The document summarizes key changes to the rules for determining the place of provision of services under the service tax regime in India post 2012. Some key points:
1. A new charging section was introduced requiring determination of place of provision of service.
2. The Place of Provision of Services Rules, 2012 (POPS Rules) were introduced to determine whether a service was provided in the "taxable territory".
3. Under the main Rule 3, the location of the service receiver determines the place of provision. Exceptions are provided in Rules 4-6 and 9-12.
This document discusses India's place of provision rules for services for the purposes of determining service tax liability. It provides an overview of the key rules, including:
1. The general rule that the place of provision is the location of the service receiver.
2. Performance-based services are taxed where the services are physically performed.
3. Property-based services are taxed where the property is located.
4. Event-based services are taxed where the event takes place.
5. Specific categories like banking, telecom, and transport are taxed where the service provider is located.
It also addresses concepts like exports of services and determining place of provision for services provided across
The key points are:
1. The Place of Provision of Service Rules, 2012 were introduced to determine where services are consumed for service tax purposes under India's negative list regime.
2. Unlike previous rules which focused on where services were performed or payments received, the new rules define consumption as the place of provision.
3. The rules outline 12 categories and specify the place of provision for different types of services such as performance-based, immovable property
Simplified approach to export of services rules dear friendsRajula Gurva Reddy
This document analyzes whether certain services provided in India would qualify as export of services under service tax rules. It provides explanations for each condition required to qualify as an export of service, including that the service provider must be located in India, the recipient located outside India, the service cannot be in the negative list, the place of provision must be outside India, and payment must be received in convertible foreign currency. The document concludes that if all conditions under Rule 6A of the Service Tax Rules are met, the service will be considered an export of service.
The document discusses the rules for determining the place of supply under the proposed GST law. It outlines separate principles for goods and services. For goods, the location and movement of goods determines the place of supply. For services, the document examines 12 specific service categories and determines the place of supply based on the location of the service, object, performance, recipient or supplier. It also includes a residual category. The place of supply rules aim to distinguish intra-state and inter-state supplies but may increase complexity for service providers.
The document discusses key provisions around place of supply under the Indian GST regime. It covers sections governing intra-state and inter-state supplies of goods and services, as well as import and export of goods and services. Specific provisions are outlined for determining the place of supply for various categories of goods and services, such as immovable property, performance-based services, transportation, and telecommunication. The overall intent is to clearly distinguish domestic from cross-border supplies and supplies to registered and unregistered persons.
This document summarizes the rules for determining the place of provision of various services under GST. It outlines 14 rules for different types of services. The key rules are:
- For services provided on board conveyances like planes or trains, the place of provision is the first scheduled point of departure.
- For passenger transportation, the place of provision is where the journey commences.
- For goods transportation, the place of provision is the destination of the goods.
- For certain specified services like banking, intermediary services, and short-term vehicle rentals, the place of provision is the location of the service provider.
- If any part of a service is provided in a taxable
The document discusses the valuation of taxable services under the Service Tax regime in India. It explains how the gross amount charged is considered the value of taxable services as per Section 67 of the Finance Act. Reimbursements are included in the value unless the service provider acts as a pure agent for the recipient. The valuation rules and recent case laws regarding composite contracts, reimbursements, and works contracts are also summarized.
This document discusses India's place of provision rules for services for the purposes of determining service tax liability. It provides an overview of the key rules, including:
1. The general rule that the place of provision is the location of the service receiver.
2. Performance-based services are taxed where the services are physically performed.
3. Property-based services are taxed where the property is located.
4. Event-based services are taxed where the event takes place.
5. Specific categories like banking, telecom, and transport are taxed where the service provider is located.
It also addresses concepts like exports of services and determining place of provision for services provided across
The key points are:
1. The Place of Provision of Service Rules, 2012 were introduced to determine where services are consumed for service tax purposes under India's negative list regime.
2. Unlike previous rules which focused on where services were performed or payments received, the new rules define consumption as the place of provision.
3. The rules outline 12 categories and specify the place of provision for different types of services such as performance-based, immovable property
Simplified approach to export of services rules dear friendsRajula Gurva Reddy
This document analyzes whether certain services provided in India would qualify as export of services under service tax rules. It provides explanations for each condition required to qualify as an export of service, including that the service provider must be located in India, the recipient located outside India, the service cannot be in the negative list, the place of provision must be outside India, and payment must be received in convertible foreign currency. The document concludes that if all conditions under Rule 6A of the Service Tax Rules are met, the service will be considered an export of service.
The document discusses the rules for determining the place of supply under the proposed GST law. It outlines separate principles for goods and services. For goods, the location and movement of goods determines the place of supply. For services, the document examines 12 specific service categories and determines the place of supply based on the location of the service, object, performance, recipient or supplier. It also includes a residual category. The place of supply rules aim to distinguish intra-state and inter-state supplies but may increase complexity for service providers.
The document discusses key provisions around place of supply under the Indian GST regime. It covers sections governing intra-state and inter-state supplies of goods and services, as well as import and export of goods and services. Specific provisions are outlined for determining the place of supply for various categories of goods and services, such as immovable property, performance-based services, transportation, and telecommunication. The overall intent is to clearly distinguish domestic from cross-border supplies and supplies to registered and unregistered persons.
This document summarizes the rules for determining the place of provision of various services under GST. It outlines 14 rules for different types of services. The key rules are:
- For services provided on board conveyances like planes or trains, the place of provision is the first scheduled point of departure.
- For passenger transportation, the place of provision is where the journey commences.
- For goods transportation, the place of provision is the destination of the goods.
- For certain specified services like banking, intermediary services, and short-term vehicle rentals, the place of provision is the location of the service provider.
- If any part of a service is provided in a taxable
The document discusses the valuation of taxable services under the Service Tax regime in India. It explains how the gross amount charged is considered the value of taxable services as per Section 67 of the Finance Act. Reimbursements are included in the value unless the service provider acts as a pure agent for the recipient. The valuation rules and recent case laws regarding composite contracts, reimbursements, and works contracts are also summarized.
The document summarizes the Place of Provision of Service Rules 2012 in India. It defines key terms like service, taxable territory and place of provision. It outlines 12 rules for determining the place of provision for different service types like passenger transportation, goods transport agency services, online information services, performance-based services relating to immovable property, events, etc. It also provides examples and applies the relevant rules to determine the place of provision. The roles of auditors and accountants are discussed in ensuring correct identification and payment of service tax.
Reverse Charge Mechanism Under Service Tax Laws Syed Irshad Ali
The document discusses various aspects of the reverse charge mechanism under service tax in India. It defines reverse charge mechanism and explains when it came into effect. It lists 12 services to which reverse charge applies and whether it is full or partial reverse charge. It addresses issues around point of taxation, CENVAT credit, valuation, exemptions and compliance requirements. It provides an example of the accounting treatment and invoice format under reverse charge mechanism.
- A branch office is deemed to be a separate establishment from its head office for determining the receipt and provision of services under Section 66A.
- Reimbursements from the head office to a branch for salaries and expenses cannot be considered taxable service since the branch is not independently providing services to the head office.
- Post 2012, the Place of Provision of Services Rules define that a service should be taxed based on where the service is consumed; if consumed overseas by a branch, then no service tax applies in India.
This document discusses various aspects of service tax in India as it relates to employers and employees, director fees, the reverse charge mechanism, and manpower supply. Some key points include:
1. Services provided by an employer to an employee are taxable if there is consideration. Examples of taxable services are transportation or guesthouse services provided for a fee.
2. Director fees paid to individuals are taxable, while fees paid to entities appointing the director are taxed to the entity.
3. The reverse charge mechanism applies when non-corporate entities provide services to corporate entities. The corporate entity accounts for the tax on a reverse charge basis.
4. Legal and arbitral services provided to individuals
- Reverse charge mechanism shifts the liability to pay service tax from the service provider to the service receiver. It applies in cases of services imported from outside India, services provided by individuals/firms to businesses, and certain other notified services.
- Under complete reverse charge, the service receiver assumes full responsibility for tax compliance including registration, tax payment, and return filing. Under partial reverse charge, liability is split between provider and receiver.
- The service receiver must register and comply with all tax obligations for services covered under reverse charge. Point of taxation rules vary for determining tax payment timing between provider and receiver. Demand notices can be issued to both parties in case of tax disputes.
Seminar on Service Tax at Jaipur on 20.4.2013(Session iv)Agarwal sanjiv & Co
This document provides information about cross border services and the taxation of such services under service tax law in India. It discusses key concepts like exports, imports and place of provision of services. It explains Rules 6A, 3, 4, 5, 6, 7 and 8 of the Place of Provision of Services Rules, 2012 which govern the taxation of cross border services based on conditions like location of the service provider and receiver, and where the service is performed. The presentation aims to clarify the tax treatment of various cross border transactions and how to determine the taxability in different situations.
