Service tax regn and applicability

Dear sir,

First you have to see whether the service provided by your client is a taxable service or not.For that you have to look into the exact nature of activity. From your querry it is not clear whether the client is a individual or not. Whther he issue a consignment note.

Two conditions to be satisfied to attaract tax is :-

1 the client must be commercial concern ( Not individual)
2. The client issues consignment Note.

If these conditins are not satisfied there is no service tax.

Now in the budget 2006, some changes are brought in. The condition of the client being a commercial concern is done away with. Now even individual will be liable wef the date to be notified after the enactment of finance Bill, 2006.

Moreover, the requirement of issue of consignement note to attract tax is also in a confusion. CBEC has clarified to HPCL that non issue of consignment Note cannot be a ground for non payment of tax. CBEC says that Rule 4 B of service tax rules 1994 says it is a liability on the part of GTA to issue consignment Note.

Considering these two issues , it is going to so happen that all are going to pay tax. FM in Budget 2005, stated that there will be no tax on truck owner etc. but through these changes his words are given a go by.

It also well settled that a circular is not binding on the assessees.

You please get in touch with these.

After that we will discuss in detail.

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regarding TDS, you are liable to dedct TDS at 2%+cess.

Thanks for your mail i will come back