New Charging
Section 66B
•
There shall be Levied a tax (here in after referred
service tax) @12%
•
on value of all services
•
other than those specified in negative list
•
provided or agreed to be provided in taxable
territory
•
by one person to another
•
and collected in such manner as may be prescribed.
Analysis of Service-65B(44)
•
-any activity (not defined)
•
- for consideration (not defined)
•
- carried out by a person for another
•
- and includes a declared service (s.66E)(9
services) (out of this 4 services are similar to deemed sales under Art
366(29A) of Constitution)
Activity
•
not defined
•
includes passive activity
•
e.g. declared service (66E) includes forbearance to
Act, or refraining from doing something or tolerance to a situation.
Consideration
•
Not defined
•
Definition of Contract Act to apply and shall include
both monetary and non monetary consideration
•
hence an act of charity is not taxable unless for
advertising name of donor in special way or if it for business advantage
•
Money for Research when researcher under no obligation
to carry out particular research
•
However if researcher is to provide IPRs of the
research to person giving money, it is for consideration.
•
Conditions merely for proper usage of funds does not
amount to consideration
In case of non
monetary consideration if equivalent money value is not ascertainable
•
a) On the basis of gross amount charged for similar
service provided to other person in the ordinary course of trade;
•
b) Where value cannot be so determined, the equivalent
money value of such
•
consideration, not less than the cost of provision of
service.
Special Cases –
whether consideration or not
•
Amount received in settlement in dispute-Yes if dispute
related to consideration
•
Advance for Service-Yes
•
Deposits returned on cancellation of agreement to
provide service-Tax to be refunded
•
Returnable Security Deposit –No
•
Demurrages-Yes
•
Fines and Penalties-No
•
Excess payment by mistake-Yes if not returned
•
Forfeited Deposit of Service Receiver-No if due to
circumstances not related to service
Analysis of -By one person to another (2.3 of GN-2)
•
e.g. service by one branch to another or to HO is
service to self and not taxable.
•
Exceptions where services to self are taxable (Expl.
2 to section 65B(44) Def. of Service
•
One entity in taxable territory and another in non
taxable territory
•
By unincorporated body to members
Person
•
(i) an
individual,
•
(ii) a
Hindu undivided family,
•
(iii) a
company,
•
(iv) a
society,
•
(v) a
limited liability partnership,
•
(vi) a
firm,
•
(vii) an association of persons or body
of individuals, whether incorporated or not,
•
(viii) Government,( most of services
in –ve list)
•
(ix) a local authority, (most of services in
–ve list)or
•
(x) every artificial juridical person, not
falling within any of the preceding sub-clauses.
Agreed to be provided
•
Services agreed to be provided are also taxable has
following implications:
-
Advance received becomes taxable
-
Advances forfeited for cancellation of service which
was agreed to be provided becomes taxable
•
Forfeited Deposit of Service Receiver-is not consideration if due to circumstances not related to
service (Para 2.2.8 S.no.6 of table of
Guidance Note)
‘Service’ does not include
•
any activity that constitutes only a transfer
in title of (i) goods or (ii) immovable property by way of sale, gift or in
any other manner
•
Addition vide Amendment made in Finance Bill
2012 by Lok sabha: transfer, delivery or supply of goods deemed to be sale
under article 366(29A) of constitution
•
a transaction
only in (i) money or (ii) actionable claim
Explanation
2 added by loksabha in Finance bill 2012
transaction
in money shall not include any activity relating to use of money or its
conversion by cash or by any other mode, from one form, currency or
denomination to another form, currency or denomination for which a separate
consideration is charged.
•
any service
provided by an employee to an employer in the course of the employment.
•
fee payable to a court or a tribunal set up under a law
for the time being in force
Further Service
shall not include (because they are not employees)
•
Functions performed by MP,MLA,MC, Panchayat members etc
who receive consideration for performing their office duties
•
Duties performed on post held under provisions of
Constitution
•
Chairperson or member of body established by Central of
state government or local authority and not deemed as employee
Transactions in
Actionable Claims and money
Includes
•
deposit,
withdrawal from bank
•
loan and its repayment
•
Conversion of money (now excluded by Amendment)
•
Actionable claims includes transfer of unsecured debt
for consideration
Doesn’t Include:
•
Commission received under chit fund
•
Draft Charges
•
Debt collection charges
Analysis of
Service does not include any activity that constitutes
only a transfer in title of
(i)
goods or
(ii)
immovable property
by way of sale, gift or in any other manner
Transfer in Title
‘Transfer of title’ means change in ownership. Mere
transfer of custody or possession over goods or immovable property where
ownership is not transferred does not amount to transfer of title. For example
giving the property on rent or goods for use on hire would not involve a
transfer of title.
“Only” transfer in title is excluded from service
The word ‘only’ signifies the transactions which involve
only transfer of title in goods or immovable property is not included as
service. A transaction which in addition to a transfer of title in goods or
immovable property involves an element of another activity carried out or to be
carried out by the person transferring the title would not be excluded from the
definition of service.
Not Only cases i.e. Composite Contracts
The manner of treatment of such composite transactions
for the purpose of taxation, i.e. are they to be treated as sale of goods or
provision of service, has been laid down by the Honorable Supreme Court in the
case of Bharat Sanchar Nigam Limited vs Union of India [2006(2)STR161(SC)]
•
“42. Of all the different kinds
of composite transactions the drafters of the 46th Amendment chose three
specific situations, a works contract, a hire purchase contract and a catering
contract to bring within the fiction of a deemed sale.
•
Of these three, the first and third involve a
kind of service and sale at the same time.
•
Apart from these two cases where splitting of
the service and supply has been Constitutionally permitted in Clauses (b) and
(g) of Clause 29A of Art. 366, there is no other service which has been
permitted to be so split. For example the clauses of Art. 366(29A) do not cover
hospital services. Therefore, if during the treatment of a patient in a
hospital, he or she is given a pill, can the sales tax authorities tax the
transaction as a sale?
