final indore rishabh

8/9/2019 Final Indore Rishabh

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Overview of Service Tax Provisions

AndImportant Services under the ServiceTax

Rishabh R. [email protected]

098198-61049

CA Final Student, Mumbai
mailto:[email protected]:[email protected]


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AGENDA

Introduction

Administration of Service Tax

Act & Rules Applicable

Category of Services

Finance Bill (No.2),2009 Amendments

Few Important Services

Question & Answer Session


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INTRODUCTION

Recommended by Dr. Raja Chelliah Committee (Tax

Reforms Committee)

No separate law

First introduced in the year 1994 vide Chapter V (Section

64 to 96) of Finance Act,1994

Chapter VA (Section 96A to 96I) was inserted by

Finance Act,2003

Applicable to whole of India except the state of Jammu and

Kashmir and its provisions were made applicable witheffect from July 1,1994.Ex:

In India the service sector contributes nearly 53% of GDP Rate Applicable as of now is 10.3%

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Administration of ServiceTax

Administered by the Excise department working under Department of Revenue ,

Ministry of Finance , Government of India

The responsibility of administration and collection of service tax has been vested with

CBEC (Central Board of Excise and Customs)

Section 93 and 94 of Chapter V and section 96 I of Chapter VA of Finance Act ,

1994 empowers the Central Government to issue Notifications to exempt any

service or part of service from service tax

Accordingly Notifications have been issued by Department of Revenue

,Ministry of Finance from time to time

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Act and Rules Applicable toService Tax

1. Chapter V and Chapter VA of Finance Act 1994

2. Service Tax Rules,1994

Forms

Procedure for Registration

Due dates

Records

1. Service Tax (Removal of Difficulty) Order,2002

2. Service Tax (Advance Rulings) Rules, 2003

3. Cenvat Credit Rules 2004(Earlier Service Tax CreditRules,2002)

4. Export of Service Rules,2005

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Act and Rules Applicable toService Tax(Contd.)

8. Service Tax (Registration of Special Category of Persons)Rules, 2005

9. Service Tax (Determination of Value) Rules, 2006

10. Taxation of Services (Provided from Outside India and

Received in India) Rules, 200611. Works Contract (Composition Scheme for Payment of

Service Tax) Rules, 2007

12. Service Tax (Publication of Names) Rules, 2008

13. Service Tax Dispute Resolution Scheme, 2008

14. Service Tax (Provisional Attachment of Property) Rules,2008

15. Service Tax Return Preparer Scheme,2009

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Acid Test to decideTaxability

Service

Provider

Place Where

service is

delivered

Taxable Service

Section 65(105)

Recipient

of ServiceService

Threshold limit of Rs 10 lakhs for service

providers


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Taxable services

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Category of Services

Communication Services 5 Travel & Transport Services 14

Entertainment Services 13

Professional/Marketing/Agency 20

Real Estate 5

Insurance 4

Cargo/Port 7

Financial 13

Business/Commercial 17

Others 8

TOTAL 106


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3 New services added

Finance(No. 2) Bill, 2009

Cosmetic and Plastic surgery services introduced [Sec65(105)(zzzzk)]

Transport of goods by National waterways and Inland

Waters introduced [Sec 65(105)(zzzzl)] Legal services to a business entity, by any other business

entity introduced [Sec 65(105)(zzzzm)]

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t t


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. ract c ng artereAccountant/CS/CWA

Services Introduced : 16.10.1998

Definition: Sec 65(83)

"practicing chartered accountant" means a person who is a memberof the Institute of Chartered Accountants of India and is holding a

certificate of practice granted under the provision of the CharteredAccountants Act, 1949 (38 of 1949) and includes any concernengaged in rendering services in the field of Chartered accountancy;

Taxable service- Taxable service means any service provided or to beprovided to any person, by a practising chartered accountant in hisprofessional capacity, in any manner-S.65(105)(s);

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Practicing CharteredAccountant/CS/CWA

Services(Contd.) CA in practice may act as Liquidator, Trustee, Executor,

Administrator, Arbitrator, Receiver, or representative in

taxation or financial matter Services rendered in professional capacity subject to

service tax

Services rendered in a professional capacity relating torepresenting the client before any statutory authority in the

course of proceedings initiated under any law- exempt fromtax from 13.07.2006 (Notification No. 25/2006)

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Issues What is professional capacity ?

