Presentation on Service Tax

submitted By
Praveenkumar S.N Somesha M.R

SERVICE TAX
The law provides the definition of Service Tax as - "service tax"

means tax leviable under the provisions of this Chapter. And "this
chapter" provides definition of various services covered for the Service Tax.

Service Tax is a form of indirect tax imposed on specified services

called "taxable services". Service tax cannot be levied on any service which is not included in the list of taxable services. Over the past few years, service tax been expanded to cover new services.

DEFINITION OF SERVICE
"Service" means any activity carried out by a person for another for consideration, and includes a declared service, but shall not include: (a) an activity which constitutes merely, (i) a transfer of title in goods or immovable property, by way of sale, gift or in any other manner; or (i) such transfer, delivery or supply of any goods which is deemed to be a sale within the meaning of clause (29A) of article 366 of the Constitution; or (ii) a transaction in money or actionable claim ; (b) a provision of service by an employee to the employer in the course of or in relation

to his employment;
(c) fees taken in any Court or tribunal established under any law for the time being in force.

History
Service Tax was imposed in 1994 for the first time on telephone
services,, services relating to non-life insurance and services provided by Stock Brokers. Service Tax is applicable to the

whole of India except the State of Jammu and Kashmir. It also

extends to the designated areas in the Continental Shelf and Exclusive Economic Zone of India.

Authority for levy (Charging section)

The authority for levy of Service Tax on specified services is
contained in Section 66 of the Finance Act, 1994. At present, this section stipulates a rate of tax of 12 per cent of the value of

a taxable service. In addition education cess @ 2% and

secondary and higher education cess @1% of amount of service tax is also leviable.

Registration
The taxpayer has to submit an application in form ST-1 for registering himself with the jurisdictional Superintendent of Central Excise. This application is to be made within 30 days from the date a particular Service Tax is levied or within 30 days from the date of commencement of business, The Superintendent grants a certificate of registration in form ST-2 within 7 days

failing which it will be deemed as if the taxpayer has been

registered.

Exemptions

Retrospective exemptions granted for repair of roads to management, maintenance or repair services undertaken in relation to non commercial Government buildings for supply of taxable services by DTA units to authorized operations of SEZ to services provided by Association of Dyeing units in relation to common effluent treatment plants Scheme for penalty waiver for renting of immovable property

Penalty would be waived for those tax payers who pay the service tax due on the renting of immovable property service (as on 6th day of March, 2012) in full along with interest within 6 months.

Exemptions (Contd)

Some Proposed Exemptions of Services:

Given to UN and International Organisations

Healthcare services Veterinary Clinics Charitable services under Income tax

Renting for religion

Advocates to individuals Technical testing for clinical research Training / Coaching in arts, culture, sports Specified services to educational institutes Specified services of a recognised sports body Sponsorship of tournaments Construction for Government etc.,

DECLARED SERVICES SECTION 66E

(a) renting of immovable property;

(b) 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 (c) temporary transfer or permitting the use or enjoyment of any intellectual property right; (d) development, design, programming, customization, adaptation, up gradation,

enhancement, implementation of information technology software;

(e) agreeing to the obligation to refrain from an act, or to tolerate an act or a situation, or to do an act;

NEGATIVE LIST OF SERVICES

SECTION 66D (a) 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. provided to business entities (b) services by the Reserve Bank of India; (c) services by a foreign diplomatic mission located in India

New Services Covered under Reverse Charge Mechanism

In the cases below both the service provider and service receiver will be considered as persons liable to pay the tax on a predetermined percentage
Sr. No Service Recipient (Body Corporate) Service Provider (Individual, Firm, LLP)

Description of Service

Hiring of Motor vehicles designed to carry passenger

(a)with abatement (b)without abatement

100% 40% 75% 50% 100

NIL 60% 25% 50% -

2 3 4.

