Positive and Negative lists under service tax under the older regime of indirect taxes in India.

1. CA. SANJEEV MALHOTRA
FCA, FCS, AICWA
1
Amendments - Service Tax
NEGATIVE LIST OF TAXATION
AND
POINT OF TAXATION RULES

2. CA. SANJEEV MALHOTRA
FCA, FCS, AICWA
2
Negative List of Taxation - Background
 Ist Concept Paper on 31 August 2011
 Overwhelming response for negative list basis.
 Long +ve list is prone to legal disputes and not
conducive to tax administration.
 Opinion divided on timing of implementation
 Along with GST implementation
 Before GST implementation.
 Issue of Services, Goods, Luxury and
Entertainment is an independent issue.

3. CA. SANJEEV MALHOTRA
FCA, FCS, AICWA
3
Definitions
 Service means “ anything which does not constitute supply of
goods, money or immovable property”
 Thus service would exclude value of deemed sales as well.
 Status of transfer of Right to use goods like Royality.
 Charged on value of services provided or to be provided by a
taxable person to another person.
 Taxable person means “ any person who independently carries
out any economic activity, whether or not for profit.
 Employees under contract of employment - no independent
economic activity. – teachers on overtime. – Compare it under
provisions of Income Tax Act, 1961.
 Economic Activity means for consideration – Free not covered.

4. CA. SANJEEV MALHOTRA
FCA, FCS, AICWA
4
Negative List of Services
 Specific Exclusions
 Directly in relation to agriculture,
horticulture and animal husbandary.
 Transport of goods to outside India.
 Independent Journalists, PTI and UNI.
 Religious Entities and Political parties.

5. CA. SANJEEV MALHOTRA
FCA, FCS, AICWA
5
Negative List of Services (Cont……..)
 By Specified Persons – Govt. for following services
 Business promotion and Support
 Construction / Works Contract
 Insurance
 Port or Airport Services
 Postal Services
 Renting of immovable property.
 Security
 Trade Fairs and Exhibitions
 Transport – Goods and passangers
 Warehousing
 Services of International bodies and diplomatic missions.

6. CA. SANJEEV MALHOTRA
FCA, FCS, AICWA
6
Negative List of Services (Cont……..)
 Social Welfare and Public Utilities
 Services by Non profit entities under I T Act to
public and social welfare at or below costs.
 Financial Sector
 Sale, Purchase or acquisition of securities, debts or mutual
funds except services in relation to such activities
 Interest or discount on cheques / bills etc.
 Dividend on investments
 Sale and purchase of foreign currency amongst banks or AD

7. CA. SANJEEV MALHOTRA
FCA, FCS, AICWA
7
Negative List of Services (Cont……..)
 Transport
 Non AC 2nd Class, Metro or mono rail travel.
 Public transport buses except tourist buses.
 Public transport in ship or vessel except tourist
 Metered cabs or three wheelers
 Construction and Real Estate
 Specified infrastructure projects for public good
 Residential building comprising 1 dwelling unit
 Renting of personal dwellings upto Rs. 1 lac pm.

8. CA. SANJEEV MALHOTRA
FCA, FCS, AICWA
8
Negative List of Services (Cont……..)
 Education
 Pre School, School or recognised education
except donations or similar admission charges
 Health
 Except health and fitness, weight reduction
programmes, cosmetic or plastic surgery.
 Others
 Copyright services
 Independent journalists, PTI & UNI

9. CA. SANJEEV MALHOTRA
FCA, FCS, AICWA
9
Negative List of Services (Cont……..)
 Sports persons as players, coach, umpire etc except
as brand ambassadors
 By trade union to its members
 Representative services of advocate to individuals
 Exempt entity to its own members.
 Tolls except services in respect of tolls.
 Betting and gambling except services in respect of
promoting, marketing or organising.
 Advertisements other than ads of newspapers, Radio
broadcast, TV or other electronic media

10. CA. SANJEEV MALHOTRA
FCA, FCS, AICWA
10
POINT OF TAXATION RULES, 2011
 Formulated by 18/2011 dt. 01.03.11 and amended by
25/2011 dt. 31.03.11.
 Collection of service tax & determination of rate
 Continuous Supply of service means service for
exceeding 3 months including following notified.
 Telecommunication services
 Commercial & Industrial Construction
 Construction of residential complex
 Internet Telecommunication services
 Works Contract services

11. CA. SANJEEV MALHOTRA
FCA, FCS, AICWA
11
POT RULES, 2011 RULE 3
 Service is provided or to be provided AND
 Earlier of payment or Issue of invoice.
 Exp - Advance – date of receipt of advance
 Exp – Services provided from outside
India and received in India – Earlier of
receipt of invoice or date of payment.

12. CA. SANJEEV MALHOTRA
FCA, FCS, AICWA
12
RULE 3……………………………. Amendment
 Invoice issued within prescribed 14 days of
completion of service.
 Earlier of date of payment or date of invoice
 Invoice not issued within prescribed 14 days
 Earlier of date of payment or date of completion
of service

13. CA. SANJEEV MALHOTRA
FCA, FCS, AICWA
13
POT IN CASE OF CHANGE OF RATE : RULE 4
 Includes change of value, composition rates or
exemption notification altering taxability.
 Service provided before change of rate
 Earlier of invoice issue or receipt of payment
 Service provided after the change of rate
 Date of payment / Invoice after the change
 Payment & invoice issued before change then
earlier of invoice or payment.

14. CA. SANJEEV MALHOTRA
FCA, FCS, AICWA
14
POT IN CASE OF NEW SERVICES : RULE 5
 Service made taxable for first time
 No tax in case invoice issued and payment recd
before the event.
 No tax in case payment recd before the change
and invoice issued within 14 days.

15. CA. SANJEEV MALHOTRA
FCA, FCS, AICWA
15
CONTINOUS SUPPLY OF SERVICES : RULE 6
 For due dates specified in the contract
 POT will be dates specified in the contract
 Invoice or payment recd before the specified date
 POT will be invoice date or date of payment
 Advance recd before provision of service
 POT will be date of receipt of advance
 Services provided from outside India and received in
India.
 Earlier of receipt of invoice or date of payment

16. CA. SANJEEV MALHOTRA
FCA, FCS, AICWA
16
CASH BASIS OF PAYMENT - RULE 7
 POT will be date of making or receiving the
payment as the case may be in following
 Export of services
 Payment on reverse charge basis for payments made
within 6 months of date of invoice.
 Individuals, prop or partnership firms providing
following services
 CA, CS, CWA, Architects, Interior decorator, Legal,
Scientific and Technical Consultancy
 For exemption of export of services the
payment in convertible foreign exchange reqd.

17. CA. SANJEEV MALHOTRA
FCA, FCS, AICWA
17
Taxation of Copy rights etc. …RULE 8
 Applicable for royality payments to Copyright,
patents, trade mark, designs etc.
 Consideration ascertainable only after period.
 Taxable on earlier of issue of invoice or
payment received by the provider.

18. CA. SANJEEV MALHOTRA
FCA, FCS, AICWA
18
OTHER CHANGES
 Renegotiation of invoice – tax on revised amt
 Provided excess amt is refunded or Cr. Note
 CENVAT credit eligible on receipt of invoice
 Except in case of reverse charge
 Provided payment is made within 3 months
 Even to specified persons on cash basis
 Reversal of credit or payment in case of
renegotiation of invoice amount.

19. THANK YOU
CA. SANJEEV MALHOTRA
FCA, FCS, AICWA
0124-2561965, 09810995282
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CA. SANJEEV MALHOTRA
FCA, FCS, AICWA
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