- Three New Services in tax net (including Doctors and Advocate partially)
- Expansion of tax net in two service
- Stock exchanged Sub-Broker excluded form tax net
- Works Contract Service Composition Scheme to include value of material provided by Recipient.
- Refund to Exporters reformed
- Exemption to certain association
- Exemption to Tour Operator
- Extension of territorial jurisdiction.
- CENVAT reversal in case of provision/write off.
- Retrospective amendment to ITSS and GTA exemption notification
- Change in mechanism in revision of orders by commissioner
- Advance Ruling by Income Tax Act
- Transport of coastal goods and goods through National Waterways and Inland Water
- Cosmetic and plastic surgery service
- Legal consultancy service.
- This service aims at taxing any service provider or to be provided by any person to any other person in relation to transportation of the under mentioned
- coastal goods or
- goods through national waterway; or
- goods through inland water or
- The costal goods means goods transported in a vessel from one port in India to another (other than imported goods) as given under section 2(7) of the Customs Act, 1962.
- This services aims at taxing any service provided or to be provided in relation to cosmetic surgery or plastic surgery. However this service does not intended to tax surgeries undertaken to restore or reconstruct anatomy or functions of body affected due to congenital defects, developmental abnormalities, degenerative diseases, injury or trauma. Generally these processes could be undertaken to correct impairment caused by burns, fractures or congenital abnormalities like cleft lip etc. TRU circular also provides the indicative surgeries that can be taxed under this service listed as under
- Buttock augmentation and lift;
- Rhinoplasty (reshaping of nose);
- Otoplasty (ear surgery);
- Rhytidectomy (face lift);
- Liposuction (removal of fat from the body);
- Brow lift;
- Cheek augmentation;
- Facial implants;
- Lip augmentation;
- Forehead lift;
- Cosmetic dental surgery;
- Orthodontics;
- Aesthetic dentistry;
- Laser skin surfacing
- This service aims at taxing any service provided or to be provided to a business entity, by any other business entity, in relation to advice, consultancy or assistance in any branch of law. For the purpose of this service business entity includes an association of persons, body of individuals, company or firm. Individual here is excluded, However if the individual providing the service from his proprietor concern can be excluded has to be examined. This service excludes any service provided by way of appearance before any court; tribunal or authority shall not amount to taxable service. This service is wide enough to cover not only advocates but also any person (entity) providing such service.
- It is very important to highlight here is Chartered Accountants/Cost Accountants/Company Secretary are exempted for any service provided in relation to representing the client before any statutory authority in the course of proceedings initiated under any law for the time being in force. Therefore the services such as reply to show cause notice, collection of facts or preparation of statements for the purpose of the notice etc are also exempted along with the appearance fee. However this service excludes only appearance fee and not other services.
- The table below provides the various situations and their taxability.
Sl. No.
|
Service provider
|
Service Receiver
|
Taxability
|
1.
|
Individual
|
Entity
|
Non-taxable
|
2.
|
Entity
|
Individual
|
Non-taxable
|
3.
|
Individual
|
Individual
|
Non-taxable
|
3.
|
Entity
|
Entity
|
Taxable
|
- Finance Bill 2009 (No.2) intends to tax by amending the “transportation by rail in container service” to extend the scope of taxable service beyond transportation in a container by a person other than Indian Railways. In other words goods transported by Indian railways in any form are now intended to be taxable with this finance bill.
- Production or processing of goods for or on behalf of a client was covered under Business Auxiliary service. However the service/process that amounts to manufacture in terms of provision of central excise was excluded. Earlier the product like liquor which is not excisable goods (Subject to state excise) was not taxable if the process was amounting to manufacture. In this finance bill it is proposed to amend this service to exclude only excisable goods that amounts to manufacture. Therefore the non-excisable goods that are manufactured for or on behalf of the client attract service tax.
