Mansorovar ppt

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Mansarover CPE Study Circle of CIRC of ICAI Mansarover CPE Study Circle of CIRC of ICAI

AAPresentationPresentation

OnOn

““Recent Amendments in Service Tax”Recent Amendments in Service Tax”AtAt

Seminar on Direct and Indirect TaxesSeminar on Direct and Indirect Taxes

Monday,Monday, byby 29th29th October, 2012 October, 2012 Dr. Sanjiv Agarwal Dr. Sanjiv AgarwalJaipur Jaipur FCA, FCSFCA, FCS

© Dr. Sanjiv Agarwal© Dr. Sanjiv Agarwal

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This presentation covers –This presentation covers – Paradigm shift in taxation of services in India – An overview Paradigm shift in taxation of services in India – An overview

Major changes in service tax law by the Finance Act, 2012 - Major changes in service tax law by the Finance Act, 2012 -

at a Glance at a Glance

Negative List of ServicesNegative List of Services

Exempted ServicesExempted Services

Declared Services (Including Valuation)Declared Services (Including Valuation)

Bundled ServicesBundled Services

Abatements Abatements

Reverse Charge ProvisionsReverse Charge Provisions

Other Amendments Other Amendments

33

Indian Economy – An overviewIndian Economy – An overview

India’s economy is the 11India’s economy is the 11thth largest economy in the largest economy in the world and the second fastest growing even in today’s world and the second fastest growing even in today’s recessionrecession

World is presently facing recession-II but Indian World is presently facing recession-II but Indian economy is still better than comparable economies. economy is still better than comparable economies.

Agriculture, services and industry are the major Agriculture, services and industry are the major sector of India an economy. Contribution of different sector of India an economy. Contribution of different sectors in March, 2012 was :sectors in March, 2012 was :

Agriculture 19%Agriculture 19% Services 59%Services 59% Industry 22%Industry 22%

to be contdto be contd…….…….

44

GDP CO MPO SITIO N IN MARCH, 2012

Agriculture19%

Industry22%

Service Sector59%

Brief Overview of Services / Brief Overview of Services / Service Tax Share of Services in Service Tax Share of Services in

GDPGDP

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Share of services in GDP trackedShare of services in GDP tracked

Year Year % of GDP % of GDP19501950 151519701970 333319801980 363619941994 404019951995 414120002000 474720052005 535320102010 575720122012 5959

In 2011-12, services have grown by 9.6 % which is In 2011-12, services have grown by 9.6 % which is more more

than GDP growth ratethan GDP growth rate

66

Service Tax in India (The Past)Service Tax in India (The Past)

Introduced in India in 1994 as a simple, modest tax Introduced in India in 1994 as a simple, modest tax with just three services. with just three services.

Service tax – an indirect tax.Service tax – an indirect tax. Approach to Service Tax – Selective as against Approach to Service Tax – Selective as against

comprehensive one.comprehensive one. Desirable from revenue, equity and economic view Desirable from revenue, equity and economic view

point.point. Governed by Finance Act, 1994 and a dozen of Governed by Finance Act, 1994 and a dozen of

rules. rules. Legislative dependence on other laws.Legislative dependence on other laws. Scattered and heterogeneous large mass of service Scattered and heterogeneous large mass of service

providers as well as wide spectrum of services. providers as well as wide spectrum of services. Jurisdictional application.Jurisdictional application.

77

Growth of Service TaxGrowth of Service Tax

Year No of new services Total No of services

Total collection (Rs. in crore)

1994 3 3 407

2001 - 26 2612

2005 13 72 14199

2008 7 103 51301

2010 3 112 58000

2012 0 120 95000

2013 - All 126000 (BE)

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Service Tax in India (The Service Tax in India (The Past)Past)

Selective Approach to Service TaxSelective Approach to Service Tax

Selective v. Comprehensive approach Selective v. Comprehensive approach Taxation by choice Taxation by choice Service not defined but taxable service definedService not defined but taxable service defined > 120 taxable services [section 65(105)]> 120 taxable services [section 65(105)] Resulted in distortions / prejudice Resulted in distortions / prejudice Untapped tax potential Untapped tax potential Economically unjustified Economically unjustified

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Service Tax - TodayService Tax - Today

Shift to Comprehensive Approach

W.e.f. 1 July 2012W.e.f. 1 July 2012 Finance Act, 2012 – A land mark Act to shift Finance Act, 2012 – A land mark Act to shift

from positive to negative approach.from positive to negative approach. It took 18 years to shift from selective approach It took 18 years to shift from selective approach

to positive approach to tax servicesto positive approach to tax services

1010

All Services(including declared Services

(-)

Specific Exclusions

(-)

Negative List Services

Exemptions

Taxable Services

(-)

Taxation of Services by Finance Act, 2012

(=)

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Service Tax - TodayService Tax - Today

New system of taxation of servicesNew system of taxation of services All services to be taxed other than services All services to be taxed other than services

specified in the negative list and exempted specified in the negative list and exempted services – Section 66B.services – Section 66B.

Negative list (17 in number) specified through Negative list (17 in number) specified through statutory provisions – Section 66D.statutory provisions – Section 66D.

‘‘Service’ defined for the first time.Service’ defined for the first time. ‘‘Negative List’ and ‘declared services’ also Negative List’ and ‘declared services’ also

defined.defined.

1212

Service Tax provisions no longer Service Tax provisions no longer applicable (w.e.f. 1.7.2012)applicable (w.e.f. 1.7.2012)

Section 65 Section 65 Old definitions of Services / Taxable Old definitions of Services / Taxable Services Services

Section 65A Section 65A Classification of Services Classification of Services Section 66Section 66 Charge of Service Tax Charge of Service Tax Section 66A Section 66A Charge of Service Tax on Charge of Service Tax on

Services Services received from outside received from outside IndiaIndia

Import of Service Rules, 2006Import of Service Rules, 2006 Export of Service Rules, 2005Export of Service Rules, 2005

1313

New Provisions in Service TaxNew Provisions in Service Tax

Section 66 BSection 66 B deals with charge of service tax deals with charge of service tax on the after Finance Act, on the after Finance Act,

20122012 Section 66 CSection 66 C provides for determination of provides for determination of

place of provision of servicesplace of provision of services Section 66 DSection 66 D comprises of negative list of comprises of negative list of

services services Section 66 ESection 66 E comprises of the services which comprises of the services which

constitute declared servicesconstitute declared services Section 66 FSection 66 F provide principles of provide principles of

interpretation interpretation of specified description of specified description of services of services or bundled servicesor bundled services

1414

The New Taxability ConceptThe New Taxability ConceptSERVICE FOR A

CONSIDERATION

E - MAGIC TEST

E: EmployeeM: MoneyA: Actionable claimG: GoodsI: Immovable propertyC: Court Fee

9 DE

CL

AR

ED

SE

RV

ICE

S

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Taxable Services w.e.f. 1.7.2012Taxable Services w.e.f. 1.7.2012

All services All services Taxable Taxable [section 65B(44)][section 65B(44)] Declared services Declared services Taxable Taxable (section 66E) (section 66E) Services covered under Services covered under Not Taxable Not Taxable

negative list of services negative list of services (section 66D) (section 66D) Services exempt under Mega Services exempt under Mega Exempted Exempted Notification No. 25/2012-ST Notification No. 25/2012-ST dated 20.6.2012dated 20.6.2012Other specified ExemptionsOther specified Exemptions Exempted Exempted

1616

Taxation of Services Post Finance Act, 2012

1717

What is ServiceWhat is Service

‘‘Service' has been defined in clause (44) of the new Service' has been defined in clause (44) of the new section section

65B and means –65B and means –

any activityany activity

for considerationfor consideration

carried out by a person for anothercarried out by a person for another

and includes a declared service (66E)and includes a declared service (66E)

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What is ServiceWhat is Service Activity must be for a consideration (nexus / Activity must be for a consideration (nexus /

reciprocity) reciprocity) Activity – includes both activity as well as Activity – includes both activity as well as

non-activity non-activity Consideration – includes both monetary and Consideration – includes both monetary and

non monetary considerationnon monetary consideration Two persons are involved –Two persons are involved –

Service provider Service provider Service receiver Service receiver

Only services provided by one person to Only services provided by one person to another are taxable another are taxable

Person – natural as well as artificial Person – natural as well as artificial

1919


ActivityActivity Not defined in the ActNot defined in the Act In common understanding, activity includes –In common understanding, activity includes –

An act doneAn act done A work doneA work done A deed doneA deed done An operation carried outAn operation carried out Execution of an actExecution of an act Provision of a facility etc.Provision of a facility etc.

