., 0.12% (instead of 0.1%), if the currency is exchanged for an amount upto Rs. 1 lakh. If the amount exceed from 1 lakh to 10 lakh then Rs. 120 and 0.06% (instead of Rs. 100 and 0.05%) and Rs. 660 and 0.12% in case the exchange is above 10 lakhs.
Insurance An insurer carrying on life insurance business shall have the option to pay tax at 3% of the premium charged from policy holder in the first year and 1.5% in the subsequent year. However, this option is not applicable if the insurer has allocated the amount towards investment or savings on behalf of the policy holder and the same has been intimated to the policy holder.
Abatement Notification no. 13/2012-ST, dated 17.03.2012 provides abatement under new taxation system.

C. Classification of service / Principles for interpretation of specified descriptions of services

Section 66F lays down two principles for interpretation of specified descriptions of services and bundled services which are as follows:

Specific service ü In case of reference to a service (herein referred to as main service) shall not include reference to a service which is used for providing main service. (It implies that if any service rendered in relation to negative list or exempted service etc., then said services shall not be construed as a negative list or exempted services etc.,)ü In case where a service is capable of differential treatment for any purpose based on its description, the most specific description shall be preferred over a more general description.
Bundled Service – means a bundle of provision of various services wherein an element of provision of one service is combined with an element or elements of provision of any other service or services. The taxability of a bundled service shall be determined in the following manner, namely:––(a) if various elements of bundled service are naturally bundled in the ordinary course of business, it shall be treated as provision of the single service which gives such bundle its essential character;(b) if various elements of bundled service are not naturally bundled in the ordinary course of business, it shall be treated as provision of the single service which results in highest liability of service tax.

D. Payment of Service Tax under reverse charge mechanism.

Normally, service tax is payable by the person who is providing the taxable service. However, the Central Government is empowered under Section 68(2) to notify the specified persons who are liable to pay service tax in respect of notified taxable services.

In this budget a proviso has been inserted wherein the Central Government can notify the specified services and the extent of service tax which shall be payable such person and the remaining part of the service tax shall be paid by the service provider. In other words, by insertion this proviso both the service recipient and the service provider together is required to pay the service tax.

The Government has issued a notification under section 68(2) by notifying the following taxable services and the extent of service tax payable thereon by the person liable to pay service tax:

a. Notified Taxable Service:

ü In case of Insurance agent, the Insurance Company;

ü In case of GTA, the consignor or consignee or his agent who effects the payment;

ü In case of sponsorship services, the body corporate or partnership firm located in the taxable territory (i.e.,India)

ü Service provided by Arbitral Tribunal or an Individual advocate or the support service provided or agreed to be provided by Government or local authority, to any business entity, then business entity is required to pay the service tax;

ü Services provided by Individual, HUF, Firm, AOP in respect of:

i. Renting or hiring of motor vehicle designed to carry passenger; or
ii. Supply of manpower; or
iii. Works contract

Then the Company or body corporate is required to pay service tax.

ü In case of import of taxable service, the recipient is required to pay service tax.

b. Extent of service tax payable by the recipient and by the service provider is as follows:

Sr. No

Description of service

% of service tax payable by the service provider

% of service tax payable by the recipient

1

Insurance agent

Nil

100%

2

GTA

Nil

100%

3

Sponsorship

Nil

100%

4

Arbitral Tribunal

Nil

100%

5

Individual Advocate

Nil

100%

6

Support service by Government or local authority

Nil

100%

7

Renting or hiring of motor vehicle to carry passenger on abated value

Nil

100%

8

Renting or hiring of motor vehicle to carry passenger on non abated value

60%

40%

9

Supply of manpower

25%

75%

10

Works contract

50%

50%

11

Import of taxable service

Nil

100%

E. Point of Taxation Rule, 2012 – these changes are effective 01.04.2012

(i) In case of export of services and eight specified services provided by individuals or firms, the point of taxation is the date of payment. Effective 1st April 2012 all assessee (individual, firm including LLP) whose turnover is below Rs. 50 lakhs in a financial year has an option to pay service tax on receipt basis. Thus, it implies that apart from individual / firm / LLP whose turnover exceeds Rs. 50 lakhs are required to pay service tax on accrual basis.

(ii) In case of exporters, the period extended by the Reserve Bank ofIndiais now explicitly included in the period for which the tax is allowed to be deferred.

(iii) Date of payment has been defined – this date shall be the earlier of the dates of entry into books of accounts or actual credit in the bank account (when applicable). However, when there is change in effective rate of tax or a new levy between the said two dates, the date of payment shall be the date of actual credit in the bank account, if the amount is credited through a banking instrument more than four working days after the date of such change.

F. General Amendment

Existing provision All the definition including the taxable service as defined under section 65 will not be applicable with effect from such date as may be notified by the Central Government.

Classification of services as covered under section 65A, charging section and import of taxable services as covered under section 66 and section 66A will not be applicable with effect from such date as may be notified by the Central Government.

Special Audit Special Audit has been envisaged under section 72A wherein the Commissioner of Central Excise has been empowered to direct the service provider to get his accounts audited by a Chartered Accountant or Cost Accountant nominated by him. This provision will be effective from the date the Finance Bill receives its assent from President.
Show Cause Notice The service tax department can issue show cause notice within 18 months instead of 1 year. Further, any statement issued by the department subsequent to any notice containing the details of service tax not levied or paid or short levied or short paid etc., then such statement issued for the subsequent period shall be deemed to be construed as a show cause notice.
Appeal The time limit to present the appeal before the Commissioner of Central Excise is reduced from 3 months to 2 months.

G. CENVAT Credit – Effective 01.04.2012

a. Capital Goods

– The definition of capital goods has been amended to include motor vehicles other than those falling under tariff headings 8702, 8703, 8704, 8711 and their chassis used for providing output service. It implies that any service provider using the said motor vehicles for providing the taxable service shall be entitled to avail the CENVAT credit.

– However, in respect of motor vehicles falling under tariff headings 8702, 8703, 8704, 8711 and their chassis and are registered in the name of provider of output service (such as courier agency, tour operator, rent-a-cab operator, cargo handling agency, GTA, outdoor caterer, pandal or shamiana contractor) for providing taxable service are entitled to avail the CENVAT credit. It implies that effective 01.04.2012 only those motor vehicles which are falling under the aforesaid tariff heading will fall within the definition of capital goods.

