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Residential Refresher Course (RRC) -Presentation ii

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Agarwal sanjiv & Co
Agarwal sanjiv & Co

This presentation covers the new regime of service taxation in India, including the negative list of services, exempted services, declared services and valuation, and bundled services. It discusses the scope of services taxable under the new regime, including examples of new activities that may be taxed. It also summarizes the key aspects of the negative list of services, such as the sectors covered and considerations in developing the list. Specific services discussed in detail include those provided by government, Reserve Bank of India, foreign diplomatic missions, relating to agriculture, trading of goods, manufacturing, selling advertising space/time, access to roads/bridges via tolls, betting/gambling and lotteries.

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LATUR BRANCH OF WIRC OF ICAI Residential Refresher Course (RRC) A Presentation On “New Regime of Service Taxation in India” On by Saturday, Dr. Sanjiv Agarwal 25st August,2012 FCA, FCS @ Goa © Dr. Sanjiv Agarwal
SESSION – II New Regime of Taxation of Services 2
This presentation covers • Negative List of Services • Exempted Services • Declared Services (Including Valuation) • Bundled Services
Scope of Service Tax Services on which Service Tax shall be attracted comprise of :  Those services which satisfy the definition of service u/s 65B (44)  Nine specified declared services u/s 66E  Those services which do not find place in negative list of services u/s 66D  Those services which are not exempt from levy of Service Tax under Notification No. 25/2012-ST dated 20.06.2012 to be contd…. 4
Scope of Service Tax Services on which no Service Tax shall be payable comprise of : • Service which are specifically excluded from the scope of definition of service itself u/s 65(44). • 17 broad services specified in the negative list of services u/s 66D. • Services which are exempt from levy of Service Tax under N. No. 25/2012-ST dated 20.06.2012. • Specified services otherwise exempt under specific notifications. • Activities where service provider and service receiver are in non –taxable territory 5
Examples of new activities which may be taxed • Non commercial construction for non-government purpose • Private roads • Residential construction of more than one unit • Commercial artists/performers • Actors, directors • Reality show judges • Tourism boats • Board director’s remuneration • Non-compete fee • Arbitrators to business entities • Banking services to government • Unrecognized IPRs to be contd.. 6
Examples of new activities which may be taxed • Discourses and lectures • Services to RBI • Hotel Telephone Calls • Matrimonial sites • Astrologers • Secondments • Services provided by employers • ……………………….. (keep on thinking) 7
Negative list of Services What is negative list • Defined in new section 66D • Section 66D Specifies seventeen 17 broad categories of services. • Effective from 1-7-2012 • If an activity meets the charactertics of ‘ service ‘, it is taxable unless specified in Negative List. • Based on socio-economic–tax criterion 8
Consideration in Negative List Socio – Economic Considerations in Negative list • Administrative considerations: taxation of Government, difficult to tax sectors e.g. margin-based financial services. • Under contractual obligations: Specified international bodies and diplomatic missions • Welfare considerations: welfare of vulnerable sections of society, essential education, public health; public transport, services by non-profit entities, religious services, promotion of art, culture and sports. • Economic considerations: transport of export goods, services meant for agriculture, animal husbandry and infrastructure development. • Explicit activities in the nature of services, which are within the taxing powers of States: betting and lotteries, tolls. 9
Sectors in Negative List Negative list of services is drawn from seven broad sectors, viz. • services provided by specified person ie, Government • social welfare & public utilities • financial sector • transportation • construction & real estate • education • health care • others & miscellaneous 10
Services by Government or a local authority Services by Government or a local authority excluding the following services to the extent they are not covered elsewhere: • Services by the Department of Posts by way of speed post, express parcel post, life insurance and agency services provided to a person other than Government; • Services in relation to an aircraft or a vessel, inside or outside the precincts of a port or an airport; • Transport of goods or passengers; or • Support services provided to business entities to be contd.. 11
Service provided by Government or Local Authority • Most of services provided by Central / State Governments exempt from service tax. • But following services are taxable -  Department of posts - speed post, express parcel, life insurance and agency service to non government business entity but basic mail, money orders, operation of saving accounts ,pension payment etc services are covered in negative list  In relation to vessel or aircraft service within/outside port/airport  Transport of goods and/ or passengers  Support service to business entities To be contd…..
Service provided by Government or Local Authority • Services by government as sovereign functions (grant of licensing rights or audit of government, passport etc.) • Excludes corporations formed under Central Acts or State Acts or various Government companies registered under Companies Act, 1956 or autonomous institutions set up by a Special Acts • Government Department needs to be registered and to pay tax on support services of  Renting of immovable properties  Speed post, express parcel, life insurance.  Transport of goods and/ or passengers  Services in relation to vessel or aircraft • For other services, government not liable to pay service tax as tax paid by service recipient in reverses charge (N. No. 30) To be contd…..
Service provided by Government or Local Authority “ Support services" means  infrastructural,  operational,  administrative,  logistic,  marketing or  any other support of any kind comprising functions that entities carry out in ordinary course of operations themselves but may obtain as services by outsourcing from others for any reason whatsoever  shall include advertisement and promotion, construction or works contract, renting of immovable property, security, testing and analysis  Services provided by Government Security agencies are covered under support service - under reverse charge, Service Receiver is liable to tax.
Service by Reserve Bank of India • All services provided by RBI are in Negative List • Service Provided to RBI is taxable unless covered in negative list. • Service provided by banks to RBI taxable unless covered in Negative List or exempted services
Services by a foreign diplomatic mission located in India • Services by diplomatic mission of any country located in India • Does not cover services provided by any office or establishment of an International organization (Section 3 of United Nation Privileges & Immunities Act 1947) • Example- UNESCO, UNICEF, IMF, IBRD etc • Notification No. 27/2012- ST dated 20.6.2012 conditionally exempts service provided by any person  for the official use of a provision of a foreign diplomatic mission or consular post in India  for personal use or use of the family member of diplomatic agents or career consular officers posted in India
Service relating to Agriculture or Agricultural Produce services relating to agriculture by way of— (i) agricultural operations directly related to production of any agricultural produce including cultivation, harvesting, threshing, plant protection or seed testing; (ii) supply of farm labour; (iii) processes carried out at an agricultural farm including tending, pruning, cutting, harvesting, drying, cleaning, trimming, sun drying, fumigating, curing, sorting, grading, cooling or bulk packaging and such like operations which do not alter the essential characteristics of agricultural produce but make it only marketable for the primary market; (iv) renting or leasing of agro machinery or vacant land with or without a structure incidental to its use; (v) loading, unloading, packing, storage or warehousing of agricultural produce; (vi) agricultural extension services; (vii) services by any Agricultural Produce Marketing Committee or Board or services provided by a commission agent for sale or purchase of agricultural produce; to be contd…
Service relating to Agriculture or Agricultural Produce The Services relating to agriculture or agriculture produce specified in negative list-  agricultural operations directly related to production of any agricultural produce including cultivation, harvesting, threshing, plant protection or seed testing;  supply of farm labour;  processes carried out at the agricultural farm including tending, pruning, cutting, harvesting, drying cleaning, trimming, sun drying, fumigating, curing, sorting, grading, cooling or bulk packaging and such like operations which do not alter essential characteristics of agricultural produce but makes it only marketable for the primary market not for retail market; (e.g. cleaning of wheat) to be contd …….
Service relating to Agriculture or Agricultural Produce • renting of agro machinery or vacant land with or without a structure incidental to its use (e.g. green house, storage shed.) • loading, unloading, packing, storage and warehousing of agricultural produce; • agricultural extension services (application of scientific research, farmer education & training) • services provided by any Agricultural Produce Marketing Committee or Board (APMC) for agriculture or agricultural produce but does not include non -agricultural activities (e.g. renting of shops or other property or services provided by commission agent for sale or purchase of agricultural produce) to be contd …….
Service relating to Agriculture or Agricultural Produce Agriculture -Section 65 B(3) Cultivation of plants and rearing of all life-forms of animals except the rearing of horses, for food, fiber, fuel, raw material or other similar products Agriculture Produce -Section 65B(5) any produce of agriculture on which either no further processing is done or such processing is done as is usually done by a cultivator or producer which does not alter its essential characteristics but makes it marketable for primary market (E.g. Plantation crops like rubber, tea or coffee but does not include potato chips or tomato ketchup) to be contd …….
Trading of Goods • Trading of goods is not a taxable service, it being a sale and not a service. • If a transaction is a sale, it is not a service and vice versa • Transfer of title in goods is crucial • Activities of a commission agent / clearing and forwarding agent who sells goods on behalf of another for a commission are not trading of goods (Title of goods does not pass) • Forward contracts are in the nature of trading of goods. • Future contracts are not trading of goods to be contd …….
Trading of Goods Goods - Section 65B(25) “goods" means • every kind of movable property • other than actionable claim and money • includes securities, growing crops, grass, and things attached to or forming part of the land which are agreed to be severed before sale or under the contract of sale
Process amounting to manufacture or production of goods  process amounting to manufacture or production of goods" means a process on which duties of excise are leviable under section 3 of the Central Excise Act, 1944 or any process amounting to manufacture of alcoholic liquors for human consumption, opium, Indian hemp and other narcotic drugs and narcotics on which duties of excise are leviable under any State Act for the time being in force.  Covers manufacturing activity carried out on contract or job work basis where  Transfer of title of goods is not involved  Duties of excise are leviable on such process 23
Process amounting to manufacture or production of goods What is Excisable Goods  “excisable goods” means goods specified in the First Schedule and the Second Schedule to the Central Excise Tariff Act, 1985 as being subject to a duty of excise and includes salt  Mobility and marketability are essential conditions  Goods includes any article, material or substance which is capable of being bought and sold for a consideration and such goods shall be deemed to be marketable.
Process amounting to manufacture or production of goods Related Exemptions (Clause -30 , N. No. 25/2012) Carrying out an intermediate production process as job work in relation to - (a) agriculture, printing or textile processing; (b) cut and polished diamonds and gemstones; or plain and studded jewellery of gold and other precious metals, falling under Chapter 71 of the Central Excise Tariff Act ,1985 (5 of 1986) (c) any goods on which appropriate duty is payable by the principal manufacturer or (d) processes of electroplating, zinc plating, anodizing, heat treatment, powder coating, painting including spray painting or auto black, during the course of manufacture of parts of cycles or sewing machines upto an aggregate value of taxable service of the specified processes of one hundred and fifty lakh rupees in a financial year subject to the condition that such aggregate value had not exceeded one hundred and fifty lakh rupees during the preceding financial year
Selling of space or time slots for advertisements Selling of space or time slots for advertisements other than advertisements broadcast by radio or television This entry in negative list should qualify the following tests – • involves selling of space (in case of print media) • involves selling of time slots ( in case of electronic media) • purpose of selling time slots / space to be for advertisements (publicity / sales promotion, awareness etc.) • excludes broadcast by radio or television ( i.e. broadcast will be taxable) to be contd …….
Selling of space or time slots for advertisements Taxable Non-taxable Sale of space or time for Sale of space for advertisement in advertisement to be broadcast on print media radio or television Sale of time slot by a broadcasting Sale of space for advertisement in organization bill boards, public places (including stadia), buildings, conveyances, cell phones, automated teller machines, internet Aerial advertising Presentation made in person
Selling of space or time slots for advertisements “Advertisement" means • any form of presentation for promotion of, • or bringing awareness about, • any event, • idea, • immovable property, • person, service, • goods or actionable claim through • newspaper, television, radio or any other means • but does not include any presentation made in person; • Services provided by advertisement agencies relating to preparation / designing etc of advertisements are taxable. • Print media includes newspaper and books.
Service way of access to a road or a bridge on payment of toll charges • Only covers toll charges for access to road and bridge • Includes National highways or state highways. • Toll on other roads not in negative list • Collection charges or service charges paid to any toll collection agency are not covered under negative list • Dose not include services used for providing such service
Betting, Gambling or Lottery Betting or Gambling means • putting on stake something of value, • particularly money, • with consciousness of risk and hope of gain on the outcome of a game or a contest, • whose result may be determined by chance or accident, or on the likelihood of anything occurring or not occurring • Betting is a form of wagering contract in which money or money’s worth is made payable by the parties on the result of an uncertain event, usually a game or sport • Gambling means playing game of chance for money or risky action undertaken with the hope of success • Lottery is a game of chance (e.g. lottery, bingo, lotto etc.) which may include online games to be contd …….
Betting, Gambling or Lottery • Auxiliary services for organizing or promoting betting or gambling events are not covered in negative list • State subject covered in list II • Actionable claim • In Union of India & Others v. Martin Lottery Agencies Ltd (2009) 14 STR 593 (Supreme Court), it was held that service tax can not be levied on sale of lottery ticket • In Martin Lottery Agencies Ltd. v. Union of India (2007) 8 STR 561 (Sikkim), it was held that petitioner was not rendering services in relation to promotion of client’s goods and service tax liability did not arise
Admission to entertainment events and access to amusement facilities Entertainment event if it is intended (may not necessarily provide) to provide any one or more of the following to the recipients / viewers / audience - • recreation • pastime • fun , or • enjoyment to be contd …….
Admission to entertainment events and access to amusement facilities This could be by way of – • exhibition of cinematographic film • circus • concerts • sporting events • pageants • award functions • dance performance • musical performance • theatrical performances – drama, ballets or any such event / programme. to be contd …….
Admission to entertainment events and access to amusement facilities Amusement facility means • a facility • where fun or recreation is provided • by means of  rides  gaming devices  bowling alleys in amusement parks  amusement arcades  water parks  theme parks  such other places • but does not include a place within such facility where other services are provided to be contd …….
Admission to entertainment events and access to amusement facilities • Amusement means entertainment, diversion, pastime, sport etc. • Theatrical performances need not be performed in theatre • Standalone amusement ride in a mall – fun or recreation by means of ride – covered under amusement – excluded • Membership of club which provides amusement facilities - excluded • Event manager for organizing an entertainment event or entertainment is not cover in this category
Transmission or distribution of Electricity by an electricity transmission or distribution utility • Provided by Electricity Transmission or Distribution utility • Covers both – • Transmission • Distribution • Installation of gensets or similar equipment by private contractor for distribution - taxable • Charges collected by developer or a housing society for distribution of electricity within a residential complex - taxable but excluded if it acts as a licensed authority
Specified services relating to education • Service by way of - i. Pre-school education and education up to higher secondary school or equivalent ii. Education as a part of a prescribed curriculum for obtaining a qualification recognized by law iii. Education as a part of an approved vocational education course • Conduct of degree courses by colleges, universities or institutions which lead to grant of qualifications recognized by law to be contd …….
Specified services relating to education Approved vocational education course  a course run by an industrial training institute or an industrial training centre affiliated to the National Council for Vocational Training, offering courses in designated trades as notified under the Apprentices Act, 1961  a Modular Employable Skill Course, approved by the National Council of Vocational Training, run by a person registered with the Directorate General of Employment and Training, Ministry of Labour and Employment, Government of India  a course run by an institute affiliated to the National Skill Development Corporation set up by the Government of India to be contd …….