Activity could be active or passive and forbearance to actActivity could be active or passive and forbearance to act Agreeing to an obligation to refrain from an act or to tolerate an Agreeing to an obligation to refrain from an act or to tolerate an

act or a situation - listed as a declared service u/s 66Eact or a situation - listed as a declared service u/s 66E

2020


ConsiderationConsideration Means everything received or recoverable Means everything received or recoverable

in return for a provision of service which in return for a provision of service which includes -includes -

Monetary paymentMonetary payment Non-monetary paymentNon-monetary payment Deferred considerationDeferred consideration

2121


ConsiderationConsideration Monetary consideration means any Monetary consideration means any

consideration in form of Money.consideration in form of Money. Includes not only cash but also cheques, Includes not only cash but also cheques,

promissory note, bill of exchange, letter of promissory note, bill of exchange, letter of credit, draft, pay order, traveler’scredit, draft, pay order, traveler’s cheques, cheques, money order, postal or electronic remittance or money order, postal or electronic remittance or any such similar instrumentany such similar instrument

Non-monetary consideration - money Non-monetary consideration - money equivalentequivalent

2222


Activity for a Consideration Activity for a Consideration

Activity should be carried out by a person for a Activity should be carried out by a person for a ConsiderationConsideration

Activity without consideration like-Activity without consideration like- DonationDonation GiftsGifts Free charitiesFree charities

outside the ambit of serviceoutside the ambit of service Charity for consideration would be service and Charity for consideration would be service and

taxable unless otherwise exemptedtaxable unless otherwise exempted

2323

What is ServiceWhat is ServicePerson-65B(37)Person-65B(37)

Person includes,–– an individual, a Hindu undivided family, a company, a society, a limited liability partnership, a firm, an association of persons or body of individuals,

whether incorporated or not, Government, a local authority, or every artificial juridical person, not falling within any

of the above

2424


Government – Not definedGovernment – Not defined

Section 3(22) of General Clause Act, 1897Section 3(22) of General Clause Act, 1897

includes Central/State Government/ Union includes Central/State Government/ Union

TerritoryTerritory

Actions taken in the name of President/ GovernorActions taken in the name of President/ Governor

Most of services provided by government are in Most of services provided by government are in

Negative List Negative List

2525

What is Service : What is Service : Exclusions Exclusions

Service does not include - Service does not include - any activity that constitutes only a transfer in title of goods or 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 immovable property by way of sale, gift or in any other manner a transfer, delivery or supply of goods which is deemed to be a transfer, delivery or supply of goods which is deemed to be a sale of goods within the meaning of clause (29A) of article 366 of sale of goods within the meaning of clause (29A) of article 366 of the Constitutionthe Constitution

a transaction only in money or actionable claima transaction only in money or actionable claim a service provided by an employee to an employer in the course a service provided by an employee to an employer in the course

of the employment.of the employment. fees payable to a court or a tribunal set up under a law for the fees payable to a court or a tribunal set up under a law for the

time being in forcetime being in force

2626

What is ServiceWhat is ServiceTax on Money RemittanceTax on Money Remittance No service tax on foreign currency remitted to No service tax on foreign currency remitted to

India from overseas (Circular No.163 dated India from overseas (Circular No.163 dated 10.7.2012)10.7.2012)

Amount of remittance comprises moneyAmount of remittance comprises money Service excludes money transactionsService excludes money transactions Even fee for remittance is not taxable (POPS) Even fee for remittance is not taxable (POPS) Sender of money outside India bank / company Sender of money outside India bank / company

remitting located outside Indiaremitting located outside India Fee charged by Indian bank - remitter located Fee charged by Indian bank - remitter located

outside India (not taxable as per POPS)outside India (not taxable as per POPS)

2727


This scope of service shall not apply to –This scope of service shall not apply to –

a)a) functions performed by M.P., M.L.A., Members of functions performed by M.P., M.L.A., Members of Panchayats / Municipalities who receive any consideration Panchayats / Municipalities who receive any consideration in performing the functions of that office as such member; in performing the functions of that office as such member; oror

b)b) duties performed by any person who holds any post in duties performed by any person who holds any post in pursuance of the provisions of the Constitution in that pursuance of the provisions of the Constitution in that capacity; orcapacity; or

c)c) duties performed by any person as a Chairperson or a duties performed by any person as a Chairperson or a Member or a Director in a body established by the Central Member or a Director in a body established by the Central Government or State Government or local authority and Government or State Government or local authority and who is not deemed as an employee before 1.07.2012who is not deemed as an employee before 1.07.2012


For the purpose of scope of service -For the purpose of scope of service -

(a) an unincorporated association or a AOP and a member (a) an unincorporated association or a AOP and a member

thereof shall be treated as distinct persons;thereof shall be treated as distinct persons;

(b) an establishment of a person in the taxable territory and any (b) an establishment of a person in the taxable territory and any

of his other establishment in a non-taxable territory shall be of his other establishment in a non-taxable territory shall be

treated as establishments of distinct persons.treated as establishments of distinct persons.

(c)(c) A person carrying on a business through a branch or agency or A person carrying on a business through a branch or agency or

representational office in any territory shall be treated as having representational office in any territory shall be treated as having

an establishment in that territoryan establishment in that territory

2828

Remuneration to Partner – Not a Remuneration to Partner – Not a ServiceService

Partnership firm is not a distinct legal entity apart Partnership firm is not a distinct legal entity apart from the partners under the Partnership Act, 1932from the partners under the Partnership Act, 1932

Partner is not an employee of the firm -contract of Partner is not an employee of the firm -contract of employment requires two distinct firms, employment requires two distinct firms, viz., viz., employer and employeeemployer and employee

Partners are the real owners of the assets of Firm to Partners are the real owners of the assets of Firm to the extent of their sharethe extent of their share

Salary paid to partner is only profit known by a Salary paid to partner is only profit known by a different namedifferent name

It is only a transaction in moneyIt is only a transaction in money Incomes received from firm treated as income from Incomes received from firm treated as income from

Profits and Gains of Business or Profession under I T Profits and Gains of Business or Profession under I T Act, 1961Act, 1961

Partnership Act can not be overlookedPartnership Act can not be overlooked 2929

Directors services to Company - Directors services to Company - TaxableTaxable

Director’s services to the company are taxable w.e.f Director’s services to the company are taxable w.e.f 1.7.20121.7.2012

Sitting fees, commission, bonus, etc. are subject to Sitting fees, commission, bonus, etc. are subject to service taxservice tax

W.e.f. 1.7.2012 upto 6.8.2012, service tax will be W.e.f. 1.7.2012 upto 6.8.2012, service tax will be deposited by the directors while from 7.8.2012 vide deposited by the directors while from 7.8.2012 vide Notification No. 45/2012, Service Tax on such services Notification No. 45/2012, Service Tax on such services will be deposited by the company under reverse chargewill be deposited by the company under reverse charge

WTDs /MDs /EDs who are under contractual WTDs /MDs /EDs who are under contractual employment with the company and receive salary or employment with the company and receive salary or remuneration from the company will not be covered - remuneration from the company will not be covered - considered as employees of the companyconsidered as employees of the company

3030

Directors services to company- Directors services to company- Taxable Taxable

Interest on loan by director to company, dividend on Interest on loan by director to company, dividend on shares, other professional charges on account of services shares, other professional charges on account of services not rendered as a director (in professional capacity) are not not rendered as a director (in professional capacity) are not liable to Service Taxliable to Service Tax

