PRSN / VVK / RAD Indirect Taxes Dept.

- HQ

Income Tax Wealth Tax

TAXES ON CITIZENS
Custom Duty Excise Duty Direct Indirect Sales Tax / VAT Service Tax Entry Tax / Octroi Air Tax (Breathing) Tax on anything

Professional Tax Property Tax

Registration Tax

In future... ... may ?

(Stamp Act)

Water Tax

Living Tax

2 Death Tax

SALE

Sales Tax / VAT Works Contract Tax

Commercial Dealings in GOODS

DEEMED SALE -

MANUFACTURING Excise Duty IMPORTS -

Commercial dealings in SERVICES

Customs Duty

+
PROVIDING SERVICE Service Tax
3

BUSINESS ACTIVITY

GOODS &GOODS VAT SERVICE 12.5% (GST TAX) SERVICES 12% to 16% Service year In Tax 2010 12.24%
4

ELEMENTS OF SALE S A L E
-- GOODS i.e. MOVABLE

-- PARTIES-BUYER/SELLER

-- CONSIDERATION - PRICE

-- DELIVERY WITH TITLE

INVOICE

CLASSFICATION OF SALE

LOCAL SALE

SALE

INTER STATE SALE IMPORT / EXPORTSALE MISC. SALES of above all

INCIDENCE OF LEVY

Single Point Levy Multi Point Levy Double Point Levy

DISTINCTION BETWEEN
SALE

DEEMED SALE

46th CONSTITUTION AMENDMENT ACT

8

You secure a Purchase Order for manufacture & supply of Boiler accessories for agreed price,

--

Transaction construed as Sales

Instead secure a Work Order for manufacture, ransportation, loading / unloading, installation, commissioning & handing over the job foragreed contract price.

--

Transaction construed as Works Contract

9

Labour & Service charges Rs.150/-

Spares & Consumables Rs. 50/-

Spl. Sub-contractor Turnover Rs. 100/-

CONTRACT VALUE Rs. 1000/Contractees Material (on recovery basis) Rs.150/Construction Materials Local RD Purchases Rs. 100/-

Profit Rs. 100/-

Other Purchases

Factory supply Rs.100/-

Imports Rs.100/-

URD Rs.100/-

Outstation Rs.50/-

10

11

TAXATION CONCEPT UNDER TRANSITION

LST / CST concept with single point taxation scheme. Towards new concept VAT VAT VAT VAT VAT ! - Service Tax, Service Tax Inherently VAT provides for : Tax levy on multi-point basis; With eligibility of tax set-off; Set-off conceptually is broad based
12

TRANSITION

Service Tax

VAT CONCEPT
VAT as proposed shall come under the domain of respective State taxation jurisdiction. Obviously the existing State sales tax law will be replaced by STATE VALUE ADDED TAX ACT. VAT concept provides for tax levy at every stage of sale or resale instead present scheme of single point. However, VAT levy at every stage of sale / resale is restricted on the Value Addition of such goods.
13

VAT CONCEPT
VAT concept, however, provides an inbuilt mechanism for tax set-off which paid at the previous stage, be known as Input Tax Credit ITC.

to

ITC benefit under VAT concept covers input as well as capital goods to be availed by traders or manufacturers. paid tax of
14

ITC benefit can be availed only against local tax purchase document I.e., VAT vendor bill indicating component.

ITC benefit under VAT concept covers closing stock goods as on 31/03/2005, subject to conditions.

VAT CONCEPT ITC benefit in full to be allowed on local or Inter state sale. making

ITC benefit to an exporter of goods is allowed by way of refund. ITC benefit to a dealer effecting stock transfer will be allowed for an amount exceeding 4% of ITC. Under VAT concept the applicable rate of tax have been categorized in minimum numbers i.e., 0%, 1% , 4%, 12.5%.