Specified services relating to education • Education upto higher secondary school or equivalent are in negative list. • Services provided to or by an educational institution for Auxiliary educational services and renting of immovable property – exempted under mega notification Negative list will not include – • Private tuitions • Education as a part of prescribed curriculum for obtaining qualification recognized by law of a foreign county • Services provided to educational institutions • Placement services to be contd …….
Specified services relating to education Education related services not in negative list but exempt from tax under Notification No. 25/2012-ST dated 20.06.2012 • Transportation of students to / from institutions • Provision of mid-day meal in schools • Admission related services to educational institutes where education services are exempt. • Coaching / training in recreational activities of arts, culture or sports.
Services by way of renting of residential dwelling for use as residence Renting coves all types of arrangements in relation to immovable property with or without its transfer of possession or control and whether wholly or partly. It would cover / include – • allowing • permitting • granting access / entry / occupation • use of facility • letting • leasing • licensing, or • other similar arrangements (such as right to use, sub-lease, space sharing etc.) to be contd …….
Services by way of renting of residential dwelling for use as residence Renting of certain kinds of property already covered in the negative list • renting of vacant land, with or without a structure incidental to its use, relating to agriculture. • renting of residential dwelling for use as residence • renting out of any property by Reserve Bank of India • renting out of any property by a Government or a local authority to non-business entity to be contd …….
Services by way of renting of residential dwelling for use as residence • Residential dwelling not defined but includes residential accommodation • does not include hotel, motel, inn, Guest house, camp site, lodge, house boat or other placement temporary stay • Residential dwelling used partly as a residence and partly for non residential purpose- treated as bundled service • Residential unit – independent residential unit with specific facilities for living, cooking and sanitation to be contd …….
Financial Services Services by way of— (i) extending deposits, loans or advances where consideration is represented by way of interest or discount (ii) inter se sale or purchase of foreign currency amongst banks or authorised dealers of foreign exchange or amongst banks and such dealers to be contd …….
Financial Services • Transactions in money outside the ambit of ‘service’ • Any activity related to a transaction in money by way of its use or conversion by cash or by any other mode, from one form , currency or denomination to another form, currency or denomination would not be treated as a transaction in money if a separate consideration is charged for such an activity • Service tax levied on service charges for transactions in money including of charges for making of drafts, letter of credits issuance charges, service charges relating to issuance of CDs/ CPs etc • Interest rate swaps and foreign exchange swaps are excluded being securities and hence excluded to be contd …….
Financial Services • Only interest and discount are in negative list • Interest on  Money borrowed  Debt incurred  Deposit  Claim / obligation/ similar right • Service charge / fee/ commission not covered (e.g. pre payment fee, late fee, cheque bounce charges) • interest on credit facility not utilized (commitment charges ) not covered • Bill discounting – only discount covered to be contd …….
Financial Services • Any charges over and above interest/ discount taxable • Purchase/ sale of foreign currency between banks and authorized dealers under negative list • Examples of services in negative list-  Fixed deposits or saving deposits or any other such deposits in a bank for which return is received by way of interest  Providing a loan or over draft facility for in consideration for payment of interest  Mortgages or loans with a collateral security to the extent that the consideration for advancing such loans or advances are represented by way of interest  Corporate deposits to the extent that the consideration for advancing such loans or advances are represented by way of interest or discount
Services relating to transportation of passengers Services by- • a stage carriage; • railways in a class other than (i) first class or (ii) an AC coach ( now exempt under Notification No 43/2012 till 30.9.2012) • metro, monorail or tramway • inland waterways • public transport, other than predominantly for tourism purpose, in a vessel, between places located in India; and • metered cabs, radio taxis or auto rickshaws. to be contd …….
Services relating to transportation of passengers • ‘Stage Carriage’ defined in section 2(40) of Motor Vehicles Act, 1988. • Motor vehicle constructed or adapted to carry more than six passengers excluding the driver for hire or reward at separate fares paid by or for individual passengers, for the whole journey or for stages of the journey • National waterways covered in inland waterways • Metered cab means any contract carriage on which an automatic device, of the type and make approved by the State Transport Authority, is fitted which indicates reading of the fare chargeable at any moment and that is charged accordingly under the conditions of its permit issued under the Motor Vehicles Act, 1988 to be contd …….
Services relating to transportation of passengers Covered under negative list Not Covered under negative list Motor vehicles on hire to state Motor vehicles to state transport transport undertaking (more taken undertaking 12 passengers) Exemption to Transport of No exemption for Tourism, passengers by a contract carriage conducted tours, chartered or hire
Service relating to transportation by Goods Services provided in relation to transportation of goods specified in the negative list • by road except the services of (i) a goods transportation agency or (ii) a courier agency • by aircraft or vessel from a place outside India up to the customs station of clearance in India; or • by inland waterways (agents covered) to be contd …….
Service relating to transportation by Goods • Services provided by GTA taxable except under separate exemption available for • fruits, vegetables, eggs, milk, food grains or pulses in a goods carriage; • goods where gross amount charged on a consignment transported in a single goods carriage does not exceed one thousand five hundred rupees; or • goods where gross amount charged for transportation of all such goods for a single consignee in the goods carriage does not exceed rupees seven hundred fifty. • Transport of Goods by rail is exempt upto 30.9.2012 • Courier services – Express cargo service, angadia – taxable to be contd …….
Service relating to transportation by Goods Nature of service relating to Whether covered in the transportation of Goods negative list entry By railways No (but exempt) By air within the country or No abroad By a vessel in the coastal waters No By a vessel on a national Yes waterway Services provided by a GTA No
Funeral, Burial, Crematorium or Mortuary Services including Transportation of the deceased • Funeral • Burial • Crematorium • Mortuary • Transportation of deceased
Exemptions under Service Tax General Exemptions Small Scale Exemption • The threshold exemption limit of Rs. 10 lakh continues to exist and it is over and above the exemptions notified in Notification No. 25/2012-ST dated 20.6.2012. • W.e.f. 1.4.2012, aggregate value of Rs. 10 lakh would mean the sum total of value of first consecutive invoices issued during a financial year, but does not include value charged in invoices towards such services which are exempt from whole of service tax. (Refer Notification No. 33/2012-ST dated 20.6.2012) to be contd….
Exemption under Service Tax General Exemptions • W.e.f.1.07.2012, Notification No. 6/2005 as amended shall no longer be applicable. There is a change in scope of aggregate value which shall mean as follows and subject to following conditions-  total of value of taxable services  value shall be as charged in first consecutive invoices issued during financial year  value charged in invoices issued for taxable services which are exempt from whole of Service Tax shall be excluded in determining the aggregate value
Exemption under Service Tax General Exemptions Exemption for Exporters/SEZ  Transportation of export goods by Goods Transport Agency in a goods carriage received by an exporter for transport of goods. (Refer Notification No. 31/2012- ST dated 20.6.2012)  Refund of service tax paid on all input taxable services received by an exporter of goods and used for export of goods, subject to certain specified conditions. (Refer Notification No. 39/2012-ST dated 20.6.2012)  Taxable services, received by a unit located in a Special Economic Zone or Developer of SEZ for the authorised operations. (Refer Notification No. 40/2012-ST dated 20.6.2012)
Exemption under Service Tax General Exemptions Exemption for Exporters/SEZ  Rebate of Service Tax paid on taxable services received by exporter of goods and used for export of goods, subject to conditions (Refer Notification No. 41/2012-ST dated 29.6.2012)  Exemption to services provided by commission agent located outside India and engaged by Indian exporter for promotion of export goods exported upto Service Tax calculated on 10% of free on board value of export goods (Refer Notification No. 42/2012-ST dated 29.6.2012)
Exemption under Service Tax General Exemptions Exemption to Import of Technology  Taxable service involving import of technology, from so much of service tax, as is equivalent to the extent of amount of cess payable on the said transfer of technology under the provisions of section 3 of the Research and Development Cess Act, 1986.(Refer Notification No. 14/2012-ST dated 17.3.2012) Exemption for Services to Foreign Diplomatic Mission  Taxable services provided for the official use of a foreign diplomatic mission or consular post in India, or for personal use or for the use of the family members of diplomatic agents or career consular officers posted therein. (Refer Notification No. 27/2012-ST dated 20.6.2012)
Exemption under Service Tax General Exemptions Exemption to Services by TBI or STEP  Taxable services provided by a Technology Business Incubator (TBI) or a Science and Technology Entrepreneurship Park (STEP) recognized by the National Science and Technology Entrepreneurship Development Board (NSTEDB) of the Department of Science and Technology, Government of India. (Refer Notification No. 32/2012-ST dated 20.6.2012) Exemption to Renting of an Immovable Property  Taxable service of renting of an immovable property, from so much of the service tax leviable thereon, as is in excess of the service tax calculated on a value which is equivalent to the gross amount charged for renting of such immovable property less taxes on such property, namely property tax levied and collected by local bodies. (Refer Notification No. 29/2012-ST dated 20.6.2012)
Exemption under Service Tax General Exemptions Exemption to Railway Services  Taxation of services of passenger transportation by railways in first class / AC coach and transportation of goods by railways exempt upto 30 September, 2012 (Refer Notification No. 43/2012-ST dated 2.7.2012)
Specific Exempted Services (Vide mega Exemption Notification No. 25/2012-ST dated 20.6.2012)  W.e.f. 1.7.2012  Covers 39 specific exemptions  Negative List services – not taxable at all ; can be amended only by parliament  Exempted services – taxable but exempt under notification; can be modified by notification.
Services Provided to the United Nations or a Specified International Organization Services Provided to the United Nations or a Specified International Organization • Service provided to all international organization are not exempt but service to only specified international organizations of United Nations (Privileges and Immunities Act, 1947) are exempt • Service provided for official use of foreign diplomatic mission/ counselor post and personal use are exempt vide N. No. 27/2012-ST dated 20.6.2012
Health Care Services Health care services by a clinical establishment, an authorised medical practitioner or para-medics What is health care • “Health care services” means any service by way of diagnosis or treatment or care • For illness, injury, deformity, abnormality or pregnancy in any organization system of medicine and includes services by way of supply of meals for the patient or transportation of the patient to and from a clinical establishment • Does not include hair transplant or cosmetic or plastic surgery, except when undertaken to restore or to reconstruct anatomy or functions of body affected due to congenital defects, developmental abnormalities, injury or trauma.
Health Care Services  All health care services shall not be exempt but only recognized systems of medicine are covered under exemption.  Recognized systems of medicine include • Allopathy • Yoga • Naturopathy • Ayurveda • Homeopathy • Siddha • Unani • Any other system of medicine that may be recognized by Central Government.
Health Care Services “Authorised medical practitioner” means  any medical practitioner registered with any of the Councils of the recognised system of medicine  includes medical professional having the requisite qualification to practice in any recognised system of medicine as per any law for the time being in force.  medical practitioner is a physician or surgeon
Health care Services by a Clinical Establishment or Authorized Medical Practitioner or Para medics “Clinical establishment” means • a hospital • nursing home • clinic, • sanatorium or an institution by, whatever name called, • that offers services, or facilities requiring diagnosis or treatment or care for • illness, • injury, • deformity, • abnormality or • pregnancy, • in any recognised system of medicine, established and administered or maintained by any person or a place established as an independent entity or a part of an establishment to carry out diagnostic or investigative services of diseases.
Health Care Services • Paramedics are trained health care professionals, e.g. nursing staff, physiotherapists, technicians, lab assistants etc. • The services to be exempt must • be health care services • be provided by - (i) a clinical establishment, or (ii) an authorised medical practitioner, or (iii) para-medics • Earlier exempted under Notification No. 30/2011-ST dated 25.4.2011 w.e.f. 1.5.2011.
Health Care of Animals or Birds Services by a veterinary clinic in relation to health care of animals or birds • Health care services for animals and birds - Exempted • Such services are generally provided by a veterinary clinic • ‘Veterinary’ implies relating to the diseases, injuries and treatment of farm and domestic animals
Services by way of Charitable Activities Services by an entity registered under section 12AA of the Income tax Act, 1961 by way of charitable activities “Charitable activities”- Clause (k) means activities relating to – (a) public health by way of – • care or counselling of - (i) terminally ill persons or persons with severe physical or mental disability (ii) persons afflicted with HIV or AIDS, or (iii) persons addicted to a dependence-forming substance such as narcotics drugs or alcohol or • public awareness of preventive health, family planning or prevention of HIV infection (b) advancement of religion or spirituality
Services by way of Charitable Activities (c) advancement of educational programmes or skill development relating to,- (I) abandoned, orphaned or homeless children (II) physically or mentally abused and traumatized persons (III) Prisoners or (IV) persons over the age of 65 years residing in a rural area (d) preservation of environment including watershed, forests and wildlife or (e) advancement of any other object of general public utility up to a value of twenty five lakhs rupees in any FY provided that total value of such activities had not exceeded twenty five lakhs rupees during the preceding FY
Services by way of Charitable Activities Conditions for this exemption -  services should be provided by an entity registered u/s 12AA of Income Tax Act, 1961, and  services should be charitable activities (as above)
Services relating to Religious Place and Religious Ceremony Services by a person by way of-  renting of precincts of a religious place meant for general public or  conduct of any religious ceremony • Renting of precinct of a religious place as well as conduct of any religious ceremony, both shall be exempt • Religious place is a place which is primarily meant for conduct of prayers or worship pertaining to a religion • ‘Precincts’ means an area within the walls or perceived boundaries of a particular building or place; an enclosed or clearly defined area of ground around a cathedral, church, temple, college etc.
Services relating to Religious Place and Religious Ceremony • Exemption is available only if the place is meant for general public • General public means the body of people at large sufficiently defined by some common quality of public or impersonal nature • E.g.- if a marriage is performed in precincts of a church by renting of that place, it would be exempt
Services provided by arbitral tribunal Services provided by- (a) an arbitral tribunal to - (i) any person other than a business entity; or (ii) a business entity with a turnover up to rupees ten lakh in the preceding financial year; (b) an individual as an advocate or a partnership firm of advocates by way of legal services to,- (i) an advocate or partnership firm of advocates providing legal services ; (ii) any person other than a business entity; or (iii) a business entity with a turnover up to rupees ten lakh in the preceding financial year; or (c) a person represented on an arbitral tribunal to an arbitral tribunal
Services provided by arbitral tribunal Taxability for Arbitral Tribunal Sole / Panel to Arbitral Tribunal exempt to any person (non business entity) exempt to business entity (turnover upto 10 lakh) exempt to business entity (turnover > 10 lakh) taxed under reverse charge Taxability for advocates Individual / firm to Individual / firm exempt to business entity (turnover upto 10 lakh) exempt to business entity (turnover > 10 lakh) taxed under reverse charge • Firm includes LLP • Effectively, no tax to be paid by advocates / arbitral tribunal • Legal services – advice, consultancy or assistance in any branch of law in any manner, includes representational services (Clause w of N. No. 25/2012-ST dated 20.6.2012)
Services by way of technical testing or analysis of newly developed drugs Services by way of technical testing or analysis of newly developed drugs, including vaccines and herbal remedies, on human participants by a clinical research organisation approved to conduct clinical trials by the Drug Controller General of India Conditions to be satisfied – (a) service of conduct of technical testing and analysis (b) service in relation to newly developed drugs/vaccines/herbal remedies (c) service on human participants (d) service by clinical research organization approved by Drug Controller General of India.