In case of nominee director, the nominating company who In case of nominee director, the nominating company who receives fees will be liable to pay service tax receives fees will be liable to pay service tax

The invoice / receipt to be issued by the directors within 30 The invoice / receipt to be issued by the directors within 30 daysdays

In case of nominee directors, the invoice will be issued by In case of nominee directors, the invoice will be issued by the nominating companythe nominating company

In the case of Government nominees, the services shall be In the case of Government nominees, the services shall be deemed to be provided by the Government but liable to be deemed to be provided by the Government but liable to be taxed under reverse charge basistaxed under reverse charge basis

3131

Employer facilities to Employer facilities to Employees Employees

Draft Circular (F.No. 354 /127/2012-TRU dated 27.7.2012) issued Draft Circular (F.No. 354 /127/2012-TRU dated 27.7.2012) issued for clarification on certain activities / facilities / reimbursements to for clarification on certain activities / facilities / reimbursements to employees by the employers employees by the employers

(a)(a) Treatment of supplies made by the employer to Treatment of supplies made by the employer to employeesemployees Amount deducted from salary / paid for service provided by the employer to Amount deducted from salary / paid for service provided by the employer to

employee is for consideration and taxableemployee is for consideration and taxable Employer who provides some services free of cost (e.g. crèche, gymnasium Employer who provides some services free of cost (e.g. crèche, gymnasium

or a health club) are not liable to taxor a health club) are not liable to tax

(b) Treatment of reimbursements made by the employer to the (b) Treatment of reimbursements made by the employer to the employeeemployee

Reimbursements of expenditure incurred on behalf of the employer in Reimbursements of expenditure incurred on behalf of the employer in course of employment would not amount to a service, hence non-taxablecourse of employment would not amount to a service, hence non-taxable

3232

Employer facilities to Employer facilities to Employees Employees

Treatment of supplies and reimbursements made Treatment of supplies and reimbursements made by the employer to ex-employees/ pensionersby the employer to ex-employees/ pensioners

Same tax treatment with ex- employees of the Same tax treatment with ex- employees of the company –company –

Reimbursement of expenses on behalf of Reimbursement of expenses on behalf of

company – non-taxablecompany – non-taxable Facilities for consideration – taxableFacilities for consideration – taxable Facilities free of cost - non taxableFacilities free of cost - non taxable

3333

Examples of new activities which Examples of new activities which may be taxedmay be taxed

Non commercial construction for non-government Non commercial construction for non-government purposepurpose

Private roads Private roads Residential construction of more than one unitResidential construction of more than one unit Commercial artists/performersCommercial artists/performers Actors, directorsActors, directors Reality show judgesReality show judges Tourism boatsTourism boats Board director’s sitting feeBoard director’s sitting fee Non-compete feeNon-compete fee Arbitrators to business entitiesArbitrators to business entities

to be contd..to be contd..

3434

Examples of new activities Examples of new activities which may be taxedwhich may be taxed

Discourses and lecturesDiscourses and lecturesBanking services to governmentBanking services to governmentUnrecognized IPRsUnrecognized IPRsServices to RBIServices to RBIHotel Telephone CallsHotel Telephone CallsVideo library facilities by hotelsVideo library facilities by hotelsMatrimonial sitesMatrimonial sitesAstrologersAstrologersWorks contracts for movable propertiesWorks contracts for movable propertiesOn board catering and other facilitiesOn board catering and other facilities

3535

MAJOR CHANGES IN MAJOR CHANGES IN SERVICE TAX LAW BY SERVICE TAX LAW BY FINANCE ACT, 2012 FINANCE ACT, 2012

- AT A GLANCE- AT A GLANCE

3636

3737

MAJOR CHANGES IN SERVICE TAX LAW BY MAJOR CHANGES IN SERVICE TAX LAW BY FINANCE ACT, 2012 - AT A GLANCEFINANCE ACT, 2012 - AT A GLANCE

Objective to Objective to widen tax basewiden tax base Service Tax law to be shorter by about 40 percent Service Tax law to be shorter by about 40 percent Effective rate Effective rate of Service Tax shall be of Service Tax shall be 12.36 percent 12.36 percent w.e.f. w.e.f.

01.04.2012 including education cesses01.04.2012 including education cesses Definition of ‘service’ Definition of ‘service’ finds place in statutory provisions finds place in statutory provisions All services to be taxed including a set of services called ‘declared All services to be taxed including a set of services called ‘declared

services’services’ Negative list of services containing 17 broad service categories to Negative list of services containing 17 broad service categories to

be out of Service Tax ambit.be out of Service Tax ambit. Withdrawing of many existing exemptions / abetments or their Withdrawing of many existing exemptions / abetments or their

rationalizationrationalization

3838

MAJOR CHANGES IN SERVICE TAX LAW BY MAJOR CHANGES IN SERVICE TAX LAW BY The FINANCE ACT, 2012 - AT A GLANCEThe FINANCE ACT, 2012 - AT A GLANCE

Place of provision of supply rules will determine the location of Place of provision of supply rules will determine the location of service and become be basis of taxation.service and become be basis of taxation.

Withdrawal of export of service rules and import of service rules Withdrawal of export of service rules and import of service rules in view of place of supply of service rules coming into operation.in view of place of supply of service rules coming into operation.

Concept of Concept of taxable territory and non- taxable territory taxable territory and non- taxable territory brought brought in basis of charge of Service Tax shifted under new section 66B. in basis of charge of Service Tax shifted under new section 66B.

Taxation of Service to be determined by provision of service in Taxation of Service to be determined by provision of service in taxable territory and non taxable territory.taxable territory and non taxable territory.

Classification of service criteria replaced by new section 66F on Classification of service criteria replaced by new section 66F on interpretation principles of specified description of service or interpretation principles of specified description of service or bundled services. bundled services.

3939

MAJOR CHANGES IN SERVICE TAX LAW BY The MAJOR CHANGES IN SERVICE TAX LAW BY The FINANCE ACT, 2012 - AT A GLANCEFINANCE ACT, 2012 - AT A GLANCE

Consequent upon change in service tax rates, there is change of Consequent upon change in service tax rates, there is change of service tax rate in composition scheme and specified rates w.e.f. service tax rate in composition scheme and specified rates w.e.f. 1.4.2012 (1.4.2012 (Composition scheme withdrawn w.e.f 1.7.2012 for Composition scheme withdrawn w.e.f 1.7.2012 for works contracts) works contracts)

Penalty wavier for arrears paid within specified time in respect of Penalty wavier for arrears paid within specified time in respect of renting of immovable property servicerenting of immovable property service

Retrospective exemption to road repairs and repairs etc of non Retrospective exemption to road repairs and repairs etc of non commercial government buildingscommercial government buildings

Under new reverse charge mechanism, onus of paying Service Under new reverse charge mechanism, onus of paying Service Tax will be shared by service provider and service receiver in Tax will be shared by service provider and service receiver in case of specified servicescase of specified services

Service Tax on taxable services provided by service provider Service Tax on taxable services provided by service provider located in Jammu & Kashmir state liable under reverse chargelocated in Jammu & Kashmir state liable under reverse charge

to be contd….to be contd….

4040

MAJOR CHANGES IN SERVICE TAX LAW BY The MAJOR CHANGES IN SERVICE TAX LAW BY The FINANCE ACT, 2012 - AT A GLANCEFINANCE ACT, 2012 - AT A GLANCE

Change in valuation rules in relation to works contracts and Change in valuation rules in relation to works contracts and outdoor catering / supply of food.outdoor catering / supply of food.

Provision introduced for date of determination of value of Provision introduced for date of determination of value of service, tax rate and rate of exchange.service, tax rate and rate of exchange.

Payment of Service Tax on receipt basis for all service providers Payment of Service Tax on receipt basis for all service providers being individuals / firms / LLPs, if aggregate value of taxable being individuals / firms / LLPs, if aggregate value of taxable services in previous year does not exceed Rs. 50 lakh.services in previous year does not exceed Rs. 50 lakh.

