Service tax reckoner


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Service tax reckoner

  1. 1. India Newsflash Reckoner on Service Tax Liability BackgroundWith the Union Budget 2012, the finance minister has ushered in wide sweeping changes in the servicetax regulations. Most important of them being the so called “negative list” which renders almost allservices barring few, taxable under service tax law.With the proposed changes, we see a lot of confusion and panic in the business community, this moveaffects both the receivers and the providers of service in India. In light of these facts we have producedthis easy guide, which will help you determine if you need charge service tax or not.We hope this is of great use to you and your organization. CoverageUnder the new provisions a service is defined as “Any activity carried out by a person for another forconsideration, and includes a declared service”Explicit exclusions from the definition are :• Transfer of title in goods or immovable property• A transaction in money or actionable claim• Service by an employee to the employer• Fees taken by any courtHence if your company is involved in any “activity” you are liable to pay service tax unless youfulfill any one of the following criterion. Turnover Below LimitsAssesses ( individuals, Companies, firms) with an annual turnover less than Rs 10 lakh areexempt from charging service tax. from their customers.However once the turnover exceeds the specified limit, the company would have to register underthe act and collect taxes.
  2. 2. India Newsflash Service in Negative ListServices covered under the so called “Negative list” are exempt from service tax, these services areServices provided by Government Authorities ManufacturingServices provided by Reserve Bank Of India Entertainment events and Amusement facilities(“RBI”)Services provided by Foreign Diplomatic Games of chance ( betting, gambling and lottery)MissionServices by way of renting of residential Education ( pre-school, vocational anddwelling for use as residence recognized qualifications)Trading of goods Toll ChargesGoods Transportation ( except goods Interest on loans and advances and interbanktransportation agency and courier agency) forex trading Public Transport (Stage carriage, railways ( except first class and AC coaches), Metro/trams,Sale of space or time for advertising ( other than inland waterways, transport in a vessel of lessradio and television) than 15 tonnes ( other than for tourists), metered cabs, radio tax, auto-rickshaws.Electricity Transmission and Distribution Funeral ServicesAgriculture and related activities Services in General ExemptionsServices provided to United Nations or specified Health care services by a clinical establishment,International Organizations medical practitioner or Para- medics Services by a section 12AA entity for charitableServices provided by veterinary clinic purposes Services by a person by way ofServices of technical testing of drugs by • Renting of a religious place for general publicapproved organization • Conduct of religious ceremonyFee charged by Advocates from non corporates, Training or coaching relating to arts, culture orfee for representation before tribunals sports
  3. 3. India Newsflash Services in General Exemptions (Cont.)Services provided Temporary transfer of a copyright relating to•To educational inst. by way of catering original literary, dramatic, musical, artistic•To educational inst. for transportation or works or cinematograph filmsadmission of students Services by way of sponsorship of tournamentServices provided to recognized sports body or championships Services provided by way of erection ,Services provided to govt. or local authority by construction, repair, alteration , renovation ofway of erection , construction, repair, alteration , roads, bridge, tunnel , building owned byrenovation of civil structure, historical charitable organization, pollution control factorymonument etc. etc.Services provided in relation to serving of food Renting of motor vehicle meant to carry moreor beverages by units not having air- than twelve passengers to state transportconditioning/heating or a license to serve undertaking and, a means of transportation ofalcoholic beverages goods to a goods transport agencyServices by way of renting hotels, inns or places Services by way of motor vehicle parking tomeant for residential or lodging purposes. general public excluding leasingTransport of passengers by air terminating in an Services provided by GTA by way ofairport located in AP, Assam, Manipur, transportation of fruits, eggs, milk etc. whereMeghalaya, Mizoram, Nagaland, Sikkim, or gross amount charged for single carriage doesTripura or WB or contract carriage for not exceed Rs 1500 and for a single consigneetransportation of passengers does not exceed Rs 750Services of slaughtering of bovine animals Services of general insurance businessServices to govt. by way of repair of ship, boat ; Services of collecting and providing newswaste collection; storage , transport or testing of rendered by independent journalists, Press Trustwater; sewerage treatment of India or United News of IndiaServices by performing artist in folk or classical Process as job worker in relation to specifiedart forms goodsServices by way of making telephone calls from Service provided by incubatee with a totalPCO, Airport phones etc. business turnover not exceeding 50 lakhsServices received by govt. or charitable Services by unincorporated body or society toorganization from service provider located in own members by way of reimbursements ofnon-taxable territory. charges or contributionServices provided by Sub broker , Member ofcommodity exchange , Mutual fund agent, Services provided by way of transportation of 9Marketing agent of lottery tickets or A business specified goods by railways or by a vessel.facilitator
  4. 4. India Newsflash Declared ServicesNotwithstanding any other factors. Services in the declared services list ARE taxable under theprovisions of service tax. These have been specified with a view to remove ambiguity inapplication of law. The services under this list are : Activity in relation to delivery of goods on hireRenting of immovable property purchase.Construction of complex, building or structure Agreeing to the obligation to refrain from ,toor a part thereof except where entire tolerate, to do an act. Including no competeconsideration is received after issuance of clauses in Contractscertificate of completion.Temporary transfer or permitting the use of Development, design, programming, adaptationenjoyment of any intellectual property right. etc. of information technology softwareTransfer of goods by way of hiring, leasing, Service portion in activity wherein food, otherlicensing without transfer of right to use. article of human consumption is supplied.Service portion in execution of works contract.
  5. 5. India NewsflashDISCLAIMER: This paper is a copyright of Arkay & Arkay, Chartered Accountants. Noreader should act on the basis of any statement contained herein without seekingprofessional advice. The finance bill is pending parliamentary approval and may undergosubstantial changes. The authors and the firm expressly disclaim all and any liability to anyperson who has read this paper, or otherwise, in respect of anything, and of consequencesof anything done, or omitted to be done by any such person in reliance upon the contents ofthis paper.Suite 1101,KLJ Towers, NSP,Delhi -110034 IndiaTel : +91 9910124927Fax : +91 11 27940068Email :