Is Royalty income from authorship of bookstaxable ?

Personal/Group tutions given by practicing CAstaxable ?

Whether receipts from Manpower recruitmentwork or Management Consultancy will be taxedunder this head ?

Persons not holding COP and rendering Tax

advisory services liable to pay service tax ?


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2.Legal Services

Introduced : yet to be effective

Finance (No.2) Bill,2009 Legal services to a business entity, by any other

business entity introduced [Sec 65(105)(zzzzm)]

In relation to :

Advice

Consultancy Assistance in any branch of law


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Issues

What is a Law ?

Whether Non advocates are taxable ?

Firm of advocates giving consultancy onany matter other than branch of law ?

Advice on Package Scheme ofIncentives,other schemes of State or

Central Government ?


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3.Commercial Training &Coaching Services

Introduced: 01.07.2003

Definitions-

Sec 65(27)- "commercial training or coaching centre

Any institute or establishment

Imparting skill,knowledge,lessons Any subject other than sports

Excludes pre school coaching

Also excludes any institute or establishment issuing certificatesrecognized by law

Taxable service- any service provided or to be provided Toany person, by a commercial training or coaching centre inrelation to commercial training or coaching -Sec 65(105)(zzc)


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Issues

What is the meaning of word Commercial ? NGO making surplus out of training,Does

NGO become commercial ?

Person taking group tutions,is it commercial

coaching ? Certification courses provided by colleges

and universities not recognized by law,Will itbe taxed ?


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4.Stock Broker Services

Introduced : 1.7.1994


Stock Broker means

Application made for registration

Registered as a stock broker or

Sub broker Taxable service- Taxable service means any service

provided or to be provided to any person, by a stock

broker in connection with sale or purchase of securitieslisted on recognized stock exchange-S.65(105)(s);

The Finance (No.2) Bill,2009 has proposed to omit the wordsSub Broker from definition of Stock Broker


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Issues

Services provided by Unregistered StockBroker,taxable ?

Services provided by one broker to anotherbroker,taxable ?

Whether arbitrage,jobbing done by thebroker on his own account,taxable ?

Transactions of unlisted securities of listed

companies I.e Debentures,CommercialPapers,taxable ?


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5.Management or BusinessConsultants Services

Introduced : 16/10/1998

Definition : 65(65)

Management or Business Consultant means

any person who is engaged in providing anyservice,either directly or indirectly,inconnection with the management of anyorganisation or business in any manner and

includes any person who renders anyadvice,consultancy or technical assistance inrelation to :

anagement or us ness


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anagement or us nessConsultants

Services(Contd.) Financial management Human Resources Management

Marketing Management

Production Management

Logistics Management

Procurement & Management of Information Technologyresources ;or

other similar areas of management Taxable service-Taxable service means any service provided or to be provided

to any person by a management or business consultant in connection withthe management of any organisation or business in any manner-S.65(105)(r);


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Issues

Are the following activities management ?

Service of Drafting of Whistle Blower Policy

Drafting a Risk Management Framework

Corporate Governance Rating

Internal Audit by a non practicing CA/CS/CWA

Advisory services in getting ISO certification,variousgovernment approvals like SEZ,environmentclearances,FDA approvals


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6.Sponsorship Services


Definition: Sec 65(99a)

sponsorship" includes naming an event after thesponsor,displaying the sponsors company logo or tradingname,giving the sponsor exclusive or priority booking

rights,sponsoring prizes or trophies for competition;But does not include any financial or other support in the formof donations or gifts,given by the donors subject to thecondition that the service provider in under no obligation toprovide anything in return to such donors;

Taxable service-Taxable service means any service provided or

to be provided to any body corporate or firm,by any personreceiving sponsorship,in relation to such sponsorship,in anymanner but does not include services in relation to sponsorshipof sports events-S.65(105)(s);


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Issues

What is a Sports event?