15

VAT CONCEPT Under VAT concept a consolidated rate is prescribed and thus other levies to be abolished.e.g., Surcharge, TOT etc., Under VAT concept, however, levy of entry tax while permissible same to be made vatable. Presently CST Act 1956 dealing with Inter State transaction to remain undisturbed. Existing sales tax registration under State Act while to be replaced by a TIN number, CST registration will be the same. 16

WCT PAYMENTS SCHEME

ACTUAL BAISIS (ascertain Gross construction material value, supported by Books of Accounts & Proof)

COMPOUNDING BASIS 2% - 4% on Contract Value, Subject to certain conditions.

17

INPUT - LOCAL TAX PAID GOODS

LOCAL SALES IN TN

eligible for 100% ITC benefit

INTER STATE SALES FROM TN eligible for 100% ITC benefit EXPORT SALES FROM TN eligible for ITC full refund. STOCK TRANSFER FROM TN eligible for ITC exceeding 4% LOCAL MFG. GOODS FOR ABOVE DESPATCHES as above.

18

INPUT - CST PAID GOODS / IMPORTED

LOCAL SALES IN TN

eligible for 100% ITC benefit

INTER STATE SALES FROM TN eligible for 100% ITC benefit EXPORT SALES FROM TN eligible for ITC full refund. STOCK TRANSFER FROM TN eligible for ITC exceeding 4% LOCAL MFG. GOODS FOR ABOVE DESPATCHES as above.

19

FINANCIAL BURDEN TRADER Vs MANUFACTURER

20

TRADING ACTIVITY PRE & POST VAT REGIME

Sl. No Particulars PreVAT
Rs. 11 1 1 .1 1 .1 11 11 1 1 .1 Nil 11 1 1 .1 NA 11 1 1 .1 ... 11 1 1 .1 NA 1 .1 11

Post VAT
Rs. 1 .1 11

Remarks

1 Sale by X & Co 1 ST @ 11/ VAT @ 11 % .1 % 1 Resale price by Y& Co 1 ST @ Nil / VAT @ 11 . % 1 1 Gross sales price 1 VAT payable by Y&Co 1 Re-sale price by K&Co 1 ST @ Nil / VAT @ 11 . % 1 1 Final price to consumers 1 VAT payable by K&Co 1 Gross Tax Element 1

11 1 Manufacturer 1 .1 11 1 Wholeseller 1 .1 1 .1 11 11 1 1 .1 1 1( Rs. 11 - Rs. 11 ) .1 . 11 . 11 11 1 Retailer 1 .1 1 .1 11 11 1 1 .1 1 1(Rs. 11 - Rs. 11 ) .1 . 11 . 11 Tax Component higher % 1 .1 by 111 11
21

MANUFACTURING ACTIVITY PRE & POST VAT REGIME

Figure in Rs. S l. N o P rtic la a u rs P re VT A
1 1 1 . 11

Ps ot VT A
1 1 1 . 11

1 P c re e t C s ro u m n o t a In u ) p ts b C n u a le ) o s mb s 1 1 1 1 1 1 1 1 T xo P c re e t a n ro u m n M . C a e +P fit fg h rg s ro M . S llin P e fg e g ric S @ 11 A @ 11 T . %VT 1 / . % 1 In o eP e v ic ric V TP y le A ab G s T xE m n ro s a le e t T ta T x% o l a

*( 1 % ) (11 . % 1) 11 11 . 11 11 . 1 1 1 . 11 1 1 1 . 11 1 11 1 1 1 . 1 11 1 1 1 . 1 1 1 . 11 1 1 1 . 11 1 11 1 1 1 . 1 11 1 1 1 . 11 . 1 11 11 . 1 1 1 . 11 1 1 1 . 11 1% 1 1% 1 22

CONCEPT & SCHEME OF CST ACT

23

INTER STATE SALE

24

CLASSFICATION OF SALE LOCAL SALE INTER STATE SALE

25

INTER STATE SALES - CONCEPT Movement of goods from one State to another in pursuance of contract of sale

26

CST APPLICABLE RATE

2% generally for sale to registered dealer against C-Form VAT Rate of origin State will applicable if sale to unregistered dealers / without form 4% applicable to declared goods
27