– Components, spares and accessories of dumpers or tippers used for providing output service will not be construed as capital goods.

b. Input Service – The definition of input service will not include:

– Rent-a-cab or supply of tangible goods in so far as they relate to a motor vehicle which is not a capital goods;

– General Insurance or Repair, re-conditioning or restoration of any motor vehicle (refer section 65(105)(zo)) except when used by the manufacturer of motor vehicle or by the general insurance company.

c. Conditions for allowing CENVAT credit in respect of inputs and capital goods

– Now the service provider is required to maintain the documentary evidence of delivery and location of the inputs / capital goods in order to avail the CENVAT credit on inputs / capital goods.

– If the capital goods, on which CENVAT credit has been taken, are removed after being used, whether as capital goods or as scrap or waste, the manufacturer or provider of output services shall pay an amount equal to the CENVAT Credit taken on the said capital goods reduced by the percentage points calculated by straight line method as specified below for each quarter of a year or part thereof from the date of taking the CEVAT Credit, namely –

a. for computers and computer peripherals

for each quarter in the first year @ 10%

for each quarter in the second year @ 8%

for each quarter in the third year @ 5%

for each quarter in the fourth and fifth year @ 1%

b. for capital goods, other than computers and computer peripherals @ 2.5% for each quarter.

It may be noted that if the amount so calculated is less than the amount equal to the duty leviable on transaction value, the amount to be paid shall be equal to the duty leviable on transaction value.

d. Refund of Export of taxable service

– A simplified scheme for refunds is being introduced by substituting the entire Rule 5 of the CENVAT Credit Rules, 2004. The new scheme does not envisage any co-relation between input service and export of taxable service. The new rule reads as:

New formula for availing the refund:

Refund amount = ((Export turnover of goods+ Export turnover of services) x Net CENVAT credit) / Total turnover

Where,-

Net CENVAT credit means total CENVAT credit availed on inputs and input services by the manufacturer or the output service provider;

Export turnover of goods means the value of final products and intermediate products cleared during the relevant period and exported without payment of Central Excise duty under bond or letter of undertaking;

Export turnover of services = payments received during the relevant period for export services + export services whose provision has been completed for which payment had been received in advance in any period prior to the relevant period – advances received for export services for which the provision of service has not been completed during the relevant period;

Total turnover means sum total of the value of –

(a) all excisable goods cleared during the relevant period including exempted goods, dutiable goods and excisable goods exported;

(b) export turnover of services as determined and the value of all other services, during the relevant period; and

(c) all inputs removed as such under sub-rule (5) of rule 3 against an invoice, during the period for which the claim is filed.

e. Under Rule 6(3) of the CENVAT Credit Rules, 2004 – The service provider who provides both taxable service and exempt service and opts not to maintain separate accounts shall pay an amount equal to 6% (instead of 5%) of value of the exempted goods and exempted services provided he has opted for first option.

f. Input Service Distributor – CENVAT credit in respect of input service can be distributed subject to the following conditions:

The credit distributed against a document referred to in rule 9 does not exceed the amount of service tax paid thereon;

Credit of service tax attributable to service used in a unit exclusively engaged in manufacture of exempted goods or providing of exempted services shall not be distributed;

Credit of service tax attributable to service used wholly in a unit shall be distributed only to that unit; and

Credit of service tax attributable to service used in more than one unit shall be distributed pro-rata on the basis of the turnover of the concerned unit to the sum total of the turnover of all the units to which the service relates.

H. Amendment to Service Tax Rules, 1994 – Effective from 01.04.2012

Partnership firm includes a limited liability partnership (LLP). It implies that LLP can effect payment of service tax on a quarterly basis.

Invoice can be raised within 30 days (instead of 14 days) from the date of completion of service or receipt of any payment towards the value of such service whichever is earlier. However, services rendered in relation to banking and other financial services, the invoice can be raised within 45 days by banking company or a financial institution including NBFC or any other body corporate.

Now adjustment of excess amount paid can be made without any threshold limit provided the excess amount paid is on account of reasons not involving interpretation of law, taxability, classification, valuation or applicability of any exemption notification.

Threshold limit – For the purpose of computation of threshold limit to claim exemption upto Rs. 10 lakhs one need not include the value of such services which are wholly exempt from levy of service tax levied under any notification.

Applicability of service tax – Industry wise / Service wise

Budget impact on few service or sector wise has been captured in the following table:

Sector / Service

Particulars

Manufacturer / Job worker The following services are exempt from levy of service tax:

Any service rendered in relation to any process amounting to manufacture or production of goods;

Job work in relation to –

agriculture, printing or textile processing;

cut and polished diamonds and gemstones; or plain and studded jewellery of gold and other precious metals, falling under Chapter 71 of the Central Excise Tariff Act, 1985;

any goods on which appropriate duty is payable by the principal manufacturer; or

processes of electroplating, zinc plating, anodizing, heat treatment, powder coating, painting including spray painting or auto black, during the course of manufacture of parts of cycles or sewing machines up to an aggregate value of taxable service of the specified processes of Rs. 150 lakh in a financial year subject to the condition that such aggregate value had not exceeded Rs. 150 lakh during the preceding financial year.

Section 65B(40) defines “Process amounting to manufacture or production of goods” means a process on which duties of excise are leviable under section 3 of the Central Excise Act, 1944 or any process amounting to manufacture of alcoholic liquors for human consumption, opium, Indian hemp and other narcotic drugs and narcotics on which duties of excise are leviable under any State Act for the time being in force.

It is important to note that manufacture of alcoholic liquors, opium etc., is also exempt from levy of service tax.

Renting of Immovable property Wavier of penalty – The assessee who has not remitted service tax upto 6th March 2012, the Government has waived the penalty provided the service provider remits the service tax along with interest within 6 months from the date Finance Bill, 2012 receives the presidential assent.

It may be noted that renting of immovable property is deemed to be a declared service. Renting means allowing, permitting or granting access, entry, occupation, use or any such facility, wholly or partly, in an immovable property, with or without the transfer of possession or control of the said immovable property and includes letting, leasing, licensing or other similar arrangements in respect of immovable property.

Exemption

ü Services rendered by way of renting of residential dwelling for use as residence;

ü Renting of precincts of a religious place meant for general public;

ü Services by way of motor vehicle parking to general public excluding leasing of space to an entity for providing such parking facility.