The document summarizes key changes to India's service tax regime introduced in the 2012 budget, including expanding the scope of services covered, increasing the general rate to 12%, and introducing a reverse charge mechanism. Under the reverse charge mechanism, liability to pay service tax is shifted wholly or partially from service providers to service receivers for certain specified services. This places additional compliance burdens on service receivers. The changes aim to prepare taxpayers for the proposed Goods and Services Tax to be introduced in April 2013.
The presentation contains the history of Reverse charge machainism from the date from which it was inroduced and the subsequent amendments. We have added all the services covered under Reverse Charge Mechainism till date. For ease of understanding, we have presented every service in the form of chart and diagrams.
The document discusses the rationale and concepts of reverse charge and partial charge mechanisms under service tax in India. It provides details on the key aspects like notified services, registration requirements, returns, point of taxation, place of provision of service rules, and CENVAT credit eligibility. The document elaborates on various notified services where either reverse charge or partial charge applies such as insurance and recovery agent services, GTA services, sponsorship, legal services, director services to companies, manpower supply, security services, and works contract services. It also provides examples and case studies to illustrate compliance requirements for different situations.
The document summarizes service tax law in India, including key provisions around liability and registration requirements. It outlines that generally the service provider is liable to pay service tax, but section 68(2) allows for reverse charge mechanisms where the service recipient is liable. It provides examples of services where reverse charge applies fully or partially, such as insurance, goods transport, and works contracts. The document also discusses related topics such as applicable tax rates, input tax credit eligibility, and invoice requirements.
The document discusses reverse charge and joint charge under service tax in India. It provides details on the legal provisions, history of reverse charge, relevant notifications, list of services covered under reverse charge mechanism, and accounting treatment. Key services covered in full or partial reverse charge include insurance auxiliary, sponsorship, transport of goods, legal services, and manpower supply. The document also discusses utilization of tax credits and point of taxation rules in relation to reverse charge.
Study Circle Reference Material-CA Payal (Prerana) Shah-10 02 2015Payal (Prerana) Shah
This document provides a summary of notifications and circulars issued under Service Tax laws from April 2014 to January 2015. It discusses changes to taxability around joint ventures, exchange rates, and services related to international money transfers. Specifically, it was clarified that cash calls for joint ventures will be examined on a case-by-case basis to determine if Service Tax applies. The exchange rate to use is now defined in new Rule 11. For international money transfers, intermediary services provided in India to foreign operators are taxable, as are any fees charged to recipients in India. An exemption was also introduced for certain religious pilgrimage services.
The document discusses reverse charge mechanism (RCM) in service tax in India.
[1] RCM was introduced in 2005 and applies to certain specified services. Over time, the list of services covered under full or partial RCM has expanded and now contains 11 services.
[2] The document then lists the 11 services currently covered under full or partial RCM and specifies the applicable percentage of service tax to be paid by the service receiver rather than the service provider. This includes services like insurance auxiliary, recovery agent, sponsorship, legal and director services.
IamSMEofIndia E circular- Service tax on reimbursementsIamSME
The document clarifies service tax rules on reimbursements in India. It discusses:
1. Service tax law has existed for over 10 years but recent clarification was needed due to confusion and court cases.
2. Reimbursements for expenses incurred while providing services are now compulsory subject to tax, with some exceptions.
3. For expenses to be exempt as a "pure agent", eight conditions must be satisfied including that the service provider acts only as an agent in procuring goods/services for the recipient.
4. The clarification aims to close loopholes where tax was avoided by splitting contracts into exempt reimbursements and taxable service fees.
Introduction:
•Service Tax was introduced in 1994 vide Finance Act, 1994 with 3 SERVICES
namely, Brokerage charged by stockbroker, Telephone services & premium on
General Insurance Services. •Applicable to whole of India except Jammu & Kashmir. •Today there are 109 services under section 65(105), which are considered taxable
This independent contractor agreement is between Think Innovations Pty. Ltd. T/A Remote Staff and Marielli Jonah Cantor. It outlines the terms of Marielli's engagement as an independent contractor to perform telemarketer services for Remote Staff clients for 10 days. Key terms include Marielli providing 8 hours per day of telemarketer services through Remote Staff's online system, being paid 144.23 PHP per hour, confidentiality requirements, intellectual property ownership, and termination terms. The agreement is governed by Philippine law and is valid for 12 months.
Simplified approach to export of services rules dear friendsRajula Gurva Reddy
This document analyzes whether certain services provided in India would qualify as export of services under service tax rules. It provides explanations for each condition required to classify a service as an export of service, including that the service provider and recipient must be located in different countries, the payment must be received in foreign currency, and the place of provision must be outside India based on the Place of Provision of Services Rules. The document concludes that if all conditions specified in the Export of Services Rules are met, including those analyzed in the questions and answers, then a service can be classified as an export of service and would not be taxable.
This document provides an overview of changes to India's service tax regulations introduced by the Finance Act of 2012. Some key points:
- The taxation approach shifted from selective to comprehensive, bringing more services into the tax net.
- A negative list was introduced, such that any service not explicitly listed as exempt would be taxable. Certain services were also explicitly declared as taxable.
- New rules were introduced to determine the place of provision of a service, based on factors like the location of the service receiver or provider.
- Amendments were made to the point of taxation rules to align with the new regulatory framework and ensure tax is collected based on accrual rather than receipt of payment.
1. Service tax is levied under the Finance Act, 1994 on taxable services at the rate of 12% plus applicable cess, resulting in an effective tax rate of 12.36%.
2. The Place of Provision of Services Rules, 2012 determine whether a service is provided in the taxable territory of India and therefore subject to service tax. Generally, the location of the service recipient applies, unless specific exceptions for certain types of services.
3. The Point of Taxation Rules, 2011 determine the point in time at which a service is deemed provided and therefore the applicable tax rate. Generally this is the earlier of the invoice date or payment date, with exceptions for delayed invoices.
This document provides an overview of service tax law in India. Some key points:
- Service tax was first introduced in 1994 and now covers all services except those in the negative list.
- It is levied on the value addition from the provision of services within India.
- Various rules determine the taxable person, valuation of services, point of taxation, and place of provision of services.
- There are nine types of declared taxable services and 17 services exempted under the negative list.
- The document outlines some of the major provisions and rules under the service tax laws.
This document discusses the taxation of cross-border services in India. It provides an overview of key concepts related to the export and import of services, including the definition of a "service", legislative background, and taxation rules. Some key points:
1) It outlines the definition of "service" under the new tax regime and exclusions from this definition.
2) It discusses the previous legislative framework for export and import of services prior to 2012, including rules for determining whether a service is exported or imported.
3) It introduces the new taxability framework introduced in 2012, including the concepts of taxable and non-taxable territory, and discusses how the place of provision of services is used to determine taxability
The document summarizes the Place of Provision of Service Rules 2012 in India. It defines key terms like service, taxable territory and place of provision. It outlines 12 rules for determining the place of provision for different service types like passenger transportation, goods transport agency services, online information services, performance-based services relating to immovable property, events, etc. It also provides examples and applies the relevant rules to determine the place of provision. The roles of auditors and accountants are discussed in ensuring correct identification and payment of service tax.
Reverse Charge Mechanism Under Service Tax Laws Syed Irshad Ali
The document discusses various aspects of the reverse charge mechanism under service tax in India. It defines reverse charge mechanism and explains when it came into effect. It lists 12 services to which reverse charge applies and whether it is full or partial reverse charge. It addresses issues around point of taxation, CENVAT credit, valuation, exemptions and compliance requirements. It provides an example of the accounting treatment and invoice format under reverse charge mechanism.
- A branch office is deemed to be a separate establishment from its head office for determining the receipt and provision of services under Section 66A.
- Reimbursements from the head office to a branch for salaries and expenses cannot be considered taxable service since the branch is not independently providing services to the head office.
- Post 2012, the Place of Provision of Services Rules define that a service should be taxed based on where the service is consumed; if consumed overseas by a branch, then no service tax applies in India.
This document discusses various aspects of service tax in India as it relates to employers and employees, director fees, the reverse charge mechanism, and manpower supply. Some key points include:
1. Services provided by an employer to an employee are taxable if there is consideration. Examples of taxable services are transportation or guesthouse services provided for a fee.
2. Director fees paid to individuals are taxable, while fees paid to entities appointing the director are taxed to the entity.
3. The reverse charge mechanism applies when non-corporate entities provide services to corporate entities. The corporate entity accounts for the tax on a reverse charge basis.