Criteria for Rs 10 lakh threshold exemption changed. Criteria for Rs 10 lakh threshold exemption changed. Time limit for appeal by assessees to Commissioner (Appeals) Time limit for appeal by assessees to Commissioner (Appeals)

reduced from 3 months to 2 monthsreduced from 3 months to 2 months Revision Application Authority and Settlement Commission Revision Application Authority and Settlement Commission

provisions made applicable to service tax.provisions made applicable to service tax. Special Audit of Service tax assesses by CAs /CWAs . Special Audit of Service tax assesses by CAs /CWAs .

4141

Goods & Service Tax Goods & Service Tax (The Future)(The Future)

GST: A Common TaxGST: A Common Tax

onon

Goods Services

4242

GST – In Budget 2012GST – In Budget 2012

No announcement on GST rollout date No announcement on GST rollout date GST to be implemented in consultation with the States at the earliest GST to be implemented in consultation with the States at the earliest GST network (GSTN) likely to be in place from August, 2012GST network (GSTN) likely to be in place from August, 2012 GSTN to implement common PAN based registration, return filing and GSTN to implement common PAN based registration, return filing and

processing of payments for centre and all states on a shared platform.processing of payments for centre and all states on a shared platform. Bringing closer of Service Tax and Central Excise for transition to GST Bringing closer of Service Tax and Central Excise for transition to GST Drafting of model legislation for CGST and SGST under progress.Drafting of model legislation for CGST and SGST under progress. Common forms for Service Tax and Central Excise registration and Common forms for Service Tax and Central Excise registration and

return proposed.return proposed. Place of Provision of Service Rules, 2012 to trigger debate to assess Place of Provision of Service Rules, 2012 to trigger debate to assess

issues that may arise in taxation of inter state services for eventual issues that may arise in taxation of inter state services for eventual launch of GST. launch of GST.

4343

The GST Journey – The GST Journey – beginning of end…….beginning of end…….

Past Recent Past Now & Past Recent Past Now & Future Future

National GST Dual GST ???????

…or end of beginning !!

NEGATIVE LISTNEGATIVE LIST[[SECTION 66D]SECTION 66D]

4444

4545

Negative list of ServicesNegative list of Services

What is negative listWhat is negative list

• Defined in new section 66DDefined in new section 66D

• Section 66D Specifies seventeen 17 broad categories of Section 66D Specifies seventeen 17 broad categories of services.services.

• Effective from 1-7-2012Effective from 1-7-2012

• If an activity meets theIf an activity meets the c characteristics haracteristics of service , it is of service , it is taxable unless specified in Negative List.taxable unless specified in Negative List.

• Based on socio-economic–tax criterionBased on socio-economic–tax criterion

4646


(a) Services by Government or a local authority excluding the following (a) Services by Government or a local authority excluding the following services to the extent they are not covered elsewhere:services to the extent they are not covered elsewhere:

(i)Services by the Department of Posts by way of speed post, (i)Services by the Department of Posts by way of speed post, express parcel post, life insurance and agency services provided express parcel post, life insurance and agency services provided to a person other than Government;to a person other than Government;

(ii)Services in relation to an aircraft or a vessel, inside or outside the (ii)Services in relation to an aircraft or a vessel, inside or outside the precincts of a port or an airport;precincts of a port or an airport;

(iii)Transport of goods or passengers; or(iii)Transport of goods or passengers; or

(iv)Support services ,other than services covered under clauses (i) to (iv)Support services ,other than services covered under clauses (i) to (iii) above, provided to business entities;(iii) above, provided to business entities;

to be contd..to be contd..


Most of services provided by Central / State Most of services provided by Central / State Governments exempt from service tax.Governments exempt from service tax.

But following services are But following services are taxabletaxable - - Department of posts - speed post, express parcel, Department of posts - speed post, express parcel,

life insurance and agency service life insurance and agency service to non to non governmentgovernment business entity but basic mail, money business entity but basic mail, money orders, operation of saving accounts ,pension orders, operation of saving accounts ,pension payment etc services are covered in negative listpayment etc services are covered in negative list

In relation to vessel or aircraft service In relation to vessel or aircraft service within/outside port/airportwithin/outside port/airport

Transport of goods and/ or passengersTransport of goods and/ or passengers Support service to business entities Support service to business entities

To be contd…..To be contd…..


Services by government as sovereign functions (grant of Services by government as sovereign functions (grant of licensing rights or audit of government, passport etc.)licensing rights or audit of government, passport etc.)

Excludes corporations formed under Central Acts or Excludes corporations formed under Central Acts or State Acts or various Government companies registered State Acts or various Government companies registered under Companies Act, 1956 or autonomous institutions under Companies Act, 1956 or autonomous institutions set up by a Special Acts set up by a Special Acts

Government Department needs to be registered and to Government Department needs to be registered and to pay tax on support services ofpay tax on support services of Renting of immovable propertiesRenting of immovable properties Speed post, express parcel, life insurance.Speed post, express parcel, life insurance. Transport of goods and/ or passengers Transport of goods and/ or passengers Services in relation to vessel or aircraft Services in relation to vessel or aircraft

For other services, government not liable to pay service For other services, government not liable to pay service tax as tax paid by service recipient in reverses charge tax as tax paid by service recipient in reverses charge (N. No. 30)(N. No. 30)

To be contd…..To be contd…..

Negative list of ServicesNegative list of ServicesSupport services meansSupport services means

infrastructural, infrastructural, operational, operational, administrative,administrative, logistic, logistic, marketing or marketing or any other support of any kind comprising functions that any other support of any kind comprising functions that

entities carry out in ordinary course of operations entities carry out in ordinary course of operations themselves but may obtain as services by outsourcing themselves but may obtain as services by outsourcing from others for any reason whatsoever from others for any reason whatsoever

shall include advertisement and promotion, construction shall include advertisement and promotion, construction or works contract, renting of immovable property, or works contract, renting of immovable property, security, testing and analysis;security, testing and analysis;

Services provided by Government Security agencies are Services provided by Government Security agencies are covered covered under support service - under reverse charge, Service under support service - under reverse charge, Service Receiver is liable to tax.Receiver is liable to tax.

Negative list of ServicesNegative list of Services(b) Service by Reserve Bank of India(b) Service by Reserve Bank of India

(c) Services by a foreign diplomatic mission located in India (c) Services by a foreign diplomatic mission located in India

(d)Service relating to Agriculture or Agricultural Produce by way (d)Service relating to Agriculture or Agricultural Produce by way of -of -

(i) agricultural operations directly related to production of any (i) agricultural operations directly related to production of any agricultural produce including cultivation, harvesting, threshing, agricultural produce including cultivation, harvesting, threshing, plant protection or seed testing;plant protection or seed testing;

(ii) supply of farm labour;(ii) supply of farm labour;

(iii)processes carried out at an agricultural farm including tending, (iii)processes carried out at an agricultural farm including tending, pruning, cutting, harvesting, drying, cleaning, trimming, sun pruning, cutting, harvesting, drying, cleaning, trimming, sun drying, fumigating, curing, sorting, grading, cooling or bulk drying, fumigating, curing, sorting, grading, cooling or bulk packaging and such like operations which do not alter the packaging and such like operations which do not alter the essential characteristics of agricultural produce but make it only essential characteristics of agricultural produce but make it only marketable for the primary market;marketable for the primary market;

•


(iv)renting or leasing of agro machinery or vacant (iv)renting or leasing of agro machinery or vacant land with or without a structure incidental to its land with or without a structure incidental to its use;use;

(v)loading, unloading, packing, storage or (v)loading, unloading, packing, storage or warehousing of agricultural produce;warehousing of agricultural produce;

(vi)agricultural extension services;(vi)agricultural extension services;

(vii)services by any Agricultural Produce Marketing (vii)services by any Agricultural Produce Marketing Committee or Board or services provided by a Committee or Board or services provided by a commission agent for sale or purchase of commission agent for sale or purchase of agricultural produceagricultural produce

5151

Negative list of ServicesNegative list of Services(e) Trading of Goods(e) Trading of Goods Trading of goods is not a taxable service, it being a Trading of goods is not a taxable service, it being a

sale and not a service.sale and not a service. If a transaction is a sale, it is not a service and If a transaction is a sale, it is not a service and vice vice

versaversa Transfer of title in goods is crucial Transfer of title in goods is crucial Activities of a commission agent / clearing and Activities of a commission agent / clearing and

forwarding agent who sells goods on behalf of another forwarding agent who sells goods on behalf of another for a commission are not trading of goods (Title of for a commission are not trading of goods (Title of goods does not pass)goods does not pass)

Forward contracts are in the nature of trading of goods.Forward contracts are in the nature of trading of goods. Future contracts are not trading of goods Future contracts are not trading of goods

to be contd …….to be contd …….