Works contract Works contract composition scheme – The rate of tax has been enhanced from 4% to 4.8% (excluding cess) effective 01.04.2012 vide notification No. 10/2012 – ST 17.03.2012.

Service portion in the execution of a works contract is deemed to be a declared service;

Section 65B(54) defines “works contract” to mean a contract wherein transfer of property in goods involved in the execution of such contract is leviable to tax as sale of goods and such contract is for the purpose of carrying out construction, erection, commissioning, installation, completion, fitting out, improvement, repair, renovation, alteration of any building or structure on land or for carrying out any other similar activity or a part thereof in relation to any building or structure on land;

Note: In case the service is rendered by an individual, HUF, proprietary firm, partnership firm, LLP or AOP, to the Company or a business entity registered as a body corporate, then the service provider is required to pay service tax on 50% of the service value and the service recipient is required to pay service tax on the balance 50% of the service value.

It implies that if the builder (registered as a Company) appoints any sub-contractor who is an individual, firm etc., then builder is liable to pay service tax on 50% of the value of service rendered by the sub-contractor.

Determination of Valuation of service – The value of works contract service shall be determined in the following manner, namely:-

ü Value of works contract service shall be equivalent to the gross amount charged for the works contract less the value of transfer of property in goods involved in the execution of the said works contract.

ü gross amount charged for the works contract shall not include value added tax or sales tax;

OR

ü Value of works contract service shall include, –

(i) labour charges for execution of the works;

(ii) amount paid to a sub-contractor for labour and services;

(iii) charges for planning, designing and architect’s fees;

(iv) charges for obtaining on hire or otherwise, machinery and tools used for the execution of the works contract;

(v) cost of consumables such as water, electricity, fuel used in the execution of the works contract;

(vi) cost of establishment of the contractor relatable to supply of labour and services;

(vii) other similar expenses relatable to supply of labour and services; and

(viii) profit earned by the service provider relatable to supply of labour and services;

ü Note 1: Where the assessee is not able to ascertain the actual value from the books of accounts then the service tax shall be payable in the following manner, namely:-

(A) 40% of the total amount charged for the works contract;

(B) If the gross amount charged includes land value, then service tax shall be payable on 25% of the total amount including such gross amount.

(C) In case of other works contracts including completion and finishing services such as glazing, plastering, floor and wall tiling, installation of electrical fittings not covered under sub-clause (A), service tax shall be payable on 60% of the total amount charged for the works contract;

ü Note 2: “Total amount” means the sum total of gross amount and the value of all goods, (excluding the value added tax, if any, levied on goods) and services supplied free of cost for use in or in relation to the execution of works contract, under the same contract or any other contract:

Provided that where the value of goods or services supplied free of cost is not ascertainable, the same shall be determined on the basis of the fair market value of the goods or services that have closely available resemblance;

ü Note 3: Duty of excise paid on any goods, property which is transferred (whether as goods or in some other form) in the execution of works contract, shall not be availed as CENVAT credit”.

Construction Service Construction service is deemed to be a declared service.

Construction service covers – Construction of a complex, building, civil structure or a part thereof, including a complex or building intended for sale to a buyer, wholly or partly, except where the entire consideration is received after issuance of completion-certificate by the competent authority. Further, construction” includes additions, alterations, replacements or remodelling of any existing civil structure.

Exemption – The following services will be exempt from levy of service tax:

1. Services provided to the Government or local authorityby way of erection, construction, maintenance, repair, alteration, renovation or restoration of –

(a) a civil structure or any other original works meant predominantly for a non-industrial or non-commercial use;

(b) a historical monument, archaeological site or remains of national importance, archaeological excavation, or antiquity specified under Ancient Monuments and Archaeological Sites and Remains Act, 1958;

(c) a structure meant predominantly for use as (i) an educational, (ii) a clinical, or (iii) an art or cultural establishment;

(d) canal, dam or other irrigation works;

(e) pipeline, conduit or plant for (i) drinking water supply (ii) water treatment (iii) sewerage treatment or disposal; or

(f) a residential complex predominantly meant for self-use or the use of their employees or other persons specified in the Explanation 1 to clause 44 of section 65 B of the said Finance Act;

2. Services provided by way of erection, construction, maintenance, repair, alteration, renovation or restoration of,-

(a) road, bridge, tunnel, or terminal for road transportation for use by general public;

(b) building owned by an entity registered under section 12 AA of the Income tax Act, 1961(43 of 1961) and meant predominantly for religious use by general public;

(c) pollution control or effluent treatment plant, except located as a part of a factory; or

(d) electric crematorium;

3. Services by way of erection or construction of original works pertaining to,-(a) airport, port or railways;

(b) single residential unit otherwise as a part of a residential complex;

(c) low- cost houses up to a carpet area of 60 square metres per house in a housing project approved by competent authority empowered under the ‘Scheme of Affordable Housing in Partnership’ framed by the Ministry of Housing and Urban Poverty Alleviation, Government of India;

(d) post- harvest storage infrastructure for agricultural produce including a cold storages for such purposes; or

(e) mechanised food grain handling system, machinery or equipment for units processing agricultural produce as food stuff excluding alcoholic beverages;

Note: Classification between works contract service and construction service is a subject matter of litigation.

Software Services Services rendered in relation to development, design, programming, customisation, adaptation, upgradation, enhancement, implementation of information technology software shall be deemed to be declared services and accordingly the same shall be subject to service tax.

Section 65B(28) defines “information technology software” means any representation of instructions, data, sound or image, including source code and object code, recorded in a machine readable form, and capable of being manipulated or providing interactivity to a user, by means of a computer or an automatic data processing machine or any other device or equipment;

It may be noted that whether software licence is subject to VAT or service tax will be a subject matter of litigation.

Support Service (Very important for all Industries) Support services rendered by Government or local authority to any business entity are subject to service tax. It may be noted any business entity has availed any support service from Government / local authority, then as a recipient of service, the business entity will be liable to pay service tax.