4. Legal and arbitral services provided to individuals
- Reverse charge mechanism shifts the liability to pay service tax from the service provider to the service receiver. It applies in cases of services imported from outside India, services provided by individuals/firms to businesses, and certain other notified services.
- Under complete reverse charge, the service receiver assumes full responsibility for tax compliance including registration, tax payment, and return filing. Under partial reverse charge, liability is split between provider and receiver.
- The service receiver must register and comply with all tax obligations for services covered under reverse charge. Point of taxation rules vary for determining tax payment timing between provider and receiver. Demand notices can be issued to both parties in case of tax disputes.
Seminar on Service Tax at Jaipur on 20.4.2013(Session iv)Agarwal sanjiv & Co
This document provides information about cross border services and the taxation of such services under service tax law in India. It discusses key concepts like exports, imports and place of provision of services. It explains Rules 6A, 3, 4, 5, 6, 7 and 8 of the Place of Provision of Services Rules, 2012 which govern the taxation of cross border services based on conditions like location of the service provider and receiver, and where the service is performed. The presentation aims to clarify the tax treatment of various cross border transactions and how to determine the taxability in different situations.
The document summarizes key changes to India's service tax regime introduced in the 2012 budget, including expanding the scope of services covered, increasing the general rate to 12%, and introducing a reverse charge mechanism. Under the reverse charge mechanism, liability to pay service tax is shifted wholly or partially from service providers to service receivers for certain specified services. This places additional compliance burdens on service receivers. The changes aim to prepare taxpayers for the proposed Goods and Services Tax to be introduced in April 2013.
The presentation contains the history of Reverse charge machainism from the date from which it was inroduced and the subsequent amendments. We have added all the services covered under Reverse Charge Mechainism till date. For ease of understanding, we have presented every service in the form of chart and diagrams.
The document discusses the rationale and concepts of reverse charge and partial charge mechanisms under service tax in India. It provides details on the key aspects like notified services, registration requirements, returns, point of taxation, place of provision of service rules, and CENVAT credit eligibility. The document elaborates on various notified services where either reverse charge or partial charge applies such as insurance and recovery agent services, GTA services, sponsorship, legal services, director services to companies, manpower supply, security services, and works contract services. It also provides examples and case studies to illustrate compliance requirements for different situations.
The document summarizes service tax law in India, including key provisions around liability and registration requirements. It outlines that generally the service provider is liable to pay service tax, but section 68(2) allows for reverse charge mechanisms where the service recipient is liable. It provides examples of services where reverse charge applies fully or partially, such as insurance, goods transport, and works contracts. The document also discusses related topics such as applicable tax rates, input tax credit eligibility, and invoice requirements.
The document discusses reverse charge and joint charge under service tax in India. It provides details on the legal provisions, history of reverse charge, relevant notifications, list of services covered under reverse charge mechanism, and accounting treatment. Key services covered in full or partial reverse charge include insurance auxiliary, sponsorship, transport of goods, legal services, and manpower supply. The document also discusses utilization of tax credits and point of taxation rules in relation to reverse charge.
Study Circle Reference Material-CA Payal (Prerana) Shah-10 02 2015Payal (Prerana) Shah
This document provides a summary of notifications and circulars issued under Service Tax laws from April 2014 to January 2015. It discusses changes to taxability around joint ventures, exchange rates, and services related to international money transfers. Specifically, it was clarified that cash calls for joint ventures will be examined on a case-by-case basis to determine if Service Tax applies. The exchange rate to use is now defined in new Rule 11. For international money transfers, intermediary services provided in India to foreign operators are taxable, as are any fees charged to recipients in India. An exemption was also introduced for certain religious pilgrimage services.
The document discusses reverse charge mechanism (RCM) in service tax in India.
[1] RCM was introduced in 2005 and applies to certain specified services. Over time, the list of services covered under full or partial RCM has expanded and now contains 11 services.
[2] The document then lists the 11 services currently covered under full or partial RCM and specifies the applicable percentage of service tax to be paid by the service receiver rather than the service provider. This includes services like insurance auxiliary, recovery agent, sponsorship, legal and director services.
IamSMEofIndia E circular- Service tax on reimbursementsIamSME
The document clarifies service tax rules on reimbursements in India. It discusses:
1. Service tax law has existed for over 10 years but recent clarification was needed due to confusion and court cases.
2. Reimbursements for expenses incurred while providing services are now compulsory subject to tax, with some exceptions.
3. For expenses to be exempt as a "pure agent", eight conditions must be satisfied including that the service provider acts only as an agent in procuring goods/services for the recipient.
4. The clarification aims to close loopholes where tax was avoided by splitting contracts into exempt reimbursements and taxable service fees.
Introduction:
•Service Tax was introduced in 1994 vide Finance Act, 1994 with 3 SERVICES
namely, Brokerage charged by stockbroker, Telephone services & premium on
General Insurance Services. •Applicable to whole of India except Jammu & Kashmir. •Today there are 109 services under section 65(105), which are considered taxable
This independent contractor agreement is between Think Innovations Pty. Ltd. T/A Remote Staff and Marielli Jonah Cantor. It outlines the terms of Marielli's engagement as an independent contractor to perform telemarketer services for Remote Staff clients for 10 days. Key terms include Marielli providing 8 hours per day of telemarketer services through Remote Staff's online system, being paid 144.23 PHP per hour, confidentiality requirements, intellectual property ownership, and termination terms. The agreement is governed by Philippine law and is valid for 12 months.
Simplified approach to export of services rules dear friendsRajula Gurva Reddy
This document analyzes whether certain services provided in India would qualify as export of services under service tax rules. It provides explanations for each condition required to classify a service as an export of service, including that the service provider and recipient must be located in different countries, the payment must be received in foreign currency, and the place of provision must be outside India based on the Place of Provision of Services Rules. The document concludes that if all conditions specified in the Export of Services Rules are met, including those analyzed in the questions and answers, then a service can be classified as an export of service and would not be taxable.
This document provides an overview of changes to India's service tax regulations introduced by the Finance Act of 2012. Some key points:
- The taxation approach shifted from selective to comprehensive, bringing more services into the tax net.
- A negative list was introduced, such that any service not explicitly listed as exempt would be taxable. Certain services were also explicitly declared as taxable.
- New rules were introduced to determine the place of provision of a service, based on factors like the location of the service receiver or provider.
- Amendments were made to the point of taxation rules to align with the new regulatory framework and ensure tax is collected based on accrual rather than receipt of payment.
1. Service tax is levied under the Finance Act, 1994 on taxable services at the rate of 12% plus applicable cess, resulting in an effective tax rate of 12.36%.
2. The Place of Provision of Services Rules, 2012 determine whether a service is provided in the taxable territory of India and therefore subject to service tax. Generally, the location of the service recipient applies, unless specific exceptions for certain types of services.
3. The Point of Taxation Rules, 2011 determine the point in time at which a service is deemed provided and therefore the applicable tax rate. Generally this is the earlier of the invoice date or payment date, with exceptions for delayed invoices.
This document provides an overview of service tax law in India. Some key points:
- Service tax was first introduced in 1994 and now covers all services except those in the negative list.
- It is levied on the value addition from the provision of services within India.
- Various rules determine the taxable person, valuation of services, point of taxation, and place of provision of services.
- There are nine types of declared taxable services and 17 services exempted under the negative list.
- The document outlines some of the major provisions and rules under the service tax laws.
This document discusses the taxation of cross-border services in India. It provides an overview of key concepts related to the export and import of services, including the definition of a "service", legislative background, and taxation rules. Some key points:
1) It outlines the definition of "service" under the new tax regime and exclusions from this definition.
2) It discusses the previous legislative framework for export and import of services prior to 2012, including rules for determining whether a service is exported or imported.
3) It introduces the new taxability framework introduced in 2012, including the concepts of taxable and non-taxable territory, and discusses how the place of provision of services is used to determine taxability
Place of Provision of Service Rules, 2012Raj Khona
The document discusses the Place of Provision of Service Rules, 2012 in India. Some key points:
- The rules determine where a service is considered consumed for taxation purposes and aim to avoid double taxation.
- There are 14 rules that cover specific service categories or provide default provisions. Rule 3 is the general default rule.
- The rules examine factors like the location of the service provider, receiver, place of performance to determine the place of provision.
- Examples are provided to illustrate how certain rules like rules 4, 5, 6, and 7 covering performance-based, immovable property related, event-related and multi-location services respectively would apply.
The document discusses the rules for determining the place of supply under the proposed GST law. It outlines separate principles for goods and services. For goods, the location and movement determine the place of supply. For services, location, performance location, and recipient location are key factors. Twelve specific service categories and a residual category are identified. The place of supply rules will require service providers to distinguish between intra-state and inter-state services for tax compliance under GST.
