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New Service Tax Regime on Negative List applicable from 1st July 2012

The Central Government vide Notification No. 19/2012-ST dated 05.06.2012 has announced Date of Introduction of new regime of most awaited Negative List approach in Service Tax, which will apply w.e.f. 01.07.2012 i.e. service tax would be applicable on all services except those mentioned either in the Negative List or in the Mega Exemption vide Notification No. 12/2012-ST dated 17.03.2012.

Further, the Following new Sections have been inserted for governing the Service Tax Legislature:-

1. Section 65B – Definitions/ Interpretation of various Terms.

2. Section 66B – Charge of Service Tax à This is the new charging section of service tax. This section seeks to levy service tax at the rate of 12% on the value of all services, except services specified in the negative list (in section 66D). These services would be chargeable to tax if these are provided by any person to any person.

3. Section 66C – Determination of Place of Provision of Service à This seeks to empower the Central Government to make rules which will contain principles on the basis of which taxing jurisdiction of a service can be determined. These rules would be known as Place of Provision of Services Rules, 2012. From 01.07.2012, these rules come into effect, existing ‘Export of Services Rules, 2005’ and ‘Taxation of Services (Provided from outside India and received in India) Rules, 2006’ will be rescinded.

4. Section 66D-Negative list of Services à This seeks to specify  the  list  of  such services which will be outside the ambit of service tax.  

5. Section 66E – Declared services à to charge service tax on service portion of 9 specified Deemed Sale.

6. Section 66F – Principles of interpretation of specified description of Services or bundled Services.

7. Changes in reverse charge mechanism vide Notification no. 15/2012-ST dated 17.03.2012 & Changes in abatement rates vide Notification no. 13/2012-ST dated 17.03.2012 à effective from 1stJuly 2012.

8. Mega Exemption Notification vide Notification no. 12/2012 –ST dated. 17.03.2012 à effective from 1st July 2012.

9.Valuation for works Contract Services vide Notification no. 11/2012-ST dated 17.03.2012 àeffective from 1st July 2012.

Certain provisions under the old Sections will cease to operate from 01.07.2012 vide Notification no. 20/2012-ST, 21/2012-ST, 22/2012-ST and 23/2012-ST dated 05.06.2012:-

1. Section 65 – Definition of Taxable Service

2. Section 65A – Classification of Taxable service

3. Section 66 -Charge of Section Tax

4. Section 66A – Charge of Service Tax on Services received from outside India

Hope the information will assist you in your Professional endeavors. In case of any query/ information, please do not hesitate to write back to us.

Bimal Jain

FCA, ACS, LLB, B.Com (Hons)  

Email: bimaljain@hotmail.com  

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Category Service Tax, Other Articles by - Bimal Jain 



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