Negative list of ServicesNegative list of ServicesGoods - Section 65B(25)Goods - Section 65B(25)

Goods meansGoods means every kind of movable property other every kind of movable property other

than actionable claim and money than actionable claim and money includes securities, includes securities, growing crops, growing crops, grass, and things attached to or forming grass, and things attached to or forming part of the land which are agreed to be part of the land which are agreed to be severed before sale or under the severed before sale or under the contract of salecontract of sale


(f) Any process amounting to manufacture or production (f) Any process amounting to manufacture or production of goodsof goods

process amounting to manufacture or production of goods means a process 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 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 Act, 1944 or any process amounting to manufacture of alcoholic liquors for human consumption, opium, Indian hemp and other narcotic drugs and human consumption, opium, Indian hemp and other narcotic drugs and narcotics on which duties of excise are leviable under any State Act for the narcotics on which duties of excise are leviable under any State Act for the time being in force.time being in force.

Covers manufacturing activity carried out on contract or job work basis Covers manufacturing activity carried out on contract or job work basis where where Transfer of title of goods is not involvedTransfer of title of goods is not involved Duties of excise are leviable on such processDuties of excise are leviable on such process

5454


What is Excisable GoodsWhat is Excisable Goods Excisable goods means goods specified in the First Schedule Excisable goods means goods specified in the First Schedule

and the Second Schedule to the Central Excise Tariff Act, 1985 and the Second Schedule to the Central Excise Tariff Act, 1985 as being subject to a duty of excise and includes saltas being subject to a duty of excise and includes salt

Mobility and marketability are essential conditionsMobility and marketability are essential conditions Goods includes any article, material or substance which is Goods includes any article, material or substance which is

capable of being bought and sold for a consideration and such capable of being bought and sold for a consideration and such goods shall be deemed to be marketable.goods shall be deemed to be marketable.

Negative list of ServicesNegative list of Services(g) Selling of space or time slots for (g) Selling of space or time slots for advertisements other than advertisements advertisements other than advertisements broadcast by radio or televisionbroadcast by radio or television

(h)Service way of access to a road or a bridge on (h)Service way of access to a road or a bridge on payment of toll chargespayment of toll charges

(i) Betting, Gambling or Lottery(i) Betting, Gambling or Lottery

(j)Admission to entertainment events and access (j)Admission to entertainment events and access to amusement facilitiesto amusement facilities

(k)Transmission or distribution of Electricity by an (k)Transmission or distribution of Electricity by an electricity transmission or distribution utility electricity transmission or distribution utility

5656


(l) Service by way of -(l) Service by way of -i.i. Pre-school education and education up to higher Pre-school education and education up to higher

secondary school or equivalentsecondary school or equivalentii.ii. Education as a part of a prescribed curriculum Education as a part of a prescribed curriculum

for obtaining a qualification recognized by law for obtaining a qualification recognized by law for the time being in force;for the time being in force;

iii.iii. education as a part of an approved vocational education as a part of an approved vocational education course;education course;

Conduct of degree courses by colleges, universities or Conduct of degree courses by colleges, universities or institutions which lead to grant of qualifications institutions which lead to grant of qualifications

recognized recognized by law by law



Approved vocational education courseApproved vocational education course a course run by an industrial training institute or an a course run by an industrial training institute or an

industrial training centre affiliated to the National industrial training centre affiliated to the National Council for Vocational Training, offering courses in Council for Vocational Training, offering courses in designated trades as notified under the Apprentices Act, designated trades as notified under the Apprentices Act, 19611961

a Modular Employable Skill Course, approved by the a Modular Employable Skill Course, approved by the National Council of Vocational Training, run by a person National Council of Vocational Training, run by a person registered with the Directorate General of Employment registered with the Directorate General of Employment and Training, Ministry of Labour and Employment, and Training, Ministry of Labour and Employment, Government of IndiaGovernment of India

a course run by an institute affiliated to the National Skill a course run by an institute affiliated to the National Skill Development Corporation set up by the Government of Development Corporation set up by the Government of IndiaIndia



Circular No. 164/15/2012-ST dated 28.08.2012Circular No. 164/15/2012-ST dated 28.08.2012 If VEC is offered by Government / Local Authority, If VEC is offered by Government / Local Authority,

service tax does not ariseservice tax does not arise If VEC is offered by an independent institution, in If VEC is offered by an independent institution, in

form of society or any other similar body, form of society or any other similar body, qualification recognized by any law or approved qualification recognized by any law or approved VEC is in Negative List VEC is in Negative List

Recognized by any law will include such courses as Recognized by any law will include such courses as are approved or recognized by any entity are approved or recognized by any entity established under a central or state law established under a central or state law

However, definition is silent on these issuesHowever, definition is silent on these issues

5959


Education upto higher secondary school or Education upto higher secondary school or equivalent are in negative list.equivalent are in negative list.

Services provided Services provided toto or or bby an educational y an educational institution for Auxiliary educational services and institution for Auxiliary educational services and renting of immovable property – exempted under renting of immovable property – exempted under mega notificationmega notification

Negative list will not include – Negative list will not include – Private tuitions Private tuitions Education as a part of prescribed curriculum for Education as a part of prescribed curriculum for

obtaining qualification recognized by law of a foreign obtaining qualification recognized by law of a foreign county county

Services provided to educational institutions Services provided to educational institutions Placement services Placement services Educational toursEducational tours Seminars and conferences (including CPE Hours)Seminars and conferences (including CPE Hours)



Education related services not in negative list but Education related services not in negative list but exempt exempt

from tax under Notification No. 25/2012-ST dated from tax under Notification No. 25/2012-ST dated

20.06.2012 20.06.2012 • Transportation of students to / from Transportation of students to / from

institutions institutions • Provision of mid-day meal in schools Provision of mid-day meal in schools • Admission related services to educational Admission related services to educational

institutes where education services are institutes where education services are exemptexempt

• Coaching / training in recreational activities Coaching / training in recreational activities of arts, culture or sportsof arts, culture or sports


(m) Services by way of renting of residential (m) Services by way of renting of residential dwelling for use as residence dwelling for use as residence

Renting covers all types of arrangements in relation to immovable Renting covers all types of arrangements in relation to immovable property with or without its transfer of possession or control and property with or without its transfer of possession or control and whether wholly or partly. It would cover / include – whether wholly or partly. It would cover / include –

• allowing allowing • permitting permitting • granting access / entry / occupation granting access / entry / occupation • use of facility use of facility • letting letting • leasing leasing • licensing, or licensing, or • other similar arrangements other similar arrangements (such as right to use, sub-lease, space sharing etc.) (such as right to use, sub-lease, space sharing etc.)