Services of training or coaching in recreational activities Services by way of training or coaching in recreational activities relating to arts, culture or sports • Exemption is to training or coaching Such coaching or training must relate to any one or more of —  arts,  culture,  sports • Activities by performing artists in folk or classical art forms of music, dance or theatre are not liable to service tax
Services provided to / by educational institution Services provided to or by an educational institution in respect of education exempted from service tax, by way of -  auxiliary educational services or  renting of immovable property • Auxiliary education services shall cover the services in relation to educational activities only and include – i. any service relating to imparting any  skill  knowledge  education  development of course conduct  other knowledge enhancement activity i. whether for students or faculty ii. out sourced activities ordinarily carried out by educational institutions
Services provided to / by educational institution iii. Services in relation to –  admission  conduct of examination  catering of students under any mid day meal scheme sponsored by Government  Transportation of students or faculty iii. Services in relation to catering under mid day scheme and transportation were hitherto exempt under different notifications under outdoor catering services and tour operator’s services
Services provided to a recognised sports body Services provided to a recognized sports body by- a) an individual as a player, referee, umpire, coach or team manager for participation in a sporting event organized by a recognized sports body; b) another recognised sports body;  Recognized sports body include IOA, SAI, Intl0A, etc  Services by individual player, referee etc to sports body are exempt for participation in event  Services by one recognized sport body to other is exempt  Services by individuals such as selectors, commentators, curators, technical experts is not exempt  Services provided to unrecognized franchisee of sport event taxable (eg: IPL )
Services by way of sponsorship of sporting events Services by way of sponsorship of sporting events organised- a) by a national sports federation, or its affiliated federations, where the participating teams or individuals represent any district, state or zone; b) by Association of Indian Universities, Inter-University Sports Board, School Games Federation of India, All India Sports Council for the Deaf, Paralympic Committee of India or Special Olympics Bharat; c) by Central Civil Services Cultural and Sports Board; d) as part of national games, by Indian Olympic Association; or e) under Panchayat Yuva Kreeda Aur Khel Abhiyaan (PYKKA) Scheme
Services by way of sponsorship of sporting events • Events, i.e., tournaments or championships organized only by specified bodies in relation to games, sport, cultural events etc – Exempted • Any sponsorship of event organized by any other body like BCCI arranging IPL cricket tournament –Not Exempted • Vide N. No. 30/2012-ST dated 20.6.2012, entire service tax is payable by the body corporate or partnership firm receiving the service in India under reverse charge method
Services provided to the Government, a local authority or a governmental authority Services provided to the Government, a local authority or a governmental authority by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of - a) a civil structure or any other original works meant predominantly for use other than for commerce, industry, or any other business or profession; b) a historical monument, archaeological site or remains of national importance, archaeological excavation, or antiquity specified under the Ancient Monuments and Archaeological Sites and Remains Act, 1958 (24 of 1958); c) a structure meant predominantly for use as (i) an educational, (ii) a clinical, or (iii) an art or cultural establishment; d) canal, dam or other irrigation works; e) pipeline, conduit or plant for (i) water supply (ii) water treatment, or (iii) sewerage treatment or disposal; or f) a residential complex predominantly meant for self-use or the use of their employees or other persons specified in the Explanation 1 to clause 44 of section 65 B of the said Act;
Services provided to the Government, a local authority or a governmental authority  Government (States or Central) or any local authority (such as municipal corporation, development authority etc) or governmental authority (such as Revenue Board, Water Board etc) shall be exempt from levy of service tax on • construction, • erection, • commissioning, • installation, • completion, • fitting out, • repair, • maintenance, • renovation, or • alteration, in relation to specified structure, buildings or complex.
Services provided to the Government, a local authority or a governmental authority  Construction of buildings or structures such as hospitals or educational institutes for the government or local authority or governmental authority –Exempt  if such construction is for others – Taxable  A civil structure or any other original works meant predominantly for use other than for commerce, industry, or any other business or profession – Exempt  If client is other than the Government, a local authority or a governmental authority, service tax is required to paid  Service tax is payable on construction of a residential complex having more than one single residential unit
Services provided by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration Services provided by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of,- a) a road, bridge, tunnel, or terminal for road transportation for use by general public; b) a civil structure or any other original works pertaining to a scheme under Jawaharlal Nehru National Urban Renewal Mission or Rajiv Awaas Yojana; c) a building owned by an entity registered under section 12 AA of the Income tax Act, 1961(43 of 1961) and meant predominantly for religious use by general public; d) a pollution control or effluent treatment plant, except located as a part of a factory; or e) a structure meant for funeral, burial or cremation of deceased
Services provided by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration • Construction of roads for use by general public - Exempt • Construction of roads which are not for general public use e.g. construction of roads in a factory, residential complex etc –Taxable • If assessee is constructing such structures for the government, a local authority or a governmental authority – Exempt • If assessee is constructing for others – Taxable • construction of a building owned by an entity registered under section 12 AA of the Income tax Act, 1961 and meant predominantly for religious use by general public – Exempt • Repair, maintenance of airports, ports and railways -Taxable
Services by way of construction, erection, commissioning, or installation of original works Services by way of construction, erection, commissioning, or installation of original works pertaining to,- a) an airport, port or railways, including monorail or metro; b) a single residential unit otherwise than as a part of a residential complex; c) low- cost houses up to a carpet area of 60 square metres per house in a housing project approved by competent authority empowered under the ‘Scheme of Affordable Housing in Partnership’ framed by the Ministry of Housing and Urban Poverty Alleviation, Government of India; d) post- harvest storage infrastructure for agricultural produce including a cold storages for such purposes; or e) mechanised food grain handling system, machinery or equipment for units processing agricultural produce as food stuff excluding alcoholic beverages;
Services by way of construction, erection, commissioning, or installation of original works • “Original works” as defined in Valuation Rules means – (a) all new constructions; or (b) all types of additions and alterations to abandoned or damaged structures on land that are required to make them workable, (c) erection, commission or installation of plant, machinery or equipment or structures, whether prefabricated or otherwise • No service tax liability on erection or installation of machineries or equipments for units processing agricultural produce • Erection or installation of machineries or equipments for dal mills, rice mills, milk dairies or cotton ginning mills -Exempt • Only erection and construction of original works is covered • Exemption will cover low cost houses under the scheme of affordable housing in partnership
Temporary transfer or permitting the use or enjoyment of a copyright Temporary transfer or permitting the use or enjoyment of a copyright covered under clauses (a) or (b) of sub-section (1) of section 13 of the Indian Copyright Act, 1957 relating to original literary, dramatic, musical, artistic works or cinematograph films;  A music company would be required to pay service tax  Service Tax is not payable on the royalty amount so received from the music company by composer  an author having copyright of a book written by him –Exempt  copyright of a cinematographic film -Exempt
Services by a performing artist in folk or classical art forms Services by a performing artist in folk or classical art forms of (i) music, or (ii) dance, or (iii) theatre, excluding services provided by such artist as a brand ambassador; • The service provided by any person being a performing artist in the form of - • folk, or • classical in relation to - • music, • dance, or • theatre are exempt • if such an artist provides services as a brand ambassador for any product, service, event or company etc for a consideration - Taxable
Services by way of collecting or providing news Services by way of collecting or providing news by an independent journalist, Press Trust of India or United News of India; • The exemption will be available to following persons or service providers – (a) independent journalists (individuals, reporters, correspondents etc but not editors of newspapers or electronic media) (b) Press Trust of India (PTI) (c) United News of India (UNI) • PTI and UNI are government sponsored news agencies – Non Taxable • News syndication by private news agencies for a consideration - Taxable
Services by way of renting of a hotel, inn, guest house, club, campsite or other commercial places Services by way of renting of a hotel, inn, guest house, club, campsite or other commercial places meant for residential or lodging purposes, having declared tariff of a unit of accommodation below rupees one thousand per day or equivalent • “Declared tariff” includes charges for all amenities provided in the unit of accommodation (given on rent for stay) like furniture, air- conditioner, refrigerators or any other amenities, but does not include any discount offered on the published charges for such unit • Abatement under Notification No. 26/2012-ST is also available to such services where declared tariff is Rs. 1000 or more and Service Tax is payable only on 60 per cent of the gross value of taxable service
Serving of food or beverages by a restaurant / eating joints Services provided in relation to serving of food or beverages by a restaurant, eating joint or a mess, other than those having (i) the facility of air-conditioning or central air-heating in any part of the establishment, at any time during the year, and (ii) a licence to serve alcoholic Beverages • It is not necessary that the facility of air-conditioning is available round the year • Serving of food or beverages in a centrally air-conditioned premise will be taxed if its restaurant has a license to serve alcoholic beverages • those restaurants which do not have license to serve alcoholic beverages - Exempt • Under N. No. 26/2012-ST dated 20.6.2012, abatement @ 30 per cent is allowed w.e.f. 1.7.2012 to bundled services by way of supply of food or any other article of human consumption or any drink in a premises, including a hotel, convention centre, club etc. subject to condition of non availment of Cenvat Credit on inputs.
Services by way of transportation by rail or a vessel from one place in India to another Services by way of transportation by rail or a vessel from one place in India to another of the following goods - a. petroleum and petroleum products falling under Chapter heading 2710 and 2711 of the First Schedule to the Central Excise Tariff Act, 1985 ; b. relief materials meant for victims of natural or man-made disasters, calamities, accidents or mishap; c. defence or military equipments; d. postal mail or mail bags; e. household effects; f. newspaper or magazines registered with the Registrar of Newspapers; g. railway equipments or materials; h. agricultural produce; i. foodstuff including flours, tea, coffee, jaggery, sugar, milk products, salt and edible oil, excluding alcoholic beverages; or j. chemical fertilizer and oilcakes;
Services by way of transportation by rail or a vessel from one place in India to another • The exemption is in relation to – (a) transportation of specified goods only (b) in a rail or a vessel. (c) from one place to other by rail or vessel • Goods specified are of general nature, transportation of which is in national and public interest
Services provided by a goods transport agency for transportation of goods Services provided by a goods transport agency by way of transportation of - a) fruits, vegetables, eggs, milk, food grains or pulses in a goods carriage; b) goods where gross amount charged for the transportation of goods on a consignment transported in a single goods carriage does not exceed one thousand five hundred rupees; or c) goods, where gross amount charged for transportation of all such goods for a single consignee in the goods carriage does not exceed rupees seven hundred fifty;
Services by way of giving on hire Services by way of giving on hire - a) to a state transport undertaking, a motor vehicle meant to carry more than twelve passengers; or b) to a goods transport agency, a means of transportation of goods Exemption shall be available subject to following conditions – • hiring to a State transport undertaking or to a goods transport agency • hiring of motor vehicle to carry more than 12 passengers or in case of GTA, for transportation of goods • In both the cases, vehicle should be given on hire
Transport of passengers with or without accompanied belongings Transport of passengers, with or without accompanied belongings, by - a) air, embarking from or terminating in an airport located in the state of Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, or Tripura or at Bagdogra located in West Bengal; b) a contract carriage for the transportation of passengers, excluding tourism, conducted tour, charter or hire; or c) ropeway, cable car or aerial tramway; The ingredients of a contract carriage are -  It carries passengers for hire or reward  It is engaged in contract whether expressed or implied for use of such vehicle as a whole;  The contract must be entered into by the person with the holder of permit in relation to such vehicle or with any person authorized by him
Transport of passengers with or without accompanied belongings  The agreed consideration can either by on time basis or one point to another;  The vehicle should not stop to pick up or set down passengers not included in the contract anywhere during the journey;  It includes maxi-cab or motor-cab. • In cases where a bus operates on a route under a contract carriage and passengers embark or disembark from the bus at any place falling on the route and pay separate fares for the whole or for stages of journey, no Service Tax would be payable. • transport of passenger in a contract carriage for the transportation of passengers for tourism, conducted tour, charter or hire is taxable
Services by way of vehicle parking to general public Services by way of vehicle parking to general public excluding leasing of space to an entity for providing such parking facility • Rent of vacant land used for parking is liable to Service Tax • No Service Tax is payable on providing the facility of motor vehicle parking to general public • Parking facility provided to any one which is not a general public, say a bank or hotel or car dealer etc –Taxable • General public defined to mean the body of people at large sufficiently defined by some common quality of pubic or impersonal nature
Services provided to Government, a local authority or a governmental authority Services provided to Government, a local authority or a governmental authority by way of - a) carrying out any activity in relation to any function ordinarily entrusted to a municipality in relation to water supply, public health, sanitation conservancy, solid waste management or slum improvement and upgradation; or b) repair or maintenance of a vessel or an aircraft Services provided to the Government or a local authority or Governmental Authority may cover services by way of – (a) repair of a ship, boat or vessel or aircraft (b) effluents and sewerage treatment; (c) waste collection or disposal; (d) storage, treatment or testing of water for drinking purposes; or (e) transport of water by pipeline or conduit for drinking purposes;
Services provided to Government, a local authority or a governmental authority Activities carried out in relation to functions ordinarily entrusted to municipality in relation to –  water supply  public health  sanction conservation  solid waste management  slum improvement / upgradation
Services of general insurance business Services of general insurance business provided under following schemes a. Hut Insurance Scheme; b. Cattle Insurance under Swarnajaynti Gram Swarozgar Yojna (earlier known as Integrated Rural Development Programme); c. Scheme for Insurance of Tribals; d. Janata Personal Accident Policy and Gramin Accident Policy; e. Group Personal Accident Policy for Self-Employed Women; f. Agricultural Pumpset and Failed Well Insurance; g. premia collected on export credit insurance;
Services of general insurance business h. Weather Based Crop Insurance Scheme or the Modified National Agricultural Insurance Scheme, approved by the Government of India and implemented by the Ministry of Agriculture; i. Jan Arogya Bima Policy; j. National Agricultural Insurance Scheme (Rashtriya Krishi Bima Yojana); k. Pilot Scheme on Seed Crop Insurance; l. Central Sector Scheme on Cattle Insurance; m. Universal Health Insurance Scheme; n. Rashtriya Swasthya Bima Yojana; or o. Coconut Palm Insurance Scheme;
Services provided by an incubatee Services provided by an incubatee up to a total turnover of fifty lakh rupees in a financial year subject to the following conditions, namely:- a) the total turnover had not exceeded fifty lakh rupees during the preceding financial year; and b) a period of three years has not been elapsed from the date of entering into an agreement as an incubatee Services provided by an incubatee up to a total business turnover of fifty lakh rupees in a financial year subject to conditions • the total business turnover had not exceeded fifty lakh rupees during the preceding financial year; and • a period of three years has not lapsed from the date of entering into an agreement as an incubatee
Service by an unincorporated body or a non- profit entity Service by an unincorporated body or a non- profit entity registered under any law for the time being in force, to its own members by way of reimbursement of charges or share of contribution - a) as a trade union; b) for the provision of carrying out any activity which is exempt from the levy of service tax; or c) up to an amount of five thousand rupees per month per member for sourcing of goods or services from a third person for the common use of its members in a housing society or a residential complex • Services should be provided to own members and not to non- members. • Service of an unincorporated body or a non- profit entity registered under any law for the time being in force to its own members up to an amount of Rs 5,000 per member per month by way of reimbursement of charges or share of contribution is exempt from service tax
Services provided by Intermediaries Services by the following persons in respective capacities - a) sub-broker or an authorised person to a stock broker; b) authorised person to a member of a commodity exchange; c) mutual fund agent to a mutual fund or asset management company; d) distributor to a mutual fund or asset management company; e) selling or marketing agent of lottery tickets to a distributer or a selling agent; f) selling agent or a distributer of SIM cards or recharge coupon vouchers; g) business facilitator or a business correspondent to a banking company or an insurance company, in a rural area; or h) sub-contractor providing services by way of works contract to another contractor providing works contract services which are exempt;
Services by an organizer to any person in respect of a business exhibition held outside India Services by an organizer to any person in respect of a business exhibition held outside India  Organizer should be in India  Exhibition should be held outside India  It should be in relation to business
Services by way of making telephone calls Services by way of making telephone calls from - a) departmentally run public telephone; b) guaranteed public telephone operating only for local calls; or c) free telephone at airport and hospital where no bills are being issued
Services by way of slaughtering of bovine animals Services by way of slaughtering of bovine animals (omitted w .e. f . 07.08.2012)