•
Doctors,
lawyers and other professionals render service in the course of which can it be
said that there is a sale of goods when a doctor writes out and hands over a
prescription or a lawyer drafts a document and delivers it to his/her client?
Strictly speaking with the payment of fees, consideration does pass from the
patient or client to the doctor or lawyer for the documents in both cases.
•
43. The reason why these services do
not involve a sale for the purposes of Entry 54 of List II is, as we see it,
for reasons ultimately attributable to the principles enunciated in Gannon
Dunkerley’s case, namely, if there is an instrument of contract which may be
composite in form in any case other than the exceptions in Article 366(29-A),
unless the transaction in truth represents two distinct and separate contracts
and is discernible as such, then the State would not have the power to separate
the agreement to sell from the agreement to render service, and impose tax on
the sale. The test therefore for composite contracts other than those mentioned
in Article 366 (29A) continues to be - did the parties have in mind or intend
separate rights arising out of the sale of goods. If there was no such
intention there is no sale even if the contract could be disintegrated. The
test for deciding whether a contract falls into one category or the other is to
as what is the substance of the contract. We will, for the want of a better
phrase, call this the dominant nature test.”
Emerging
Principles
•
Except in cases of works contracts or catering
contracts, the nature of a composite transaction would be determined by the
element which determines the ‘dominant nature’ of the transaction.
-If the
dominant nature of such a transaction is sale of goods or immovable property
then such transaction would be treated as such.
-If the
dominant nature of such a transaction is provision of a service then such
transaction would be treated as a service and taxed as such even if the
transaction involves an element of sale of goods
•
In case of works contracts and ‘service wherein goods,
being food or any other article of human consumption or any drink (whether or
not intoxicating) is supplied in any manner as part of the service’ the
‘dominant nature test’ does not apply and service portion is taxable as a
‘service’ This has also been declared as a service under section 66E of the Act
Goods
•
Goods has been defined in section 65B of the Act as
‘every kind of moveable property other than actionable claims and money;
and includes securities, growing crops, grass and things attached to or
forming part of the land which are agreed to be severed before sale or under
contract of sale’.
•
The definition
of ‘goods’ has essentially been borrowed from the Sale of Goods Act, 1930 with
the only variation that in the inclusion clause of the said definition the
phrase ‘stocks and shares’ been replaced with ‘securities’.
Securities
•
Securities has been defined in section 65B of the Act
as having the same meaning assigned to it in clause (h) of section 2 of the
Securities Contract (Regulation) Act, 1956 (42 0f 1956) in terms of which
‘securities’ includes –
•
Shares, scrips, stocks, bonds, debentures, debenture
stock or other marketable securities of a like nature in or of any incorporated
company or other body corporate.
•
Derivative.
•
Security receipt as defined in clause (zg) of section 2
of the Securitisation and Reconstruction of Financial Assets and Enforcement of
Security Interest Act, 2002.
•
Units or any other such instrument issued to the
investors under any mutual fund scheme.
•
Government securities;
•
Such other instruments as may be declared by the
Central Government to be securities.
•
Rights or interest in securities.
•
In effect, therefore, activities that are in the nature
of only transfer of title by way of sale, redemption, purchase or acquisition
of securities on principal-to-principal basis, excluding services of dealers,
brokers or agents in relation to such transactions, are outside the ambit of
‘services.
•
However
activities which are not in the nature of transfer of title in securities (for
example a person agreeing not to exercise his right in a security for a given
period of time for a consideration) would not be included in this exclusion
clause to the definition of ‘service.
Deletion of
Notification 12/2003 vs. exclusion of Sale
•
Notification 12/2003 – ST exempted so much of the value
of all taxable services as was equal to the value of goods and materials sold
by the service provider to the service recipient subject to condition that
there is documentary proof of such value of goods and materials.
•
Under the
negative list scheme, transactions that involve transfer of title in goods are
excluded.
•
Therefore if goods are being sold by a service provider
under a distinct and a separate contract then sale of such goods is excluded
from the definition of service.
•
If it is a ‘composite contract’ and dominant nature of
the contract is that of provision of service then value of goods cannot be
excluded and if the dominant nature is sale of goods then the contract is not
taxable as service.
•
In view of the
above notification 12/2003-ST has been proposed to be deleted.
Declared Services
•
4 declared services have emerged out of definition of
deemed sales
These are:
6. Transfer of goods by hiring, leasing etc without
transfer of right to use goods
7. Delivery under hire purchase or any system of payment by
installments (taxable value is 10% of interest only-13/2012). Management
fee, processing fee and documentation charges are fully taxable.