Optitax's presentation on critical changes in gst law 01 feb 19Nilesh Mahajan
The Government has brought some key changes in GST law in an attempt to simplify GST further.
We have tried to capture these changes and also explained some of the changes in flow chart form for better understanding.
In this regard, please find attached Optitax’s presentation on ‘CRITICAL CHANGES IN GST LAW’
Further, the said presentation also explains levy of security services under reverse charge mechanism
This document provides an overview of service tax provisions in India, including:
1. It discusses the shift in India's service tax approach from a selective positive list to a comprehensive negative list in 2012.
2. It outlines key aspects of the new service tax framework including the definition of taxable services, exemptions, place of provision rules, and the reverse charge mechanism.
3. It summarizes major changes introduced in the 2012-2013 budget and Finance Act related to service tax compliance requirements and penalties.
The Point of Taxation Rules define when a service will be deemed provided for determining the applicable tax rate. The rules were introduced to reduce disputes over tax rates and establish a point of taxation. Key provisions include:
- For invoices within 30 days of service, the point is the invoice date, otherwise it's the service completion date.
- For continuous supply of services over 3 months, the point is the payment date required by the contract.
- For individuals and small firms, tax can be paid by the quarterly due date for any payments received.
Find out the detailed explanation of the provisions related to Place of Supply under the dual GST Law for the efficient tax administration from the presentation. Give it a read and we would love to know your feedback!
Service tax registration in india by legal raastaLegal Raasta
Service Tax registration in India involves filing Form ST-1 in duplicate along with a copy of the PAN card and proof of address. A person liable for paying Service Tax must register within 30 days of becoming liable or a new taxable service coming into effect. Registration involves assigning a Service Tax Code based on the PAN number. The registration certificate will be granted within 7 days normally. A fresh registration is needed if ownership of the business is transferred to another person.
Service tax is a tax levied by the Central Government of India on taxable services. The key points are:
1. Service tax is levied on services provided or agreed to be provided in India excluding those under the negative list. The point of taxation is determined based on when the invoice is issued or payment is received, as per the Point of Taxation Rules.
2. The place of provision of services rules determines whether a service is provided in India based on factors like where the service is performed, the location of the recipient or provider, or where immovable property is located.
3. The constitution provides the authority to levy service tax under Entry 92C of the Union List. The tax
This document discusses the partial reverse charge mechanism for works contracts under Indian service tax law. Key points:
1) For certain works contracts, the liability to pay service tax is shared between the service provider and service recipient. For service portions of works contracts, the recipient must pay 50% of the service tax and the provider pays the remaining 50%.
2) The value of the service portion of a works contract is determined by subtracting the value of transferred goods from the total contract value. For certain types of works contracts, the service portion is deemed to be 40-70% of the total contract value.
3) The introduction of partial reverse charge for works contracts increases the tax burden on service recipients while aiming
The document discusses proposed amendments to India's service tax laws presented in the Union Budget. Key points include:
1) The negative list and exemptions under service tax were proposed to be pruned to widen the tax base. Radio taxi services were brought into the service tax ambit.
2) Mandatory pre-deposit requirements for appeals were increased. Interest rates on delayed tax payments were substantially enhanced.
3) The point of taxation and valuation rules saw some amendments. The scope of the reverse charge mechanism and exemptions list were modified.
4) CENVAT credit rules were amended to disallow credit beyond 6 months and restrict unit to unit transfers within large taxpayer units.
GST implications on YouTuber Revenue.pptxtaxguruedu
Over the last three years, YouTube has paid its creators more than $50 billion dollars through the YouTube Partner Program. No doubt, the tax implication of such amount cannot be ignored.
The Government has enacted the CGST (Amendment) Act, 2018, the IGST (Amendment) Act, 2018, by publication in official Gazette to amend the respective GST Acts.
In this regard, we have captured major amendments in CGST Act, 2017 and IGST Act, 2017 for your perusal
The Point of Taxation Rules, 2011 determine when service tax becomes payable and the applicable tax rate. Key points include:
- Service tax is payable at the earlier of the date of invoice or date of payment.
- For continuous supply of services, each completion event or periodic payment date determines the point of taxation.
- If the effective tax rate changes, the point of taxation will be the earlier of the date of invoice or date of payment.
- For new taxable services, service tax may not be payable if payment was received or invoice issued before the service became taxable.
The document provides an overview of the Goods and Services Tax (GST) in India. It defines key terms like taxable supply, non-taxable supply, and exempt supply. It outlines the sections of the GST acts that cover aspects like the levy of GST, time and place of supply, input tax credit, registration, returns and payments. The document also briefly mentions the rate of GST, valuation rules, reverse charge mechanism, and transitional provisions.
The document provides an overview of the Goods and Services Tax (GST) in India. It defines key terms like taxable supply, non-taxable supply, and exempt supply. It outlines the sections of the GST acts that cover aspects like the levy of GST, time and place of supply, input tax credit, registrations, returns and payments. The document also briefly mentions the tax rates under GST and the exceptions to the levy.
This document provides an overview of the Goods and Services Tax (GST) implemented in India, including:
1. It outlines the history and challenges of India's previous indirect tax structure that led to the implementation of GST. This includes issues like cascading taxes and lack of uniformity across states.
2. It summarizes international models of GST and how it has been implemented in over 140 countries globally with common principles like being destination-based and allowing input tax credits.
3. It describes the objectives and key aspects of GST in India like subsuming multiple taxes into a single tax, creating a unified market, and being a consumption-based tax levied at each stage of supply.
This notification provides an exemption from central tax for intra-state supply of goods by a registered supplier to a registered recipient for export, with the tax levied reduced to 0.05% from the standard rate. Several conditions are outlined for the supplier and recipient to qualify for the exemption, including the supplier issuing an invoice, the recipient exporting goods within 90 days and providing shipping documentation to the supplier. The supplier is not eligible for exemption if the recipient fails to export within 90 days of invoicing.
The document discusses the various types of returns that must be filed under the Goods and Services Tax (GST) in India. It explains returns that normal taxpayers, composition taxpayers, foreign non-residents, input service distributors, tax deductors, and e-commerce operators must file, including GSTR-1, GSTR-2, GSTR-3, GSTR-4, and others. These returns must be filed monthly or quarterly and include details of outward and inward supplies, tax payments, input tax credits, and reconciliations to ensure all transactions are recorded properly.
The document provides an overview of the Goods and Services Tax (GST) in India. It defines key terms like taxable supply, non-taxable supply, and exempt supply. It outlines the sections of the GST acts that cover levy, place of supply, time of supply, nature of supply, input tax credit, registration, returns, payments, and refunds. The document also briefly mentions the chapters that cover assessments, audits, inspections, demands and recovery, appeals and revisions, offences and penalties.
The document provides an overview of the Goods and Services Tax (GST) in India. It defines key terms like taxable supply, non-taxable supply, and exempt supply. It outlines the sections of the GST acts that cover levy, place of supply, time of supply, nature of supply, input tax credit, registration, returns, payments, and refunds. The document also briefly mentions the chapters that cover assessments, audits, inspections, demands and recovery, appeals and revisions, offences and penalties.
The document provides an overview of the Goods and Services Tax (GST) in India. It defines key terms like taxable supply, non-taxable supply, and exempt supply. It outlines the sections of the GST acts that cover aspects like the levy of GST, time and place of supply, input tax credit, registration, returns and payments. The document also briefly mentions the tax rates under GST and chapters dealing with assessments, appeals and penalties.
The document provides an overview of the Goods and Services Tax (GST) in India. It defines key terms like taxable supply, non-taxable supply, and exempt supply. It outlines the sections of the GST acts that cover aspects like the levy of GST, time and place of supply, input tax credit, registration, returns and payments. The document also briefly mentions the tax rates under GST and chapters dealing with assessments, appeals and penalties.
The document provides an overview of the Goods and Services Tax (GST) in India. It defines key terms like taxable supply, non-taxable supply, and exempt supply. It outlines the sections of the GST acts that cover levy, place of supply, time of supply, nature of supply, input tax credit, registration, returns, payments, and refunds. The document also briefly mentions the chapters that cover assessments, audits, inspections, demands and recovery, appeals and revisions, offences and penalties.
The document provides an overview of the Goods and Services Tax (GST) in India. It defines key terms like taxable supply, non-taxable supply, and exempt supply. It outlines the sections of the GST acts that cover aspects like the levy of GST, time and place of supply, input tax credit, registration, returns and payments. The document also briefly mentions the tax rates under GST and chapters dealing with assessments, appeals and penalties.