What is a body corporate?

What is a firm ? In respect of Services provided from

outside India and received in

India,Whether services provided toother than body corporate and firmscan be taxed ?


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7.Security Agency Services


Definition: Sec 65(94) Security Agency means

Any person engaged in business

Security of any property,movable & immovable

Includes services of investigation

Detection or verification

Of any fact or activity

Supply of security personnel

Taxable service- any service provided or to be provided To anyperson, by a security agency in relation to security of anyproperty or person and detection,etc services -Sec 65(105) (zzc)


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Issues

Is security agency service providedby a Police Department taxable ?

Is security agency service providedby a NGO taxable ?

Is security agency service providedby animal keepers likedog,horse,other pets taxable ?


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8.Cosmetic & PlasticSurgery Services

Introduced : yet to be effective

Finance (No.2) Bill,2009

Services by any person to any personin relation to

Costmetic & Plastic surgery

Excludes any surgery undertaken torestore or reconstruct anatomy orfunctions of body due to diseases


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Issues

Removal of Fat

Smile surgery

Dental Surgery


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Useful Links

Directorate of Service Tax, Ministry of Finance

http://www.servicetax.gov.in/

Union Budget

http://www.indiabudget.nic.in/ub2009-10/fb/bill5.pdf

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QUESTIONS?

SUGGESTIONS??

COMMENTS???


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2.Insurance AuxillaryServices



"practicing chartered accountant" means a person who is amember of the Institute of Chartered Accountants of India

and is holding a certificate of practice granted under theprovision of the Chartered Accountants Act, 1949 (38 of1949) and includes any concern engaged in renderingservices in the field of Chartered accountancy;

Taxable service- Taxable service means any service

provided or to be provided to any person, by a practisingchartered accountant in his professional capacity, in anymanner-S.65(105)(s);


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3. Event ManagementServices


Definition : Sec 65(40)- Event Management

: Sec 65(41) Event manager

Taxable service - any service provided or to be provided to

to any person, by an event manager in relation to eventmanagement [Sec 65(105) (zu)]

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Event ManagementServices(Contd.)

An event manager is hired to execute an event such as aproduct launch of any corporate, promotional activities,exhibitions and private functions, etc.

Event manager uses his expertise and ideas to manage anevent

Includes any consultation provided for organizing event

No service tax on sale proceeds of tickets or revenuegenerated from the sale of space

Services provided by an organizer of trade fairs and

exhibitions to an exhibitor in relation to business exhibitionis liable to service tax under Business Exhibition Service

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5. Information TechnologySoftware Services


Definition Sec 65(53a)

"information technology software means anyrepresentation of instructions, data, sound or image,

including source code and object code, recorded in amachine readable form, and capable of being manipulatedor providing interactivity to a user, by means of a computeror an automatic data processing machine or any otherdevice or equipment

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Taxable service

Sec 65(105) (zzzze) any service provided or to be provided

To any person, by any other person in relation to informationtechnology software for use in the course, or furtherance, of

business or commerce, including,(i) development of information technology software,(ii) study, analysis, design and programming of informationtechnology software,(iii) adaptation, upgradation, enhancement, implementation andother similar services related to information technology software

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(iv) providing advice, consultancy and assistance on mattersrelated to information technology software, includingconducting feasibility studies on implementation of a system,specifications for a database design, guidance and assistanceduring the startup phase of a new system, specifications to

secure a database, advice on proprietary informationtechnology software,(v) acquiring the right to use information technology softwarefor commercial exploitation including right to reproduce,distribute and sell information technology software and rightto use software components for the creation of and inclusionin other information technology software products,(vi) acquiring the right to use information technology softwaresupplied electronically