“support services” means infrastructural, operational, administrative, logistic, marketing or any other support of any kind comprising functions that entities carry out in ordinary course of operations themselves but may obtain as services by outsourcing from others for any reason whatsoever and shall include advertisement and promotion, construction or works contract, renting of immovable property, security, testing and analysis;

Transport of Goods or Passenger by Road, Air etc., A. Transportation of passengers – The following services is exempt from levy of service tax when service is provided by:(i) a stage carriage (“stage carriage” shall have the meaning assigned to it in clause (40) of section 2 of the Motor Vehicles Act, 1988);(ii) railways in a class other than first class or A/c coach;(iii) metro, monorail or tramway;

(iv) inland waterways;

(v) public transport, other than predominantly for tourism purpose, in a vessel of less than fifteen tonne net; and

(vi) metered cabs, radio taxis or auto rickshaws.

(vii) air, embarking or terminating in an airport located in the state of Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, or Tripura or at Baghdogra located in West Bengal; or

(viii) a contract carriage for the transportation of passengers, excluding tourism, conducted tour, charter or hire;

Abatement

ü Notification No.6/2012 – ST, dated 17.03.2012 provides abatement to the extent of 60% of the value of taxable services in respect of “transport of passenger by air services” subject to the condition that the service provider is not entitled to avail the CENVAT credit of duty on inputs or capital goods, used for providing such taxable service. (Effective 01.04.2012)

ü Transport of passengers, with or without accompanied belongings by rail – 70% of the value of service.

B. Transportation of Goods: The following services are exempt from levy of service tax when service is rendered by —(i) by road except the services of a GTA or a courier agency;

(ii) by an aircraft or a vessel from a place outsideIndiato the first customs station of landing inIndia; or

(iii) by inland waterways;

(iv) Services provided by a goods transport agency by way of transportation of –

(a) fruits, vegetables, eggs, milk, food grains or pulses in a goods carriage;

(b) goods where gross amount charged on a consignment transported in a single goods carriage does not exceed Rs. 1500/-; or

(c) goods, where gross amount charged for transportation of all such goods for a single consignee in the goods carriage does not exceed Rs. 750/-;

Abatement

ü Transport of goods by rail – 70% of the value of service.

ü Transport of goods by road by Goods Transport Agency – 75% of the value of service subject to the condition that CENVAT credit is not availed.

ü Transport of goods in a vessel from one port inIndiato another – 50% of the value of service subject to the condition that CENVAT credit is not availed.

Supply of Tangible goods / Hire purchase / leasing etc., Service rendered in relation to transfer of goods by way of hiring, leasing, licensing or in any such manner without transfer of right to use such goods shall be deemed to be a declared services and accordingly the same shall be subject to service tax.

It may be noted that in respect of services provided or agreed to be provided by way of renting or hiring any motor vehicle designed to carry passengerby an individual, HUF, Proprietary firm, Partnership firm, LLP or AOP to the Company or a business entity registered as a body corporate, then the service tax shall be payable as follows:

on abated value the service receiver is required to pay service tax as a recipient of service on the whole amount.

on non abated value the service provider is required to pay 60% of the service value and the service receiver is required to pay at 40% of the service value.

Abatement – Renting of any motor vehicle designed to carry passengers60% of the service value subject to the condition that CENVAT credit has not been availed.

Similarly any activities in relation to delivery of goods on hire purchase or any system of payment by instalments shall be deemed to declared services and accordingly the same shall be subject to service tax.

It is important to note that delivery of goods on hire purchase or any system of payment of instalment is construed as a deemed ‘sale’ within the definition of Article 366(29A) of the Constitution of India. Thus, delivery of goods on hire purchase or any other system of instalment is subject to sale tax / VAT. Apart from the said transaction, if any activity which is in the nature of service and is in relation to delivery of goods on hire purchase or any system of payment by instalment will be covered.

Exemption – Services by way of giving on hire –

(a) to a state transport undertaking, a motor vehicle meant to carry more than twelve passengers; or

(b) to a goods transport agency, a means of transportation of goods;

Hotel / Restaurant / Outdoor caterer / Inn / Guest House / Club / Convention center 1. Restaurant / Outdoor catererAny service portion in an activity wherein goods, being food or any other article of human consumption or any drink (whether or not intoxicating) is supplied in any manner as a part of the activity is deemed to be construed as a declared service and accordingly the same shall be subject to service tax.
The value of taxable service involved in the supply of food or drinks for consumption either in a restaurant or as outdoor catering service, either by itself or along with other services, shall be computed as follows:Restaurant – 40% of the total amount charged;Outdoor catering service – 60% of the total amount charged.

Exemption – Services provided in relation to serving of food or beverages by a restaurant, eating joint or a mess, other than those having the facility of air-conditioning or central air-heating in any part of the establishment, at any time during the year, and which has a licence to serve alcoholic beverages.

2. Hotel / Inn / Guest house / ClubExemption upto Rs. 1000 – Services by way of renting of a hotel, inn, guest house, club, campsite or other commercial places meant for residential or lodging purposes, having declared tariff of a room below rupees one thousand per day or equivalent.

3. Abatement

Supply of food or any other article of human consumption or any drink, in a premises, including hotel, convention center, club, pandal, shamiana or any place specially arranged for organizing a function – 30% of the value of service subject to the condition that CENVAT credit on any goods classifiable under chapter 1 to 22 of the CETA, 1985 has not been taken.

Renting of hotels, inns, guest houses, clubs, campsites or other commercial places meant for residential or lodging purposes – 40% of the value of service subject to the condition that CENVAT credit on inputs has not been taken.

Educational Sector The following services are exempt from levy of service tax:

Service rendered by any person in relation to:

pre-school education and education up to higher secondary school or equivalent;

education as a part of a curriculum for obtaining a qualification recognised by any law for the time being in force;

education as a part of an approved vocational education course;

Services by way of training or coaching in recreational activities relating to arts, culture or sports;

Services provided-

(a) to an educational institution by way of catering under any centrally assisted mid-day meals scheme sponsored by Government;

(b) to or by an institution in relation to educational services, where the educational services are exempt from the levy of service tax, by way of transportation of students or staff;

(c) to or by an institution in relation to educational services, where the educational services are exempt from the levy of service tax, by way of services in relation to admission to such education;

Supply of manpower In case of supply of manpower, if the service is provided by an individual, HUF or proprietary firm or partnership firm (including LLP) or AOP to the Company or a business entity registered as a body corporate, then the service provider is required to pay service tax at 25% and the service recipient is required to pay service tax at 75% on the service value.
Health Care / Clinical research The following services are exempt from levy of service tax:

Health care services rendered by a clinical establishment, an authorised medical practitioner or paramedics and services rendered by a veterinary clinic in relation to health care of animals or birds are.