The document provides an overview of the Goods and Services Tax (GST) in India. It defines key terms like taxable supply, non-taxable supply, and exempt supply. It outlines the sections of the GST acts that cover aspects like the levy of GST, time and place of supply, input tax credit, registration, returns and payments. The document also briefly mentions the tax rates under GST and chapters dealing with assessments, appeals and penalties.
The document provides an overview of key concepts related to the Goods and Services Tax (GST) in India. It defines important terms like taxable supply, non-taxable supply, and exempt supply. It also outlines the sections of the GST law that cover levy and rates, valuation, registration, time and place of supply, input tax credit, and compliance requirements.
The document provides an overview of the Goods and Services Tax (GST) in India. It defines key terms like taxable supply, non-taxable supply, and exempt supply. It outlines the sections of the GST acts that cover aspects like the levy of GST, time and place of supply, input tax credit, registration, returns and payments. The document also briefly mentions the rate of GST, valuation rules, reverse charge mechanism, and transitional provisions.
The document provides information about Goods and Services Tax (GST) in India, including:
1) It defines GST and explains that it is a single tax rate for goods and services unlike the previous system which had different tax rates for goods and services.
2) GST has two components - Central GST and State GST which are levied on intra-state supplies, and Integrated GST which is levied on inter-state supplies.
3) The document discusses the key aspects of GST such as its structure, rates, time and place of supply, input tax credit, returns, and the impact and changes for businesses. It aims to simplify complex GST concepts with examples and
The document discusses the various types of returns that must be filed under the Goods and Services Tax (GST) in India. It explains returns that normal taxpayers, composition taxpayers, foreign non-residents, input service distributors, tax deductors, and e-commerce operators must file, including GSTR-1, GSTR-2, GSTR-3, GSTR-4, and others. These returns must be filed monthly or quarterly and include details of outward and inward supplies, tax payments, input tax credit, and reconciliations to ensure all transactions are recorded properly.
The document provides information on India's proposed Goods and Services Tax (GST) regime, including:
1) It outlines the current indirect tax regime and taxes that will be subsumed or not subsumed under GST. Major taxes to be subsumed include service tax, central excise duty, VAT/sales tax, while some taxes like electricity duty and property tax will not be.
2) GST will include CGST, SGST, UGST, and IGST which will be levied on the supply of goods or services. IGST will apply to inter-state supplies while CGST+SGST will apply intra-state.
3) Input tax credit will be
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Issues in pops final
1. Issues in Place of Provision of
Service Rules, 2012
Naresh Thacker, Partner
Jitendra Motwani, Associate Partner
ELP
April 16, 2014
2. Pre- 2012
Service Tax was chargeable under Section 66 of the Finance Act, 1994.
‘There shall be levied a tax at the rate of 12% of the value of the taxable
services……’
Taxable services being defined under Section 65
Significantly, there was no reference in charging section w.r.t place
where service performed
Place of provision of service was being determined as follows:
In the case of Import- Section 66A read with Taxation of Services (Provided
from outside India and received in India) Rules, 2006
In case of Export- Export of Service Rules, 2005.
Under the Pre-2012 regime, import of service was chargeable to service
tax under “reverse charge mechanism”
Export of service was exempted from service tax.
3. Change in Charging Section- Post 2012
NEW CHARGING SECTION 66B w.e.f. 01.07.2012
“There shall be levied a tax (hereinafter referred to as the service tax)
at the rate of twelve per cent. on the value of all services, other than
those services specified in the negative list, provided or agreed to be
provided in the taxable territory by one person to another and
collected in such manner as may be prescribed.
(Thus under new charging section, it is a must to determine place of
provision of service which was not relevant earlier)
4. POPS Rules, 2012- Introduction
As part of changes to Service-tax Law, Place of Provision of Services Rules,
2012, (‘POPS’) have been made effective from 1.7.2012 to determine
whether service was provided within “taxable territory”
New rules replace existing Export of Services Rules, 2005 and the Taxation
of Services (Provided from Outside India and Received in India) Rules, 2006.
POPS Rules are primarily meant for persons who deal in cross border
services. They will also be equally applicable for those who have operations
with suppliers or customers in the state of Jammu and Kashmir.
5. POPS Rules, 2012- Introduction
Additionally service providers operating within India from multiple locations,
without having centralized registration will find them useful in determining
the precise taxable jurisdiction applicable to their operations. The rules will
be equally relevant for determining services that are wholly consumed
within a SEZ to avail the outright exemption.
Education Guide issued by the CBEC assists to determine whether services
are provided in the taxable territory
6. POPS Rules, 2012- Philosophy
Philosophy of the POPS, as set out in the Education Guide, is that a service
should be taxed in the jurisdiction of its consumption. Therefore, exports are
not charged to tax, as the consumption is elsewhere, and services pay tax on
their importation into the taxable territory.
This philosophy reflected under Rule 3- which provides that a service shall
be deemed to be provided where the receiver is located.
However, above principle subject to a number of exceptions. (Rules 4-6 and
9-12)
A chart is provided in the next slide giving a snapshot of the Rules.
7. POPS Rules- At a Glance
Rule Particulars
3 Service shall be deemed to be provided where the service receiver is located
4 Performance based services
5 Services relating to immovable property
6 Services relating to events
7 Service provided at more than one location
8 Services where provider and receiver are located in taxable territory
9 Specified Services
10 Goods Transportation service (excluding by way of mail / courier)
11 Passenger Transportation Service
12 Services provided on board of a conveyance
Where provision of service is prima facie determinable in terms of more than one rule, it
shall be determined in terms of the rule which occurs later – Rule 14
8. POPS- Rule 3
The main rule 3 is applied when none of the other later rules apply. In
other words, if a service is not covered by an exception under one of
the later rules, and is consequently covered under this default rule,
then the receiver’s location will determine whether the service is
leviable to tax in the taxable territory. (Rule 14)
The principal effect of the Main Rule 3 is that:-
A. Where the location of receiver of a service is in the taxable territory,
such service will be deemed to be provided in the taxable territory and
service tax will be payable.
B. However if the receiver is located outside the taxable territory, no
service tax will be payable on the said service
(Example on next slide will clarify above rule)
9. Taxable Territory Non- Taxable Territory
ABC
SERVICE PROVIDER
DEF
RECEIVER
PQR
RECEIVER
XYZ
SERVICE PROVIDER
1. A company ABC provides a service to a receiver PQR, both located in the taxable
territory. Since the location of the receiver is in the taxable territory, the service is
taxable. Service tax liability will be discharged by ABC, being the service provider and
being located in taxable territory.
2. However, if ABC were to supply the same service to a recipient DEF located in non-
taxable territory, the provision of such service is not taxable, since the receiver is located
outside the taxable territory.
3. If the same service were to be provided to PQR (located in taxable territory) by an
overseas provider XYZ (located in non-taxable territory), the service would be taxable,
since the recipient is located in the taxable territory. However, since the service provider
is located in a non-taxable territory, the tax liability would be discharged by the receiver,
under the reverse charge principle (also referred to as “tax shift”).
10. Determination of Place of Service under Rule 3
For example:
Head office in the US- ‘HO’. Branch office is in India- ‘BO’
Service provider in India and providing service to branch office.
However contract for provision of service between US and Indian Service
Provider. Consideration also received from the US HO in convertible foreign
exchange.
What is the place of service?
Under Rule 3 place of provision of service is the location of service recipient
Definition of location of service of recipient is (Section 2(i)),
Location of premises where it has obtained centralized registration. If not,
location of business establishment or
If services used at a place other than business establishment, then fixed
establishment or
If service used at more than one establishment, establishment most directly
concerned with the use of service
11. Determination of Place of Service under Rule 3
In above example, place of recipient cannot be either place of registration
since the HO is in US.
Place of recipient also cannot be business establishment since service
utilized at place other than business establishment i.e. BO.
Therefore, subject to the said service not falling under Rule 4 to 6 and Rule
9-12- service recipient is BO as it is a fixed establishment .
It is however important to understand what is fixed establishment
Fixed establishment, under the Education Guide is described as-
A place other than business establishment
Such place is characterized by a sufficient degree of permanence and
suitable structure in terms of human and technical resources to
provide/receive services.
Temporary staff for a short visit cannot be fixed establishment.
12. Determination of Place of Service under Rule 3
A branch office covered under fixed establishment
Emphasis is on the presence of human and technical resources to receive/
provide services. Eg. Property / building on its own cannot be a fixed
establishment.
However no clarity on “sufficient degree of permanence and suitable
structure”
eg1. Would a branch office established by a business establishment outside
the taxable territory merely for filing returns become fixed establishment?
eg2. Would a server farm utilized by the internet companies for hosting of
data be considered to be a fixed establishment?
13. Determination of Place of Service under Rule 3
Example 2:
The main business entity in Country A, establishes subsidiary company in
India.
