This presentation is on Change in Service Tax Law

1. R. Rampuria & Company

2. 1. Introduction
2. What is service?
3. Declared Service- Deemed as Service
4. Reverse Charge
5. Joint charge
6. Negative List – Services not taxable
7. Point of taxation
8. Abatement
9. Threshold Exemption
10. Payment of service tax
11. Accounting Codes
12. Filing of return
13. Fees payable for late filing of return

3.  Service Tax was First introduced in the year
1994 through insertion of Chapter V of
Finance Act,1994.
 From July 01,2012 there has been complete
change in the levy of tax on services on the
basis of Negative list.
 The service tax is administered by Excise
department
 Service tax do not extend to the State of
Jammu & Kashmir

4.  Earlier there was no definition of service, but now it has been defined in
Clause(44) of the Sec 65B and means-
a) Any activity
b) For consideration
c) Carried out by a person for another
d) And includes a declared service
 But does not include
 Any activity that constitutes only a transfer in title of goods or immovable
property by way of sale , gift or in any other manner .
 A transfer, delivery or supply of goods which is deemed top be a sale of
goods within the meaning of Clause (29A) of article 366 of the constitution
 A transaction in money or actionable claim.
 Any service provided by an employee to an employer in the course of
employment.
 Fees payable to a court or tribunal set up under a law for the time being in
force.

5.  Renting of immovable property.
 Construction of a building, complex or part thereof.
 Temporary transfer or permitting the use or enjoyment of an
intellectual property right.
 Development, design, programming, customisation, upgradation,
enhancement implementation of IT software.
 Agreeing to the obligation to refrain from an act or situation or to do
an act.
 Transfer of goods by way of hiring, leasing, etc. without transfer of
right to use.
 Activities in relation to transfer of goods on hire purchase or
instalment basis
 Service portion in execution of a works contract
 Service portion wherein goods, being food, drink etc. is supplied.

6. Sl Description of a service % of tax payable by % of tax payable
No service provider by service
recipient
1 In respect of services provided or agreed to be provided by an insurance agent to a
100%
person carrying on insurance business Nil
2 In respect of services provided or agreed to be provided by a goods transport
Nil 100%
agency for transportation of goods by road *
3 In respect of services provided or agreed to be provided by way of sponsorship
Nil 100%
4 In respect of services provided or agreed to be provided by an arbitral tribunal
Nil 100%
5 In respect of services provided or agreed to be provided by individual advocate or a
Nil 100%
firm of advocates by way of legal services
5A In respect of services provided or agreed to be provided by a director of a company
Nil 100%
to the company
6 In respect of services provided or agreed to be provided by government or local
authority by way of support services excluding (1)renting of immovable property
Nil 100%
(2)services specified in sub clauses(i),(ii) and (iii) of clause 9a) of section 66D of
Finance Act,1994
7 In respect of any taxable services provided or agreed to be provided by any person Nil 100%
who is located in a non taxable territory and received by a person located in a
taxable territory

7. *Provided or agreed to be provided by a GTA in
respect of goods , where the person liable to pay
freight is –
(a)Factory registered under Factories Act,1948
(b)Society registered under Societies Registration Act
©Cooperative society registered under any law
(d)Dealer of exercisable goods registered under
Central Exercise Act
(e)Body corporate established under any law
(f)Any partnership firm registered or not

8. Joint charge is applicable to specified services where the service provider is an
individual, HUF, or a partnership firm whether registered or not, including association
of persons and the recipient is a body corporate.
Sl No. Description of a service % of service % of service
tax payable tax payable
by service by service
provider receiver
7 (a) In respect of services provided or agreed to be provided by Nil 100%
way of renting of a motor vehicle designed to carry
passengers on abated value to any person who is not
engaged in the similar business
(b) In respect of services provided or agreed to be provided by
way of renting of a motor vehicle designed to carry on
passengers on non abated value to any person who is not 60% 40%
engaged in the similar business
8 In respect of services provided or agreed to be provided by way of 25% 75%
manpower for any purpose or “security services”
9 In respect of services provided or agreed to be provided in service 50% 50%
portion in execution of works contract

9. Negative List as stated in section 66D specifies services which are
not taxable. These are as follows:
 Services by government or local authority except the
following:
• Services provided by department of post by way of speed
• Services in relation to an aircraft or a vessel.
• Transport of goods or passengers.
• Support services provided to business entities other than
 Services by RBI
 Services by foreign diplomatic mission located in India.