Health care services” means any service by way of diagnosis or treatment or care for illness, injury, deformity, abnormality or pregnancy in any recognised system of medicine and includes services by way of supply of meals for the patient or transportation of the patient to and from a clinical establishment, but does not include hair transplant or cosmetic or plastic surgery, except when undertaken to restore or to reconstruct anatomy or functions of body affected due to congenital defects, developmental abnormalities, injury or trauma.

Services by way of technical testing or analysis of newly developed drugs, including vaccines and herbal remedies, on human participants by a clinical research organisation approved to conduct clinical trials by the Drug Controller General ofIndia;

Religious / Charitable Activities The following services are exempt from levy of service tax:

Services by an entity registered under section 12AA of the Income tax Act, 1961 (43 of 1961) by way of charitable activities including import of taxable service.

“Charitable activities” means activities relating to –

(a) public health by way of –

(I) care or counseling of (i) terminally ill persons or persons with severe physical or mental disability, (ii) persons afflicted with HIV or AIDS, or (iii) persons addicted to a dependence-forming substance such as narcotics drugs or alcohol; or

(II) public awareness of preventive health, family planning or prevention of HIV infection;

(b) advancement of religion;

(c) advancement of educational programmes or skill development relating to,-

(I) abandoned, orphaned or homeless children;

(II) physically or mentally abused and traumatized persons;

(III) prisoners; or

(IV) persons over the age of 65 years residing in a rural area;

(d) preservation of environment including watershed, forests and wildlife; or

(e) advancement of any other object of general public utility up to a value of twenty five lakh rupees in a financial year subject to the condition that total value of such activities had not exceeded twenty five lakhs rupees during the preceding financial year.

2. Services rendered by a person in respect of following:

(a) renting of precincts of a religious place meant for general public; or

(b) conduct of any religious ceremony;

Advocate / Arbitral tribunal The following services are exempt from levy of service tax if services provided to any person other than a business entity by -(a) an individual as an advocate; or(b) a person represented on and as arbitral tribunals;

However, it may be noted that if the aforesaid services are provided to a business entity, then as a recipient of service, the business entity is required to pay the service tax.

Cargo handling / ware housing services etc., The value of taxable service shall include the amount realised as demurrage or by any other name whatever called for the provision of a service beyond the period originally contracted or in any other manner relatable to the provision of service.
Financial Sector / Banking sector 1. The following services are exempt from levy of service tax:ü Services by the following persons in respective capacities –

(a) a sub-broker or an authorised person to a stock broker;

(b) an authorised person to a member of a commodity exchange;

(c) a mutual fund agent or distributor to mutual fund or asset management company for distribution or marketing of mutual fund;

(d) a business facilitator or a business correspondent to a banking company or an insurance company in a rural area;

ü Service by way of –

(a) Extending deposits, loans or advances in so far as the consideration is represented by way of interest or discount;

(b) Inter-se sale or purchase of foreign currency amongst the banks or authorised dealers of foreign exchange or amongst the banks and such dealers.

2. Abatement

a. Financial leasing services including equipment leasing and hire purchase, the service provider is entitled avail the benefit of abatement to the extent of 90% of the service value subject to the condition that:

ü It may be noted that for the purpose of said service consideration received will include only interest. The abatement shall not apply to an amount, other than an amount forming or representing as interest, charged by the service provider such as lease management fee, processing fee, documentation charges and administrative fee.

b. Services provided in relation to chit – 30% of the service value subject to the condition that CENVAT credit has not been taken.
3.The person liable to pay service tax in relation to purchase or sale of foreign currency, including money changing is now required to pay tax at the enhanced rate i.e., 0.12% (instead of 0.1%), if the currency is exchanged for an amount upto Rs. 1 lakh. If the amount exceed from 1 lakh to 10 lakh then Rs. 120 and 0.06% (instead of Rs. 100 and 0.05%) and Rs. 660 and 0.12% in case the exchange is above 10 lakhs.

 

Advertisement Selling of space or time slots for advertisements other than advertisements broadcast by radio or television is exempt from levy of service tax.
Club or Association services A Club or association which is a registered co-operative society is exempt from levy of service tax if it renders services in relation to the project which is relating to a common facility set-up for treatment and recycling of effluents and solid waste, with financial assistance from the Central or State Government. (Notification no. 1/2012 – ST, dated 17.03.2012).

Service by an unincorporated body or an entity registered as a society to own members by way of reimbursement of charges or share of contribution is exempt from levy of service tax-

as a trade union;

for the provision of exempt services by the entity to third persons; or

up to an amount of five thousand rupees per month per member for sourcing of goods or services from a third person for the common use of its members in a housing society or a residential complex;

Insurance In respect of services provided or agreed to be provided by an insurance agent to any person carrying on insurance business, the insurance company will be subject to service tax as a recipient of service.

An insurer carrying on life insurance business shall have the option to pay tax at 3% of the premium charged from policy holder in the first year and 1.5% in the subsequent year. However, this option is not applicable if the insurer has allocated the amount towards investment or savings on behalf of the policy holder and the same has been intimated to the policy holder.

Services of general insurance business provided in respect of notified services (refer notification no. 12/2012-ST, dt:17.03.2012) are exempt from levy of service tax.

Entertainment Admission to entertainment events or access to amusement facilities is exempt from levy of service tax

Section 65B(24) defines “entertainment event” to mean an event or a performance which is intended to provide recreation, pastime, fun or enjoyment, by way of exhibition of cinematographic film, circus, concerts, sporting event, pageants, award functions, dance, musical or theatrical performances including drama, ballets or any such event or programme;

Section 65B(9) defines “amusement facility” to mean a facility where fun or recreation is provided by means of rides, gaming devices or bowling alleys in amusement parks, amusement arcades, water parks, theme parks or such other places but does not include a place within such facility where other services are provided.

 

Lottery, Betting, gambling etc., Service rendered in relation to betting, gambling or lottery are covered under negative list and therefore not liable to service tax;

Service rendered by a selling or marketing agent of lottery tickets to a distributer or a selling agent is exempt from levy of service tax;

However, the services rendered by the distributor or selling agent in relation to promotion, marketing, organising or assisting in organising lottery who has the option to pay service tax on the aggregate face value of the lottery tickets is now required to pay tax at enhanced rate i.e., Rs. 7000 (instead of Rs. 6000) where the guaranteed prize payout is more than 80% and Rs. 11000/- (instead of Rs. 9000) where the guaranteed prize payout is less than 80%.