Renting of certain kinds of property already covered inRenting of certain kinds of property already covered in

the negative listthe negative list renting of vacant land, with or without a structure renting of vacant land, with or without a structure

incidental to its use, relating to agriculture. incidental to its use, relating to agriculture. renting of residential dwelling for use as residence renting of residential dwelling for use as residence renting out of any property by Reserve Bank of India renting out of any property by Reserve Bank of India renting out of any property by a Government or a renting out of any property by a Government or a

local authority to non-business entity local authority to non-business entity



Residential dwelling not defined but includes residential Residential dwelling not defined but includes residential accommodationaccommodation

Does not include hotel, motel, inn, guest house, camp Does not include hotel, motel, inn, guest house, camp site, lodge, house boat or other placement temporary site, lodge, house boat or other placement temporary staystay

Residential dwelling used partly as a residence and partly Residential dwelling used partly as a residence and partly for non residential purpose- treated as bundled servicefor non residential purpose- treated as bundled service

Residential unit – independent residential unit with Residential unit – independent residential unit with specific facilities for living, cooking and sanitationspecific facilities for living, cooking and sanitation

Generally, hostels rooms / hotel rooms not a residential Generally, hostels rooms / hotel rooms not a residential unitunit



(n) Services by way of—(i) extending deposits, loans or advances in so far as the 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 contto be contd …….d …….

Negative list of ServicesNegative list of Services Transactions in money outside the ambit of Transactions in money outside the ambit of

‘service’‘service’ Any activity related to a transaction in money by Any activity related to a transaction in money by

way of its use or conversion by cash or by any other way of its use or conversion by cash or by any other mode, from one form , currency or denomination to mode, from one form , currency or denomination to another form, currency or denomination would not another form, currency or denomination would not be treated as a transaction in money if a separate be treated as a transaction in money if a separate consideration is charged for such an activityconsideration is charged for such an activity

Service tax levied on service charges for Service tax levied on service charges for transactions in money including of charges for transactions in money including of charges for making of drafts, letter of credits issuance charges, making of drafts, letter of credits issuance charges, service charges relating to issuance of CDs/ CPs etcservice charges relating to issuance of CDs/ CPs etc

Interest rate swaps and foreign exchange swaps Interest rate swaps and foreign exchange swaps are excluded being securities and hence excludedare excluded being securities and hence excluded



Only interest and discount are in negative listOnly interest and discount are in negative list Interest onInterest on

Money borrowed Money borrowed Debt incurredDebt incurred DepositDeposit Claim / obligation/ similar rightClaim / obligation/ similar right

Service charge / fee/ commission not covered (e.g. Service charge / fee/ commission not covered (e.g. pre payment fee, late fee, cheque bounce charges)pre payment fee, late fee, cheque bounce charges)

Interest on credit facility not utilized (commitment Interest on credit facility not utilized (commitment charges ) not coveredcharges ) not covered

Bill discounting – only discount coveredBill discounting – only discount coveredto be contd …….to be contd …….

Negative list of ServicesNegative list of Services Any charges over and above interest/ discount Any charges over and above interest/ discount

taxabletaxable Purchase/ sale of foreign currency between banks Purchase/ sale of foreign currency between banks

and authorized dealers under negative listand authorized dealers under negative list Examples of services in negative list-Examples of services in negative list-

Fixed deposits or saving deposits or any other such Fixed deposits or saving deposits or any other such deposits in a bank for which return is received by way of deposits in a bank for which return is received by way of interestinterest

Providing a loan or over draft facility for consideration on Providing a loan or over draft facility for consideration on payment of interestpayment of interest

Mortgages or loans with a collateral security to the Mortgages or loans with a collateral security to the extent that the consideration for advancing such loans extent that the consideration for advancing such loans or advances are represented by way of interestor advances are represented by way of interest

Corporate deposits to the extent that the consideration Corporate deposits to the extent that the consideration for advancing such loans or advances are represented for advancing such loans or advances are represented by way of interest or discountby way of interest or discount

Negative list of ServicesNegative list of Services(o)Services relating to transportation of passengers (o)Services relating to transportation of passengers with or without accompanied belongings, by—with or without accompanied belongings, by—

(i) a stage carriage;(i) a stage carriage;

(ii) railways in a class other than—(ii) railways in a class other than—

(A) first class; or(A) first class; or

(B) an air conditioned coach;(B) an air conditioned coach;

(iii) metro, monorail or tramway;(iii) metro, monorail or tramway;

(iv) inland waterways;(iv) inland waterways;

(v) public transport, other than predominantly for (v) public transport, other than predominantly for tourism purpose, in a vessel, between places located tourism purpose, in a vessel, between places located in India; andin India; and

(vi) metered cabs, radio taxis or auto rickshaws;(vi) metered cabs, radio taxis or auto rickshaws;6969

Negative list of ServicesNegative list of Services(p) services by way of transportation of goods—(p) services by way of transportation of goods—

(i) by road except the services of—(i) by road except the services of—

(A) a goods transportation agency; or(A) a goods transportation agency; or

(B) a courier agency;(B) a courier agency;

(ii) by an aircraft or a vessel from a place outside India upto (ii) by an aircraft or a vessel from a place outside India upto the customs station of clearance in India the customs station of clearance in India ; or; or

(iii) by inland waterways;(iii) by inland waterways;

(q) funeral, burial, crematorium or mortuary services (q) funeral, burial, crematorium or mortuary services including transportation of the deceased.including transportation of the deceased.

7070

GENERAL EXEMPTIONSGENERAL EXEMPTIONS

7171

Exemptions under Service Tax Exemptions under Service Tax General ExemptionsGeneral Exemptions

Small Scale Exemption Small Scale Exemption • The threshold exemption limit of Rs. 10 lakh continues to The threshold exemption limit of Rs. 10 lakh continues to

exist and it is over and above the exemptions notified in exist and it is over and above the exemptions notified in Notification No. 25/2012-ST dated 20.6.2012. Notification No. 25/2012-ST dated 20.6.2012.

• W.e.f. 1.4.2012, aggregate value of Rs. 10 lakh would W.e.f. 1.4.2012, aggregate value of Rs. 10 lakh would mean the sum total of value of first consecutive invoices mean the sum total of value of first consecutive invoices issued during a financial year, but does not include value issued during a financial year, but does not include value charged in invoices towards such services which are charged in invoices towards such services which are exempt from whole of service taxexempt from whole of service tax. (Refer Notification No. . (Refer Notification No. 33/2012-ST dated 20.6.2012)33/2012-ST dated 20.6.2012)

to be contd….to be contd….

Exemption under Service Tax Exemption under Service Tax General ExemptionsGeneral Exemptions

• W.e.f. 1.07.2012, Notification No. 6/2005 as W.e.f. 1.07.2012, Notification No. 6/2005 as amended shall no longer be applicable. There amended shall no longer be applicable. There is a change in scope of is a change in scope of aggregate valueaggregate value which which shall mean as follows and subject to following shall mean as follows and subject to following conditions-conditions- total of value of taxable services total of value of taxable services value shall be as charged in first consecutive value shall be as charged in first consecutive

invoices issued during financial yearinvoices issued during financial year value charged in invoices issued for taxable value charged in invoices issued for taxable

services which are exempt from whole of Service services which are exempt from whole of Service Tax shall be excluded in determining the Tax shall be excluded in determining the aggregate valueaggregate value


Exemption for Exporters/SEZExemption for Exporters/SEZ Transportation of export goods by Goods Transport Transportation of export goods by Goods Transport

Agency in a goods carriage received by an exporter for Agency in a goods carriage received by an exporter for transport of goods. transport of goods. (Refer Notification No. 31/2012- ST (Refer Notification No. 31/2012- ST dated 20.6.2012)dated 20.6.2012)

Refund of service tax paid on all input taxable services Refund of service tax paid on all input taxable services received by an exporter of goods and used for export of received by an exporter of goods and used for export of goods, subject to certain specified conditions. goods, subject to certain specified conditions. (Refer (Refer Notification No. 39/2012-ST dated 20.6.2012)Notification No. 39/2012-ST dated 20.6.2012)

Taxable services, received by a unit located in a Special Taxable services, received by a unit located in a Special Economic Zone or Developer of SEZ for the authorised Economic Zone or Developer of SEZ for the authorised operations. operations. (Refer Notification No. 40/2012-ST dated (Refer Notification No. 40/2012-ST dated 20.6.2012)20.6.2012)