10.  Services relating to agriculture or agricultural produce .
 Trading of goods involving transfer of title of goods.
 Any process amounting to production or manufacture of
goods.
 Selling of space or time slots for advertisement other
than advertisement broadcast by radio or television
 Betting , gambling or lottery
Admission to entertainment events or access to
amusement facility
Service by way of access to a road or a bridge on payment
of toll charges.
 Transmission or distribution of electricity.

11.  Specified services relating to education-
• Pre school education and education upto higher secondary
school .
•Education as a part of curriculum or approved vocational
education.
 Services by way of renting of residential dwelling for use as
residence.
Financial services like-
• extending deposits, loans or advances
• sale or purchase of foreign currency amongst banks or
authorized dealers
 Services relating to transportation of passengers
 Services by way of transportation of goods
 Funeral, burial, crematorium or mortuary services.

12. Point of taxation is the point of time when a service shall be deemed to have been
provided, which means when the service tax is due.
 If service provider is an individual /partnership firm /LLP
whose aggregate value of taxable services provided from
one or more premises is Rs. 50laks or less in the previous
financial year ,the service provider shall have an option to
pay tax upto services of Rs. 50lakhs in the current year ,
when the payment is received.
 In case service receivers liable to pay tax under reverse
charge the Point of Taxation is the date on which payment is
made to the service provider . However, this rule will not
apply if the payment is not made within 6 months from the
date of Invoice.

13.  In other cases , the Point of Taxation shall be as
follows:
(a) Date of invoice or payment whichever is earlier,
if invoice is issued within the prescribed period of 14
days from the date of completion of provision of
service.
(b) Date of completion of the provision of service
or payment, if invoice is not issued within the
prescribed period as above.

14. Sl. Date of Date of Date on Point of Remarks
No. completion invoice which Taxation
of service payment is
received
1 April April April April Invoice issued within 14 days
10,2011 20,2011 30,2011 20,2011 and before receipt of payment
2 April April April April Invoice not issued within 14
10,2011 26,2011 30,2011 10,2011 days and payment received
after completion of service
3 April April April April Invoice issued within 14 days
10,2011 20,2011 15,2011 15,2011 but payment received before
invoice
4 April April April April 5,2011 Invoice not issued within 14
10,2011 26,2011 5,2011(par & April days. Part payment before
t) & April 10,2011 for completion & remaining later.
25,2011(re respective
maining) amounts

15. Sl. Description of taxable service % of value Conditions
No on which
. service tax
is payable
1 Services in relation to financial 10 Nil
leasing including hire purchase
2 Transport of goods by rail 30 Nil
3 Transport of passengers, with 30 Nil
or without accompanied
belongings by rail
4 Bundled service by way of 70 (i)CENVAT credit on any goods
supply of food or any other classifiable under Chapters 1 to 22 of
article of human consumption the Central Excise Tariff Act, used for
together with renting of such providing the service has not been
premises taken under the provisions of CENVAT
Credit Rules

16. Sl. Description of taxable service % of value Conditions
No on which
. service tax
is payable
5 Transport of passengers by rail 40 CENVAT Credit on inputs and capital
with or without belongings goods, used for providing the service
has not been taken under the provisions
of CENVAT credit rules
6 Renting of hotels, inns, guest 60 Same as above
house or other commercial
places meant for residential or
lodging purpose
7 Services of goods transport 25 CENVAT credit on inputs, capital goods
agency in relation to & input services, used for providing the
transportation of goods service has not been taken under the
provisions of CENVAT credit rules
8 Services provided in relation to 70 Same as above
chit