Supply of manpower for any purpose Works contract service

services provided by individual advocate to business entity

Other Changes

Rule 7 has been proposed to be deleted. Presently it provides provisions for determination of valuation of taxable services provided from outside India. Section 67A is being inserted to prescribe the relevant date for the application of rate of exchange, valuation or rate of service tax. In lieu thereof Rule 5B of Service Tax Rules has been proposed to be deleted.
It is proposed to introduce Special Audit Provisions separately under the Finance Act, 1994 to give comprehensive powers for such audit relevant for service tax purposes. Presently the same are made available and applicable through the Central Excise Act

To encourage quick settlement of disputes and save the business from the worries of prosecution in certain situations, new provisions relating to Settlement Commission under Central Excise Act are made applicable to Service Tax.
At present in service tax, appeals against the order of Commissioner (Appeals) lie before the Tribunal; whereas in Central Excise, a revision mechanism is available to hear certain specified matters. It is proposed to introduce revision mechanism for service tax, to the extent applicable Prosecution for non-issue of invoice within time specified would be invoked only if the same is done knowingly with the intent to evade payment of service tax

Provisions relating to Settlement Commission are being brought in the Service Tax by adding sections 31, 32 and 32A to 32P of the Central Excise Act in section 83.

Declared Service
Declared Service has been defined vide Section 66E as an activity carried out by a person for another for consideration and specified in section 66E of the Act. The following nine activities have been specified in section 66E:

Declared Service

Previously Taxable under

Renting of Immovable property;

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 certificate of Completion by a competent authority;

Construction of Residential / Commercial Complex

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

Intellectual Property Service

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

Information Technology Software Services

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

If the above activities are carried out by a person for another for consideration it would amount to provision of service. Most of these services are presently also being taxed except in so far as Sl. No.5 is concerned. It is clarified that they are amply covered by the definition of service but have been declared with a view to remove any ambiguity for the purpose of uniform application of law all over the country.

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

Service portion in execution of a works contract;

Work Contract Service

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

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

Supply of tangible goods for use

Covered Service Tax

Sr.No
1 2 3 4 Advertising Air Travel Agent Airport Services Architect

Service Category

Date of Introduction
01.11.1996 01.07.1997 10.09.2004 16.10.1998

ATM Operations, Management or Maintenance

01.05.2006

Auctioneers' service, other than auction of property under directions or orders of a count of or auction by Central Govt.

01.05.2006

Authorized Service Station Auxiliary to General Insurance Auxiliary to Life Insurance

16.07.2001

8 9

16.07.2001 16.08.2002

10

Banking & Other Financial Services

16.07.2001

11

Beauty Parlor

16.08.2002

12
13 14 15 16 17 18

Broadcasting
Business Auxiliary Service Business Exhibition Service Business Support Service Cable Operator Cargo Handling Chartered Accountant

16.07.2001
01.07.2003 10.09.2004 01.05.2006 16.08.2002 16.08.2002 16.10.1998

19
20

Cleaning Service
Clearing & Forwarding Agent

16.06.2005
16.07.1997

21 22 23 24 25 26

Clubs and Associations Commercial or Industrial Construction Commercial Training or Coaching Company Secretary Construction of Residential Complex Consulting Engineer

16.06.2005 10.09.2004 01.07.2003 16.10.1998 16.06.2005 07.07.1997

27
28 29 30

Convention Centre
Cost Accountant Courier Services Credit Card, Debit Card, Charge Card or other payment card related services

16.07.2001
16.10.1998 01.11.1996 01.05.2006

31 32

Credit Rating Agency Custom House Agent

16.10.1998 15.06.1997

33
34 35 36 37 38 39 40

Dredging
Dry Cleaning Erection, Commissioning or Installation Event Management Fashion Designer Forward Contract Services Franchise Service Foreign Exchange Broker

16.06.2005
16.08.2002 01.07.2003 16.08.2002 16.08.2002 10.09.2004 01.07.2003 01.07.2003

41 42 43 44 45 46 47 48

General Insurance Health Club & Fitness Centre Intellectual Property Service Interior Decorator Internet Caf Internet Telecommunication Service Life Insurance Mailing List Compilation and Mailing