Service agreement with Indian subsidiary to provide promotional and
support activities to customers in India. Promotional and support activities
involve marketing, demonstration of various products of the Business
Establishment A to potential customers and dealers. Agreement states that
subisdiary is not an Agent of Business Establishment A. Also subsidiary has
no relationship with potential customers/dealers other than demonstrating
products.
Place of provision in Country A or India?
Service Recipient is the parent company located in Country A and therefore
amounts to export of service.
Decision of Tandus Flooring India by the AAR (2013-TIOL-03- ARA-ST)- Held
service recipient is the parent company located in other Country and
amounts to export of Service.
14. Rule 4: Place of provision for services based on performance
The place of provision of following services shall be the location where the
services are actually performed, namely:-
(a) services provided in respect of goods that are required to be made
physically available by the service receiver to the service provider, in order
to provide the service:
Provided that when such services are provided from a remote location by
way of electronic means the place of provision shall be the location where
goods are situated at the time of provision of service;
(b) services provided in conjunction with the supply of goods under
another contract by the service provider;
(c) services provided entirely or predominantly, in the ordinary course of
business, in the physical presence of an individual, represented either as
the service receiver or a person acting on behalf of the receiver.
15. Examples under Rule 4
Repair, reconditioning, or any other work on goods (not amounting to
manufacture), storage and warehousing, courier service, cargo handling
service (loading, unloading, packing or unpacking of cargo), technical
testing/inspection/certification/ analysis of goods, dry cleaning etc.
It will not cover services where the supply of goods by the receiver is not
material to the rendering of the service e.g. where a consultancy report
commissioned by a person is given on a pen drive belonging to the
customer.
Certain services like cosmetic or plastic surgery, beauty treatment services,
personal security service, health and fitness services, photography service
(to individuals), internet café service, classroom teaching, are examples of
services that require the presence of the individual receiver for their
provision. As would be evident from these examples, the nature of services
covered here is such as are rendered in person and in the receiver’s physical
presence.
16. Rule 5- Place of service relating to immovable property
The place of provision of services provided directly in relation to an
immovable property, including services provided in this regard by experts
and estate agents, provision of hotel accommodation by a hotel, inn, guest
house, club or campsite, by whatever, name called, grant of rights to use
immovable property, services for carrying out or coordination of
construction work, including architects or interior decorators, shall be the
place where the immovable property is located or intended to be located.
17. Examples under Rule 5
i)The service consists of lease, or a right of use, occupation, enjoyment or exploitation
of an immovable property;
ii) the service is physically performed or agreed to be performed on an
immovable property (e.g. maintenance) or property to come into existence
(e.g. construction);
iii) the direct object of the service is the immovable property in the sense that
the services enhances the value of the property, affects the nature of the
property, relates to preparing the property for development or
redevelopment or the environment within the limits of the property (e.g.
engineering, architectural services, surveying and sub-dividing, management
services, security services etc);
iv) the purpose of the service is:
a) the transfer or conveyance of the property or the proposed transfer or
conveyance of the property (e.g., real estate services in relation to the
actual or proposed acquisition, lease or rental of property, legal services
rendered to the owner or beneficiary or potential owner or beneficiary of
property as a result of a will or testament);
b) the determination of the title to the property.
18. Examples under Rule 5
Examples of land-related services:
i) Services supplied in the course of construction, reconstruction, alteration,
demolition, repair or maintenance (including painting and decorating) of any
building or civil engineering work;
ii) Renting of immovable property;
iii) Services of real estate agents, auctioneers, architects, engineers and similar
experts or professional people, relating to land, buildings or civil engineering works.
This includes the management, survey or valuation of property by a solicitor,
surveyor or loss adjuster.
iv) Services connected with oil/gas/mineral exploration or exploitation relating to
specific sites of land or the seabed.
v) The surveying (such as seismic, geological or geomagnetic) of land or seabed.
vi) Legal services such as dealing with applications for planning permission.
vii) Packages of property management services which may include rent collection,
arranging repairs and the maintenance of financial accounts.
viii) The supply of hotel accommodation or warehouse space.
19. Rule 6- Place of provision relating to events
The place of provision of services provided by way of admission to, or
organization of, a cultural, artistic, sporting, scientific, educational, or
entertainment event, or a celebration, conference, fair, exhibition, or similar
events, and of services ancillary to such admission, shall be the place where
the event is actually held
20. Examples under Rule 6
Illustration 1
A management school located in USA intends to organize a road show in
Mumbai and New Delhi for prospective students. Any service provided
by an event manager, or the right to entry (participation fee for
prospective students, say) will be taxable in India.
Illustration 2
An Indian fashion design firm hosts a show at Toronto, Canada. The firm
receives the services of a Canadian event organizer. The place of
provision of this service is the location of the event, which is outside the
taxable territory. Any service provided in relation to this event, including
the right to entry, will be non-taxable
21. Rule 7- Place of service when provided at more than one
location
Where any service referred to in rules 4, 5, or 6 is provided at more than
one location, including a location in the taxable territory, its place of
provision shall be the location in the taxable territory where the greatest
proportion of the service is provided.
Illustration
An Indian firm provides a ‘technical inspection and certification service’
for a newly developed product of an overseas firm (say, for a newly
launched motorbike which has to meet emission standards in different
states or countries). Say, the testing is carried out in Maharashtra (20%),
Kerala (25%), and an international location (say, Colombo 55%).
Notwithstanding the fact that the greatest proportion of service is
outside the taxable territory, the place of provision will be the place in
the taxable territory where the greatest proportion of service is
provided, in this case Kerala.
22. Rule 8- When provider and receiver located in taxable
territory
Place of provision of a service, where the location of the service provider as
well as that of the service receiver is in the taxable territory, shall be the
location of the service receiver.
Illustration
A helicopter of Pawan Hans Ltd (India based) develops a technical snag in
Nepal. Say, engineers are deputed by Hindustan Aeronautics Ltd, Bangalore, to
undertake repairs at the site in Nepal. But for this rule, Rule 4, sub-rule (1)
would apply in this case, and the place of provision would be Nepal i.e. outside
the taxable territory.
However, by application of Rule 8, since the service provider, as well as the
receiver, are located in the taxable territory, the place of provision of this
service will be within the taxable territory.
23. Rule 9- Provision of specified services
The place of provision of following services shall be the location of the
service provider:-
a) Services provided by a banking company, or a financial institution,
or a non-banking financial company, to account holders;
b) Telecommunication services provided to subscribers;
c) Online information and database access or retrieval services;
d) Intermediary services;
e) Service consisting of hiring of means of transport, upto a period of
one month.
24. Examples under Rule 9
Examples of services by banking company or financial institution to an
“account holder”, in the ordinary course of business:- i) services linked to or
requiring opening and operation of bank accounts such as lending, deposits,
safe deposit locker etc; ii) transfer of money including telegraphic transfer,
mail transfer, electronic transfer etc.
Examples of online information generated automatically by software from
specific data input by the customer, such as web-based services providing
trade statistics, legal and financial data, matrimonial services, social
networking sites; ii) digitized content of books and other electronic
publications, subscription of online newspapers and journals, online news,
flight information and weather reports; iii) Web-based services providing
access or download of digital content. Eg. Manupatra / Westlaw are
examples of provision of legal data.
25. Examples under Rule 9- Cont’d
Examples of ‘intermediary services’:-
i) Travel Agent (any mode of travel)
ii) Tour Operator
iii) Commission agent for a service [an agent for buying or selling of goods is
excluded]
iv) Recovery Agent
Examples of Hiring of Means of Transport
i) Land vehicles such as motorcars, buses, trucks;
ii) Vessels;
iii) Aircraft;
iv) Vehicles designed specifically for the transport of sick or injured persons;
v) Mechanically or electronically propelled invalid carriages;
vi) Trailers, semi-trailers and railway wagons.
26. Rule 9- Cont’d
Web based services providing access or download of digital content.
Following not included:
Sale or purchase of goods, articles over the internet- eg. Flipkart
Telecommunication services provided over the internet- eg. Skype
Service rendered over the internet such as architectural drawing etc.
Repair of software/hardware from remote location over internet
Internet ‘backbone’ services. Eg. Services provided by ISPs.
Illustration I-
Service receiver located in India.
Service provider located outside India. Servers also located outside India-
Pre POPS- import of service.
Post POPS- place of provision of service is location of service provider i.e.
outside India.
27. Rule 9- Cont’d
Illustration II-
Service receiver located abroad
Service provider located India.
Servers located in India
Pre POPS- service consumed and benefit of same outside India (Category III
of the Export of Service Rules) . If consideration in foreign exchange- then
export of service
Post POPS- Based on Rule 9- place of provision of service India.