( under CST Act)

Prohibition on State Act Changes w.e.f 11/5/02

28

Prescribed Declaration - CST Act

FORM - A

O T

FORM - J
29

FORM - C
ISSUE OF C-FORM - PURPOSE

Use in manufacture / processing of goods for sale Use in mining Use in generation / distribution of power Packing of goods for sale / resale Use in telecommunication
30

CLASSIFICATION OF INTER STATE SALE

Direct Inter State Sale A & Co Tamil Nadu Purchase Order 10 Nos. of Tractors Rs. 10 Lacs each Subsequent Inter State Sale A & Co Tamil Nadu Purchase Order 10 Nos. of Tractors Rs. 10 Lacs each

C & Co Karanataka

B & Co Andhra Pradesh

Purchase Order 10 Nos. of Tractors Rs. 9 Lacs each

B & Co 31 Andhra Pradesh

INTER STATE SALE DURING MOVEMENT OF GOODS - CST ACT (A)

Selling dealer ABBBlore (from outside TN) L&T - PO

C-

For m
(B)

A - ABB Blore B - Seller / Deemed Seller L&T C - Client NLC - TN

E Cer -1 tifi cate

L&T subsequent seller Effecting transit saleendorsement of LR

NLC - PO

Mo vem con sign ent of men t

C-F orm

(C)
NLC - client dealer receiving goods

CONTRACT CONDITIONS ELEMENTS

Directiv e of client

Contra ct nature Financial implicati on

Contract conditions Contract price

BASKET OF ELEMEN TS

Legal option eligibility Statute changes

Procureme nt policy Status of client

CONTRACT CONDITIONS - Effect on Indirect Taxes

BASKET OF ELEMENTS Contract nature Status of client Directive of client Contract conditions Contract price Price variation Procurement policy Legal option eligibility Statute - changes

Live contract conditions a over view

NTPC contract conditions Clause 8 It was confirmed by L&T that the contract price for the contract is inclusive of all taxes, duties & levies including service tax and NTPC shall not be liable to pay any Taxes, duties & levies for the items as per clause---------

Cont.

Clause 14.4 For the purpose of the contract it is agreed that the contract price specified in Article 2 (Contract price and Terms of Payments) of the contract agreement is based on the taxes, duties and levies and charges prevailing at the date 7 days prior to the last date of bid submission . If any rates of tax are increased or decreased , a new tax is introduced an equitable adjustment of the contract price shall be made to fully take into account any such change by addition to the contract price -------------

Contract conditions Vis--vis Vendor

Scope of Order - Terms & Conditions Intention Description of goods - As per PO Purchase price of goods Delivery instruction to seller Applicable rate of tax - Essential - as negotiated - Benefits

- Clarity Sourcing of goods from local/outstation vendors - Tax planning Providing of any declaration / certificate - Legal eligibility

Bidding Requirement

All Inclusive contracts Statutory variations payable / not payable Whether client issue any material If so, free issue or chargeable Any specific BOQ for supply value and client is capable of issuing form C. Whether any deemed export benefit is available for the project. Whether any fabrication will be carried out at site. Status of client viz. Non profit organization, Place of execution of work Scope of work to carried out. SEZ.

TAX PLANNING
PROCUREMENT PROJECT EXECUTION

40

PROCUREMENT STAGE

FROM LOCAL RD

FROM INTER STATE

FROM OWN SOURCE

Used as such

Transferred after Conversion

Against our C - Form

41

BOUGHT OUT GOODS

INTER STATE

INTRA STATE

CONCESIONAL RATE @ 2% AGAINST OUR C FORM

On value addition CONDITION For declared goods @ 4% ST only For others FULL Applicable Rate

42

43

EXECUTION STAGE Strategy will depend upon The State VAT scheme nature of job description of work Involvement/usage of material etc.,

44

STRATEGIES

Composition jobs (Rate 4 %) Vs Vat Payment on actual (12.5 %) Ascertain the material content Find out the proportion - 60 % or 30 % Availability in execution state and related landed cost Reduce CST Sale (from works & Transit sales) from purchases. Take the VAT credit Variations between 10% to 30 % -ideal to go for actual method
45

STRATEGIES Client C form against BOQ reduces WCT

Procurement plan need get changed if the job is under composition rate. Procure locally and adjust the VAT credit against CST sales Off load to Spl. Subcontractor.