Management, Maintenance or Repair services The following services have been exempted from levy of service tax:– Exemption has been granted with retrospective effect from 16.06.2005 to 26.07.2009 in respect of service provided in relation to management, maintenance or repair of road.– Similarly exemption has also been granted with retrospective effect from 16.06.2005 till the new taxation regime comes into force in respect of service provided in relation to management, maintenance or repair of non-commercial government.

– Refund mechanism has been provided for such service providers.

Special Economic Zone Rule 6(6A) of the CENVAT credit Rules, 2004 introduced last year is being given effect from February 10, 2006. This will neutralize the investigations or demands for reversal of CENVAT credits in respect of service provided to SEZs for the past periods. It implies that service rendered to SEZ will not be construed as exempted services and therefore assessee is not required to reverse the CENVAT credit.
Telecom Exempt
1.Services by way of making telephone calls from -departmentally run public telephones;guaranteed public telephones operating only for local calls; or

free telephone at airport and hospitals where no bills are being issued;

2. Service provided by a selling agent or a distributer of SIM cards or recharge coupon vouchers.

Intellectual Property right / Technology Knowhow Service rendered in relation to temporary transfer or permitting the use or enjoyment of any intellectual property right is deemed to be declared serviceand accordingly the same shall be subject to service tax.ü Exemption – Temporary transfer or permitting the use or enjoyment of a copyright covered under section 13(1)(a) or 13(1)(b) of the Indian Copyright Act, 1957 (14 of 1957), relating to original literary, dramatic, musical, artistic works or cinematograph films;

– In case Import of technology, Research and Development cess paid by the importer shall be entitled for exemption subject to such conditions as specified. (Notification no. 14/2012-ST, dt 17.03.2012.

Power Services rendered in relation to transmission or distribution of electricity by an electricity transmission or distribution utility is exempt from levy of service tax.
Tour Operator Abatementü Package tour – 75% of the service value subject to condition that:

(i) CENVAT credit has not been taken;

(ii) The bill indicates that it is inclusive of charges for such a tour.

ü Providing services solely of arranging or booking accommodation for any person in relation to a tour – 90% of the service value subject to the condition that:

(i) CENVAT credit has not been taken.

(ii) The invoice indicates that it is towards the charges for such accommodation.

(iii) This exemption shall not apply in such cases where the invoice, bill or challan issued by the tour operator, in relation to a tour, only includes the service charges for arranging or booking accommodation for any person and does not include the cost of such accommodation.

ü Services, other than services specified above, provided or to be provided to any person, by a tour operator in relation to a tour – 60% of the value of service tax subject to the condition that:

(i) CENVAT credit has not been taken;

(ii) The bill issued indicates that the amount charged in the bill is the gross amount charged for such a tour.

General The value of taxable service shall not include

Interest on,-

deposits; and

delayed payment of any consideration for the provision of services or sale of goods;

Accidental damages due to unforeseen actions not relatable to the provision of service

Annexure 1 – List of services which are not subject to service tax.

Exclusion from the definition of service A transfer of title in goods or property, by way of sale, gift or in any other manner; or

A transaction in money or actionable claim;

Service rendered by an employee to the employer in the course of or in relation to his employment;

Fees taken in any Court or tribunal established under any law for the time being in force

Negative List – (17 Services has been listed in the negative list) Services rendered by Government or a local authority excluding the specified services

Services by a foreign diplomatic mission located inIndia;

Services by the Reserve Bank ofIndia;

Services relating to agriculture as specified;

Trading of goods;

Any process amounting to manufacture or production of goods;

Selling of space or time slots for advertisements other than advertisements broadcast by radio or television;

Service by way of access to a road or a bridge on payment of toll charges;

Betting, gambling or lottery;

Admission to entertainment events or access to amusement facilities;

transmission or distribution of electricity by an electricity transmission or distribution utility;

Services by educational sector such as—

(i) pre-school education and education up to higher secondary school or equivalent;

(ii) education as a part of a curriculum for obtaining a qualification recognised by any law for the time being in force;

(iii) education as a part of an approved vocational education course;

13. Services by way of renting of residential dwelling for use as residence;

14. Services by way of— extending deposits, loans or advances in so far as the consideration is represented by way of interest or discount; or inter se sale or purchase of foreign currency amongst banks or authorised dealers of foreign exchange or amongst banks and such dealers;

15. Service of transportation of passengers, with or without accompanied belongings, by – a stage carriage, railways, metro, monorail or tramway, inland waterways, public transport, other than predominantly for tourism purpose, in a vessel of less than fifteen tonne net, and metered cabs, radio taxis or auto rickshaws. (Note: service tax is leviable in respect of passenger travelling in first class or an AC coach will be subject to service tax)

16. Services by way of transportation of goods

(i) by road except the services of—

– a goods transportation agency; or

– a courier agency;

(ii) by an aircraft or a vessel from a place outsideIndiato the first customs station of landing inIndia; or

(iii) by inland waterways;

17. Funeral, burial, crematorium or mortuary services including transportation of the deceased.

Exemption (Notification no. 12/2012-ST, dt: 17.03.2012) Services provided to the United Nations or a specified international organization;

Health care services by a clinical establishment, an authorised medical practitioner or para-medics;

Services by a veterinary clinic in relation to to health care of animals or birds;

Services by an entity registered under section 12AA of the Income tax Act, 1961 (43 of 1961) by way of charitable activities;

Services by a person by way of-

(a) renting of precincts of a religious place meant for general public; or

(b) conduct of any religious ceremony;

6. Services provided to any person other than a business entity by –

(a) an individual as an advocate; or

(b) a person represented on and as arbitral tribunals;

7. Services by way of technical testing or analysis of newly developed drugs, including vaccines and herbal remedies, on human participants by a clinical research organisation approved to conduct clinical trials by the Drug Controller General ofIndia;

8. Services by way of training or coaching in recreational activities relating to arts, culture or sports;

9. Services provided-

(a) to an educational institution by way of catering under any centrally assisted mid – day meals scheme sponsored by Government;

(b) to or by an institution in relation to educational services, where the educational services are exempt from the levy of service tax, by way of transportation of students or staff;