28. Intermediary Services
Intermediary-
someone who arranges or facilitates provision of service between 2
persons.
Provision of main service on his own account is excluded
Intermediary wrt to goods and wrt service
Commission charged by intermediary wrt to goods excluded.
Characteristics of intermediary-
Cannot alter the nature or value of service
Value of intermediary service is distinguishable from value of main service
Service provided by intermediary is distinguishable from the main service.
egs.: Travel agent; tour operator; commission agent; recovery agent.
29. Examples of Intermediary Services
Illustration I-
Online Market Based Company ‘X’ situated in UK.
Establishes a subsidiary company ‘Y’ in India.
Enters into a service agreement with Y for marketing and promotion of X.
Consideration paid in foreign exchange.
Whether Y is intermediary ?
Depends on the facts and circumstances and Service Agreement.
If the service agreement is specifically restricted to only providing marketing
and promotion and the subsidiary does not have any relationship with the
clients of X in India, then Y would not be an intermediary for the following
reasons,
It is not acting as an agent of X. Its role is limited only to provide marketing
service to X.
Intermediary envisages two works being done simultaneously by an
intermediary- facilitation of service between principal and client and
simultaneously, providing service to principal. In present case, there is no
facilitation of service to client.
30. Examples of Intermediary Services
However, if service agreement states that Y is responsible for collection of fees,
and that it is paid a commission, Y would qualify as an intermediary.
Illustration II-
Bank A in India part of large multi national Bank established all over the
world
Bank A performs various services to its Foreign Branch (eg. ‘Originating
service’ whereby facilitates the provision of service by offshore branch to
Indian Client)
Whether such service qualifies as intermediary service.
Question of whether the Bank A is an intermediary depends on the type of
service provided to Foreign branch.
For instance, if Bank is providing an ‘originating service’ i.e. a service
involving identification, evaluation and recommendation of a target to
Foreign branch for financial services- Bank A facilitates the service, gets
commission and therefore satisfies condition of intermediary. Rule 9 (c)
squarely applicable (Note that Rule 9 (a) is not applicable since there is no
service being provided to account holders’)
31. Examples of Intermediary Services
However, if Bank A is providing some service to Foreign Branch which does
not involve third parties and the service is being provided on its own
account, then Rule 9 is inapplicable.
32. Rule 10- Place of provision of goods transportation
services.
The place of provision of services of transportation of goods, other than by
way of mail or courier, shall be the place of destination of the goods:
Provided that the place of provision of services of goods transportation
agency shall be the location of the person liable to pay tax.
Illustration
A consignment of cut flowers is consigned from Chennai to Amsterdam.
The place of provision of goods transportation service will be
Amsterdam (outside India, hence not liable to service tax).
Conversely, if a consignment of crystal ware is consigned from Paris to
New Delhi, the place of provision will be New Delhi.
33. Rule 11- Passenger Transportation Service
The place of provision in respect of a passenger transportation service
shall be the place where the passenger embarks on the conveyance for a
continuous journey.
33
1 Delhi-London-New
York- London – New
York
Delhi Yes, New Delhi, being the
place of provision for
continuous journey with
single return ticket.
2 New York-London-
Delhi
New York No, New York is place of
provision for
continuous journey with
single return
ticket
34. Rule 12- service provided on board conveyance
Place of provision of services provided on board a conveyance during the
course of a passenger transport operation, including services intended to be
wholly or substantially consumed while on board, shall be the first
scheduled point of departure of that conveyance for the journey.
Illustration
A video game or a movie-on-demand is provided as on-board
entertainment during the Kolkata-Delhi leg of a Bangkok-Kolkata-Delhi
flight. The place of provision of this service will be Bangkok (outside
taxable territory, hence not liable to tax).
If the above service is provided on a Delhi-Kolkata-Bangkok-Jakarta flight
during the Bangkok-Jakarta leg, then the place of provision will be Delhi
(in the taxable territory, hence liable to tax).
35. Rule 13- Power to Notify Description of certain Services
Rule 13 gives Power to the Central Government to notify any description of
service or circumstances in which the place of provision of service shall be
the place of effective use and enjoyment of service.
The Education Guide states that the rule an enabling power meant to
correct any injustice being met due to the applicability of rules in foreign
territory in a manner which is inconsistent with the POPS leading to double
taxation.
Due to cross border nature of many services, it is also possible in certain
situations to set up businesses in non taxable territory while the effective
enjoyment, or in other words, consumption, may be in taxable territory.
Rule also mean as an anti-avoidance measure where the intent of law is
sought to be defeated through ingenious practices unknown to ordinary
ways of conducting business.
36. Rule 14- Order of Application of Rules
Notwithstanding anything stated in any rule, where the provision of a
service is, prima facie, determinable in terms of more than one rule, it shall
be determined in accordance with the rule that occurs later among the rules
that merit equal consideration.
Illustration I
An architect based in Mumbai provides his service to an Indian Hotel
Chain (which has business establishment in New Delhi) for its newly
acquired property in Dubai. If Rule 5 (Property rule) were to be applied,
the place of provision would be the location of the property i.e. Dubai
(outside the taxable territory). With this result, the service would not be
taxable in India. Whereas, by application of Rule 8, since both the
provider and the receiver are located in taxable territory, the place of
provision would be the location of the service receiver i.e. New Delhi.
Place of provision being in the taxable territory, the service would be
taxable in India. By application of Rule 14, the later of the Rules i.e. Rule
8 would be applied to determine the place of provision.
37. Case Studies under POPS – Case Study 1
ABC Pvt. Ltd. is providing depository service to various clients. ABC is not a
Banking Company, Financial Institution or NBFC. ABC has certain NRI clients
who are situated outside India and do purchase and sell shares in India and
their demat account is maintained by the ABC in India. ABC recovers Demat
charges and other depository charges (e.g. annual account maintenance
charges) from the NRI clients.
Question: In terms of the POPS rules whether service tax is payable on the
services provided to NRI Clients?
The above situation will be covered under Rule of 3 of POPS. Under Rule 3,
the place of provision of service would be place of the service recipient.
Since the NRI viz. the service recipient is situated outside India, the place of
provision of service is outside India.
38. Case Study 1- Cont’d
However, in the aforesaid scenario the Department may demand service tax
on the ground that the service falls under Rule 9 on the ground that service
provided by ABC are in the nature of intermediary services.
Rule 9 of POPS will not be applicable in this case since the Education Guide
issued by CBEC has categorically clarified that stock brokers are not covered
under said Rule 9 . The relevant portion of the Education Guide is
reproduced below,
“5.9.6 For the purpose of this rule, an intermediary in respect of goods
(such as a commission agent i.e. a buying or selling agent, or a
stockbroker) is excluded by definition
Hence such services appear to be covered under Rule 3.
39. Case Study 2
ABC Pvt. Ltd. is conducting Insurance broking business in India jointly
with a foreign company XYZ Inc. For this purpose ABC and XYZ has
formed a company PQR Ltd. in India. After a period of 5 years, ABC
decides to quit the insurance broking business and gives ‘No
Objection Certificate’ to XYZ to continue business with other Indian
company and further ABC agrees for not to carry insurance broking
business in India for next three years. For this purpose the XYZ Inc.
has paid a sum of US $ 5 mn to ABC for issue of NOC as well as for
non compete fees.
Question: Whether service tax is payable on the non compete fees
paid by XYZ Inc to ABC Pvt., under POPS rules?
40. Case Study 2- Cont’d
The payments made by XYZ to ABC would be consideration for a service, as
the act of agreeing to refrain from competing for 3 years is a declared
service falling under clause (e) of section 66E. The relevant provision reads
as follows,
“66E: Declared Services: (e) agreeing to the obligation to refrain from an
act, or to tolerate an act or a situation, or to do an act;”
In the present case, since the aforesaid service does not fall under any of
the categories listed under Rules 4-6 and 9-12 of the POPS, Rule 3 of the
POPS would be applicable and the place of the provision of service would be
location of service recipient. Since the non compete fees are being paid by
XYZ, located outside taxable territory and the consideration is in convertible
foreign exchange, the non-compete services will tantamount to export of
services covered under Rule 6A of Service-tax Rules.
41. Case Study 2- Cont’d
However, situation will be different if the amount is sourced through the
company formed between XYZ inc and new Indian Partner.
If the amount is being sourced through the Newly formed Indian
company between XYZ with its new Indian partner, then the service
receiver would be the Indian Company (the fixed establishment) which
will be using/consuming the said service. Therefore, if the payment is
received through the newly formed Indian company, the location of
recipient of service would be within taxable territory and service tax
would be leviable.