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Points to note

Software consists of carrier medium such as CD, Floppy andcoded data

Packaged software sold off the shelf, being treated asgoods, is leviable to excise duty

IT software services provided for use in business orcommerce are included

Supply of IT software electronically included

Services provided in relation to advice, consultancy on ITsoftware included

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d d i


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Amendment proposed inFinance Bill 2009

the word providing is to be substituted for acquiring inSec 65(105)(zzzze)- Information Technology SoftwareServices with retrospective effect from 16.05.2008

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6. Consulting Engineer


Definition Sec 65(31)

"consulting engineer" means any professionally qualified engineeror anybody corporate or any other firm who, either directly orindirectly, renders any advice, consultancy or technical assistance in

any manner to any person in one or more disciplines of engineering Taxable service- Sec 65(105) (g)

Taxable service means any service provided or to be provided

to any person, by a consulting engineer in relation to advice,consultancy or technical assistance in any manner in one or moredisciplines of engineering including the discipline of computerhardware engineering

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Consulting Engineer

Includes self-employed professionally qualified engineer,whether or not employing others for assistance.

For services rendered by the sub-consultant to the primeconsultant, the levy of Service Tax, on the prime ormain consulting engineer who raises a bill on his client(which would include the charge for services by the sub-consultant).

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Illustrative list

(i) Feasibility study

(ii) Pre-design services/project report

(iii) Basic design engineering

(iv) Detailed design engineering

(v) Procurement(vi) Construction supervision and project management

(vii) Supervision of commissioning and initial operation

(viii) Manpower planning and training

(ix) Post-operation and management

(x) Trouble shooting and technical services,including establishing systems and procedures for an existingplant.

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Specific Exemption

taxable services provided by a consulting engineer to aclient on transfer of technology

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Taxable services

Communication Services1. Telecommunication Service

65(105)(zzzx)

2. Mailing List Compilation and Mailing

65(105)(zzzg)3. Internet Telephony

65(105)(zzzu)

4. Internet Cafe65(105)(zzf)

5. Development and Supply of Contents65(105)(zzzzb)

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Travel and Transport

6. Air Travel Agent 65(105)(l)

7. Airport Services 65(105)(zzm)

8. Transport of Goods by Aircraft 65(105)(zzn)

9. Transport of passenger embarking in India for

international journey by air 65(105)(zzzo)

10. Tour operator 65(105)(n)

11. Rent-A-Cab scheme operator 65(105)(o)

12.Rail Travel Agent 65(105)(zz)

13. Transport of goods by road 65(105)(zzp)

14. Travel Agent Other 65(105)(zzx)

15. Transport of goods other than water through

pipeline or other conduit 65(105)(zzz)

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Travel and Transport..

16. Transport of goods in Container by Rail65(105)(zzzp)

17. Ship Management65(105)(zzzt)

18. Transport by Cruise Ship 65(105)(zzzv)

19. Courier 65(105)(f)

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Entertainment20. Photography 65(105)(zb)

21. Online Information & Data Base Access or retrieval 65(105)(zh)22. Video-tape Production 65(105)(zi)

23. Sound Recording 65(105)(zj)

24. Broadcasting agency or organization 65(105)(zk)

25.Cable Operator 65(105)(zs)

26. Event Management 65(105)(zu)

27. Fashion Designer 65(105)(zv)

28. Club or Association 65(105)(zzze)

29. Mandap Keeper 65(105)(m)

30. Convention Centre 65(105)(zc)

31. Outdoor Caterer 65(105)(zzt)

32. Pandal or shamiana 65(105)(zzw)

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P f i l /


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Professional /Marketing/Agency

33. Consulting Engineer 65(105)(g)

34. Architect 65(105)(p)

35. Interior decorator 65(105)(q)

36. Management or Business consultant 65(105)(r)

37. Chartered Accountant 65(105)(s)

38. Cost Accountant 65(105)(t)

39. Company Secretary 65(105)(u)

40. Scientific and Technical consultancy 65(105)(za)

41. Beauty Treatment 65(105)(zq)

42. Health Club & Fitness 65(105)(zw)

43. Opinion Poll 65(105)(zzs)

44. Programme Producer 65(105)(zzu)

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P f i l /


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Professional /Marketing/Agency..