8. Service portion in works contract (taxable value is
-20%,40%,60%) or tax @ 4.8% in composition(11/2012)
9. Serving food and drinks (taxable value:Restaurant-40%,
Outdoor caterer-60%, (11/2012), Hotel, convention centre, club, pandal,
shamiana or other place specially arranged for organizing a function-70% of
total amount excluding Vat )
Deemed Sales under
Article 366(29A) covered by Sales hence not taxable
These are –
•
transfer, otherwise than in pursuance of a contract, of
property in any goods for cash, deferred payment or other valuable
consideration
•
transfer of property in goods (whether as goods or in
some other form) involved in the execution of a works contract
•
delivery of goods on hire-purchase or any system of
payment by installments
•
transfer of the right to use any goods for any purpose
(whether or not for a specified period) for cash, deferred payment or other
valuable consideration
•
supply of goods by any unincorporated association or
body of persons to a member thereof for cash, deferred payment or other
valuable consideration
•
supply, by way of or as part of any service or in any
other manner whatsoever, of goods, being food or any other article for human
consumption or any drink (whether or not intoxicating), where such supply or
service, is for cash, deferred payment or other valuable consideration
Transfer of Right
to use Goods
•
Transfer of right to use goods is a well
recognized constitutional and legal concept. Every transfer of goods on lease,
license or hiring basis does not result in transfer of right to use goods. ‘Transfer
of right of goods’ involves transfer of possession and effective control over
such goods(Supreme Court in Rashtriya Ispat Nigam Limited)
BSNL Judgement
The test laid down by the Supreme Court in the case of
Bharat Sanchar Nigam Limited vs Union of India [2006(2)STR161(SC)] to determine
whether a transaction involves transfer of right to use goods, which has been
followed by the Supreme Court and various High Courts, is as follows:
•
There must be goods available for delivery;
•
There must be a consensus ad idem as to the identity of
the goods;
•
The transferee should have legal right to use the goods
– consequently all legal consequences of such use including any permissions or
licenses required therefore should be available to the transferee;
•
For the period during which the transferee has such
legal right , it has to be the exclusion to the transferor – this is the
necessary concomitant of the plain language of the statute, viz., a ‘transfer
of the right to use’ and not merely a license to use the goods;
•
Having transferred, the owner cannot again transfer the
same right to others.
Transfer of goods by way of hiring, leasing, licensing
or any such manner vs. transfer of right to use such goods
•
Transfer of goods by way of hiring, leasing,
licensing or any such manner without transfer of right to use such goods is
declared service under s.66F
•
A car is given in hire by a person to a company along
with a driver on payment of charges on per month/mileage basis-Right to use is
not transferred as the car owner retains the permissions and licenses relating
to the cab. Therefore possession and effective control remains with the owner
(Delhi High Court Judgment in the case of International Travel House in Sales
Tax Appeal no 10/2009 refers). The service is, therefore covered in the
declared list entry.
•
Supply of equipment like excavators, wheel loaders,
dump trucks, cranes, etc for use in a particular project where the person to
whom such equipment is supplied is subject to such terms and conditions in the
contract relating to the manner of use of such equipment, return of such
equipment after a specified time, maintenance and upkeep of such equipment-The
transaction will not involve transfer of right to use such equipment as in
terms of the agreement the possession and effective control over such equipment
has not been transferred even though the custody may have been transferred
along with permission to use such equipment. The receiver is not free to use
such equipment in any manner as he likes and conditions have been imposed on
use and control of such equipment
•
Hiring of bank lockers -The transaction does not
involve the right to use goods as possession of the lockers is not transferred
to the hirer even though the contents of the locker would be in the possession
of the hirer.(refer to Andhra Pradesh High Court Judgment in the case of State
Bank of India Vs State of Andhra Pradesh)
•
Hiring out of vehicles where it is the responsibility
of the owner to abide by all the laws relating to motor vehicles -No transfer
of right to use goods as effective control and possession is not transferred (
Allahabad High Court judgment in Ahuja Goods Agency vs State of UP
[(1997)106STC540] refers)
•
Hiring of audio visual equipment where risk is of the
owner -No transfer of right to use goods as effective control and possession is
not transferred
Delivery of goods on hire-purchase or any system of payment by
installments
•
Section 2 of the Hire Purchase Act, 1972 defines a
“hire purchase agreement’ as ‘an agreement under which goods are let out on
hire and under which the hirer has the option to purchase them in accordance
with the terms of the agreement and includes an agreement under which-
(i) possession of goods is
delivered by the owner thereof to a person on condition that such person pays
the agreed amount in periodical installments, and
(ii) the property in the goods is
to pass to such person on the payment of the last of such installments, and
(iii) such person has a right to
terminate the agreement at any time before the property so passes.’
•
Key ingredients of the deemed sale category of
‘delivery of goods on hire-purchase or any system of payment by installments’,
therefore are-
- Transfer
of possession (and not just of custody)
- The hirer has the option or
obligation to purchase the goods in accordance with the terms of the agreement.
Difference between a normal hiring agreement and a
hire-purchase agreement -
•
In a mere hiring agreement the hirer has no option to
purchase the goods hired and the risks and rewards incidental to ownership of goods
remain with the owner and are not transferred to the hirer. In a hire-purchase
agreement the hirer has an option or an obligation to purchase goods.
Paradox
•
Delivery of goods on hire-purchase or any
system of payment by installments is covered in the definition of deemed sale
and hence not taxable as service
•
At the same time it is declared service under
s.66E
•
Hence question arises what part of this
service is taxable
•
It has been held by Supreme court in the case of
Association Of Leasing & Financial Service Companies Vs Union Of
India [2010 (20) S.T.R. 417 (S.C.)] that in equipment leasing/hire-purchase
agreements there are two different and distinct transactions, viz., the
financing transaction and the equipment leasing/hire-purchase transaction and that
the financing transaction, consideration for which was represented by way of
interest or other charges like lease management fee, processing fee,
documentation charges and administrative fees, which is chargeable to service
tax. Therefore, such financial services that accompany a hire-purchase
agreement fall in the ambit of this entry of declared services
•
In terms of the exemption notification relating to such
activities, service tax is leviable only on 10% of the amount representing
interest. No exemption is available in respect of other charges.
Works Contract
•
The phrase used is ‘works contract’ and not work
contract. ‘Works’ has a defined and accepted legal meaning. As per Black’s Law
dictionary ‘works’ means ‘buildings or structures on land’.
•
Works contract has been defined in section 65B of the
Act as 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, maintenance (substituting
“improvement”), repair, renovation, alteration of any movable or immovable
property (substituting “building or structure on land”) or for carrying out any
other similar activity or a part thereof in relation to any movable or
immovable property (substituting “building or structure on land”).
(Substitution made in Finance Bill 2012
by Lok Sabha)
•
In terms of Article 366 (29A) of the Constitution of India transfer
of property
in goods involved in execution of
works contract is deemed to be a sale of such goods.