Exemption for Exporters/SEZExemption for Exporters/SEZ Rebate of Service Tax paid on taxable services Rebate of Service Tax paid on taxable services

received by exporter of goods and used for export received by exporter of goods and used for export of goods, subject to conditions of goods, subject to conditions (Refer Notification (Refer Notification No. 41/2012-ST dated 29.6.2012)No. 41/2012-ST dated 29.6.2012)

Exemption to services provided by commission Exemption to services provided by commission agent located outside India and engaged by Indian agent located outside India and engaged by Indian exporter for promotion of export goods exported exporter for promotion of export goods exported upto Service Tax calculated on 10% of free on upto Service Tax calculated on 10% of free on board value of export goods board value of export goods (Refer Notification No. (Refer Notification No. 42/2012-ST dated 29.6.2012) 42/2012-ST dated 29.6.2012)


Exemption to Import of TechnologyExemption to Import of Technology Taxable service involving import of technology, from so much Taxable service involving import of technology, from so much

of service tax, as is equivalent to the extent of amount of of service tax, as is equivalent to the extent of amount of cess payable on the said transfer of technology under the cess payable on the said transfer of technology under the provisions of section 3 of the Research and Development provisions of section 3 of the Research and Development Cess Act, 1986Cess Act, 1986.(Refer Notification No. 14/2012-ST dated .(Refer Notification No. 14/2012-ST dated 17.3.2012)17.3.2012)

Exemption for Services to Foreign Diplomatic MissionExemption for Services to Foreign Diplomatic Mission Taxable services provided for the official use of a foreign Taxable services provided for the official use of a foreign

diplomatic mission or consular post in India, or for personal diplomatic mission or consular post in India, or for personal use or for the use of the family members of diplomatic agents use or for the use of the family members of diplomatic agents or career consular officers posted therein. or career consular officers posted therein. (Refer Notification (Refer Notification No. 27/2012-ST dated 20.6.2012)No. 27/2012-ST dated 20.6.2012)


Exemption to Services by TBI or STEP Exemption to Services by TBI or STEP Taxable services provided by a Technology Business Taxable services provided by a Technology Business

Incubator (TBI) or a Science and Technology Entrepreneurship Incubator (TBI) or a Science and Technology Entrepreneurship Park (STEP) recognized by the National Science and Park (STEP) recognized by the National Science and Technology Entrepreneurship Development Board (NSTEDB) Technology Entrepreneurship Development Board (NSTEDB) of the Department of Science and Technology, Government of of the Department of Science and Technology, Government of India. (Refer Notification No. 32/2012-ST dated 20.6.2012)India. (Refer Notification No. 32/2012-ST dated 20.6.2012)

Exemption to Renting of an Immovable PropertyExemption to Renting of an Immovable Property Taxable service of renting of an immovable property, from so Taxable service of renting of an immovable property, from so

much of the service tax leviable thereon, as is in excess of the much of the service tax leviable thereon, as is in excess of the service tax calculated on a value which is equivalent to the service tax calculated on a value which is equivalent to the gross amount charged for renting of such immovable property gross amount charged for renting of such immovable property less taxes on such property, namely property tax levied and less taxes on such property, namely property tax levied and collected by local bodies. (Refer Notification No. 29/2012-ST collected by local bodies. (Refer Notification No. 29/2012-ST dated 20.6.2012)dated 20.6.2012)


Exemption to Railway ServicesExemption to Railway Services Taxation of services of passenger Taxation of services of passenger

transportation by railways in first class / transportation by railways in first class / AC coach and transportation of goods by AC coach and transportation of goods by railways exempt upto 30 September, 2012 railways exempt upto 30 September, 2012 (Refer Notification No. 43/2012-ST dated (Refer Notification No. 43/2012-ST dated 2.7.2012) 2.7.2012)

W.e.f 1.10.2012 , Railway services is W.e.f 1.10.2012 , Railway services is liable to Service Taxliable to Service Tax

EXEMPTED EXEMPTED SERVICES SERVICES

[[NOTIFICATION NO. 25/2012-ST, DATED NOTIFICATION NO. 25/2012-ST, DATED 20.6.2012]20.6.2012]

7979


(Vide mega Exemption Notification No. (Vide mega Exemption Notification No. 25/2012-ST dated 20.6.2012)25/2012-ST dated 20.6.2012)

W.e.f. 1.7.2012W.e.f. 1.7.2012 Covers 39 specific exemptions Covers 39 specific exemptions Negative List services – not taxable at Negative List services – not taxable at

all ; can be amended only by all ; can be amended only by parliament parliament

Exempted services – taxable but Exempted services – taxable but exempt under notification; can be exempt under notification; can be modified by notification.modified by notification.


(1)Services Provided to the United Nations or a Specified (1)Services Provided to the United Nations or a Specified

international organizationinternational organization

(2)Health care services by a clinical establishment, an (2)Health care services by a clinical establishment, an

authorised medical practitioner or para-medics;authorised medical practitioner or para-medics;

(3)Services by a veterinary clinic in relation to health care (3)Services by a veterinary clinic in relation to health care

of animals or birds ;of animals or birds ;


(4) Services by an entity registered under section (4) Services by an entity registered under section 12AA of the Income tax Act, 1961 (43 of 1961) by 12AA of the Income tax Act, 1961 (43 of 1961) by way of charitable activitiesway of charitable activities

““Charitable activities”- Clause (k) means activities relating to – Charitable activities”- Clause (k) means activities relating to – (a) public health by way of – (a) public health by way of –

• care or counselling of -care or counselling of -(i) terminally ill persons or persons with severe (i) terminally ill persons or persons with severe

physical or mental disabilityphysical or mental disability(ii) persons afflicted with HIV or AIDS, or (ii) persons afflicted with HIV or AIDS, or (iii) persons addicted to a dependence-forming (iii) persons addicted to a dependence-forming

substance such as narcotics drugs or alcohol or substance such as narcotics drugs or alcohol or • public awareness of preventive health, family planning public awareness of preventive health, family planning

or prevention of HIV infection or prevention of HIV infection (b) advancement of religion or spirituality (b) advancement of religion or spirituality

Exempted ServicesExempted Services(c) advancement of educational programmes or skill (c) advancement of educational programmes or skill development relating to,- development relating to,-

(I) abandoned, orphaned or homeless children (I) abandoned, orphaned or homeless children (II) physically or mentally abused and traumatized persons (II) physically or mentally abused and traumatized persons (III) Prisoners or (III) Prisoners or (IV) persons over the age of 65 years residing in a rural area (IV) persons over the age of 65 years residing in a rural area

(d) preservation of environment including watershed, (d) preservation of environment including watershed, forests and wildlife or forests and wildlife or

(e) advancement of any other object of general public (e) advancement of any other object of general public utility up to a value of twenty five lakhs rupees in utility up to a value of twenty five lakhs rupees in any FY provided that total value of such activities any FY provided that total value of such activities had not exceeded twenty five lakhs rupees during had not exceeded twenty five lakhs rupees during the preceding FYthe preceding FY


Conditions for this exemption -Conditions for this exemption - services should be provided by an entity services should be provided by an entity

registered u/s 12AA of Income Tax Act, registered u/s 12AA of Income Tax Act, 1961, and1961, and

services should be charitable activities services should be charitable activities (as above)(as above)


(5)Services by a person by way of-(5)Services by a person by way of- renting of precincts of a religious place meant for renting of precincts of a religious place meant for

general public ; orgeneral public ; or conduct of any religious ceremonyconduct of any religious ceremony

Religious place - meant for prayers / worship pertaining to Religious place - meant for prayers / worship pertaining to religion, meditation or spiritualityreligion, meditation or spirituality

General Public- body of people at large sufficiently defined General Public- body of people at large sufficiently defined by some common quality of public or impersonal nature by some common quality of public or impersonal nature