(c) to or by an institution in relation to educational services, where the educational services are exempt from the levy of service tax, by way of services in relation to admission to such education;

10. Services provided to a recognised sports body by-

(a) an individual as a player, referee, umpire, coach or manager for participation in a tournament or championship organized by a recognized sports body;

(b) another recognised sports body;

11. Services by way of sponsorship of tournaments or championships organised,-

(a) by a national sports federation, or its affiliated federations, where the participating teams or individuals represent any district, state or zone;

(b) by Association of Indian Universities, Inter-University Sports Board, School Games Federation of India, All India Sports Council for the Deaf, Paralympic Committee of India, Special Olympics Bharat;

(c) by Central Civil Services Cultural and Sports Board;

(d) as part of national games, by Indian Olympic Association; or

(e) under Panchayat Yuva Kreeda Aur Khel Abhiyaan (PYKKA) Scheme;

12. Services provided to the Government or local authority by way of erection, construction, maintenance, repair, alteration, renovation or restoration of –

(a) a civil structure or any other original works meant predominantly for a non-industrial or non-commercial use;

(b) a historical monument, archaeological site or remains of national importance, archaeological excavation, or antiquity specified under Ancient Monuments and Archaeological Sites and Remains Act, 1958 (24 of 1958);

(c) a structure meant predominantly for use as (i) an educational, (ii) a clinical, or (iii) an art or cultural establishment;

(d) canal, dam or other irrigation works;

(e) pipeline, conduit or plant for (i) drinking water supply (ii) water treatment (iii)sewerage treatment or disposal; or

(f) a residential complex predominantly meant for self-use or the use of their employees or other persons specified in the Explanation 1 to clause 44 of section 65 B of the said Finance Act;

13. Services provided by way of erection, construction, maintenance, repair, alteration, renovation or restoration of,-

(a) road, bridge, tunnel, or terminal for road transportation for use by general public;

(b) building owned by an entity registered under section 12 AA of the Income tax Act, 1961(43 of 1961) and meant predominantly for religious use by general public;

(c) pollution control or effluent treatment plant, except located as a part of a factory;

(d) electric crematorium;

14. Services by way of erection or construction of original works pertaining to,-

(a) airport, port or railways;

(b) single residential unit otherwise as a part of a residential complex;

(c) low- cost houses up to a carpet area of 60 square metres per house in a housing project approved by competent authority empowered under the ‘Scheme of Affordable Housing in Partnership’ framed by the Ministry of Housing and Urban Poverty Alleviation, Government of India;

(d) post- harvest storage infrastructure for agricultural produce including a cold storages for such purposes; or

(e) mechanised food grain handling system, machinery or equipment for units processing agricultural produce as food stuff excluding alcoholic beverages;

15. Temporary transfer or permitting the use or enjoyment of a copyright covered under clause (a) or (b) of sub-section (1) of section 13 of the Indian Copyright Act, 1957 (14 of 1957), relating to original literary, dramatic, musical, artistic works or cinematograph films;

16. Services by a performing artist in folk or classical art forms of (i) music, or (ii) dance, or (iii) theatre, excluding services provided by such artist as a brand ambassador;

17. Services by way of collecting or providing news by an independent journalist, Press Trust of India or United News of India;

18. Services by way of renting of a hotel, inn, guest house, club, campsite or other commercial places meant for residential or lodging purposes, having declared tariff of a room below rupees one thousand per day or equivalent;

19. Services provided in relation to serving of food or beverages by a restaurant, eating joint or a mess, other than those having the facility of air-conditioning or central air-heating in any part of the establishment, at any time during the year, and which has a licence to serve alcoholic beverages;

20. Services by way of transportation by rail or a vessel from one port inIndiato another of the following goods –

(a) petroleum and petroleum products falling under Chapter heading 2710 and 2711 of the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986);

(b) relief materials meant for victims of natural or man-made disasters, calamities, accidents or mishap;

(c) defence or military equipments;

(d) postal mail, mail bags or household effects;

(e) newspaper or magazines registered with Registrar of Newspapers;

(f) railway equipments or materials;

(g) agricultural produce;

(h) foodstuff including flours, tea, coffee, jaggery, sugar, milk products, salt and edible oil, excluding alcoholic beverages; or

(i) chemical fertilizer and oilcakes;

21. Services provided by a goods transport agency by way of transportation of

(a) fruits, vegetables, eggs, milk, food grains or pulses in a goods carriage;

(b) goods where gross amount charged on a consignment transported in a single goods carriage does not exceed one thousand five hundred rupees; or

(c) goods, where gross amount charged for transportation of all such goods for a single consignee in the goods carriage does not exceed rupees seven hundred fifty;

22. Services by way of giving on hire –

(a) to a state transport undertaking, a motor vehicle meant to carry more than twelve passengers; or

(b) to a goods transport agency, a means of transportation of goods;

23. Transport of passengers, with or without accompanied belongings, by –

(a) air, embarking or terminating in an airport located in the state of Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, or Tripura or at Baghdogra located in West Bengal; or

(b) a contract carriage for the transportation of passengers, excluding tourism, conducted tour, charter or hire;

24. Services by way of motor vehicle parking to general public excluding leasing of space to an entity for providing such parking facility;

25. Services provided to the Government or a local authority by way of –

(a) repair of a ship, boat or vessel;

(b) effluents and sewerage treatment;

(c) waste collection or disposal;

(d) storage, treatment or testing of water for drinking purposes; or

(e) transport of water by pipeline or conduit for drinking purposes;

26. Services of general insurance business provided under following schemes-

(a) Hut Insurance Scheme;

(b) Cattle Insurance under Swarnajaynti Gram Swarozgar Yojna (earlier known as Integrated Rural Development Programme);

(c) Scheme for Insurance of Tribals;

(d) Janata Personal Accident Policy and Gramin Accident Policy;

(e) Group Personal Accident Policy for Self-Employed Women;

(f) Agricultural Pumpset and Failed Well Insurance;

(g) premia collected on export credit insurance;

(h) Weather Based Crop Insurance Scheme or the Modified National Agricultural Insurance Scheme, approved by the Government of India and implemented by the Ministry of Agriculture;

(i) Jan Arogya Bima Policy;

(j) National Agricultural Insurance Scheme (Rashtriya Krishi Bima Yojana);

(k) Pilot Scheme on Seed Crop Insurance;