46

SERVICE TAX - PROFILE

INTRODUCED IN JULY 1994 FINANCE ACT 1994 APPLICABLE THORUGHT COUNTRY - EXCEPT J&K. TAXABLE SERVICE BASE WIDENED - 114 SERVICES. RATE OF TAX GRADUATED - 5% > 8% > 10% > 12% OTHER LEVIES CESS 2% + 1% ( effective rate 12.36%) BENEFIT OF CENVAT & ABATEMENT AVALIABLE. COMPREHENSIVE LEGISLATION FOR SET-OFF CENVAT CREDIT RULE 2004. 10TH SEP 2004.
48

Cont

SERVICE TAX - PROFILE

ON RENDERING SERVICES TO OTHERS ON DEEMED TAXABLE SERVICES EG., GTA TAX PAYABLE ON RECEIPT OF PAYMENT

MAJOR CHANGES OR ADMINISTRATION ROUTED THROUGH NOTIFICATIONS. NO SPECIFIC STATUTE TO ADMINISTER SERVICE TAX

****

49

CENVAT CREDIT

50

CENVAT CREDIT BENEFICIARY

Manufacturer
( Factory)

Service Provider (Premises) ELIGIBLE BENEFITS

Duty/s on any input & capital goods Including job workers activity Education CESS Service Tax {10 th September 2004}

INPUT SERVICE - SCOPE INPUT SERVICE TO BE USED BY :

Manufacturer of final product. Provider of taxable services Including such services used for Setting up of, modernization, renovation or repairs of factory, premises of provider of output services or an office relating such factory or premises etc., activities relation to business eg., accounting , auditing etc., inwards transportation of inputs or capital goods and outward transportation upto place of removal. Advertisement or sales promotion, marker research

CENVAT CREDIT - ELIGIBILITY

A manufacturer of finished product can avail CENVAT : Of ED on input / capital goods on its receipt in factory Of Tax on effecting payment to service provider. A provider of output service can avail CENVAT : Of ED on input / capital goods on its receipt in factory Of Tax on effecting payment to service provider. Full input tax credit available for listed services partially used for exempted manufacturing / services. U/R 6(5)

CENVAT CREDIT - UTILISATION

Towards payment of ED on Final product Towards payment of CESS through CESS credit. Towards payment of Service Tax output service Towards removal of inputs / capital goods as such reversal Towards payment of ED on partially finished goods. Towards removal of goods - not manufacturing reversal Towards payment of ED on export Eligibility of rebate

CENVAT CREDIT - DISTRIBUTION

CENVAT distribution is restricted to tax component. Distribution of CENVAT can be effected by an office of manufacturer or service provider. Such distribution shall be in relation to taxable output service of recepient unit. Eligibility of distributed credit can be availed unless covered by documents as recognised. Cross distribution of credit is prohibited. Registration is mandatory for Service Tax distributor

CENVAT CREDIT - RESTRICTIONS

CENVAT credit for capital goods not available incase benefit under IT Act availed. Benefit not available for ED exempted product. Benefit not available for exempted output service. Benefit of 20% of tax payable alone allowed for admix output service.

CENVAT CREDIT - RESTRICTIONS

Benefit not available on LDO, HSD & Petrol. Benefit not available for Motor vehicle in general. Benefit of ED not available to service provider opting benefit of specific notification.eg. 12/2003; 15/2004 Benefit eligibility is restricted to accumulated credit available

*****

58

 What is "Central Excise Duty ?

Species Taxes of Indirect

Duty is levied by Central Government

59

Basic condition for imposing the Excise Duty

Manufacturing activity

Emergence of a new commodity

Goods shall be movable

60

Goods shall be marketable Goods manufactured in India Its description conforms an entry in the CET Act 1985.