01.07.1994 16.08.2002 10.09.2004 16.10.1998 01.07.2003 01.05.2006 16.08.2002 16.06.2005

49
50

Management Consultant
Maintenance or Repair Service

01.07.1997
01.07.2003

51 52 53 54

Mandap Keeper Manpower Recruitment or Supply Agency Market Research Agency On-line Information & Database Access or Retrieval Service Opinion Poll Service Outdoor Caterer

16.10.1998 07.07.1997 16.10.1998 16.07.2001

55 56

10.19.2004 10.09.2004

57
58 59 60

Packaging Service
Pandal or Shamiana Services Photography Port Service( Major Ports)

16.06.2005
10.09.2004 16.07.2001 16.07.2001

61 62 63 64 65 66 67 68

Port Services( Other Ports) Public Relations Service Rail Travel Agent Real Estate Agent / Consultant Recovery Agent Registrar to an Issue Rent - a - Cab Operator Sale of space or time for Advertisement, other than print media

01.07.2003 01.05.2006 16.08.2002 16.10.1998 01.05.2006 01.05.2006 16.07.1997 01.05.2006

69
70

Scientific or Technical Consultancy

Security Agency

16.07.2001
16.10.1998

71 72 73 74

Share Transfer Agent Ship Management service Site Preparation Sound Recording

01.05.2006 01.05.2006 16.06.2005 16.07.2001

75

Sponsorship service provided to any body corporate or firm, other than sponsorship of sports event
Steamer Agent Stock Broker Storage & Warehousing Survey & Exploration of Minerals Survey and Map Making

01.05.2006

76 77 78 79 80

15.06.1997 01.07.1994 16.08.2002 10.09.2004 16.06.2005

81 82 83 84 85 86 87

T.V. & radio Programme Production Services Technical Testing & Analysis Technical Inspection & Certification Agency Tour Operator Transport of goods by Air Transport of goods by Road Transport of goods in containers by rail {other than Indian railway omitted w.e.f. 01.09.2009} Transport of goods other than water, through Pipeline or other conduit Transport of passengers embarking on international journey by air, other than economy class passengers

10.09.2004 01.07.2003 01.07.2003 01.09.1997 10.09.2004 01.01.2005 01.05.2006

88

16.06.2005

89

01.05.2006

90

Transport of persons by cruise ship

01.05.2006

91

Travel Agent other than Air & Rail Travel

10.09.2004

92
93 94 95 96 97 98

Underwriter
Video Tape Production Telecommunication Renting of immovable property Works contract Content Development & Supply Asset Management

16.10.1998
16.07.2001 01.06.2007 01.06.2007 01.06.2007 01.06.2007 01.06.2007

99
100

Mining Services( Oil & Gas)

Design Services

01.06.2006
01.06.2007

101 102 103 104

Information Technology Software services Investment Management for ULIP Recognized Stock Exchange Recognized Associations-Commodity Exchange Services

16.05.2008 16.05.2008 16.05.2008 16.05.2008

105
106 107 108

Clearing & Processing House services

Supply of Tangible Goods services Cosmetic or Plastic Surgery Services Transport of Coastal goods, Goods through National Waterways or Goods through Inland Waterways Legal Consultancy Services Promotion, marketing or organizing of games of chance including lottery, bingo etc. services

16.05.2008
16.05.2008 01.09.2009 01.09.2009

109 110

01.09.2009 01.07.2010

111

Health services undertaken by Hospitals or Medical establishments Maintenance of Medical Records services

01.07.2010

112

01.07.2010

113 114

Promotion of Brand of Goods, Services etc. Services of Permitting Commercial Use or Exploitation of any event
Electricity Exchange Services Copyright Services Services provided by Builder in relation to preferential location, internal/external development etc Services of Air-conditioned restaurants having license to service alcoholic beverages in relation to service of food or beverages. Services of providing of accommodation in hotels / inns/ cubs/ guest houses/ campsite for a continuous period of less than three months

01.07.2010 01.07.2010

115 116 117

01.07.2010 01.07.2010 01.07.2010

118

1.5.2011

119

1.5.2011