(l) Central Sector Scheme on Cattle Insurance;

(m) Universal Health Insurance Scheme;

(n) Rashtriya Swasthya Bima Yojana; or

(o) Coconut Palm Insurance Scheme;

27. Services provided by an incubatee up to a total business turnover of fifty lakh rupees in a financial year subject to the following conditions, namely:-

(a) the total business turnover had not exceeded fifty lakh rupees during the preceding financial year; and

(b) a period of three years has not lapsed from the date of entering into an agreement as an incubatee;

28. Service by an unincorporated body or an entity registered as a society to own members by way of reimbursement of charges or share of contribution –

(a) as a trade union;

(b) for the provision of exempt services by the entity to third persons; or

(c) up to an amount of five thousand rupees per month per member for sourcing of goods or services from a third person for the common use of its members in a housing society or a residential complex;

29. Services by the following persons in respective capacities –

(a) a sub-broker or an authorised person to a stock broker;

(b) an authorised person to a member of a commodity exchange;

(c) a mutual fund agent or distributor to mutual fund or asset management company for distribution or marketing of mutual fund;

(d) a selling or marketing agent of lottery tickets to a distributer or a selling agent;

(e) a selling agent or a distributer of SIM cards or recharge coupon vouchers; or

(f) a business facilitator or a business correspondent to a banking company or an insurance company in a rural area;

30. Carrying out an intermediate production process as job work in relation to-

(a) agriculture, printing or textile processing;

(b) cut and polished diamonds and gemstones; or plain and studded jewellery of gold and other precious metals, falling under Chapter 71 of the CETA, 1985;

(c) any goods on which appropriate duty is payable by the principal manufacturer; or

(d) processes of electroplating, zinc plating, anodizing, heat treatment, powder coating, painting including spray painting or auto black, during the course of manufacture of parts of cycles or sewing machines upto an aggregate value of taxable service of the specified processes of one hundred and fifty lakh rupees in a financial year subject to the condition that such aggregate value had not exceeded one hundred and fifty lakh rupees during the preceding financial year;

31. Services by an organiser to any person in respect of a business exhibition held outsideIndia;

32. Services by way of making telephone calls from –

(a) departmentally run public telephones;

(b) guaranteed public telephones operating only for local calls; or

(c) free telephone at airport and hospitals where no bills are being issued;

33. Services by way of slaughtering of bovine animals;

34. Services received from a service provider located in a non- taxable territory by –

(a) the Government, a local authority or an individual in relation to any purpose other than industry, business or commerce; or

(b) an entity registered under section 12AA of the Income tax Act, 1961 (43 of 1961) for the purposes of providing charitable activities.

——————————————-

Prepared & Compiled By

CA Naveen Rajpurohit

Naveen Rajpurohit & Co.,

Chartered Accountants

No. 41 , ‘5th Main Road’ ,

3rd Cross, Opp to Axis Bank

Chamrajpet, Bangalore – 560 009

e-mail: naveen@naveenrajpurohit.com

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Category : Service Tax (3413)
Type : Articles (18234)
Tags : Budget (1957)

0 responses to “Highlights of Finance Bill 2012 – Service Tax”

  1. Hemant Mishra says:

    Sir, A parcel Handling Railways Private contractor a service provider which incorporates various exempted as well as declared commodities earns more than 10 lacs per annum should liable to pay Sevice Tax or Not, please clarify ?

  2. KSR Panicker says:

    Is schools are exempted from Service tax for Civil works/building construction?
    We are doing civil work for schools. Pl. explain

  3. KSR Panicker says:

    Is service tax payable/chargeable form Schools for civil works done. We are civil contractor and doing civil work/building construction for schools-Delhi Public Schools. Can you inform whether we should charge service tax from the school and pay to government. If so how much? Pl. help

  4. Roberto Marcelo says:

    The guest house receipts is always less than Rs.5 lakhs in a year. The room charges is also less than Rs. 1000/- per day. Is service tax applicable in the case. Kindly guide. Roberto, Goa.

  5. ANITA CHACKO says:

    Is reverse mechanisim applicable in service provided by a Painting contractor for painting of a building in factory / office

  6. Bidhan Chandra Jana says:

    Can you help,wether A Non profit organization, Registered under Societies registration act. 1961. have to have service tax registration. we don’t deal with any production,, business, sales. we work for government mostly ( Health, Education, Planning, studies etc. and for the poor.
    please do help with documents.

  7. Pratik Bhansali says:

    Negative List & Declared Services – Applicability of service tax for real estate builders – viza-viz – apllicability of Rule 2A of Valuation Rules

    It may be appreciated that Rule 2A applies only for Clause (h) of Section 66E in respect of works contract. Neither definition of ‘works contract’ nor Rule 2A make any reference for clause in respect of construction of complex.
    a) Does this means servuce tax would be payable @ 12.36% for these services and abetement is only applicable for works contact services ?
    b) Whether construction of complex does not form part of ‘works contract’
    c) How valuation shall be made for construction of complex projects since they are also in the nature of works contract
    d) Is there any drafting mistake in the rules which requires further clarifucation by department

  8. Venkataraman says:

    The transportation of passengers by air – There is abatement charges of 60 % available.  If the same transportation of passengers by ship  / boat etc. – What is the position for abatement charges- Is there first of all allowed any abatement ….. If not, will it not amount to discrimination?

  9. Venkataraman says:

    What about the education cess?  The Education Cess was calculated on the service tax in earlier years.  How about the same in the Finance Bill 2012.

  10. rajasekhar says:

    thanks for providing valuable information

  11. B.Bhanasekaran says:

    The way in which the the finance bill 2012 is presented shows that the government is a legalised form of mafia collecting mamool from the publice. the mafia collect mamool in a particular locality and the government from the entire country. the service tax is new concept were in almost every common man was drastically affected. long back margret thatcher introduced a bill requesting every indivudual to pay tax proportionately to the govt. likewise the indian politicians are moving the way one day they will ask every indian must pay 25% of their earnings as service tax, 25% as income tax, 25% as sales tax, land, building, motor taxes etc and if a man is not able to pay his tax he will be hanged like the rowdies who threaten the common man in a locality.

    the govt instead of collecting the taxes hungrily may utilise the resourses in more useful manner for example the roads are laid and with in a minutes vehicles are allowed pass through the new road. is it possible in a private person laying road and allow any vehicle immediately.

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