Services received from a provider of service located in a non- taxable territory Services received from a provider of service located in a non- taxable territory by - a) Government, a local authority, a governmental authority or an individual in relation to any purpose other than commerce, industry or any other business or profession; b) an entity registered under section 12AA of the Income tax Act, 1961 for the purposes of providing charitable activities; or c) a person located in a non-taxable territory • If services are used for industry, business or commercial purpose, service tax is payable under reverse charge basis • Other purposes, it will be exempt from service tax
Services of Public Libraries Services of public libraries by way of lending of books, publications or any other knowledge- enhancing content or material Following services of public libraries shall be exempt –  lending of books  lending of publications  lending of other knowledge enhancing content or material, (i.e. in soft or hard version, digital content, web content etc) • ‘Public library’ has not been defined
Services by Employees’ State Insurance Corporation to persons governed under the Employees Insurance Act, 1948 Services by Employees’ State Insurance Corporation to persons governed under the Employees’ Insurance Act, 1948  Covers the services provided by the Employee’s State Insurance Corporation (ESIC) constituted under the Employees State Insurance Act, 1948  in relation to employee’s sickness, maternity and employment injury and promotion of measures for health etc of insured persons
Services by way of transfer of a going concern Services by way of transfer of a going concern, as a whole or an independent part thereof  Going Concern as per AS-1  Sale of business as a whole  Related services are taxable
Services by a governmental authority by way of any activity in relation to any function entrusted to a municipality Services by a governmental authority by way of any activity in relation to any function entrusted to a municipality under article 243 W of the Constitution  All services are not exempt  Services by a governmental authority by way of any activity in relation to any function entrusted to a municipality under article 243W of the Constitution are exempt
 As defined in clause 44 of section 65B, ‘service’ includes a declared service.  There are 9 categories of services or activities as declared services implying that on all such nine declared services, Service Tax shall be payable  Does not include any such transfer, delivery or supply of any goods which is deemed to be a sale within the meaning of Article 366 (29A) of the Constitution of India.  What is declared services is defined in section 65B (22) to mean any activity carried out by a person for another person for a consideration and declared as such under section 66E of the Act.  They are amply covered by the definition of service but have been declared with a view to remove any ambiguity for the purpose of uniform application of law all over the country 118
Following constitute Declared Services (Section 66E)  Renting of immovable property;  Construction of a complex, building, civil structure or a part thereof, including a complex or building intended for sale to a buyer, wholly or partly, except where the entire consideration is received after issuance of certificate of completion by a competent authority;  Temporary transfer or permitting the use or enjoyment of any intellectual property right;  Development, design, programming, customization, adaptation, up gradation, enhancement, implementation of information technology software; 119
 Agreeing to the obligation to refrain from an act, or to tolerate an act or a situation, or to do an act;  Transfer of goods by way of hiring, leasing, licensing or any such manner without transfer of right to use such goods;  Activities in relation to delivery of goods on hire purchase or any system of payment by installments ;  Service portion in execution of a works contract;  Service portion in an activity wherein goods, being food or any other article of human consumption or any drink (whether or not intoxicating) is supplied in any manner as part of the activity. 120
Renting of Immovable Property Renting of Immovable Property Renting (Section 65B (41)) allowing, permitting or granting access, entry, occupation, usage or any such facility, wholly or partly, in an immovable property, with or without the transfer of possession or control of the said immovable property and includes letting, leasing, licensing or other similar arrangements in respect of immovable property Renting of certain kinds of immovable properties is specified in the negative list • Renting of vacant land, with or without a structure incidental to its use, relating to agriculture. • Renting of residential dwelling for use as residence • Renting out of any property by Reserve Bank of India • Renting out of any property by a Government or a local authority to a non-business entity 121
Renting of Immovable Property Exemptions to Renting of Immovable property  Threshold level exemption up to Rs. 10 lakh.  Renting of precincts of a religious place meant for general public is exempt.  Renting of a hotel, inn, guest house, club, campsite or other commercial places meant for residential or lodging purposes, having declared tariff of a room below rupees one thousand per day or equivalent is exempt.  Renting to an exempt educational institution  Municipal taxes (Notification No. 29/2012-ST dated 20.6.2012) to be contd… 122
Renting of Immovable Property The immovable property could be –  factories  office buildings  warehouses  theatres  exhibition halls, and  multiple use buildings.  commercial markets  shops / shopping centre  hotel, guest houses etc  community centre etc  Allowing or permitting the usage of immovable property without transferring possession of such property is also renting of immovable property. 123
Renting of Immovable Property Nature of Activity Taxability Renting of property to educational body Chargeable to service tax; no exemption Renting of vacant land for animal husbandry Not chargeable to service tax as it is covered in the or floriculture negative list entry relating to agriculture Permitting use of immoveable property for Chargeable to service tax as permitting usage of placing vending/dispensing machines space is covered in the definition of renting Allowing erection of communication tower Chargeable to service tax as permitting usage of on a building for consideration. space is covered in the definition of renting Renting of land or building for entertainment Chargeable to service tax as there is no specific or sports exemption. Renting of theatres by owners to film Chargeable to service tax as the arrangement distributors amounts to renting of immovable property. Renting of immovable property outside India not taxable in India even if owners are in India
Construction Activities Construction Activities [Section 66E (b)] Construction activities means construction of a complex, building, civil structure or a part thereof, including a complex or building intended for sale to a buyer, wholly or partly, except where the entire consideration is received after issuance of completion certificate by the competent authority. It includes construction of -  Complex  Building  Civil structure or part thereof  Complex or building intended for sale to a buyer except where entire consideration is received after issuance of completion certificate by the competent authority. Actual sale after construction-if consideration received before such completion will also be taxed. 125
Construction Activities  Construction is not defined  Construction Includes  additions,  alteration,  replacement, or  remodeling of any existing civil structure 126
Construction Activities Who is Competent Authority to Issue Completion Certificate  Government  Any authority authorized to Issue CC under any law  In absence of any requirement to issue CC, • architect under Architect Act, 1972 • Chartered Engineer register with 10E • licensed surveyor (of local body / development or planning authority) 127
Construction Activities Residential Complex  Complex comprising of one or more buildings having more than one residential unit  Even two units would be called ‘complex’  Single residential unit – self contained residential unit designed for use, wholly / principally, for residence of one finely  Original work – new construction and all type of addition / alteration to abandoned / damaged structures on land as are required to make them workable / erection , commissioning, installation. 128
Intellectual Property Right Temporary transfer or permitting the use or enjoyment of any intellectual property right [Section 66 E (c)] Intellectual property right’ has not been defined but Intellectual Property Right includes : • Copyright  Patents  Trademarks  Designs  Any other similar right to an intangible property 129
Intellectual Property Right Examples of IPRs  Patents - New technical concepts, inventions  Copyright - Text, graphics, software, data compilations, art, music  Trademarks - Brands (Services/ Products) image and reputation  Confidential Information - Ideas, information, know-how etc.  Design Rights - Form and appearance, decoration 130
Intellectual Property Right What is taxed in IPR  all IPRs (whether recognized in law or not) excluding copy rights  temporary transfer of IPRs  permitting the use of IPRs  enjoyment of IPRs 131
Intellectual Property Right Copyrights as IPRs are exempted which include :  literary work  dramatic work  musical work  artistic works  cinematograph films 132
Information Technology Software Information Technology software related services [section 66E(d)]  It includes following in relation to Information Technology Software (ITS) –  Development  Design  Programming  Customization  Adaptation  Upgradation  Enhancement  Implementation 133
Information Technology Software ITS is defined in Section 65B(28) ITS is a representation  Representation in ITS should be of any of the following – • Instruction • Data • Sound • Image • Source code • Object code  Such items represented should be recorded in a machine readable form,  Such items represented and recorded should be capable of being manipulated.  They should provide interactivity by way of a – • computer, or • automatic data processing machine, or • any other device or equipment. 134
Information Technology Software Scope of ITS Service Design - plan, scheme Programming - process of writing a computer programme Customisation - modifying to meet a specific requirement Adaptation - change to suit, adopt Upgradation - raising standard, improving quality / version / features Enhancement - in value, content, quality Implementation - execution 135
Obligations / Actions Agreeing to obligation to refrain from on Act / to tolerate Act or situation / to do an Act [section 66E(e)] Following activities if carried out by a person for another for consideration would be treated as provision of service -  Agreeing to the obligation to refrain from an act.  Agreeing to the obligation to tolerate an act or a situation.  Agreeing to the obligation to do an act. 136
Obligations / Actions Examples of Obligations / Actions  non compete fees for agreeing not to compete  compensation on termination of business agreements  advance forfeited for cancellation of agreement to provide a service.  forfeiture of security deposit for damages done by service receiver in course of receiving of services.  cancellation charges being charged by airlines, hotels etc.  consideration for non-appearance in a court of law or withdrawal of suit.  demurrage charges or detention charges 137
Transfer of Goods Transfer of goods by hiring, leasing, licensing [66E(f)] There should be transfer of goods involved  Such transfer of goods should be by way of –  hiring  leasing  licensing, or  any such manner  Such transfer should be without transfer of right to use such goods.  Excludes intangible goods  Only goods covered [section 65B(25)] 138
Transfer of Goods Transfer of right to use  Taxable only when transfer of right to use goods is there  Constitutional / legal concept  Can be determined when agreement in read in whole, not just one clause  Transfer of right to use is deemed sale u/a 366(29A) of Constitution  If owner retains effective control, no transfer of right can take place  Service excludes deemed sale u/a 366(29A) 139
Transfer of Goods Tests laid down by Supreme Court in BSNL v UOI [(2006)2 STR 161 (SC)]  There must be goods available for delivery ;  There must be consensus ad idem as to the identity of the goods;  The transferee should have legal right to use the goods – consequently all legal consequences of such use including any permissions or licenses required therefore should be available to the transferee;  For the period during which the transferee has such legal right, it has to be the exclusion to the transferor – this is the necessary concomitant of the plain language of the statute, viz., a ‘transfer of the right to use’ and not merely a license to use the goods;  Having transferred, the owner cannot again transfer the same right to others 140
Transfer of Goods Article 366 (29A) of Constitution of India, as amended by Constitution (46th Amendment) Act, 1982, w.e.f 2.2.1983 "Tax on the sale or purchase of goods" includes-  a tax on the transfer, otherwise than in pursuance of a contract, of property in any goods for cash, deferred payment or other valuable consideration;  a tax on the transfer of property in goods (whether as goods or in some other form) involved in the execution of a works contract;  a tax on the delivery of goods on hire-purchase or any system of payment by installments;  a tax on the transfer of the right to use any goods for any purpose (whether or not for a specified period) for cash, deferred payment or other valuable consideration; to be contd…… 141
Transfer of Goods  a tax on the supply of goods by any unincorporated association or body of persons to a member thereof for cash, deferred payment or other valuable consideration;  a tax on the supply, by way of or as part of any service or in any other manner whatsoever, of goods, being food or any other article for human consumption or any drink (whether or not intoxicating) , where such supply or service is for cash, deferred payment or other valuable consideration, and such transfer, delivery or supply of any goods shall be deemed to be a sale of those goods by the person making the transfer, delivery or supply and a purchase of those goods by the person to whom such transfer, delivery or supply is made. 142
Transfer of Goods Examples of transfer without right to use  Car on hire with driver – right to use not transferred  Conditional supply of equipment – not free to use goods  Bank lockers – possession not transferred to hirer  Hiring of audio visual equipment with attendant – no transfer of right / possession
 Includes delivery of goods on -  hire purchase  any system of payment by installment  Payment in parts / installments  Lease payment is calculated so as to cover full cost of asset together with interest charges  Transfer of substantially all risks and rewards in relation to goods so transferred  Not taxable as covered under deemed sale of goods  But services in relation to such sale taxable 144
 Delivery of goods on hire purchase  Transfer of possession (and not just of custody)  The hirer has the option or obligation to purchase the goods in accordance with the terms of the agreement.  In hiring, hirer has no such option and risks remain with owner / not transferred to hirer  In hire purchase, hirer has option / obligation to purchase goods  Operating lease not covered  Involves two transactions – financial transaction and hire purchase. Financial transaction is chargeable to Service Tax [Association of Leasing & Financial Services v. Union of India (2010) 20 STR 417 (SC)].  Service Tax levied only on 10 percent value representing interest in financial lease and not full value (Notification No. 26/2012-ST) 145
Works contract [65B(54)]  “Works Contract” means a contract wherein transfer of property in goods involved in the execution of such contract is leviable to tax as sale of goods and such contract is for the purpose of carrying out construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, alteration of any movable or immovable property or for carrying out any other similar activity or a part thereof in relation to such property. 146
Works contract covers  Construction  Erection  Commissioning  Completion  Fitting out  Repair  Maintenance  Renovation  Alteration, or  Any other similar activity or part there of 147
Such activities could be in relation to any –  Movable property (plant, machinery, equipments etc)  Immovable property (land, building, structures etc)  This definition is very vast and covers almost everything 148
Some issues in works contracts Labour contracts Excluded Repair & Maintenance of motor yes if property in goods vehicles transferred in execution of WC Construction of pipeline / conduit yes, structures on land Painting/repair/renovation of building yes if involves provision of material also Erection/commissioning installation of yes if transfer of property in plant/ machine etc goods is involved and machinery etc are embedded / attached to earth after the job. 149
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Residential Refresher Course (RRC) -Presentation ii

  • 1. LATUR BRANCH OF WIRC OF ICAI Residential Refresher Course (RRC) A Presentation On “New Regime of Service Taxation in India” On by Saturday, Dr. Sanjiv Agarwal 25st August,2012 FCA, FCS @ Goa © Dr. Sanjiv Agarwal
  • 2. SESSION – II New Regime of Taxation of Services 2
  • 3. This presentation covers • Negative List of Services • Exempted Services • Declared Services (Including Valuation) • Bundled Services
  • 4. Scope of Service Tax Services on which Service Tax shall be attracted comprise of :  Those services which satisfy the definition of service u/s 65B (44)  Nine specified declared services u/s 66E  Those services which do not find place in negative list of services u/s 66D  Those services which are not exempt from levy of Service Tax under Notification No. 25/2012-ST dated 20.06.2012 to be contd…. 4
  • 5. Scope of Service Tax Services on which no Service Tax shall be payable comprise of : • Service which are specifically excluded from the scope of definition of service itself u/s 65(44). • 17 broad services specified in the negative list of services u/s 66D. • Services which are exempt from levy of Service Tax under N. No. 25/2012-ST dated 20.06.2012. • Specified services otherwise exempt under specific notifications. • Activities where service provider and service receiver are in non –taxable territory 5
  • 6. Examples of new activities which may be taxed • Non commercial construction for non-government purpose • Private roads • Residential construction of more than one unit • Commercial artists/performers • Actors, directors • Reality show judges • Tourism boats • Board director’s remuneration • Non-compete fee • Arbitrators to business entities • Banking services to government • Unrecognized IPRs to be contd.. 6
  • 7. Examples of new activities which may be taxed • Discourses and lectures • Services to RBI • Hotel Telephone Calls • Matrimonial sites • Astrologers • Secondments • Services provided by employers • ……………………….. (keep on thinking) 7
  • 8. Negative list of Services What is negative list • Defined in new section 66D • Section 66D Specifies seventeen 17 broad categories of services. • Effective from 1-7-2012 • If an activity meets the charactertics of ‘ service ‘, it is taxable unless specified in Negative List. • Based on socio-economic–tax criterion 8
  • 9. Consideration in Negative List Socio – Economic Considerations in Negative list • Administrative considerations: taxation of Government, difficult to tax sectors e.g. margin-based financial services. • Under contractual obligations: Specified international bodies and diplomatic missions • Welfare considerations: welfare of vulnerable sections of society, essential education, public health; public transport, services by non-profit entities, religious services, promotion of art, culture and sports. • Economic considerations: transport of export goods, services meant for agriculture, animal husbandry and infrastructure development. • Explicit activities in the nature of services, which are within the taxing powers of States: betting and lotteries, tolls. 9
  • 10. Sectors in Negative List Negative list of services is drawn from seven broad sectors, viz. • services provided by specified person ie, Government • social welfare & public utilities • financial sector • transportation • construction & real estate • education • health care • others & miscellaneous 10
  • 11. Services by Government or a local authority Services by Government or a local authority excluding the following services to the extent they are not covered elsewhere: • Services by the Department of Posts by way of speed post, express parcel post, life insurance and agency services provided to a person other than Government; • Services in relation to an aircraft or a vessel, inside or outside the precincts of a port or an airport; • Transport of goods or passengers; or • Support services provided to business entities to be contd.. 11
  • 12. Service provided by Government or Local Authority • Most of services provided by Central / State Governments exempt from service tax. • But following services are taxable -  Department of posts - speed post, express parcel, life insurance and agency service to non government business entity but basic mail, money orders, operation of saving accounts ,pension payment etc services are covered in negative list  In relation to vessel or aircraft service within/outside port/airport  Transport of goods and/ or passengers  Support service to business entities To be contd…..