- Finance Bill 2009 (No.2) has proposed to amend the stock broker service to exclude the taxable service provided by a sub-broker form the tax net. This amendment is proposed in view of the SEBI regulation that only the main broker can issue the contract note, so main broker collects the commission and pays the tax on the same, then passes some share as agreed to the sub-contractors which is now exempted from the tax net. TRU circular has also clarified that such consideration received by the sub-contract are also not taxable under Business Auxiliary Service)
- Information technology software service taxed “acquiring the right to use the information technology software ….” Now Finance Bill 2009 (No.2) proposes to amend the same to “providing right to use….” This change is proposed to be amended with effect from 16.05.2008.
- The provision of revision of order by commissioner of Central Excise is provided in section 84 of the Finance Act
- In view the proposed amendment to the provision of revision of orders by CCE, it is proposed that order passed by CCE under section 84 cannot be appealed to CESTAT
- Section 94 has been amended to extend the power of Central Government to make rules the date for determination of rate of service tax and the place of provision of taxable service.
- Section 95 of the Finance Act provides powers to remover difficulty in implementing the new service have been amended to include Finance (No.2) Act 2009.
- Section 96A (a) has been amended to changed the Advance Ruling Authority to that of the Income Tax Act.
- Notification 1/2009-ST dated 05.01.2009 provided exemption for the certain service provided to GTA. This notification has been given retrospective effect for clearing the pending cases and also refund for the service tax paid is also provided.
- Notification has been issued to specifically exempt certain association from tax net. The taxable service under clubs and associations provided by the specified associations are not taxable with effect from 07.07.2009 till 31.03.2010.
- Notification 41/2007-ST as amended provided exemption of service tax by way of a refund to certain input services that are used by the exporter for exporting the goods. This notification has aimed at providing better procedure and facilitates refund easily.
- Exporters are exempted from paying service tax on the goods transport agency service and business auxiliary service (Commission paid to person outside India) in relation to exported goods subject to conditions and procedure specified. In both the cases exporter himself is the person liable to pay tax in terms of Rule 2(1)(d) of the Service Tax Rules, 1994
- This notification provides exemption for the taxable service provided by one schedule bank to another schedule bank falling under “Banking and other Financial Service” and “Forex Service”.
- The notification provides exemption from payment of service tax by a tour operator having a contract carriage permit for inter-state or intrastate transportation of passengers, conducted tours, charter or hire service. (excluding tourism)
- Notification No. 1/2002-ST has been amended to extend the provisions of Chapter V of the Finance Act, 1994 to installations, structures and vessels in the entire Continental Shelf of India and Exclusive Economic Zone of India. Therefore services provided to or from SI and EEZ of India would be covered within the ambit of the provisions relating to service tax.
- The Taxation of Service (Provided from outside India and received in India) Rules 2006 commonly known as import of service rules has been amended to extend the definition of India to include installations, structures and vessels in the entire Continental Shelf of India and Exclusive Economic Zone of India.
- Any person providing works contract service could have opted for payment of special composition rate of 4.12% instead of the normal rates. Explanation to Rule 3 of Works Contract (Composition scheme for payment of service tax) Rules 2007 provide the valuation for the purpose of charging service tax on such value. This explanation has been amended to included the following
- The valuation shall exclude
- However valuation under this notification shall be applicable only in case of contract entered/payments received after 07.07.2009.
- Rule 3(5B) of the CENVAT credit Rules, 2004 has been amended to give effect to the provision in case the value of any input, or capital goods before being put to use on which CENVAT Credit has been taken is written off fully or where any provision to write off fully has been made in the books of account, then the Service provider shall pay an amount equivalent to the CENVAT credit taken in respect of the said input or capital goods. Earlier this rule was restricted to manufacturer only.
- The Rule 6 provides for reversal of the credit in case the service provider is providing both taxable and non-taxable service. One of the options in case of non-maintenance of separate records is reversal of 8% of the non-taxable turnover. This has been reduced to 6% with effect from 07.07.2009
(For any queries or clarification mail to vssudhir@gmail.com)