CH 73.08.90 Steel structures

61

CENTRALEXCISE
u Site Activities
Fabrication of structurals Fabrication of others (Pipes, Ducts,

Chutes, Cable Trays etc.)

Erection / Commissioning
62

MANUFACTURING
- INCLUDES !

MANUFACTURING

PRODUCTION FABRICATION CONVERSION REAPAIRING

63

ED Transaction Value
Negotiated price Captive consumption Cost of Design & Drawings Free issue materials Freight

64

DEEMED EXPORT BENEFITS UNDER EXIM POLICY

Deemed Exports

Deemed Export
Deemed Exports refers to those transactions in which the goods supplied do not leave the country and the payment for such supplies is received either in Indian rupees or in free foreign exchange.

Deemed Exports

Category of supply 8.2 - Deemed Export

8.2 (d) Any Project

8.2 (g) Power Projects & Refineries

Category of supply CH: 8.2

8.2 (j) Nuclear

8.2 (f) Any Project

Deemed Exports

Categories of Supply 8.2 (d)

Supply of goods to projects financed by multilateral or bilateral agencies/funds as notified by the Department of Economic Affairs, Ministry of Finance under International Competitive Bidding in accordance with the procedures of those agencies/ funds, where the legal agreements provide for tender evaluation without including the customs duty; Supply and installation of goods and equipment (single responsibility of turnkey contracts) to projects financed by multilateral or bilateral agencies/funds as notified by Department of Economic Affairs, Ministry of Finance under International Competitive Bidding in accordance with the procedures of those agencies/funds, which the bids may have been invited and evaluated on the basis of Delivered Duty Paid (DDP) prices for the goods manufactured abroad

Deemed Exports

Benefits for Deemed Export For any/all of the following Exports benefits in respect of manufacture and supply of goods. (a) Advance Authorization (b) Deemed Export Drawback. (c) Exemption from terminal excise duty where supplies are made against International Competitive Bidding. In other cases, refund of terminal excise duty will be given.

Deemed Exports

Sl. No 1

Category of Supplies

Benefits

Conditions

8.2 (d) Any Project All three benefits are Projects on ICB basis, available Projects funded by such agencies notified by Dept. of Economic Affairs, MOF ( Appex- 13) Tender evaluation as per the legal guidelines given by the funding agencies and also to be evaluated on delivered duty paid prices for the goods manufactured abroad. ICB procedures have been followed at 8.2 (g) Benefits listed under Power Projects & (a) and (b) only independent power producer ( IPP) / available Refineries Engineering, Procurement Contracts (EPC) stage For availing benefit listed under (c) ie., TED. Mega power projects as listed in Customs Noti. 21/2002. Inter State Power plant For Thermal Power Plant (1000 MW or more) For Hydel Power plant ( 500 MW or More) Power purchase agreement is required, as specified central electricity authority.
Deemed Exports

Sl. No 3

Category of Supplies

Benefits

Conditions

8.2 (j) All the 3 benefits are Procedure of competitive bidding has been followed available Nuclear projects ( not ICB). Nuclear projects specified in list 43 at Sl.No. 401 of Notification 21/2002 customs. Capacity of 440 MW or more certified by an officer not below the rank of Joint Secretary to the Govt. of India in the Dept. of Atomic Energy. 8.2 (f) All the 3 benefits are Projects on ICB basis. available Zero customs duty benefit as accorded by customs Any Project notification. Similarly the same benefits are also available for clearing goods with Nil Excise duty. This benefit is as per CEA 1944.

