Dr. Sanjiv Agarwal

Effective 1st May, 2011, the only beneficial provision in service tax  for citizens of India is that service tax (so called misery tax) on medical services has been completely withdrawn so much so that not only the service tax proposed on clinical establishments, doctors and diagnostic labs is withdrawn but the tax on services on which tax was earlier  applicable (ie, till 30th April 2011) shall no longer be leviable w.e.f. 1 May, 2011. Health services were brought into tax net from July 2010 on services provided by hospitals, nursing hones, clinics to employees of business entities where payment for such check up or preventive care was made by employer entity and health check up or treatment of persons whose  payment was made directly by insurance company under cash less scheme. This levy will not be applicable any more.

Another beneficial provision is in relation to coaching and training institutes. Any commercial coaching or training in relation to pre-school coaching or education that leads to the award of any qualification / degree/ diploma/ certificate recognized by law in India will not be subject to service tax.

The scope of service tax has been largely expanded for lawyers and legal consultants where as in case of chartered accountants, cost accountants and company secretaries enjoying exemption of service tax in representational services, it has been withdrawn from 1st May 2011.

In case of legal services, all services provided to individuals for any advice, consultancy or assistance in any branch of law have been made taxable. All representational services provided by an individual or business entity to any business entity is also taxable. What has remained out of tax net is only any representational services provided to individuals . Earlier, only services provided to business entities were taxed.

The chartered accountant, cost accountants and company secretaries enjoyed exemption from levy of service tax on representational services and  lawyers were not taxed on such services. Now with legal fraternity coming into tax net, exemption to representational services (ie, appearing before any statutory authority in pursuance of any notice) has been withdrawn from May 1, 2011. Thus, both CAs etc and legal consultants have a similar  scope of taxation except that in case of legal services, representation for individuals is not  yet taxable.

All these changes have come into effect from 1st May 2011.

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  1. ramamurthy says:

    I beg to differ from the opinion of Mr. Agarwaql. Levy of service tax on lawyers practicing other than the tax, is defnitely a burden though not a financial burden. In case of a C.A. or an advocate or consultant practicing in taxatioon upto apppellate level, can easily plan the work, however in the case of advocates practicing in other branches of law, it will be very difficulty, even to arrange the days affairs, invariably all the courts starts betwen 10.30AM to 11 AM. It is every day’s affair and will be working under presuure and the levy to collect, remit, file quartely, annually returns will be a bureden of work on such advocates. Hence, by the levy of service tax on INDIVIDUAL advocates hardship which is in the nature of Arbitrary has been caused. Collection from Individual is exempted but if the Individual is a business man and the suit is for recovery of arrears, is it in such case levy is exempted? what department may say, we do not know. Hence, I beg to differ from the opinion of my learned friend Mr.Agarwal’s thinking that by levy of service tax on lawyers, Govt. has treated them as equals.

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June 2021