•
It is a well settled position of law, declared by the
Supreme Court in BSNL‘s case [2006(2) STR 161 (SC)], that a works contract can
be segregated into a contract of sale of goods and contract of provision of
service.
•
This declared list entry has been incorporated to
capture this position of law in simple terms under s.66E
Scope of Works
Contract
•
Buildings and structures on land means not only
buildings or structures attached to earth but also things permanently fastened
to a building or structure attached to earth.
•
pipeline or conduits are structures on land contracts
for construction of such structure would be covered under works contract
•
contracts for erection commissioning or installation
of plant, machinery, equipment or structures, whether prefabricated or
otherwise be treated as a works contract if
-Transfer of property in goods is involved
in such a contract; and
- The
machinery equipment structures are attached or embedded to earth after erection
commissioning or installation
•
contracts for painting of a building, repair of a
building, renovation of a building, wall tiling, flooring be covered under
‘works contract’
•
Pure labour contracts are not works contracts
Valuation in Works
Contract
•
Follow Ganon Dunkerley i.e.
a) labor charges for execution of contract
b) amount paid to sub contractor for labor and services
c) Charges for planning, designing and architect fee
d) Charges for obtaining on hire or otherwise machinery and
tools used for execution of works contract (including Depreciation)
e) Cost of consumables used in construction contract
f) Cost of Establishment of Contractor relatable to supply
of labor & service
g) Other similar expenses relatable to supply of labor and
services
h) Profit earned on supply of labor and services
•
Gross Amount does not include: Value of transfer of
property in goods involved in the execution of the said works contract.
•
Where Value Added Tax has been paid on the actual value
of transfer of property in goods involved in the execution of the works
contract, then such value adopted for the purposes of payment of Value Added
Tax, shall be taken as the value of transfer of property in goods involved in
the execution of the said works contract.
•
Value Added Tax (VAT) or sales tax, as the case may be,
paid, if any, on transfer of property in goods involved in the execution of the
said works contract to be excluded
•
Where value
can be so arrived
(i) execution of original works- 40% of the total amount
charged for the works contract
(ii) execution of original works and the gross amount
charged includes the value of land-20% per cent of the total amount charged including
such gross amount (including land value)
(iii) works contracts, other than contracts for execution of
original works, including contracts for completion and finishing services such
as glazing, plastering, floor and wall tiling, installation of electrical
fittings-60% of the total amount charged for the works contract shall be
value of service portion.
•
Total amount shall include value of all 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.
•
Original works’ means :
all new
constructions;
all types of additions and alterations to
abandoned or damaged structures on land that are required to make them workable
Works Contract
Composition Scheme
•
Rate enhanced to 4.8% from 4%
•
Cess of 3% may be added.
Reverse Charge
mechanism applied for works contract
•
Where service provider is-
Individual
or HUF or proprietary firm or
partnership firm, regd or not or AOP
•
And service recipient is company under Companies Act or
business entity registered as body corporate located in taxable territory
•
50% tax shall be payable by service provider and 50%
shall be payable by service recepient.
Cenvat Credit
•
Cenvat Credit of duty paid not available for goods
property in which gets transferred
•
Cenvat Credit available for goods for which property is
not transferred subject to reversal under Rule 6 of Cenvat Credit Rules.
Exemption for
Works Contracts for Government- 12 of 12/2012
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; or
(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;
Supply of Food or
other articles of Human Consumption
•
It is covered both under declared service under s.66F
as well as deemed sales.
•
As per BSNL and other court decisions dissection
between sale and service part is allowed
•
The following category of restaurants are exempted –
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 license to serve alcoholic beverage. (Para
19 of 12/2012)
Valuation
•
Service provided in restaurant-40% shall be value of
service
•
Service by outdoor caterer- 60% of amount charged shall
be value of service
•
In case of Hotel, convention centre, club, pandal,
shamiana or other place specially arranged for organizing a function-70% of
total amount excluding Vat
•
Cenvat credit not available on items consumed
•
On other inputs, input services and capital goods
cenvat credit shall be available subject to Cenvat Credit Rules
.Renting of
Immovable Property
•
Already
taxable. Validity upheld by many courts. P&H-Shumbh Steel, Orrisa- Utkal
Builders, Gujrat HC-Cinemax, Delhi HC- Home Retail, and Mumbai HC also
•
S.65B:
allowing, permitting or granting access, entry, occupation, usage 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’
•
Renting
in negative list(S.66D) and Exemption(12/2012)
Negative List
Ø
renting
of vacant land, with or without a structure incidental to its use, relating to
agriculture.
Ø
renting of residential dwelling for use as
residence
Ø
renting out of any property by Reserve Bank of
India
Ø
renting
out of any property by a Government or a local authority to all non-business
entity.
Exemption
Ø
Renting
of precincts of a religious place meant for general public
Ø
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
Covers-
•
Renting for temporary purpose like marriages or other
social functions because it includes renting without transfer of possession or
control,
•
Renting for educational purposes
•
Permitting use of property for vending/dispensing
machine
•
Allowing erection of tower
•
Renting for entertainment or sports
•
Renting of theatres by owners to film distributor
Ø
Services by way of motor vehicle parking to
general public excluding leasing of space to an entity for providing such
parking facility is exempt (24 of 12/2012)
Place of property
determines taxability
If immovable property is in non
taxable territory and is owned by person in taxable territory it shall not be
taxable
Amount received
from prospective buyer for Construction before completion certificate
•
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 certificate of completion by a competent authority
•
Earlier it was there by way of explanation in
residential complex service (which was applicable after to 12 resi units only)
•
This concept had emerged from K Rajeha Development
Corporation
•
Upheld by ETC punjab in SMV Agencies for VAT purposes
•
Upheld by Mumbai HC in Maharashtra
Housing
•
As per notification 11/2012, tax is payable on
Ø
20% of
total amount only if consideration includes land
Ø
and if land is not included :
- service
tax is payable on 40% of total amount if new construction
- and 60%
of amount if old construction.