Deemed Exports

Advance Authorization Scheme - at a glance

An Advance authorization is issued to allow duty free import of inputs

Such Inputs to be physically incorporated in the export product. Fuel, Oil, Energy etc., which are consumed / utilised in the course of their use to obtain the expert product. Advance authorization are issued on the basis of the inputs and export items given under SION. Advance authorization can be issued either to manufacturer exporter or merchant exporter tied to supporting manufacturer... (1) (2) (3) (4) For Physical Exports For intermediate suppliers and To the main contractor for supply of goods to the 8.2(b), (c), (d), (e) (f), (g), (i) & (j) of the policy. Supply of goods to specified project mentioned in 8.2(d),(e), (f), (g) & (j) of the policy. Deemed Exports

Advance Authorization Scheme - at a glance

An Advance authorization can also be availed by the subcontractor of the main contractor to such project provided the name of the subcontractors appears in the main contract.

Such Authorization can also be issued for supplies made to United Nations or other multilateral agencies and paid for in free foreign exchange.

Advance Authorization is issued for duty free import of inputs are exempted from payment of basic customs duty, additional customs duty, education cess, anti dumping duty and safeguard duty if any.

However imports for supplies covered under 8.2 (i) & (j) will not be exempted from payment of applicable anti dumping and safe guard duty if any.

Deemed Exports

74

COMMERCIAL & INDUSTRIAL CONSTRUCTION SERVICE

75

CATEGORY OF SERVICES IMPACT ON US

Sl.N o 1 Taxable Service - our scope Effective Date Comments

2.

Construction services 10th Sep Our sales prior to excluding: 2004 10th Sep. 04 not liable to tax. Road, Airport, Railway, Transport terminal, bridge, Sale turnover of tunnel, long distance listed jobs qualifies for pipeline, dam full exemption Commercial & Industrial 16th June Scope modified Construction services 2005 Following addition made: Const. of pipeline or excluding : conduit, finishing services Road, Airport, Railway, viz., glazing, plastering, Transport Terminal, bridge, painting, floor and wall tunnel, long distance pipe tiling, wall covering and line dam. Further addition wall papering etc., made
76

Cont..

EXTRACT FROM SERVICE TAX NOTIFICATION 1/2006 DT. 1/3/2006

Sl.N Description of Taxable Service o

Conditions

Percenta ge

(zzq) Commercial or industrialExplanation.- The gross construction service. Thisamount charged shall exemption shall not apply ininclude the value of such cases where the taxablegoods and materials services provided are onlysupplied or provided or completion and finishing servicesused by the provider of in relation to building or civilthe construction service structure, referred to in sub-for providing such clause (c) of clause (25b) ofservice. section 65 of the Finance Act.

33

77

SERVICE TAX TAXABLE FEATURES

ON RENDERING SERVICES TO OTHERS ON DEEMED TAXABLE SERVICES EG. GTA PAYMENT OF TAX ON RECEIPT OF AMOUNT

78

CONSTRUCTION ACTIVITY - SERVICE TAX

Sl. No. 1 2 3 4 5 6 Service Commercial or Industrial Construction services Erection, Commissioning or Installation Services Construction of Complex services Site, Formation, Clearance, Excavation, Earthmoving and Demolition services. Works contract services. Goods Transport Agency service. w.e.f 10/9/2004 1/7/2003 18/4/2005 16/6/2005 1/6/2007 1/1/2005
79

COMMERCIAL OR INDUSTRIAL CONSTRUCTION SERVICE

Commercial & Industrial Construction services excluding : Road, Airport, Railway, Transport Terminal, bridge, tunnel, long distance pipe line dam. Port

Scope modified Following addition made: Const. of pipeline or conduit, finishing services viz., glazing, plastering, painting, floor and wall tiling, wall covering and wall papering etc.,

80

s In tal lat
Service Tax

Er

ect i

on ,

Commissioning.
81

ion ,

Sl.N o

CATEGORY OF SERVICES IMPACT ON US

Taxable Service - Our Scope Effective Date

Comments

1 Commissioning & installation of 1st July 2003 Plant & Machinery and equipment 2. Erection, Installation & Commissioning Plant & Machinery and equipment 3 Erection, Installation & Commissioning Plant & Machinery and equipment Further additions made. 10th Sep 2004

Exclusive of erection.