  • 13. Service provided by Government or Local Authority • Services by government as sovereign functions (grant of licensing rights or audit of government, passport etc.) • Excludes corporations formed under Central Acts or State Acts or various Government companies registered under Companies Act, 1956 or autonomous institutions set up by a Special Acts • Government Department needs to be registered and to pay tax on support services of  Renting of immovable properties  Speed post, express parcel, life insurance.  Transport of goods and/ or passengers  Services in relation to vessel or aircraft • For other services, government not liable to pay service tax as tax paid by service recipient in reverses charge (N. No. 30) To be contd…..
  • 14. Service provided by Government or Local Authority “ Support services" means  infrastructural,  operational,  administrative,  logistic,  marketing or  any other support of any kind comprising functions that entities carry out in ordinary course of operations themselves but may obtain as services by outsourcing from others for any reason whatsoever  shall include advertisement and promotion, construction or works contract, renting of immovable property, security, testing and analysis  Services provided by Government Security agencies are covered under support service - under reverse charge, Service Receiver is liable to tax.
  • 15. Service by Reserve Bank of India • All services provided by RBI are in Negative List • Service Provided to RBI is taxable unless covered in negative list. • Service provided by banks to RBI taxable unless covered in Negative List or exempted services
  • 16. Services by a foreign diplomatic mission located in India • Services by diplomatic mission of any country located in India • Does not cover services provided by any office or establishment of an International organization (Section 3 of United Nation Privileges & Immunities Act 1947) • Example- UNESCO, UNICEF, IMF, IBRD etc • Notification No. 27/2012- ST dated 20.6.2012 conditionally exempts service provided by any person  for the official use of a provision of a foreign diplomatic mission or consular post in India  for personal use or use of the family member of diplomatic agents or career consular officers posted in India
  • 17. Service relating to Agriculture or Agricultural Produce services relating to agriculture by way of— (i) agricultural operations directly related to production of any agricultural produce including cultivation, harvesting, threshing, plant protection or seed testing; (ii) supply of farm labour; (iii) processes carried out at an agricultural farm including tending, pruning, cutting, harvesting, drying, cleaning, trimming, sun drying, fumigating, curing, sorting, grading, cooling or bulk packaging and such like operations which do not alter the essential characteristics of agricultural produce but make it only marketable for the primary market; (iv) renting or leasing of agro machinery or vacant land with or without a structure incidental to its use; (v) loading, unloading, packing, storage or warehousing of agricultural produce; (vi) agricultural extension services; (vii) services by any Agricultural Produce Marketing Committee or Board or services provided by a commission agent for sale or purchase of agricultural produce; to be contd…
  • 18. Service relating to Agriculture or Agricultural Produce The Services relating to agriculture or agriculture produce specified in negative list-  agricultural operations directly related to production of any agricultural produce including cultivation, harvesting, threshing, plant protection or seed testing;  supply of farm labour;  processes carried out at the agricultural farm including tending, pruning, cutting, harvesting, drying cleaning, trimming, sun drying, fumigating, curing, sorting, grading, cooling or bulk packaging and such like operations which do not alter essential characteristics of agricultural produce but makes it only marketable for the primary market not for retail market; (e.g. cleaning of wheat) to be contd …….
  • 19. Service relating to Agriculture or Agricultural Produce • renting of agro machinery or vacant land with or without a structure incidental to its use (e.g. green house, storage shed.) • loading, unloading, packing, storage and warehousing of agricultural produce; • agricultural extension services (application of scientific research, farmer education & training) • services provided by any Agricultural Produce Marketing Committee or Board (APMC) for agriculture or agricultural produce but does not include non -agricultural activities (e.g. renting of shops or other property or services provided by commission agent for sale or purchase of agricultural produce) to be contd …….
  • 20. Service relating to Agriculture or Agricultural Produce Agriculture -Section 65 B(3) Cultivation of plants and rearing of all life-forms of animals except the rearing of horses, for food, fiber, fuel, raw material or other similar products Agriculture Produce -Section 65B(5) any produce of agriculture on which either no further processing is done or such processing is done as is usually done by a cultivator or producer which does not alter its essential characteristics but makes it marketable for primary market (E.g. Plantation crops like rubber, tea or coffee but does not include potato chips or tomato ketchup) to be contd …….
  • 21. Trading of Goods • Trading of goods is not a taxable service, it being a sale and not a service. • If a transaction is a sale, it is not a service and vice versa • Transfer of title in goods is crucial • Activities of a commission agent / clearing and forwarding agent who sells goods on behalf of another for a commission are not trading of goods (Title of goods does not pass) • Forward contracts are in the nature of trading of goods. • Future contracts are not trading of goods to be contd …….
  • 22. Trading of Goods Goods - Section 65B(25) “goods" means • every kind of movable property • other than actionable claim and money • includes securities, growing crops, grass, and things attached to or forming part of the land which are agreed to be severed before sale or under the contract of sale
  • 23. Process amounting to manufacture or production of goods  process amounting to manufacture or production of goods" means a process on which duties of excise are leviable under section 3 of the Central Excise Act, 1944 or any process amounting to manufacture of alcoholic liquors for human consumption, opium, Indian hemp and other narcotic drugs and narcotics on which duties of excise are leviable under any State Act for the time being in force.  Covers manufacturing activity carried out on contract or job work basis where  Transfer of title of goods is not involved  Duties of excise are leviable on such process 23
  • 24. Process amounting to manufacture or production of goods What is Excisable Goods  “excisable goods” means goods specified in the First Schedule and the Second Schedule to the Central Excise Tariff Act, 1985 as being subject to a duty of excise and includes salt  Mobility and marketability are essential conditions  Goods includes any article, material or substance which is capable of being bought and sold for a consideration and such goods shall be deemed to be marketable.
  • 25. Process amounting to manufacture or production of goods Related Exemptions (Clause -30 , N. No. 25/2012) Carrying out an intermediate production process as job work in relation to - (a) agriculture, printing or textile processing; (b) cut and polished diamonds and gemstones; or plain and studded jewellery of gold and other precious metals, falling under Chapter 71 of the Central Excise Tariff Act ,1985 (5 of 1986) (c) any goods on which appropriate duty is payable by the principal manufacturer or (d) processes of electroplating, zinc plating, anodizing, heat treatment, powder coating, painting including spray painting or auto black, during the course of manufacture of parts of cycles or sewing machines upto an aggregate value of taxable service of the specified processes of one hundred and fifty lakh rupees in a financial year subject to the condition that such aggregate value had not exceeded one hundred and fifty lakh rupees during the preceding financial year
  • 26. Selling of space or time slots for advertisements Selling of space or time slots for advertisements other than advertisements broadcast by radio or television This entry in negative list should qualify the following tests – • involves selling of space (in case of print media) • involves selling of time slots ( in case of electronic media) • purpose of selling time slots / space to be for advertisements (publicity / sales promotion, awareness etc.) • excludes broadcast by radio or television ( i.e. broadcast will be taxable) to be contd …….
  • 27. Selling of space or time slots for advertisements Taxable Non-taxable Sale of space or time for Sale of space for advertisement in advertisement to be broadcast on print media radio or television Sale of time slot by a broadcasting Sale of space for advertisement in organization bill boards, public places (including stadia), buildings, conveyances, cell phones, automated teller machines, internet Aerial advertising Presentation made in person
  • 28. Selling of space or time slots for advertisements “Advertisement" means • any form of presentation for promotion of, • or bringing awareness about, • any event, • idea, • immovable property, • person, service, • goods or actionable claim through • newspaper, television, radio or any other means • but does not include any presentation made in person; • Services provided by advertisement agencies relating to preparation / designing etc of advertisements are taxable. • Print media includes newspaper and books.
  • 29. Service way of access to a road or a bridge on payment of toll charges • Only covers toll charges for access to road and bridge • Includes National highways or state highways. • Toll on other roads not in negative list • Collection charges or service charges paid to any toll collection agency are not covered under negative list • Dose not include services used for providing such service
  • 30. Betting, Gambling or Lottery Betting or Gambling means • putting on stake something of value, • particularly money, • with consciousness of risk and hope of gain on the outcome of a game or a contest, • whose result may be determined by chance or accident, or on the likelihood of anything occurring or not occurring • Betting is a form of wagering contract in which money or money’s worth is made payable by the parties on the result of an uncertain event, usually a game or sport • Gambling means playing game of chance for money or risky action undertaken with the hope of success • Lottery is a game of chance (e.g. lottery, bingo, lotto etc.) which may include online games to be contd …….
  • 31. Betting, Gambling or Lottery • Auxiliary services for organizing or promoting betting or gambling events are not covered in negative list • State subject covered in list II • Actionable claim • In Union of India & Others v. Martin Lottery Agencies Ltd (2009) 14 STR 593 (Supreme Court), it was held that service tax can not be levied on sale of lottery ticket • In Martin Lottery Agencies Ltd. v. Union of India (2007) 8 STR 561 (Sikkim), it was held that petitioner was not rendering services in relation to promotion of client’s goods and service tax liability did not arise
  • 32. Admission to entertainment events and access to amusement facilities Entertainment event if it is intended (may not necessarily provide) to provide any one or more of the following to the recipients / viewers / audience - • recreation • pastime • fun , or • enjoyment to be contd …….
  • 33. Admission to entertainment events and access to amusement facilities This could be by way of – • exhibition of cinematographic film • circus • concerts • sporting events • pageants • award functions • dance performance • musical performance • theatrical performances – drama, ballets or any such event / programme. to be contd …….
  • 34. Admission to entertainment events and access to amusement facilities Amusement facility means • a facility • where fun or recreation is provided • by means of  rides  gaming devices  bowling alleys in amusement parks  amusement arcades  water parks  theme parks  such other places • but does not include a place within such facility where other services are provided to be contd …….
  • 35. Admission to entertainment events and access to amusement facilities • Amusement means entertainment, diversion, pastime, sport etc. • Theatrical performances need not be performed in theatre • Standalone amusement ride in a mall – fun or recreation by means of ride – covered under amusement – excluded • Membership of club which provides amusement facilities - excluded • Event manager for organizing an entertainment event or entertainment is not cover in this category
  • 36. Transmission or distribution of Electricity by an electricity transmission or distribution utility • Provided by Electricity Transmission or Distribution utility • Covers both – • Transmission • Distribution • Installation of gensets or similar equipment by private contractor for distribution - taxable • Charges collected by developer or a housing society for distribution of electricity within a residential complex - taxable but excluded if it acts as a licensed authority
  • 37. Specified services relating to education • Service by way of - i. Pre-school education and education up to higher secondary school or equivalent ii. Education as a part of a prescribed curriculum for obtaining a qualification recognized by law iii. Education as a part of an approved vocational education course • Conduct of degree courses by colleges, universities or institutions which lead to grant of qualifications recognized by law to be contd …….
  • 38. Specified services relating to education Approved vocational education course  a course run by an industrial training institute or an industrial training centre affiliated to the National Council for Vocational Training, offering courses in designated trades as notified under the Apprentices Act, 1961  a Modular Employable Skill Course, approved by the National Council of Vocational Training, run by a person registered with the Directorate General of Employment and Training, Ministry of Labour and Employment, Government of India  a course run by an institute affiliated to the National Skill Development Corporation set up by the Government of India to be contd …….
  • 39. Specified services relating to education • Education upto higher secondary school or equivalent are in negative list. • Services provided to or by an educational institution for Auxiliary educational services and renting of immovable property – exempted under mega notification Negative list will not include – • Private tuitions • Education as a part of prescribed curriculum for obtaining qualification recognized by law of a foreign county • Services provided to educational institutions • Placement services to be contd …….
  • 40. Specified services relating to education Education related services not in negative list but exempt from tax under Notification No. 25/2012-ST dated 20.06.2012 • Transportation of students to / from institutions • Provision of mid-day meal in schools • Admission related services to educational institutes where education services are exempt. • Coaching / training in recreational activities of arts, culture or sports.