17. Sl. Description of taxable service % of value on Conditions
No. which service
tax is payable
9 Renting of any motor vehicle 40 Same as above
designed to carry passengers
10 Transport of goods in a vessel 50 Same as above
11 Services by a tour operator in 25 (i) CENVAT credit on inputs, capital goods & input
services, used for providing taxable service, has not
relation to- been taken under the provisions of CENVAT credit
(i)A package tour rules.
(ii) The bill issued for this purpose indicates that it is
inclusive of charges for such a tour.
(ii) A tour if the tour operator is 10 i. CENVAT credit on inputs, capital goods & input
services, used for providing taxable service, has not
providing solely of arranging or been taken under the provisions of CENVAT credit
booking accommodation for any rules.
person in relation to the tour ii. The invoice, bill or challan indicates that it is towards
the charges for such accommodation.
iii. This exemption shall not apply in such cases where the
invoice , bill or challan issued by the tour operator in
relation to the tour only includes the service charges
for arranging or booking accommodation for any
person and does not include the cost of such
accommodation.

18. Sl. Description of taxable service % of value on Conditions
No. which service
tax is payable
(iii)Any services other than those 40 i. CENVAT credit on inputs, capital
specified above in (i) & (ii) goods & input services, used for
providing taxable service, has not
been taken under the provisions of
CENVAT credit rules.
ii. The bill issued indicates that the
amount charged in the bill is the
gross amount charged for such a
tour.
12 Construction of a complex, building 25 i. CENVAT credit on inputs used for
or civil structure or a part thereof, providing taxable service, has not
intended for sale to the buyer, been taken under the provisions of
wholly or partly except where the
CENVAT credit rules.
entire consideration is received after
issuance of completion certificate ii. The value of land is included in the
by the competent authority amount charged for the service
receiver.

19. 1. The service provider can avail exemption if the aggregate value if
taxable services* does not exceed Rs. 10lakhs in the preceding
financial year. However the exemption limit was Rs.4lakhs in the
year 2005-06 &2006-07 & Rs. 8lakhs for the year 2007-08.
*aggregate value means sum total of value of taxable services
charged in the first consecutive invoices issued or required to be
issued, during a financial year but does not include value charged in
invoices issued towards such services which are exempt from whole
of service tax leviable thereon under any notification.
2. While considering the aggregate value of taxable services, the
services provided from one or more premises to be considered
together.

20. *Trademark or brand name is a name or a mark, such as a symbol ,monogram, label, logo, signature,
which is used in relation to such specified services for the purpose of indicating or so as to indicate , a
connection in the course of trade between such specified services and some person using such name or
mark with or without any indication of the identity of such person.

21.  Every person providing taxable service to any person shall pay tax at the prescribed rate, in such a manner and
within such period as is prescribed.
Category Basis of payment
Individual, proprietary firm or partnership Quarterly
firm
1.If tax is deposited electronically through By the 6th day from the end of the quarter
internet banking
2.In any other case By the 5th day from the end of the quarter
Others Monthly
1.If tax is deposited electronically through By the 6th day of next month
internet banking
2.In any other case By the 5th day of next month
If the assessee has paid tax of Rs. 10lakhs or more either in cash or through CENVAT credit than it is mandatory for
the person to deposit tax electronically through internet banking.

22. W.e.f. 1-7-2012, all taxable services has been allotted new
accounting codes as under:
Name of Accounting Codes
services
Tax Other Penalties Deduct
Collection Receipts Refund
All (interest on
Taxable delayed
Service payment of
Service tax)
00441089 00441090 00441093 00441094

23.  It is mandatory for the assessee to file return
electronically in form ST-3.
 The return is filed on half yearly basis. The half
year for this purpose will cover the period of 1st
April to 30th September and 1st October to 31st
March of the relevant year.
 The return has to be filed on or before the 25 th of
the month following the particular half year; i.e.,
on 25th of April & 25th October.

24. Period of Delay Penalty
15 days from date prescribed for
Rs.500
submission of return
Beyond 15 days but not later than 30 days Rs.1000
Beyond 30 days from date prescribed Rs.1000 plus Rs.100 for every day from
the 31st day till the date of furnishing of
return
The total amount payable in terms of this rule, for delayed submission of return shall
not exceed Rs. 20000.