•
"competent authority" means the Government or
any authority authorized to issue completion certificate under any law for the
time being in force and in case of non requirement of such certificate from
such authority, from any of the following, namely:––
•
(A) architect registered with the Council of
Architecture constituted under the Architects Act, 1972; or
•
(B) chartered engineer registered with the
Institution of Engineers (India );
or
•
(C) licensed surveyor of the respective local
body of the city or town or village or
•
development or planning authority;
•
(II) the expression "construction"
includes additions, alterations, replacements or remodelling of any existing
civil structure;
Temporary transfer
or permitting the use or enjoyment of any intellectual property right;
‘Intellectual property right’ has not been defined in the
Act. The phase has to be understood as it is understood in normal trade
parlance as per which intellectual property right includes the following –
- Copyright
- Patents
- Trademarks
- Designs
- Any other similar right to an intangible property
- Registration, patent of IPR not required to cover in this category
Development etc of
IT software
Ø
development,
Ø
design,
Ø
programming,
Ø
customisation,
Ø
adaptation,
Ø
upgradation,
Ø
enhancement,
Ø
implementation
of
information technology software
•
On line development of software also covered in
declared service
•
Consultation on IT software also declared service
•
It is a settled position of law that prepackaged
software or canned software or shrink wrapped software is goods. (Supreme Court
judgment in case of Tata Consultancy Services vs State of Andhra Pradesh [2002(178) ELT 22(SC)
refers].
•
To determine
whether providing license to use a software is a service or sale of goods it
would need to be seen whether the license to use packaged software tantamount
to ‘transfer of right to use goods’.
•
‘Transfer of
right to use goods’ is deemed to be a sale under Article 366(29A) of the
Constitution of India and transfer of goods by way of hiring, leasing,
licensing or any such manner without transfer of right to use such goods is a
declared service.
.Non Compete Fee
agreeing to
•
the obligation to refrain from an act,
•
or to tolerate
an act or a situation,
•
or to do an act
Ø
This was not taxable earlier
Ø
No effort is required to earn. You just have
restrain or tolerate a situation.
Ø
This is not an activity, still taxable because
covered by declared service
Deemed Sales cases
under Article 366(29A) of Constitution
•
While these cases have specifically been excluded from
definition of service so far as they constitute sale of goods, the service
portion of these transactions specifically covered under declared service
•
These are:
6. Transfer of goods by hiring, leasing etc without
transfer of right to use goods
7. Delivery under hire purchase or any system of payment by
installments (taxable value is 10% of interest only-13/2012). Management
fee, processing fee and documentation charges are fully taxable.
8. Service portion in works contract (taxable value is
-20%,40%,60%) or tax @ 4.8% in composition(11/2012)
9. Serving food and drinks (taxable value:Restaurant-40%,
Outdoor caterer-60%, (11/2012), Hotel, convention centre, club, pandal,
shamiana or other place specially arranged for organizing a function-70% of
total amount excluding Vat )
Negative List of Servicess.66D (17 Services)
Negative list-1.Government and Local Authority
Services
services by Government or a local authority excluding the
following services to the extent they are not covered elsewhere:
(i) services by the Department of Posts by way of
speed post, express parcel post, life insurance and agency services provided to
a person other than Government;
(ii) services in relation to an aircraft or a vessel,
inside or outside the precincts of a port or an airport;
(iii) transport of goods or passengers; or
(iv) support services, other than services covered
under clauses (i) to (iii) above, provided to business entities;
•
Import of service by Government is exempt under Pt
34(a) of 12/2012
•
Some
other Services Provided by Govt in negative list are:
service of
transportation of passengers, with or without accompanied belongings, by—
(i)
a stage
carriage;
(ii)
(ii)
railways in a class other than—
(A) first
class; or
(B) an
airconditioned 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 (not generally provided by govt)
•
Services provided to government and local authority are
however taxable
•
However there is exemption for Services(12/2012)
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;
•
Hence
although government is covered by definition of person, most of the
services are under negative list and hence not taxable.
•
However following services of government and local
authority are taxable:
-Speed
Post, express parcel post, life insurance and agency services provided to
non government (local authority is not government hence service shall be
taxable)
-Aircraft
or Vessel Service (not for transportation of goods) for transportation of
passengers
-Public
transport for tourism
-Support
Services
•
Service Tax Registration of Government and
local Authority
Support
Services means outsouring service. It is covered under reverse charge
mechanism. Hence registration not required
For other
services, registration by government is required.
•
Government
Includes
state govt, central government and union territory but not local authority
Does not
include: Central and state government corporations and companies
•
Local Authority
means
panchayat, municipality, municipal committee, cantt. Board, regional
concils and development boards
Negative list
2. Service provided by RBI
2. Service provided by RBI
Is in
negative list but service provided to RBI is not in negative list
3. Service by
diplomatic missions in India
Is in negative
list but it does not covers offices of international organizations
Negative list-
4. Services
relating to agriculture
•
are also in negative list i.e.
a) Agriculture Operations
b) Supply of farm labor
c) Agricultural processes to make produce marketable only
d) renting of agro machinery and vacant land with or without
a structure incidental to use.
e) loading, unloading, packing storage or warehousing of
agriculture produce
f) agriculture extension services (Application of sci
research to agri practices thru farmer training)
g) Services by agriculture produce market committee (i.e.
market fee, license fee, rents)
Agriculture means:
•
Apart from cultivation of plants and (crops not
included ?)