  • 41. Services by way of renting of residential dwelling for use as residence Renting coves all types of arrangements in relation to immovable property with or without its transfer of possession or control and whether wholly or partly. It would cover / include – • allowing • permitting • granting access / entry / occupation • use of facility • letting • leasing • licensing, or • other similar arrangements (such as right to use, sub-lease, space sharing etc.) to be contd …….
  • 42. Services by way of renting of residential dwelling for use as residence Renting of certain kinds of property already covered in the negative list • renting of vacant land, with or without a structure incidental to its use, relating to agriculture. • renting of residential dwelling for use as residence • renting out of any property by Reserve Bank of India • renting out of any property by a Government or a local authority to non-business entity to be contd …….
  • 43. Services by way of renting of residential dwelling for use as residence • Residential dwelling not defined but includes residential accommodation • does not include hotel, motel, inn, Guest house, camp site, lodge, house boat or other placement temporary stay • Residential dwelling used partly as a residence and partly for non residential purpose- treated as bundled service • Residential unit – independent residential unit with specific facilities for living, cooking and sanitation to be contd …….
  • 44. Financial Services Services by way of— (i) extending deposits, loans or advances where consideration is represented by way of interest or discount (ii) inter se sale or purchase of foreign currency amongst banks or authorised dealers of foreign exchange or amongst banks and such dealers to be contd …….
  • 45. Financial Services • Transactions in money outside the ambit of ‘service’ • Any activity related to a transaction in money by way of its use or conversion by cash or by any other mode, from one form , currency or denomination to another form, currency or denomination would not be treated as a transaction in money if a separate consideration is charged for such an activity • Service tax levied on service charges for transactions in money including of charges for making of drafts, letter of credits issuance charges, service charges relating to issuance of CDs/ CPs etc • Interest rate swaps and foreign exchange swaps are excluded being securities and hence excluded to be contd …….
  • 46. Financial Services • Only interest and discount are in negative list • Interest on  Money borrowed  Debt incurred  Deposit  Claim / obligation/ similar right • Service charge / fee/ commission not covered (e.g. pre payment fee, late fee, cheque bounce charges) • interest on credit facility not utilized (commitment charges ) not covered • Bill discounting – only discount covered to be contd …….
  • 47. Financial Services • Any charges over and above interest/ discount taxable • Purchase/ sale of foreign currency between banks and authorized dealers under negative list • Examples of services in negative list-  Fixed deposits or saving deposits or any other such deposits in a bank for which return is received by way of interest  Providing a loan or over draft facility for in consideration for payment of interest  Mortgages or loans with a collateral security to the extent that the consideration for advancing such loans or advances are represented by way of interest  Corporate deposits to the extent that the consideration for advancing such loans or advances are represented by way of interest or discount
  • 48. Services relating to transportation of passengers Services by- • a stage carriage; • railways in a class other than (i) first class or (ii) an AC coach ( now exempt under Notification No 43/2012 till 30.9.2012) • metro, monorail or tramway • inland waterways • public transport, other than predominantly for tourism purpose, in a vessel, between places located in India; and • metered cabs, radio taxis or auto rickshaws. to be contd …….
  • 49. Services relating to transportation of passengers • ‘Stage Carriage’ defined in section 2(40) of Motor Vehicles Act, 1988. • Motor vehicle constructed or adapted to carry more than six passengers excluding the driver for hire or reward at separate fares paid by or for individual passengers, for the whole journey or for stages of the journey • National waterways covered in inland waterways • Metered cab means any contract carriage on which an automatic device, of the type and make approved by the State Transport Authority, is fitted which indicates reading of the fare chargeable at any moment and that is charged accordingly under the conditions of its permit issued under the Motor Vehicles Act, 1988 to be contd …….
  • 50. Services relating to transportation of passengers Covered under negative list Not Covered under negative list Motor vehicles on hire to state Motor vehicles to state transport transport undertaking (more taken undertaking 12 passengers) Exemption to Transport of No exemption for Tourism, passengers by a contract carriage conducted tours, chartered or hire
  • 51. Service relating to transportation by Goods Services provided in relation to transportation of goods specified in the negative list • by road except the services of (i) a goods transportation agency or (ii) a courier agency • by aircraft or vessel from a place outside India up to the customs station of clearance in India; or • by inland waterways (agents covered) to be contd …….
  • 52. Service relating to transportation by Goods • Services provided by GTA taxable except under separate exemption available for • fruits, vegetables, eggs, milk, food grains or pulses in a goods carriage; • goods where gross amount charged on a consignment transported in a single goods carriage does not exceed one thousand five hundred rupees; or • goods where gross amount charged for transportation of all such goods for a single consignee in the goods carriage does not exceed rupees seven hundred fifty. • Transport of Goods by rail is exempt upto 30.9.2012 • Courier services – Express cargo service, angadia – taxable to be contd …….
  • 53. Service relating to transportation by Goods Nature of service relating to Whether covered in the transportation of Goods negative list entry By railways No (but exempt) By air within the country or No abroad By a vessel in the coastal waters No By a vessel on a national Yes waterway Services provided by a GTA No
  • 54. Funeral, Burial, Crematorium or Mortuary Services including Transportation of the deceased • Funeral • Burial • Crematorium • Mortuary • Transportation of deceased
  • 55. Exemptions under Service Tax General Exemptions Small Scale Exemption • The threshold exemption limit of Rs. 10 lakh continues to exist and it is over and above the exemptions notified in Notification No. 25/2012-ST dated 20.6.2012. • W.e.f. 1.4.2012, aggregate value of Rs. 10 lakh would mean the sum total of value of first consecutive invoices issued during a financial year, but does not include value charged in invoices towards such services which are exempt from whole of service tax. (Refer Notification No. 33/2012-ST dated 20.6.2012) to be contd….
  • 56. Exemption under Service Tax General Exemptions • W.e.f.1.07.2012, Notification No. 6/2005 as amended shall no longer be applicable. There is a change in scope of aggregate value which shall mean as follows and subject to following conditions-  total of value of taxable services  value shall be as charged in first consecutive invoices issued during financial year  value charged in invoices issued for taxable services which are exempt from whole of Service Tax shall be excluded in determining the aggregate value
  • 57. Exemption under Service Tax General Exemptions Exemption for Exporters/SEZ  Transportation of export goods by Goods Transport Agency in a goods carriage received by an exporter for transport of goods. (Refer Notification No. 31/2012- ST dated 20.6.2012)  Refund of service tax paid on all input taxable services received by an exporter of goods and used for export of goods, subject to certain specified conditions. (Refer Notification No. 39/2012-ST dated 20.6.2012)  Taxable services, received by a unit located in a Special Economic Zone or Developer of SEZ for the authorised operations. (Refer Notification No. 40/2012-ST dated 20.6.2012)
  • 58. Exemption under Service Tax General Exemptions Exemption for Exporters/SEZ  Rebate of Service Tax paid on taxable services received by exporter of goods and used for export of goods, subject to conditions (Refer Notification No. 41/2012-ST dated 29.6.2012)  Exemption to services provided by commission agent located outside India and engaged by Indian exporter for promotion of export goods exported upto Service Tax calculated on 10% of free on board value of export goods (Refer Notification No. 42/2012-ST dated 29.6.2012)
  • 59. Exemption under Service Tax General Exemptions Exemption to Import of Technology  Taxable service involving import of technology, from so much of service tax, as is equivalent to the extent of amount of cess payable on the said transfer of technology under the provisions of section 3 of the Research and Development Cess Act, 1986.(Refer Notification No. 14/2012-ST dated 17.3.2012) Exemption for Services to Foreign Diplomatic Mission  Taxable services provided for the official use of a foreign diplomatic mission or consular post in India, or for personal use or for the use of the family members of diplomatic agents or career consular officers posted therein. (Refer Notification No. 27/2012-ST dated 20.6.2012)
  • 60. Exemption under Service Tax General Exemptions Exemption to Services by TBI or STEP  Taxable services provided by a Technology Business Incubator (TBI) or a Science and Technology Entrepreneurship Park (STEP) recognized by the National Science and Technology Entrepreneurship Development Board (NSTEDB) of the Department of Science and Technology, Government of India. (Refer Notification No. 32/2012-ST dated 20.6.2012) Exemption to Renting of an Immovable Property  Taxable service of renting of an immovable property, from so much of the service tax leviable thereon, as is in excess of the service tax calculated on a value which is equivalent to the gross amount charged for renting of such immovable property less taxes on such property, namely property tax levied and collected by local bodies. (Refer Notification No. 29/2012-ST dated 20.6.2012)
  • 61. Exemption under Service Tax General Exemptions Exemption to Railway Services  Taxation of services of passenger transportation by railways in first class / AC coach and transportation of goods by railways exempt upto 30 September, 2012 (Refer Notification No. 43/2012-ST dated 2.7.2012)
  • 62. Specific Exempted Services (Vide mega Exemption Notification No. 25/2012-ST dated 20.6.2012)  W.e.f. 1.7.2012  Covers 39 specific exemptions  Negative List services – not taxable at all ; can be amended only by parliament  Exempted services – taxable but exempt under notification; can be modified by notification.
  • 63. Services Provided to the United Nations or a Specified International Organization Services Provided to the United Nations or a Specified International Organization • Service provided to all international organization are not exempt but service to only specified international organizations of United Nations (Privileges and Immunities Act, 1947) are exempt • Service provided for official use of foreign diplomatic mission/ counselor post and personal use are exempt vide N. No. 27/2012-ST dated 20.6.2012
  • 64. Health Care Services Health care services by a clinical establishment, an authorised medical practitioner or para-medics What is health care • “Health care services” means any service by way of diagnosis or treatment or care • For illness, injury, deformity, abnormality or pregnancy in any organization system of medicine and includes services by way of supply of meals for the patient or transportation of the patient to and from a clinical establishment • Does not include hair transplant or cosmetic or plastic surgery, except when undertaken to restore or to reconstruct anatomy or functions of body affected due to congenital defects, developmental abnormalities, injury or trauma.
  • 65. Health Care Services  All health care services shall not be exempt but only recognized systems of medicine are covered under exemption.  Recognized systems of medicine include • Allopathy • Yoga • Naturopathy • Ayurveda • Homeopathy • Siddha • Unani • Any other system of medicine that may be recognized by Central Government.
  • 66. Health Care Services “Authorised medical practitioner” means  any medical practitioner registered with any of the Councils of the recognised system of medicine  includes medical professional having the requisite qualification to practice in any recognised system of medicine as per any law for the time being in force.  medical practitioner is a physician or surgeon
  • 67. Health care Services by a Clinical Establishment or Authorized Medical Practitioner or Para medics “Clinical establishment” means • a hospital • nursing home • clinic, • sanatorium or an institution by, whatever name called, • that offers services, or facilities requiring diagnosis or treatment or care for • illness, • injury, • deformity, • abnormality or • pregnancy, • in any recognised system of medicine, established and administered or maintained by any person or a place established as an independent entity or a part of an establishment to carry out diagnostic or investigative services of diseases.
  • 68. Health Care Services • Paramedics are trained health care professionals, e.g. nursing staff, physiotherapists, technicians, lab assistants etc. • The services to be exempt must • be health care services • be provided by - (i) a clinical establishment, or (ii) an authorised medical practitioner, or (iii) para-medics • Earlier exempted under Notification No. 30/2011-ST dated 25.4.2011 w.e.f. 1.5.2011.
  • 69. Health Care of Animals or Birds Services by a veterinary clinic in relation to health care of animals or birds • Health care services for animals and birds - Exempted • Such services are generally provided by a veterinary clinic • ‘Veterinary’ implies relating to the diseases, injuries and treatment of farm and domestic animals
  • 70. Services by way of Charitable Activities Services by an entity registered under section 12AA of the Income tax Act, 1961 by way of charitable activities “Charitable activities”- Clause (k) means activities relating to – (a) public health by way of – • care or counselling of - (i) terminally ill persons or persons with severe physical or mental disability (ii) persons afflicted with HIV or AIDS, or (iii) persons addicted to a dependence-forming substance such as narcotics drugs or alcohol or • public awareness of preventive health, family planning or prevention of HIV infection (b) advancement of religion or spirituality
  • 71. Services by way of Charitable Activities (c) advancement of educational programmes or skill development relating to,- (I) abandoned, orphaned or homeless children (II) physically or mentally abused and traumatized persons (III) Prisoners or (IV) persons over the age of 65 years residing in a rural area (d) preservation of environment including watershed, forests and wildlife or (e) advancement of any other object of general public utility up to a value of twenty five lakhs rupees in any FY provided that total value of such activities had not exceeded twenty five lakhs rupees during the preceding FY
  • 72. Services by way of Charitable Activities Conditions for this exemption -  services should be provided by an entity registered u/s 12AA of Income Tax Act, 1961, and  services should be charitable activities (as above)
  • 73. Services relating to Religious Place and Religious Ceremony Services by a person by way of-  renting of precincts of a religious place meant for general public or  conduct of any religious ceremony • Renting of precinct of a religious place as well as conduct of any religious ceremony, both shall be exempt • Religious place is a place which is primarily meant for conduct of prayers or worship pertaining to a religion • ‘Precincts’ means an area within the walls or perceived boundaries of a particular building or place; an enclosed or clearly defined area of ground around a cathedral, church, temple, college etc.
  • 74. Services relating to Religious Place and Religious Ceremony • Exemption is available only if the place is meant for general public • General public means the body of people at large sufficiently defined by some common quality of public or impersonal nature • E.g.- if a marriage is performed in precincts of a church by renting of that place, it would be exempt
  • 75. Services provided by arbitral tribunal Services provided by- (a) an arbitral tribunal to - (i) any person other than a business entity; or (ii) a business entity with a turnover up to rupees ten lakh in the preceding financial year; (b) an individual as an advocate or a partnership firm of advocates by way of legal services to,- (i) an advocate or partnership firm of advocates providing legal services ; (ii) any person other than a business entity; or (iii) a business entity with a turnover up to rupees ten lakh in the preceding financial year; or (c) a person represented on an arbitral tribunal to an arbitral tribunal
  • 76. Services provided by arbitral tribunal Taxability for Arbitral Tribunal Sole / Panel to Arbitral Tribunal exempt to any person (non business entity) exempt to business entity (turnover upto 10 lakh) exempt to business entity (turnover > 10 lakh) taxed under reverse charge Taxability for advocates Individual / firm to Individual / firm exempt to business entity (turnover upto 10 lakh) exempt to business entity (turnover > 10 lakh) taxed under reverse charge • Firm includes LLP • Effectively, no tax to be paid by advocates / arbitral tribunal • Legal services – advice, consultancy or assistance in any branch of law in any manner, includes representational services (Clause w of N. No. 25/2012-ST dated 20.6.2012)
  • 77. Services by way of technical testing or analysis of newly developed drugs Services by way of technical testing or analysis of newly developed drugs, including vaccines and herbal remedies, on human participants by a clinical research organisation approved to conduct clinical trials by the Drug Controller General of India Conditions to be satisfied – (a) service of conduct of technical testing and analysis (b) service in relation to newly developed drugs/vaccines/herbal remedies (c) service on human participants (d) service by clinical research organization approved by Drug Controller General of India.