Scope widened by inserting Erection w.e.f 10/9/04

Following addition made : Electrical and electronic, wiring, Plumbing, Heating, ventilation or A/c Lift and escalator, Fire insulation, Thermal insulation, sound insulation, fire proofing, & water proofing. With effect from 01/05/06.
82

16th June 2005

4 Erection, Installation & Commissioning Plant & Machinery and equipment Further additions made.

Proposed Union Budget 2006-2007

Cont..

EXTRACT FROM SERVICE TAX NOTIFICATION 1/2006 DT. 1/3/2006

Sl.No

Description of Taxable Service

Conditions

Percentage-

(zzd) Erection, commissioning orExplanation.- The gross mount installation, under a contract forcharged from the customer supplying a plant, machinery orshall include the value of the equipment and erection, commissioningplant, machinery, equipment, or installation of such plant, machineryparts and any other material or equipment. This exemption is optionalsold by the commissioning and to the commissioning and installationinstallation agency, during the agency. course of providing erection, commissioning or installation service.

33

83

Erection, Installation or commissioning

Erection, Commissioning or Installation means any service, provided by a commissioning and installation agency in relation to commissioning or installation of plant, machinery or equipment; and pre fabricated structures.
erection, commissioning or installation of plant, machinery, equipment or structures, whether pre-fabricated or otherwise; or (ii) installation of (a) electrical and electronic devices, including wirings or fittings therefor; or (b) plumbing, drain laying or other installations for transport of fluids; or (c) heating, ventilation or air-conditioning including related pipe work, duct work and sheet metal work; or (d) thermal insulation, sound insulation, fire proofing or water proofing; or (e) lift and escalator, fire escape staircases or travelators; or (f) such other similar services;
84

GOOD TRANSPORT AGENCY SERVICE

85

GOODS TRANSPORT AGENCY SERVICE

In general service tax is payable by the service provider except Goods transport agency Service tax for GTA is payable by party conforming to conditions list Service tax @ 12.24% on 25% of the Gross freight charges without the benefit of CENVAT. Eligible exemption Freight charges Rs. 1,500/- for full consignment and Rs. 750/- for part consignment.

86

Cont..

Service Tax Goods Transport Agency Taxable Person

Sl.No 1 2 3 4 5 Consignor Specified Categories Specified Categories Specified Categories Specified Categories Individual Consignee Specified Categories Specified Categories Individual Individual Individual
Payment to goods transport agency by

Taxable Person Consignor Consignee Consignor Goods transport agency Goods transport agency

Consignor Consignee Consignor Individual Made by any of the person ie., either
consignee or consignor

fied Categories : 1) Factory 2) Company 3) Corporation 4) Society 87 5) Co-operative society 6) Dealer of excisable goods, 7) Any body corporate established, or a partnership firm registered

-SERVICE TAX NEW SERVICES -wef 01/06/207

WORKS CONTRACT SERVICES

A) B) C) D) Erection, commissioning or installation Construction of a new building or a civil structure Construction of a new residential complex Turnkey projects

But

excluding works contract in respect of roads, airports, railways, transport terminals, bridges, tunnels and dams, & Port

88

WORKS CONTRACT SERVICES

-wef 01/06/207

a) Erection, commissioning or installation. b) Construction of a new building, a civil structure, a part thereof, pipeline or conduit. c) Construction of a new residential complex. d) Completion & finishing services, repair, alteration relating b) & c) above. e) Turnkey projects including EPC projects (Excluding : a) Roads b) Airports
c) Railways d) Transport terminals e) Bridges f) Tunnels g) Dams & h) Ports

89

Exclusions
Works contract relating the following works are not taxable :a) Roads b) Airports c) Railways d) Transport terminals e) Bridges f) Tunnels g) Dams & h) Ports
90

Discharge of Service tax on Works Contract Services

On Actual basis
1) 2) CONTRCT PRICE LESS SALE PRICE OF GOODS CONTRACT PRICE LISTED DEDUCTIONS

On Composition basis

91

12.36% ON FULL CONTRACT PRICE CENVAT benefit - ED/ ST (No restriction)

12.36% on 33% CONTRACT PRICE CENVAT benefit - ST (with restriction)

12.36% ON CONTRACT PRICE Less SALE PRICE OF THE GOODS: CENVAT benefit ST (with restriction)

4..12% ON CONTRACT PRICE CENVAT benefit ST

Commercial Construction Construction of Complex Ere, Instln. or Commg.