•
Rearing or Breeding of Animals (Excluding rearing of
horses)
•
And other species of life forms
•
For food,fibre,fuel, raw material and similar products
Hence Agriculture covers:
•
Breeding of fishes
•
Breeding of silk worms
•
Cultivation of ornamental flowers
•
Forestry
•
Horticiulture
•
Cultivation of crops like rubber,coffee, tea
Potato Chips and Tomato Ketchup
•
Since only those agriculture processes which are
required to make the produce marketable for primary market are covered under
negative list . Potato chips and tomato ketchup are generated through
manufacturing process which alters the essential characteristics of potatoes
and tomatoes.
Negative list-5.Trading of Goods
•
Covers-
–
Future Contracts
–
Commodity futures
•
Does not Cover Commission income for trading of goods
on auxiliary services relating to future contracts and commodity futures
because
•
Under section 66F reference to service shall not
include reference to service used for providing such service
•
When transfer of title to goods is already excluded in
def of service u/s 65b(44), there was no need for specific exclusion.
•
Under cenvat credit rules as per R 2(e) expl. Exempted
services include trading
•
As per R.3DExpl1(c) in case of trading value of
exempted service=
a)Sale Price-Cost Price or
b) 10% of
cost of goods sold
whichever
is more
•
And there is 5% reversal which has now been increased
to 6% for exempted service
Negative list-6. Process amounting to
manufacture or production of goods
•
It means process on which excise duty is leviable u/s 3
of CEA
•
Includes process amounting to manufacture of alhohlic
liquor for human consumption, opium, Indian hemp and narcotics on which excise
is leviable under state act
•
Earlier process relating to manufacture of alhohlic
liquor was exigible to service tax w.e.f. 2009 but now it has been put under
negative list.
•
Process on which excise duty is leviable shall
be covered under negative list even if there is excise duty exemption on that
item under exemption notification.
•
Certain processes although not dutiable under CEA
are exempt vide Entry 30 of Exemption Notification 12/2012 dated 17-3-12 :
•
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 Central Excise Tariff Act ,1985 (5 of 1986);
•
(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;
Negative list-7.Selling of Space or Time Slots for
Advertisement (other advertisement broadcast by radio or TV)
•
Sale
of space in print media which was taxable till is now under negative list
•
Further sale of space by way of bill boards , public
places, buildings, conveyances, cell phones, ATMs will be non taxable
•
Aerial Advertisement is also non taxable
However:
•
-Sale
of space or time or radio or TV is taxable
•
- Sale
of time slot by broadcasting organization is also taxable
•
-However services of advertising agency are not covered
under negative list
•
- If coupled service is provided covering both the
service of ad agency and sale of space and time slots in TV or radio s. 66F
relating to bundled service shall apply.
Another
Goods News for print Industries
•
As per item 17 of 12/2012 service of collecting or
providing news by independent journalist , PTI or UNI is exempt.
Negative list-8.Access to road and bridge on
payment of toll charge:
•
It covers national highways and state highways
•
Collection charges of toll collecting agency however
are not covered because under section 66F reference to service shall not
include reference to service used for providing such service
Negative list-9.Betting , Gambling or Lottery
•
Auxiliary services provided for organizing or promoting
betting or gambling events are not covered above because under section 66F
reference to service shall not include reference to service used for providing
such service
•
Even otherwise this is state subject and central
government has no power to tax
Negative list-10 Entry to Entertainment Events and
Access to Amusement Facilities.
•
‘Entertainment events’ (65B) is ‘as an event or a performance which is
intended to provide recreation, pastime, fun or enjoyment, such as
exhibition of cinematographic films, circus, concerts, sporting events,
fairs, pageants, award functions, dance performances, musical performances, theatrical
performances including cultural programs, drama, ballets or any such event
or programme’.
•
‘Amusement facility’ ‘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 place but
does not include a place within such facility where other services are
provided’.
•
Drama, balletes, other event even if not in theatre and
open shall get covered because the term is “theatrical performances and not
performance in theatre”
•
Stand alone
Amusement ride in mall is also covered in negative list.
•
Exhibition of film in video parlours is also covered by
negative list.
•
Member ship fee of club is not covered by amusement
facility
•
Services of event manager and event organizer or
entertainer are not covered above.
Negative list-11.Transmission or distribution of Electricity
•
It does not cover developer of housing society
providing such service
•
Also private operators providing genset service are not
covered, hence taxable
Negative list-12.Service in relation to Education
•
services by way of—
(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 recognized by any law for the time being in force;
(iii) education as a part of an approved vocational
education course; (i.e.cousrse of ITI, Indus training centre, Modular
Employable Skill course, course of National skill development corp.)
•
Education for qualification recognized by foreign law
is not covered.
•
Where recognized course bundled with unrecognized
course s.66F to apply. Extra billing for unrecognized course may be taken to
determine tax liability
Negative list-13.Renting of Residential Dwelling for use as residence
•
The phrase ‘residential dwelling’ has not been defined
in the Act. It has therefore to be interpreted in terms of the normal trade
parlance as per which it is any residential accommodation, but does not include
hotel, motel, inn, guest house, camp–site, lodge, house boat, or like places
meant for temporary stay.
•
Renting’ has been defined in section 65B as ‘‘allowing,
permitting or granting access, entry, occupation, usage 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
•
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 is exempt(18 of 12/2012)
•
renting of a residential dwelling which is for use
partly as a residence and partly for non residential purpose like an office of
a lawyer or the clinic of a doctor –s.66F to be followed.
•
a residential house taken on rent is used only or
predominantly for commercial or non-residential use – Taxable
•
if a house is given on rent and the same is used as a
hotel or a lodge- Taxable
•
rooms in a hotel or a lodge are let out whether or not
for temporary stay – Taxable because hotel is not residential dwelling unit
•
government department allots houses to its employees
and charges a license fee - Non taxable because govt. service in negative list
•
furnished flats given on rent for temporary stay- these
are in the nature of lodges or guest houses and hence not treatable as a
residential dwelling
Negative list-14. Financial Services
It covers services by way of—
(i) extending deposits, loans or advances in so far
as the consideration is represented by way of interest or discount;
(ii) inter se sale or purchase of foreign
currency amongst banks or authorised dealers of foreign exchange or amongst
banks and such dealers
•
Sale
and purchase of foreign currency with general public is not covered by negative
list.
