Final Indore Rishabh

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    1

    Overview of Service Tax Provisions

    AndImportant Services under the ServiceTax

    Rishabh R. Adukiarishfca@gmail.com

    098198-61049

    CA Final Student, Mumbai

    mailto:rishfca@gmail.commailto:rishfca@gmail.com
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    2

    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%

    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

    4

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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

    5

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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

    6

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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

    8

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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)]

    10

    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);

    11

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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)

    12

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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

    Definition: Sec 65(101)

    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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