42. Case Study 3
ABC Pvt. Ltd. (an Indian Co.) has an office premises at Nariman Point which is
the only asset in its Balance Sheet. Similarly ABC has only rental income in its
Statement of Profit & Loss. XYZ Inc. (a foreign company) wants to buy the
office premises and has appointed a Real Estate Broker Mr. Y (an Indian
party) to assist him in purchase of office premises. The shareholders of the
ABC Pvt. Ltd. wants to sell its office premises by way of sale of shares which
is purchased by XYZ Inc. Mr. Y has assisted in this deal to XYZ Inc. and hence
charged his fees to XYZ Inc.
Question: Decide applicability of POPS rules to payments made by XYZ to
Real Estate Broker – Mr. Y as brokerage for assisting in the
abovementioned transaction.
43. Case Study 3- Cont’d
Normally, if the sale of the office premises was through a simple money
transaction, then the place of provision of service would be determined
under Rule 5 i.e. location of the immovable property as the said service is
provided by broker Y directly in relation to immovable property by an estate
agent and therefore Service tax will be payable on the same
However, the sale of office premises presently is through a transfer of
shares, i.e. the shareholders of the ABC would sell the office premises to the
XYZ, who in turn would buy certain shares in ABC. Significantly the term
goods is defined underS.65B(25) to mean,
“every kind of movable property other than actionable claim and money; and
includes securities……”
A probable point of view that arises in the above case is that Y essentially
would be facilitating the sale of goods i.e. movable property thereby taking
the service outside the purview of Rule 5.
44. Case Study 3- Cont’d
However, the stand would be difficult to sustain given that Rule 5 brings
under it any service provided “directly in relation to an immovable
property” . The phrase “in relation to an immovable property” is to be
construed widely and would bring the above service of facilitating the sale
transaction under Rule 5. Therefore irrespective of whether the transaction
is a simple money transaction or facilitated by way of sale of shares , the
applicable Rule for determining the taxability is Rule 5 which is the place
where the immovable property is located. In view thereof service tax will be
payable on the brokerage received by Y.
45. Case Study 4
ABC Co. is an Indian company and provides recruitment services to clients
located in India and outside India. Some of the overseas clients have their
fixed establishments within India like a branch or a subsidiary or associate
company. The recruited person may be placed by the client at their fixed
establishment outside India or in India. The contract of services is executed
between ABC Co. and the overseas client, invoice for provision of service is
issued by ABC to the client and the payment is also received directly from the
client. The location where the candidate (recruitee) is to be placed is known
to the company right at the time of entering into the contract.
Question: Whether the Company is liable to charge service tax for
providing recruitment services to the foreign clients situated outside India-
If the recruited person is placed outside India.
If the recruited person is placed in India.
46. Case Study 4- Cont’d
The place of provision of service for the above scenario is to be determined
under Rule 3 i.e. location of service recipient.
Therefore, question is who is the service recipient in the present case,
whether it is foreign client or the branch of foreign client in India.
When the recruited person is placed outside India.
The service receiver, when the person is placed outside India is the place
outside India since the service provided by ABC is being consumed/used
by the place located outside India. Therefore, the service recipient is
outside the taxable territory.
When the recruited person is placed within India.
Normally, it should not have mattered where the recruited person is
placed since the agreement is between the foreign company and ABC.
Further consideration also is received from the foreign company.
However, the overseas client i.e. company receiving the recruitment
services also have places in India.
47. Case Study 4- Cont’d
Therefore one has to look into the definition of “location of service
receiver” as given under Rule 2(i)(b) which provides that – “where
services are used at more than one establishment, whether business or
fixed, the establishment most directly concerned with the use of the
service”;
Further, the Education Guide has clarified that in case of multiple
establishments of a person, the establishment that actually provides, or
receives (i. e. uses or consumes), a service, that establishment would be
treated as ‘directly concerned’ with the provision of service,
notwithstanding the contractual position, or invoicing or payment.
In the present case, it is the Indian Place that uses or consumes the
service since the employee is going to be placed there. Therefore, the
location of service recipient would be the Indian place i.e. within taxable
territory and service tax is required to be paid.
48. Case Study 5
Sargam Ltd. (S) is in the business of supplying contents such as songs, wall
papers, etc. to telecom operators. Such songs are downloaded by the
customer of telecom operator through WAP connections on mobile phone. In
few cases, telecom operators are located in J&K.
Which POP rule will be applicable in such cases?
The service that is provided by S is essentially access to online information
and database to telecom operators. Such service is directly covered under
Rule 9 (b) of POPS.
The Education Guide also clarifies that Rule 9(b) covers web-based services
providing digital contents. The relevant portion is reproduced below,
“5.9.5 What are ‘Online information and database access or retrieval
service”
Examples of such service are: (iii) web based services providing access or
download of digital content”
49. Case Study 5- Cont’d
In terms of Rule 9, service is deemed to be provided where Service provider
is located.
In this case, the location of Sargam Ltd. will be relevant from taxability point
of view. If Sargam Ltd. is situated in any part of India, other than J&K,
service-tax will be deemed to be provided at such place and will be taxable.
Since the criteria for determining place of provision of service is the location
of service provider, the location of customers/telecom operators is
irrelevant.
50. Case Study 6
Company ABC Pvt. Ltd. is incorporated in Bhutan. ABC is developing a
township project (the project) in the Bhutan. ABC has appointed consultant
from India say XYZ Ltd., to provide various consultancy services in relation to
the project to ABC Ltd. The consultant XYZ raises invoice in INR to the ABC
and ABC makes payment to the XYZ in INR only.
Question: Whether XYZ is required to charge any service tax on the
services provided to ABC?
XYZ will not be required to charge any service tax on the services provided
to ABC if the service is not within the taxable territory.
The relevant provision for determining the place of provision of service for
the above scenario is Rule 5 of POPS since the service provided by
consultants is in relation to an immovable property
51. Case Study 6- Cont’d
If service of the consultant is directly in relation to the project, then under
Rule 5, the place of provision of service is the location of immovable
property.
The Education Guide specifically includes within the purview of Rule 5, the
service of architects, engineers and similar experts or professional people,
relating to land, buildings or civil engineering works.
Therefore, in the given facts, the consultancy services, which are directly in
connection to the immovable property would be deemed to be at the
location of the immovable property i.e. Bhutan, outside the taxable
territory. Hence service is not taxable.
52. Case Study 6- Cont’d
Question: If XYZ decides to pay and amount of 6% on the value of exemted
services under Rule 6 of the Cenvat Credit Rules 2004, Whether XYZ can
recover 6% from ABC?
Yes, the 6% amount on account of reversal of credit under rule 6 can be
recovered by XYZ from their clients in view of circular No. 870/08/2008-CX
dt. 16.5.2008 issued by CBEC wherein it has been clarified that such
recovery will not amount to recovery of taxes. However, client cannot take
any cenvat in respect of such reimbursement as same amount is not
considered duty for cenvat purposes.
53. Case Study 7
ABC India has obtained services of GTA located in India for transporting
certain goods to XYZ ( an entity in Nepal). The freight is to be paid by XYZ.
Question: Discuss the applicability of POPS Rules in respect of freight paid
by XYZ.
Rule 10 of the POPS provides that the place of provision of services of
transportation of goods, shall be the place of destination of the goods.
Proviso to Rule 10 states that place of provision of services of goods
transportation agency shall be the location of the person liable to pay tax.
In the present case no tax will be payable as the destination of goods is
Nepal and the same is outside the taxable territory. Further even in terms of
the proviso, liability to pay tax has been shifted on the person who is liable
to pay the freight i.e. XYZ, which is located in Nepal. Therefore, in the
present scenario the services are deemed to be rendered in Nepal which is
outside taxable territory and hence no service-tax will be payable in this
case.
54. Case Study 8
Courier Company ‘C’ collect the parcel from their Mumbai customer
(consignor) & deliver the same to Company ‘D’ (another courier company) in
UK. In UK ‘D’ received the parcel & door step the same to Consignee in UK. In
above process Company ‘C’ raises the sales bill (including Service Tax) to
their local customer in Mumbai & collects the amount in INR from their
Mumbai Customer. At the same time, ‘D’ raises the invoice to ‘C’ (Charges
which ‘D’ paid for clearance at UK airport & door step the same parcel to
consignee in UK). In the said transaction, payment made by Local Company
‘C’ to ‘D’ is liable to Service Tax?
The place of provision of service, in the present case would be Rule 3. This is
because Rule 10, relating to transportation of goods, categorically excludes
“courier companies.”
55. Case Study 8
Since the service provider i.e. D, is outside India and the service recipient, C,
is in India, the place of provision of service under Rule 3 is India i.e. taxable
territory.
In the give circumstances, C will be required to pay service-tax under
reverse charge mechanism.