•
Loksabha has amended the definition of Interest in
Finance Bill 2012: Earlier definition said that interest has same meaning as in
s.2(28A) of Income Tax Act 1961. But new definition incorporated as under:
“ Interest
means interest payable in any manner in respect of any moneys borrowed or debt
incurred (including deposit ,claim or similar right or obligation) but does not
include ant service fee or charge in respect of money borrowed or debt incurred
or in respect of credit facility which has not been utilised.
Negative list-15 Service relating to transportation of passengers
with or without accompanied belongings, by—
(i) a stage carriage;
(ii) railways in a class other than—
•
(A) first class; or
•
(B) an airconditioned 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;
v
Hence transport of passengers by rail is taxable
if traveling by first class or in AC coach. Taxable value in such case is 30%
only.(13/2012)
Exemptions for
transportation of passengers
•
As per Para 22 of 12/2012, service by giving on hire to
state transport undertaking a motor vehicle meant to carry more than 12
passengers is exempt
•
As per Para 23 of
12/2012,there is exemption for Transport of passengers with or without
accompanies belongings by
-
air, embarking or terminating in Arunachal etc
-
Contract carriage for tpt. of passengers excluding
tourism, conducted tours, charter or hire
Negative List-16
Service relating to transportation of goods
services by way of transportation of goods—
(i) by road except the services of—
•
(A) a goods transportation agency; or
•
(B) a courier agency;
(ii) by an aircraft or a vessel from a place outside India to the
first customs station of
landing in India ; or
(iii) by inland waterways;
•
Transportation
of goods
-
By rail is not covered by negative list
-
By Air in India or abroad not covered by
negative list
-
By vessel in coastal area not covered by negative list
-
By vessel on national water way is covered by negative
list
-
By GTA not covered by negative list
Goods Transport
Agency
•
means any person who provides service in relation to
transport of goods by road and issues consignment note, by whatever name called
•
Following exemptions (Para
21 of 12/2012)are available in case of goods transport agency for
transportation of :
i) fruits, vegetables, eggs, milk, food grains, or pulses in goods
carriage
ii) Goods where gross amt charged
for on consignment transported in single goods carriage <= Rs. 1500
iii) Goods where gross amount for
tpt of all goods in single consignee in the
goods carriage <= Rs. 750
•
Further hiring service to GTA is also exempt vide para
22(b) of 12/2012.
As per notification 13/2012, 25%
of gross amount charged is taxable
•
As per notification 15/2012, in case of GTA if
consignor or consignee is –
a) Factory
under Factories Act
b) Society
under Society Regn Act
c) Co-op
Soc
d) Dealer
in excisable goods registered under CEA
e) Body
corporate under any law
f)
Partnership firm, whether registered or not, under any
law including AOP(LLP is also firm. Unregistered firm also shall pay tax)
100% tax shall be payable by
service recipient i.e. person liable to pay tax himself or through agent
17. Funeral Services
Service by way of
•
funeral,
•
burial,
•
crematorium
•
or mortuary services
•
including
transportation of the deceased
Exemptions
•
Earlier 88 exemption notifications
•
To be replaced by 10 exemption notifications
•
12/2012 dated 17-3-2012 gives 34 exempted services
EXEPMTED SERVICES 12/2012 dtd 17-3-2012
Health Services
•
Health
care services by a clinical establishment, an authorized medical practitioner or
para-medics
•
Services
by a veterinary clinic in relation to health care of animals or birds
•
“health
care services” means any service by way of diagnosis or treatment or care for
illness, injury, deformity, abnormality or pregnancy in any recognized 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
•
"clinical
establishment" means a hospital, nursing home, clinic, sanatorium or an
institution by, whatever name called, that offers services or facilities
requiring diagnosis or treatment or care for illness, injury, deformity,
abnormality or pregnancy in any recognized system of medicine, established and
administered or maintained by any person or a place established as an independent
entity or a part of an establishment to carry out diagnostic or investigative
services of diseases
•
“authorised medical practitioner” means any medical
practitioner registered with any of the Councils of the recognized system of
medicine and includes medical professional having the requisite qualification
to practice in any recognized system of medicine as per any law for the time
being in force,
•
Hence health services under recognized system of
medicine are only exempt
•
In terms of the Clause (h) of section 2 of the Clinical
Establishments Act, 2010, the following systems of medicine are recognized
systems of medicine:
Ø
Allopathy
Ø
Yoga
Ø
Naturopathy
Ø
Ayurveda
Ø
Homeopathy
Ø
Siddha
Ø
Unani
Ø
Any other system of medicine that may be
recognized by central government
Health Services- Para
Medics
•
Paramedics are trained health care professionals, for
example nursing staff, physiotherapists, technicians, lab assistants etc.
•
They are
accountable for their services when provided independently.
•
Services by them in a clinical establishment would be
in the capacity of employee and not provided in independent capacity and will
thus be considered as services by such clinical establishment.
•
Similarly
services of assisting an authorized medical professional would be considered as
services by such authorized medical professional only.
Charitable Trusts
•
Services
by an entity registered under section 12AA of the Income tax Act, 1961 (43 of
1961) by way of charitable activities
•
Import
of Service by charitable trust registered under 12AA is also exempted(34(b) of
12/2012)
“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 programmers 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.
Explanation: - For
the purpose of this clause, ‘general public’ means the body of people at large
sufficiently defined by some common quality of public or impersonal nature.