45. Security Agency 65(105)(w)

46. Credit Rating Agency65(105)(x)

47. Market Research Agency 65(105)(y)

48. Advertisement Agency 65(105)(e)49. Manpower Recruitment and Supply Agency

65(105)(k)

50. Registrar to an issue65(105)(zzzi)

51. Share Transfer Agent65(105)(zzzj)

52. Design Services 65(105)(zzzzd)

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Real estate

53. Real Estate Agent 65(105)(v)

54. Commercial or Industrial Construction Service65(105)(zzq)

55. Site formation and clearance, excavation and

earthmoving and demolition and such other activities65(105)(zzza)

56. Construction of Complex65(105)(zzzh)

57. Survey and Map Making 65(105)

(zzzc)

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Insurance

58. General Insurance65(105)(d)

59. Insurance auxiliary services concerning general

insurance business65(105)(zl)

60. Life insurance in relation to risk cover65(105)(zx)

61. Insurance auxiliary services concerning

life insurance business

65(105)(zy)

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Cargo/Port

62. Custom House Agent65(105)(h)

63. Steamer Agent 65(105)(i)

64. Clearing & Forwarding Agent65(105)(j)

65. Cargo Handling 65(105)(zr)

66. Port65(105)(zn)

67. Other Port

65(105)(zzl)68. Dredging Service 65(105)

(zzzb)

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Fi i l


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Financial69. Stock-Broker 65(105)(a)

70. Underwriter 65(105)(z)

71. Banking or Financial Services 65(105)(zm)

72. Foreign Exchange Broker 65(105)(zzk)

73. Forward Contract 65(105)(zzy)

74. ATM operations, maintenance or management 65(105)(zzzk)

75. Recovery Agent 65(105)(zzzl)

76. Credit / Debit / Charge or Other payment Card65(105)(zzzw)77. Asset management service 65(105)(zzzzc)

78. Management of Investment ULIP Service 65(105)(zzzzf)

79. Stock Exchange Service 65(105)(zzzzg)

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Financial

80. Commodity Exchange Service65(105)(zzzzh)

81. Processing and Clearing House Service65(105)(zzzzi)

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Business/ Commercial

82. Authorized Service Station 65(105)(zo)

83. Dry Cleaning 65(105)(zt)

84. Storage and warehousing 65(105)(zza)

85. Business Auxiliary Service 65(105)(zzb)

86. Commercial Training or Coaching Centre 65(105)(zzc)87. Franchise 65(105)(zze)

88. Management, maintenance or repair 65(105)(zzg)

89. Technical testing and analysis 65(105)(zzh)

90. Technical inspection and certification 65(105)(zzi)

91. Business Exhibition 65(105)(zzo)

92. Intellectual Property 65(105)(zzr)

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Business/ Commercial

93. Cleaning Activity 65(105)(zzzd)

94. Packing Activity 65(105)(zzzf)

95. Sale of space or time for advertisement65(105)(zzzm)

96. Sponsorship65(105)(zzzo)

97. Support services of business or commerce

65(105)(zzzq)98. Information Technology Software Services

65(105)(zzzze)

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Others

99. Erection, Commissioning or Installation65(105)(zzd)

100.Survey and Exploration of Mineral Oil and Gas 65(105)(zzv)

101.Auctioneers 65(105)(zzzr)

102.Public Relation 65(105)(zzzs)

103. Mining 65(105)(zzzy)

104.Renting of immovable property 65(105)(zzzz)

105.Works contract 65(105)(zzzza)

106.Supply of Tangible Goods Service 65(105)(zzzzj)

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