DECLARED SERVICES BY- Rupesh Kumar Patidar. Services has been defined to include Declared services....
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Transcript of DECLARED SERVICES BY- Rupesh Kumar Patidar. Services has been defined to include Declared services....
DECLARED SERVICES
BY- Rupesh Kumar Patidar
Services has been defined to include Declared services. Declared Services are defined under Section 65B (22) of Finance Act, 1994 to mean any activity carried out by a person for another for consideration and specified in section 66E of the Act.
Thus, for a service to come under the category of declared services, it has to satisfy two basic conditions :
It must be an activity by one person for another in the taxable territory for a consideration
It must be specified (i.e. declared) under section 66E of the Finance
Act, 1994
Contd..
Nine activities have been specified in Section 66E.
1. Renting of immovable property
Renting has been defined in section 65B as ‘‘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’.
But Excludes
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 the Reserve Bank of India
Renting out of any property by a Government or a local authority to
a non-business entity
Exemptions
Renting of precincts of a religious place meant for general public
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
Renting to an exempt educational institution
2. Construction of a complex, building, civil structure or a part thereof
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
3. Temporary transfer or permitting the use or enjoyment of any intellectual property Right
‘Intellectual property right’ has not been defined in the Act. The phrase has to be understood as in normal trade parlance as per which intellectual property right includes the following:-
Copyright� Patents� Trademarks Designs� Any other similar right to an intangible property
4. Development, design, programming, customization, adaptation, upgradation, enhancement, implementation of information technology software
The term ‘information technology software’ has been defined in section 65B of the Act as ‘any representation of instructions, data, sound or image, including source code and object code, recorded in a machine readable form, and capable of being manipulated or providing interactivity to a user, by means of a computer or an automatic data processing machine or any other device or equipment’.
5. Agreeing to the obligation to refrain from an act, or to tolerate an act or a situation,or to do an act
In terms of this entry the 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.
6. Transfer of goods
Transfer of goods by way of hiring, leasing, licensing or any such manner without transfer of right to use such goods
7. Activities in relation to delivery of goods on hire purchase or any system of payment by installments
Interest, Lease Management Fee, Processing Fee, Documentation Charges, Administrative Fee are chargeable to Service Tax
Service tax is leviable only on 10% of the amount representing interest plus other charges explicitly charged as mentioned above
8. Service portion in execution of a works contract
Basically there are two methods for valuation of services:
A. Calculate value of service and pay service tax
(i) Value of services = Gross amount – value of property in goods
If not (i), value of services shall be
(a) For execution of original works : 40% of total amount shall be value
(b) For repair, maintenance : 70% of total amount shall be value
(c) For other works contracts : 60% of total amount shall be value
B. Composition scheme
Reverse charge mechanism applied for Works contract
Where service provider is Individual or HUF or proprietary firm, registered or not, AOP, any company registered under Companies Act
50% tax shall be payable by the service provider and 50% shall be payable by service recipient
9. 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
Activities covered in this declared list entry :
Supply of food or drinks in a restaurant Supply of foods and drinks by an outdoor caterer
Valuation :
Value of service at restaurant = 40% of total amount Value of service as a part of outdoor catering = 60% of total amount
Exemption under Notification 25/12 dt 20.06.2012
Services provided in relation to serving of food or beverages by a restaurant, eating joint or a mess, other than those having the facility of air-conditioning or central air heating in any part of the establishment, at any time during the year, and which has a license to serve alcoholic beverage.
THE END