Individual Advocate Service
•
advocate” has the meaning assigned to it in clause (a)
of sub-section (1) of section 2
of the
Advocates Act, 1961 ( 25 of 1961)
•
Hence ITP s are not covered
•
Services provided by individual advocate to non
business entity is exempt
•
If service by individual advocate is provided to
business entity there is no exemption
•
Business entity means any person ordinarily carrying
out any activity relating to industry commerce or any other business
•
In case of Vat
service is always provided to business entity
•
In Income Tax,
for cases of filing ITR-1,2 service tax not applicable.
•
In respect of
service provided by individual advocate to business entity, 100% tax is payable
by service receiver.
•
Hence assessee
who even deals in goods shall have to get registration under service tax just
to pay service tax of his individual advocate. No exemption limit of Rs
1000000/- shall be available.
•
No exemption is
available for service provided by non individual advocates,
•
Hence non
individual advocates are required to pay tax themselves
Exempted Agents/Distributors
Pt 29 of 12/2012
(a) a sub-broker or
an authorized person to a stock broker;
(b) an authorized
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 distributor or a selling agent;
(e) a selling agent
or a distributor 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;
LEGISLATIVE CHANGES
Reverse Charge
Mechanism
Earlier it was
applicable to :
a)
Import of
Service
b)
Insurance
Auxiliary Service
c)
GTA
d)
Mutual Fund
Distributor
e)
Sponsorship
Now reverse charge
mechanism applicable vide Notification 15/2012
SP:SR
a)
GTA
b)
Insurance
Agents
c) Import of Service
d) Sponsorship Service to body corporate of
firm
e) Arbitral Tribunal to business entity
f) Individual Advocate to business entity
g) Support Service by Government or local
authority to business entity
h) Rent a cab service to company if 40% is
taxable,otherwise(60:40)
i) Manpower Supply to company(25:75)
j) Works contract by Individual, HUF or
prop. Firm or partnership firm, AOP for
service provided to company or business entity registered as body corporate
(50:50)
Invoice
•
Now invoice required to be issued with in 30 days from
date of providing service or receipt of payment
•
Earlier it was 14 days
•
For banking companies and NBFC, period of invoice
raised to 45 days.
•
For excess payment up to Rs. 1000 no separate invoice
required to be issued and service tax can be paid on the basis of original
invoice only. This is to redress the problem of companies in telecomm etc where
generally higher amount is deposited by small subscribers as compared to billed
amounts
Payment of service
tax in case of Export of Service
Service tax is not required to be deposited according to
R.6(1) of Service tax rules provided the export proceeds are received with in
period allowed by RBI or extended period as may be allowed from time to time.
Cash System of
Payment
•
Earlier cash payment of tax was allowed only in 8 cases
like CA,CS,ICWA, Architects etc.
•
Now cash system has been allowed for service provided
up to Rs. 50 lacs
•
Hence the above 8 categories , if billing exceeds Rs.
50 lacs in their cases still tax shall be payable on merchantile basis.
Point of taxation
•
If invoice issued with in 30 days (45 days in case of
financial sector) time of issue of invoice shall be point of taxation
•
If no invoice is issued with in prescribed time, then
time of completion of service shall be point of taxation.
•
If payment is received before issue of invoice, the
point of receipt of payment shall be point of taxation
•
If there is change in rate of tax say change from 10 to
12%, amount shall be charged at old rates provided date of credit in bank is up
to 4 working days after date of change.
•
In case of export of service, 8 services like CA etc
for billing exceeding Rs. 50 lacs, (because these service providers shall plead
that for them since now system is mercantile they should be taxed @ 10% for
services rendered before 31st march)and reverse charge mechanism, date of
payment shall be point of taxation
Adjustment of Excess
tax R.6(4B)
•
Adjustment of excess tax paid can be made in
immediately succeeding month/quarter only.
•
Earlier adjustment was possible up to 2 lacs only and intimation to Supdtt was required in
15 days
•
Now there is not limit for adjustment and sudtt is not
required to be informed.
Method of
calculating Small Service Provider exemption changed
•
Earlier ,system
was that if the aggregate value of taxable services rendered by a
provider of taxable service from one or more premises, does not exceed rupees
10 lakhs in the preceding financial year , then exemption was available up
to Rs. 10 lacs received on account of services provided which might include
the payments for billing done in earlier
years
•
Now the system has been changed and billing up to 10
lacs is to be considered only for year under consideration instead of amount
received.
Frequency of
filing return changed
•
Assesses paying more than 25 lacs or more in previous
year AND new assesses other than
individuals and firms i.e. new HUF,AOP,BOI, Company, Govt, Local Authority,
AJP- Monthly
•
Others i.e. new individuals and firms and all old
aassesees who have paid lesser than 25 lacs tax in previuos year- Quaterly
Other Changes
•
As per newly
inserted section 67A, rate of exchange shall be according to customs law for
determining value of service
•
Special Audit by
CA or ICWA introduced by inserting section 72A.
•
Under section 73
earlier notice for non payement of tax, short payment etc could be issued with
in one year from date of filing or due date of filing return. This period now
extended to 18 months.
•
In respect of
renting of immovable property service tax can be paid up to 6 months from
president assent i.e. 28-5-2012 (vide Amnesty brought in s.80)
•
Period of filing
appeal before CIT A reduced from 3 months to 2 months and period of power to
grant extension reduced from 3 months to one month thus reducing aggregate
period from 6M to 3M.
•
Period of filing
appeal before tribunal extended from 3months to 4 months.
•
For prosecution
u/s 89 attempt to evade tax to be proved.
•
Settlement
Commission brought for service tax also.
•
Maintenance of
Roads exempted retrospectively from 16-6-2005 to 26-7-2009. For period after
26-7-2009, exemption notification is already in vogue.
No comments:
Post a Comment