  • 78. Services of training or coaching in recreational activities Services by way of training or coaching in recreational activities relating to arts, culture or sports • Exemption is to training or coaching Such coaching or training must relate to any one or more of —  arts,  culture,  sports • Activities by performing artists in folk or classical art forms of music, dance or theatre are not liable to service tax
  • 79. Services provided to / by educational institution Services provided to or by an educational institution in respect of education exempted from service tax, by way of -  auxiliary educational services or  renting of immovable property • Auxiliary education services shall cover the services in relation to educational activities only and include – i. any service relating to imparting any  skill  knowledge  education  development of course conduct  other knowledge enhancement activity i. whether for students or faculty ii. out sourced activities ordinarily carried out by educational institutions
  • 80. Services provided to / by educational institution iii. Services in relation to –  admission  conduct of examination  catering of students under any mid day meal scheme sponsored by Government  Transportation of students or faculty iii. Services in relation to catering under mid day scheme and transportation were hitherto exempt under different notifications under outdoor catering services and tour operator’s services
  • 81. Services provided to a recognised sports body Services provided to a recognized sports body by- a) an individual as a player, referee, umpire, coach or team manager for participation in a sporting event organized by a recognized sports body; b) another recognised sports body;  Recognized sports body include IOA, SAI, Intl0A, etc  Services by individual player, referee etc to sports body are exempt for participation in event  Services by one recognized sport body to other is exempt  Services by individuals such as selectors, commentators, curators, technical experts is not exempt  Services provided to unrecognized franchisee of sport event taxable (eg: IPL )
  • 82. Services by way of sponsorship of sporting events Services by way of sponsorship of sporting events organised- a) by a national sports federation, or its affiliated federations, where the participating teams or individuals represent any district, state or zone; b) by Association of Indian Universities, Inter-University Sports Board, School Games Federation of India, All India Sports Council for the Deaf, Paralympic Committee of India or Special Olympics Bharat; c) by Central Civil Services Cultural and Sports Board; d) as part of national games, by Indian Olympic Association; or e) under Panchayat Yuva Kreeda Aur Khel Abhiyaan (PYKKA) Scheme
  • 83. Services by way of sponsorship of sporting events • Events, i.e., tournaments or championships organized only by specified bodies in relation to games, sport, cultural events etc – Exempted • Any sponsorship of event organized by any other body like BCCI arranging IPL cricket tournament –Not Exempted • Vide N. No. 30/2012-ST dated 20.6.2012, entire service tax is payable by the body corporate or partnership firm receiving the service in India under reverse charge method
  • 84. Services provided to the Government, a local authority or a governmental authority Services provided to the Government, a local authority or a governmental authority by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of - a) a civil structure or any other original works meant predominantly for use other than for commerce, industry, or any other business or profession; b) a historical monument, archaeological site or remains of national importance, archaeological excavation, or antiquity specified under the Ancient Monuments and Archaeological Sites and Remains Act, 1958 (24 of 1958); c) a structure meant predominantly for use as (i) an educational, (ii) a clinical, or (iii) an art or cultural establishment; d) canal, dam or other irrigation works; e) pipeline, conduit or plant for (i) water supply (ii) water treatment, or (iii) sewerage treatment or disposal; or f) a residential complex predominantly meant for self-use or the use of their employees or other persons specified in the Explanation 1 to clause 44 of section 65 B of the said Act;
  • 85. Services provided to the Government, a local authority or a governmental authority  Government (States or Central) or any local authority (such as municipal corporation, development authority etc) or governmental authority (such as Revenue Board, Water Board etc) shall be exempt from levy of service tax on • construction, • erection, • commissioning, • installation, • completion, • fitting out, • repair, • maintenance, • renovation, or • alteration, in relation to specified structure, buildings or complex.
  • 86. Services provided to the Government, a local authority or a governmental authority  Construction of buildings or structures such as hospitals or educational institutes for the government or local authority or governmental authority –Exempt  if such construction is for others – Taxable  A civil structure or any other original works meant predominantly for use other than for commerce, industry, or any other business or profession – Exempt  If client is other than the Government, a local authority or a governmental authority, service tax is required to paid  Service tax is payable on construction of a residential complex having more than one single residential unit
  • 87. Services provided by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration Services provided by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of,- a) a road, bridge, tunnel, or terminal for road transportation for use by general public; b) a civil structure or any other original works pertaining to a scheme under Jawaharlal Nehru National Urban Renewal Mission or Rajiv Awaas Yojana; c) a building owned by an entity registered under section 12 AA of the Income tax Act, 1961(43 of 1961) and meant predominantly for religious use by general public; d) a pollution control or effluent treatment plant, except located as a part of a factory; or e) a structure meant for funeral, burial or cremation of deceased
  • 88. Services provided by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration • Construction of roads for use by general public - Exempt • Construction of roads which are not for general public use e.g. construction of roads in a factory, residential complex etc –Taxable • If assessee is constructing such structures for the government, a local authority or a governmental authority – Exempt • If assessee is constructing for others – Taxable • construction of a building owned by an entity registered under section 12 AA of the Income tax Act, 1961 and meant predominantly for religious use by general public – Exempt • Repair, maintenance of airports, ports and railways -Taxable
  • 89. Services by way of construction, erection, commissioning, or installation of original works Services by way of construction, erection, commissioning, or installation of original works pertaining to,- a) an airport, port or railways, including monorail or metro; b) a single residential unit otherwise than as a part of a residential complex; c) low- cost houses up to a carpet area of 60 square metres per house in a housing project approved by competent authority empowered under the ‘Scheme of Affordable Housing in Partnership’ framed by the Ministry of Housing and Urban Poverty Alleviation, Government of India; d) post- harvest storage infrastructure for agricultural produce including a cold storages for such purposes; or e) mechanised food grain handling system, machinery or equipment for units processing agricultural produce as food stuff excluding alcoholic beverages;
  • 90. Services by way of construction, erection, commissioning, or installation of original works • “Original works” as defined in Valuation Rules means – (a) all new constructions; or (b) all types of additions and alterations to abandoned or damaged structures on land that are required to make them workable, (c) erection, commission or installation of plant, machinery or equipment or structures, whether prefabricated or otherwise • No service tax liability on erection or installation of machineries or equipments for units processing agricultural produce • Erection or installation of machineries or equipments for dal mills, rice mills, milk dairies or cotton ginning mills -Exempt • Only erection and construction of original works is covered • Exemption will cover low cost houses under the scheme of affordable housing in partnership
  • 91. Temporary transfer or permitting the use or enjoyment of a copyright Temporary transfer or permitting the use or enjoyment of a copyright covered under clauses (a) or (b) of sub-section (1) of section 13 of the Indian Copyright Act, 1957 relating to original literary, dramatic, musical, artistic works or cinematograph films;  A music company would be required to pay service tax  Service Tax is not payable on the royalty amount so received from the music company by composer  an author having copyright of a book written by him –Exempt  copyright of a cinematographic film -Exempt
  • 92. Services by a performing artist in folk or classical art forms Services by a performing artist in folk or classical art forms of (i) music, or (ii) dance, or (iii) theatre, excluding services provided by such artist as a brand ambassador; • The service provided by any person being a performing artist in the form of - • folk, or • classical in relation to - • music, • dance, or • theatre are exempt • if such an artist provides services as a brand ambassador for any product, service, event or company etc for a consideration - Taxable
  • 93. Services by way of collecting or providing news Services by way of collecting or providing news by an independent journalist, Press Trust of India or United News of India; • The exemption will be available to following persons or service providers – (a) independent journalists (individuals, reporters, correspondents etc but not editors of newspapers or electronic media) (b) Press Trust of India (PTI) (c) United News of India (UNI) • PTI and UNI are government sponsored news agencies – Non Taxable • News syndication by private news agencies for a consideration - Taxable
  • 94. Services by way of renting of a hotel, inn, guest house, club, campsite or other commercial places Services by way of renting of a hotel, inn, guest house, club, campsite or other commercial places meant for residential or lodging purposes, having declared tariff of a unit of accommodation below rupees one thousand per day or equivalent • “Declared tariff” includes charges for all amenities provided in the unit of accommodation (given on rent for stay) like furniture, air- conditioner, refrigerators or any other amenities, but does not include any discount offered on the published charges for such unit • Abatement under Notification No. 26/2012-ST is also available to such services where declared tariff is Rs. 1000 or more and Service Tax is payable only on 60 per cent of the gross value of taxable service
  • 95. Serving of food or beverages by a restaurant / eating joints Services provided in relation to serving of food or beverages by a restaurant, eating joint or a mess, other than those having (i) the facility of air-conditioning or central air-heating in any part of the establishment, at any time during the year, and (ii) a licence to serve alcoholic Beverages • It is not necessary that the facility of air-conditioning is available round the year • Serving of food or beverages in a centrally air-conditioned premise will be taxed if its restaurant has a license to serve alcoholic beverages • those restaurants which do not have license to serve alcoholic beverages - Exempt • Under N. No. 26/2012-ST dated 20.6.2012, abatement @ 30 per cent is allowed w.e.f. 1.7.2012 to bundled services by way of supply of food or any other article of human consumption or any drink in a premises, including a hotel, convention centre, club etc. subject to condition of non availment of Cenvat Credit on inputs.
  • 96. Services by way of transportation by rail or a vessel from one place in India to another Services by way of transportation by rail or a vessel from one place in India to another of the following goods - a. petroleum and petroleum products falling under Chapter heading 2710 and 2711 of the First Schedule to the Central Excise Tariff Act, 1985 ; b. relief materials meant for victims of natural or man-made disasters, calamities, accidents or mishap; c. defence or military equipments; d. postal mail or mail bags; e. household effects; f. newspaper or magazines registered with the Registrar of Newspapers; g. railway equipments or materials; h. agricultural produce; i. foodstuff including flours, tea, coffee, jaggery, sugar, milk products, salt and edible oil, excluding alcoholic beverages; or j. chemical fertilizer and oilcakes;
  • 97. Services by way of transportation by rail or a vessel from one place in India to another • The exemption is in relation to – (a) transportation of specified goods only (b) in a rail or a vessel. (c) from one place to other by rail or vessel • Goods specified are of general nature, transportation of which is in national and public interest
  • 98. Services provided by a goods transport agency for transportation of goods Services provided by a goods transport agency by way of transportation of - a) fruits, vegetables, eggs, milk, food grains or pulses in a goods carriage; b) goods where gross amount charged for the transportation of goods on a consignment transported in a single goods carriage does not exceed one thousand five hundred rupees; or c) goods, where gross amount charged for transportation of all such goods for a single consignee in the goods carriage does not exceed rupees seven hundred fifty;
  • 99. Services by way of giving on hire Services by way of giving on hire - a) to a state transport undertaking, a motor vehicle meant to carry more than twelve passengers; or b) to a goods transport agency, a means of transportation of goods Exemption shall be available subject to following conditions – • hiring to a State transport undertaking or to a goods transport agency • hiring of motor vehicle to carry more than 12 passengers or in case of GTA, for transportation of goods • In both the cases, vehicle should be given on hire
  • 100. Transport of passengers with or without accompanied belongings Transport of passengers, with or without accompanied belongings, by - a) air, embarking from or terminating in an airport located in the state of Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, or Tripura or at Bagdogra located in West Bengal; b) a contract carriage for the transportation of passengers, excluding tourism, conducted tour, charter or hire; or c) ropeway, cable car or aerial tramway; The ingredients of a contract carriage are -  It carries passengers for hire or reward  It is engaged in contract whether expressed or implied for use of such vehicle as a whole;  The contract must be entered into by the person with the holder of permit in relation to such vehicle or with any person authorized by him
  • 101. Transport of passengers with or without accompanied belongings  The agreed consideration can either by on time basis or one point to another;  The vehicle should not stop to pick up or set down passengers not included in the contract anywhere during the journey;  It includes maxi-cab or motor-cab. • In cases where a bus operates on a route under a contract carriage and passengers embark or disembark from the bus at any place falling on the route and pay separate fares for the whole or for stages of journey, no Service Tax would be payable. • transport of passenger in a contract carriage for the transportation of passengers for tourism, conducted tour, charter or hire is taxable
  • 102. Services by way of vehicle parking to general public Services by way of vehicle parking to general public excluding leasing of space to an entity for providing such parking facility • Rent of vacant land used for parking is liable to Service Tax • No Service Tax is payable on providing the facility of motor vehicle parking to general public • Parking facility provided to any one which is not a general public, say a bank or hotel or car dealer etc –Taxable • General public defined to mean the body of people at large sufficiently defined by some common quality of pubic or impersonal nature
  • 103. Services provided to Government, a local authority or a governmental authority Services provided to Government, a local authority or a governmental authority by way of - a) carrying out any activity in relation to any function ordinarily entrusted to a municipality in relation to water supply, public health, sanitation conservancy, solid waste management or slum improvement and upgradation; or b) repair or maintenance of a vessel or an aircraft Services provided to the Government or a local authority or Governmental Authority may cover services by way of – (a) repair of a ship, boat or vessel or aircraft (b) effluents and sewerage treatment; (c) waste collection or disposal; (d) storage, treatment or testing of water for drinking purposes; or (e) transport of water by pipeline or conduit for drinking purposes;
  • 104. Services provided to Government, a local authority or a governmental authority Activities carried out in relation to functions ordinarily entrusted to municipality in relation to –  water supply  public health  sanction conservation  solid waste management  slum improvement / upgradation
  • 105. Services of general insurance business Services of general insurance business provided under following schemes a. Hut Insurance Scheme; b. Cattle Insurance under Swarnajaynti Gram Swarozgar Yojna (earlier known as Integrated Rural Development Programme); c. Scheme for Insurance of Tribals; d. Janata Personal Accident Policy and Gramin Accident Policy; e. Group Personal Accident Policy for Self-Employed Women; f. Agricultural Pumpset and Failed Well Insurance; g. premia collected on export credit insurance;
  • 106. Services of general insurance business h. Weather Based Crop Insurance Scheme or the Modified National Agricultural Insurance Scheme, approved by the Government of India and implemented by the Ministry of Agriculture; i. Jan Arogya Bima Policy; j. National Agricultural Insurance Scheme (Rashtriya Krishi Bima Yojana); k. Pilot Scheme on Seed Crop Insurance; l. Central Sector Scheme on Cattle Insurance; m. Universal Health Insurance Scheme; n. Rashtriya Swasthya Bima Yojana; or o. Coconut Palm Insurance Scheme;
  • 107. Services provided by an incubatee Services provided by an incubatee up to a total turnover of fifty lakh rupees in a financial year subject to the following conditions, namely:- a) the total turnover had not exceeded fifty lakh rupees during the preceding financial year; and b) a period of three years has not been elapsed from the date of entering into an agreement as an incubatee Services provided by an incubatee up to a total business turnover of fifty lakh rupees in a financial year subject to conditions • the total business turnover had not exceeded fifty lakh rupees during the preceding financial year; and • a period of three years has not lapsed from the date of entering into an agreement as an incubatee