WORKS CONTRACT SERVICES wef. 1/6/07 includes

Commercial Construction Construction of Complex (including finishing services) Ere, Instln. or Commg. 92 EPC Contract

Renting of Immovable property w.e.f 01/06/2007 Renting of immovable property for use in the course or furtherance of business or commerce Renting of immovable property includes :renting; letting; leasing; arrangement. licensing or other similar

Use or furtherance of business or commerce include : Use of immovable property as Factories Office buildings, Warehoused, Theatres, Exhibition halls Multiple use building

Immovable property includes : Building and part of building, Land adjourning to the above buildings. The common areas and other facilities Building located in a complex or an industrial estate,

Renting of Immovable property does not include : Renting to a religious body or by a religious body Renting to an educational body, imparting knowledge or skill other than a commercial training or coaching centre.

ST exemption on following Immovable properties : Land used for agriculture, aquaculture, farming, mining purposes Land used for educational, sports, circus, entertainment and parking purposes Building used exclusively for residential purposes. Building used for purpose of accommodation, including hotels, hostels, boarding house, holiday accommodation, tents, camping facility.

Partly used immovable property

In case immovable property used for business or commerce and partly for residential purposes

deemed to be immovable property used for business or commerce It will attract Service tax on entire value

Relating to our operations

Letting of building to JVs and other group companies even if it is book adjustment Payment of Rent of our business operations viz. RO, Site office, yard, Godown, pre-cast yard CENVAT may be availed Payment of rent to transit house issue of concern ! GOI clarification is expected.

Manpower recruitment or supply agency service Manpower recruitment

07/07/1997

16/06/2005 Scope modified

By any person providing any service directly or indirectly Service are provided or to be provided to a client In relation to recruitment or supply of manpower, temporarily or otherwise Scope includes :
Pre recruitment screening, verification of credential & antecedents of candidate and authenticity of the documents by the candidate.

Amendment An analysis
On 16/06/2005
Man power recruitment or supply agency service. Due to amendment supply of man power also comes in the fold of levy.

On 18/04/2006
Commercial concern becomes person Due do this amendment any person rendering will have to pay service tax.

OUR OPERATIONS - implications Service care Deputation of staff to JV / SPV Transfer of employee to S&A companies As per valuation rules any amount collected or books adjustment / D/n or C/n will attract service tax for supply of man power.

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Purchased Purchas CST / Tax on Total Profit TTO VAT ITC Net Rem from e VAT Purcha purchas 10% VAT arks value Rate se e cost Payabl for VAT e A) Cement Mah - CST 500000 2.00% 10000 510000 51000 561000 70125 0 70125 B) Cement Kar - Local- 300000 12.50% 37500 300000 30000 330000 4125037500 3750 RD C) Cement Kar - Local 200000 12.50% 25000 200000 200000 52000 Pre cast d) Steel Kar - Local- 700000 4.00% 28000 700000 70000 770000 9625028000 68250 RD Steel Kar - Local 300000 4.00% 12000 300000 300000 12000 Pre cast e) Cement AP - CST 500000 2.00% 10000 510000 510000 0 Pre cast f) Metal/ Sand Kar - Local- 300000 4.00% 12000 300000 30000 330000 4125012000 29250 RD g) Metal/ Sand Kar - Local 200000 0.00% 0 200000 20000 220000 27500 0 27500 -URD h) Metal/ Sand Kar - Local 200000 0.00% 0 200000 200000 0 Pre -URD cast i) Coversion 300000 Cost Total Pre 151000 20762 37000 17062 Pre cast value 0 5 5 cast 106 10% profit 151000 on precast

Sl. Description No

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