  • 108. Service by an unincorporated body or a non- profit entity Service by an unincorporated body or a non- profit entity registered under any law for the time being in force, to its own members by way of reimbursement of charges or share of contribution - a) as a trade union; b) for the provision of carrying out any activity which is exempt from the levy of service tax; or c) up to an amount of five thousand rupees per month per member for sourcing of goods or services from a third person for the common use of its members in a housing society or a residential complex • Services should be provided to own members and not to non- members. • Service of an unincorporated body or a non- profit entity registered under any law for the time being in force to its own members up to an amount of Rs 5,000 per member per month by way of reimbursement of charges or share of contribution is exempt from service tax
  • 109. Services provided by Intermediaries Services by the following persons in respective capacities - a) sub-broker or an authorised person to a stock broker; b) authorised person to a member of a commodity exchange; c) mutual fund agent to a mutual fund or asset management company; d) distributor to a mutual fund or asset management company; e) selling or marketing agent of lottery tickets to a distributer or a selling agent; f) selling agent or a distributer of SIM cards or recharge coupon vouchers; g) business facilitator or a business correspondent to a banking company or an insurance company, in a rural area; or h) sub-contractor providing services by way of works contract to another contractor providing works contract services which are exempt;
  • 110. Services by an organizer to any person in respect of a business exhibition held outside India Services by an organizer to any person in respect of a business exhibition held outside India  Organizer should be in India  Exhibition should be held outside India  It should be in relation to business
  • 111. Services by way of making telephone calls Services by way of making telephone calls from - a) departmentally run public telephone; b) guaranteed public telephone operating only for local calls; or c) free telephone at airport and hospital where no bills are being issued
  • 112. Services by way of slaughtering of bovine animals Services by way of slaughtering of bovine animals (omitted w .e. f . 07.08.2012)
  • 113. Services received from a provider of service located in a non- taxable territory Services received from a provider of service located in a non- taxable territory by - a) Government, a local authority, a governmental authority or an individual in relation to any purpose other than commerce, industry or any other business or profession; b) an entity registered under section 12AA of the Income tax Act, 1961 for the purposes of providing charitable activities; or c) a person located in a non-taxable territory • If services are used for industry, business or commercial purpose, service tax is payable under reverse charge basis • Other purposes, it will be exempt from service tax
  • 114. Services of Public Libraries Services of public libraries by way of lending of books, publications or any other knowledge- enhancing content or material Following services of public libraries shall be exempt –  lending of books  lending of publications  lending of other knowledge enhancing content or material, (i.e. in soft or hard version, digital content, web content etc) • ‘Public library’ has not been defined
  • 115. Services by Employees’ State Insurance Corporation to persons governed under the Employees Insurance Act, 1948 Services by Employees’ State Insurance Corporation to persons governed under the Employees’ Insurance Act, 1948  Covers the services provided by the Employee’s State Insurance Corporation (ESIC) constituted under the Employees State Insurance Act, 1948  in relation to employee’s sickness, maternity and employment injury and promotion of measures for health etc of insured persons
  • 116. Services by way of transfer of a going concern Services by way of transfer of a going concern, as a whole or an independent part thereof  Going Concern as per AS-1  Sale of business as a whole  Related services are taxable
  • 117. Services by a governmental authority by way of any activity in relation to any function entrusted to a municipality Services by a governmental authority by way of any activity in relation to any function entrusted to a municipality under article 243 W of the Constitution  All services are not exempt  Services by a governmental authority by way of any activity in relation to any function entrusted to a municipality under article 243W of the Constitution are exempt
  • 118. As defined in clause 44 of section 65B, ‘service’ includes a declared service.  There are 9 categories of services or activities as declared services implying that on all such nine declared services, Service Tax shall be payable  Does not include any such transfer, delivery or supply of any goods which is deemed to be a sale within the meaning of Article 366 (29A) of the Constitution of India.  What is declared services is defined in section 65B (22) to mean any activity carried out by a person for another person for a consideration and declared as such under section 66E of the Act.  They are amply covered by the definition of service but have been declared with a view to remove any ambiguity for the purpose of uniform application of law all over the country 118
  • 119. Following constitute Declared Services (Section 66E)  Renting of immovable property;  Construction of a complex, building, civil structure or a part thereof, including a complex or building intended for sale to a buyer, wholly or partly, except where the entire consideration is received after issuance of certificate of completion by a competent authority;  Temporary transfer or permitting the use or enjoyment of any intellectual property right;  Development, design, programming, customization, adaptation, up gradation, enhancement, implementation of information technology software; 119
  • 120. Agreeing to the obligation to refrain from an act, or to tolerate an act or a situation, or to do an act;  Transfer of goods by way of hiring, leasing, licensing or any such manner without transfer of right to use such goods;  Activities in relation to delivery of goods on hire purchase or any system of payment by installments ;  Service portion in execution of a works contract;  Service portion in an activity wherein goods, being food or any other article of human consumption or any drink (whether or not intoxicating) is supplied in any manner as part of the activity. 120
  • 121. Renting of Immovable Property Renting of Immovable Property Renting (Section 65B (41)) allowing, permitting or granting access, entry, occupation, usage or any such facility, wholly or partly, in an immovable property, with or without the transfer of possession or control of the said immovable property and includes letting, leasing, licensing or other similar arrangements in respect of immovable property Renting of certain kinds of immovable properties is specified in the negative list • Renting of vacant land, with or without a structure incidental to its use, relating to agriculture. • Renting of residential dwelling for use as residence • Renting out of any property by Reserve Bank of India • Renting out of any property by a Government or a local authority to a non-business entity 121
  • 122. Renting of Immovable Property Exemptions to Renting of Immovable property  Threshold level exemption up to Rs. 10 lakh.  Renting of precincts of a religious place meant for general public is exempt.  Renting of a hotel, inn, guest house, club, campsite or other commercial places meant for residential or lodging purposes, having declared tariff of a room below rupees one thousand per day or equivalent is exempt.  Renting to an exempt educational institution  Municipal taxes (Notification No. 29/2012-ST dated 20.6.2012) to be contd… 122
  • 123. Renting of Immovable Property The immovable property could be –  factories  office buildings  warehouses  theatres  exhibition halls, and  multiple use buildings.  commercial markets  shops / shopping centre  hotel, guest houses etc  community centre etc  Allowing or permitting the usage of immovable property without transferring possession of such property is also renting of immovable property. 123
  • 124. Renting of Immovable Property Nature of Activity Taxability Renting of property to educational body Chargeable to service tax; no exemption Renting of vacant land for animal husbandry Not chargeable to service tax as it is covered in the or floriculture negative list entry relating to agriculture Permitting use of immoveable property for Chargeable to service tax as permitting usage of placing vending/dispensing machines space is covered in the definition of renting Allowing erection of communication tower Chargeable to service tax as permitting usage of on a building for consideration. space is covered in the definition of renting Renting of land or building for entertainment Chargeable to service tax as there is no specific or sports exemption. Renting of theatres by owners to film Chargeable to service tax as the arrangement distributors amounts to renting of immovable property. Renting of immovable property outside India not taxable in India even if owners are in India
  • 125. Construction Activities Construction Activities [Section 66E (b)] Construction activities means construction of a complex, building, civil structure or a part thereof, including a complex or building intended for sale to a buyer, wholly or partly, except where the entire consideration is received after issuance of completion certificate by the competent authority. It includes construction of -  Complex  Building  Civil structure or part thereof  Complex or building intended for sale to a buyer except where entire consideration is received after issuance of completion certificate by the competent authority. Actual sale after construction-if consideration received before such completion will also be taxed. 125
  • 126. Construction Activities  Construction is not defined  Construction Includes  additions,  alteration,  replacement, or  remodeling of any existing civil structure 126
  • 127. Construction Activities Who is Competent Authority to Issue Completion Certificate  Government  Any authority authorized to Issue CC under any law  In absence of any requirement to issue CC, • architect under Architect Act, 1972 • Chartered Engineer register with 10E • licensed surveyor (of local body / development or planning authority) 127
  • 128. Construction Activities Residential Complex  Complex comprising of one or more buildings having more than one residential unit  Even two units would be called ‘complex’  Single residential unit – self contained residential unit designed for use, wholly / principally, for residence of one finely  Original work – new construction and all type of addition / alteration to abandoned / damaged structures on land as are required to make them workable / erection , commissioning, installation. 128
  • 129. Intellectual Property Right Temporary transfer or permitting the use or enjoyment of any intellectual property right [Section 66 E (c)] Intellectual property right’ has not been defined but Intellectual Property Right includes : • Copyright  Patents  Trademarks  Designs  Any other similar right to an intangible property 129
  • 130. Intellectual Property Right Examples of IPRs  Patents - New technical concepts, inventions  Copyright - Text, graphics, software, data compilations, art, music  Trademarks - Brands (Services/ Products) image and reputation  Confidential Information - Ideas, information, know-how etc.  Design Rights - Form and appearance, decoration 130
  • 131. Intellectual Property Right What is taxed in IPR  all IPRs (whether recognized in law or not) excluding copy rights  temporary transfer of IPRs  permitting the use of IPRs  enjoyment of IPRs 131
  • 132. Intellectual Property Right Copyrights as IPRs are exempted which include :  literary work  dramatic work  musical work  artistic works  cinematograph films 132
  • 133. Information Technology Software Information Technology software related services [section 66E(d)]  It includes following in relation to Information Technology Software (ITS) –  Development  Design  Programming  Customization  Adaptation  Upgradation  Enhancement  Implementation 133
  • 134. Information Technology Software ITS is defined in Section 65B(28) ITS is a representation  Representation in ITS should be of any of the following – • Instruction • Data • Sound • Image • Source code • Object code  Such items represented should be recorded in a machine readable form,  Such items represented and recorded should be capable of being manipulated.  They should provide interactivity by way of a – • computer, or • automatic data processing machine, or • any other device or equipment. 134
  • 135. Information Technology Software Scope of ITS Service Design - plan, scheme Programming - process of writing a computer programme Customisation - modifying to meet a specific requirement Adaptation - change to suit, adopt Upgradation - raising standard, improving quality / version / features Enhancement - in value, content, quality Implementation - execution 135
  • 136. Obligations / Actions Agreeing to obligation to refrain from on Act / to tolerate Act or situation / to do an Act [section 66E(e)] Following activities if carried out by a person for another for consideration would be treated as provision of service -  Agreeing to the obligation to refrain from an act.  Agreeing to the obligation to tolerate an act or a situation.  Agreeing to the obligation to do an act. 136
  • 137. Obligations / Actions Examples of Obligations / Actions  non compete fees for agreeing not to compete  compensation on termination of business agreements  advance forfeited for cancellation of agreement to provide a service.  forfeiture of security deposit for damages done by service receiver in course of receiving of services.  cancellation charges being charged by airlines, hotels etc.  consideration for non-appearance in a court of law or withdrawal of suit.  demurrage charges or detention charges 137
  • 138. Transfer of Goods Transfer of goods by hiring, leasing, licensing [66E(f)] There should be transfer of goods involved  Such transfer of goods should be by way of –  hiring  leasing  licensing, or  any such manner  Such transfer should be without transfer of right to use such goods.  Excludes intangible goods  Only goods covered [section 65B(25)] 138
  • 139. Transfer of Goods Transfer of right to use  Taxable only when transfer of right to use goods is there  Constitutional / legal concept  Can be determined when agreement in read in whole, not just one clause  Transfer of right to use is deemed sale u/a 366(29A) of Constitution  If owner retains effective control, no transfer of right can take place  Service excludes deemed sale u/a 366(29A) 139
  • 140. Transfer of Goods Tests laid down by Supreme Court in BSNL v UOI [(2006)2 STR 161 (SC)]  There must be goods available for delivery ;  There must be consensus ad idem as to the identity of the goods;  The transferee should have legal right to use the goods – consequently all legal consequences of such use including any permissions or licenses required therefore should be available to the transferee;  For the period during which the transferee has such legal right, it has to be the exclusion to the transferor – this is the necessary concomitant of the plain language of the statute, viz., a ‘transfer of the right to use’ and not merely a license to use the goods;  Having transferred, the owner cannot again transfer the same right to others 140
  • 141. Transfer of Goods Article 366 (29A) of Constitution of India, as amended by Constitution (46th Amendment) Act, 1982, w.e.f 2.2.1983 "Tax on the sale or purchase of goods" includes-  a tax on the transfer, otherwise than in pursuance of a contract, of property in any goods for cash, deferred payment or other valuable consideration;  a tax on the transfer of property in goods (whether as goods or in some other form) involved in the execution of a works contract;  a tax on the delivery of goods on hire-purchase or any system of payment by installments;  a tax on the transfer of the right to use any goods for any purpose (whether or not for a specified period) for cash, deferred payment or other valuable consideration; to be contd…… 141
  • 142. Transfer of Goods  a tax on the supply of goods by any unincorporated association or body of persons to a member thereof for cash, deferred payment or other valuable consideration;  a tax on the supply, by way of or as part of any service or in any other manner whatsoever, of goods, being food or any other article for human consumption or any drink (whether or not intoxicating) , where such supply or service is for cash, deferred payment or other valuable consideration, and such transfer, delivery or supply of any goods shall be deemed to be a sale of those goods by the person making the transfer, delivery or supply and a purchase of those goods by the person to whom such transfer, delivery or supply is made. 142
  • 143. Transfer of Goods Examples of transfer without right to use  Car on hire with driver – right to use not transferred  Conditional supply of equipment – not free to use goods  Bank lockers – possession not transferred to hirer  Hiring of audio visual equipment with attendant – no transfer of right / possession
  • 144. Includes delivery of goods on -  hire purchase  any system of payment by installment  Payment in parts / installments  Lease payment is calculated so as to cover full cost of asset together with interest charges  Transfer of substantially all risks and rewards in relation to goods so transferred  Not taxable as covered under deemed sale of goods  But services in relation to such sale taxable 144
  • 145. Delivery of goods on hire purchase  Transfer of possession (and not just of custody)  The hirer has the option or obligation to purchase the goods in accordance with the terms of the agreement.  In hiring, hirer has no such option and risks remain with owner / not transferred to hirer  In hire purchase, hirer has option / obligation to purchase goods  Operating lease not covered  Involves two transactions – financial transaction and hire purchase. Financial transaction is chargeable to Service Tax [Association of Leasing & Financial Services v. Union of India (2010) 20 STR 417 (SC)].  Service Tax levied only on 10 percent value representing interest in financial lease and not full value (Notification No. 26/2012-ST) 145
  • 146. Works contract [65B(54)]  “Works Contract” means a contract wherein transfer of property in goods involved in the execution of such contract is leviable to tax as sale of goods and such contract is for the purpose of carrying out construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, alteration of any movable or immovable property or for carrying out any other similar activity or a part thereof in relation to such property. 146
  • 147. Works contract covers  Construction  Erection  Commissioning  Completion  Fitting out  Repair  Maintenance  Renovation  Alteration, or  Any other similar activity or part there of 147
  • 148. Such activities could be in relation to any –  Movable property (plant, machinery, equipments etc)  Immovable property (land, building, structures etc)  This definition is very vast and covers almost everything 148
  • 149. Some issues in works contracts Labour contracts Excluded Repair & Maintenance of motor yes if property in goods vehicles transferred in execution of WC Construction of pipeline / conduit yes, structures on land Painting/repair/renovation of building yes if involves provision of material also Erection/commissioning installation of yes if transfer of property in plant/ machine etc goods is involved and machinery etc are embedded / attached to earth after the job. 149