8585

Exempted ServicesExempted Services(6) Services provided by(6) Services provided by-- (a) an arbitral tribunal to -(a) an arbitral tribunal to - (i) any person other than a business entity; or(i) any person other than a business entity; or (ii) a business entity with a turnover up to rupees ten lakh (ii) a business entity with a turnover up to rupees ten lakh

in the in the preceding financial year;preceding financial year; (b) an individual as an advocate or a partnership firm of (b) an individual as an advocate or a partnership firm of

advocates by way of legal services to,-advocates by way of legal services to,- (i) an advocate or partnership firm of advocates providing (i) an advocate or partnership firm of advocates providing

legal legal services ; services ; (ii) any person other than a business entity; or(ii) any person other than a business entity; or (iii) a business entity with a turnover up to rupees ten lakh (iii) a business entity with a turnover up to rupees ten lakh

in the in the preceding financial year; orpreceding financial year; or (c) a person represented on an arbitral tribunal to an arbitral (c) a person represented on an arbitral tribunal to an arbitral

tribunal; tribunal;


Taxability for Arbitral TribunalTaxability for Arbitral Tribunal Sole / Panel Sole / Panel

to Arbitral Tribunal exemptto Arbitral Tribunal exemptto any person (non business entity) to any person (non business entity) exempt exempt to business entity (turnover upto 10 lakh) exemptto business entity (turnover upto 10 lakh) exemptto business entity (turnover > 10 lakh) taxed under reverse chargeto business entity (turnover > 10 lakh) taxed under reverse charge

Taxability for advocates Taxability for advocates Individual / firm Individual / firm to Individual / firm exemptto Individual / firm exemptto business entity (turnover upto 10 lakh) exemptto business entity (turnover upto 10 lakh) exemptto business entity (turnover > 10 lakh) taxed under reverse chargeto business entity (turnover > 10 lakh) taxed under reverse charge

• Firm includes LLPFirm includes LLP• Effectively, no tax to be paid by advocates / arbitral tribunal Effectively, no tax to be paid by advocates / arbitral tribunal • Legal services – advice, consultancy or assistance in any branch of law in Legal services – advice, consultancy or assistance in any branch of law in

any manner, includes representational services (N. No. 25/2012-ST dated any manner, includes representational services (N. No. 25/2012-ST dated 20.6.2012)20.6.2012)

Exempted ServicesExempted Services High Court of Delhi vide Order dated 21.09.2012 High Court of Delhi vide Order dated 21.09.2012

has stayed the implementation of this amendment has stayed the implementation of this amendment in a petition (W.P. (C) No. 5957/2012) of Delhi Tax in a petition (W.P. (C) No. 5957/2012) of Delhi Tax Bar Association.Bar Association.

It has directed that the provisions of Section It has directed that the provisions of Section 65B(44) and 66B of the Finance Act, 1994 (as 65B(44) and 66B of the Finance Act, 1994 (as amended by the Finance Act, 2012) as well as Rule amended by the Finance Act, 2012) as well as Rule 2(1)(d)(D)(II) of the Service Tax Rules, 1994 shall 2(1)(d)(D)(II) of the Service Tax Rules, 1994 shall not be given effect till the next date of hearing.not be given effect till the next date of hearing.

8888


(7) Services by way of technical testing or analysis of newly (7) Services by way of technical testing or analysis of newly developed drugs, including vaccines and herbal remedies, on developed drugs, including vaccines and herbal remedies, on human participants by a clinical research organisation human participants by a clinical research organisation approved to conduct clinical trials by the Drug Controller approved to conduct clinical trials by the Drug Controller General of India General of India

(8)Services by way of training or coaching in recreational (8)Services by way of training or coaching in recreational activities relating to arts, culture or sportsactivities relating to arts, culture or sports


(9) Services provided to or by an educational institution in respect of (9) Services provided to or by an educational institution in respect of

education exempted from service tax, by way of -education exempted from service tax, by way of -

(a) auxiliary educational services or (a) auxiliary educational services or

(b) renting of immovable property(b) renting of immovable property

Auxiliary education services shall cover the services in relation to Auxiliary education services shall cover the services in relation to

educational activities only and include –educational activities only and include –(i) any service relating to imparting any (i) any service relating to imparting any

skillskill knowledgeknowledge education education development of course conductdevelopment of course conduct other knowledge enhancement activityother knowledge enhancement activity

(ii) whether for students or faculty (ii) whether for students or faculty

(iii)out sourced activities ordinarily carried out by educational (iii)out sourced activities ordinarily carried out by educational institutions institutions


(iv) Services in relation to – (iv) Services in relation to – admission admission conduct of examinationconduct of examination catering of students under any mid day meal catering of students under any mid day meal

scheme sponsored by Government scheme sponsored by Government TransportationTransportation of students or faculty of students or faculty

(v) Services in relation to catering under mid day scheme and (v) Services in relation to catering under mid day scheme and transportation were hitherto exempt under different transportation were hitherto exempt under different notifications under outdoor catering services and tour notifications under outdoor catering services and tour

operator’s servicesoperator’s services

Exempted ServicesExempted Services(10) Services provided to a recognized sports body by-(10) Services provided to a recognized sports body by-

(a) an individual as a player, referee, umpire, coach or team (a) an individual as a player, referee, umpire, coach or team manager for participation in a sporting event organized by manager for participation in a sporting event organized by a recognized sports body; a recognized sports body;

(b) another recognized sports body;(b) another recognized sports body;(11) Services by way of sponsorship of sporting events organised-(11) Services by way of sponsorship of sporting events organised-

(a) by a national sports federation, or its affiliated federations, (a) by a national sports federation, or its affiliated federations, where the participating teams or individuals represent any where the participating teams or individuals represent any district, state or zone; district, state or zone;

(b) by Association of Indian Universities, Inter-University Sports (b) by Association of Indian Universities, Inter-University Sports Board, School Games Federation of India, All India Sports Board, School Games Federation of India, All India Sports Council for the Deaf, Paralympic Committee of India or Special Council for the Deaf, Paralympic Committee of India or Special Olympics Bharat; Olympics Bharat;

(c ) by Central Civil Services Cultural and Sports Board; (c ) by Central Civil Services Cultural and Sports Board; (d) as part of national games, by Indian Olympic Association; or(d) as part of national games, by Indian Olympic Association; or(e) under Panchayat Yuva Kreeda Aur Khel Abhiyaan (PYKKA) (e) under Panchayat Yuva Kreeda Aur Khel Abhiyaan (PYKKA)

Scheme Scheme


(12) Services provided to the Government, a local authority or a (12) Services provided to the Government, a local authority or a governmental authority by way ofgovernmental authority by way of constructionconstruction, , erection, erection, commissioning, installation, completion, fitting out, repair, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of -maintenance, renovation, or alteration of -

a)a) a civil structure or any other original works meant a civil structure or any other original works meant predominantly for use other than for commerce, industry, or predominantly for use other than for commerce, industry, or any other business or profession;any other business or profession;

b)b) a historical monument, archaeological site or remains of a historical monument, archaeological site or remains of national importance, archaeological excavation, or antiquity national importance, archaeological excavation, or antiquity specified under the Ancient Monuments and Archaeological specified under the Ancient Monuments and Archaeological Sites and Remains Act, 1958 (24 of 1958);Sites and Remains Act, 1958 (24 of 1958);

c)c) a structure meant a structure meant predominantly predominantly for use as (i) an for use as (i) an educational, (ii) a clinical, or (iii) an art or cultural educational, (ii) a clinical, or (iii) an art or cultural establishment; establishment;

d)d) canal, dam or other irrigation works; canal, dam or other irrigation works; e)e) pipeline, conduit or plant for (i) water supply (ii) water pipeline, conduit or plant for (i) water supply (ii) water

treatment, or (iii) sewerage treatment or disposal; ortreatment, or (iii) sewerage treatment or disposal; orf)f) a residential complex predominantly meant for self-use or the a residential complex predominantly meant for self-use or the

use of their employees or other persons specified in the use of their employees or other persons specified in the Explanation 1 to clause 44 of section 65 B of the said Act;Explanation 1 to clause 44 of section 65 B of the said Act;

Exempted ServicesExempted Services(13) Services provided by way of(13) Services provided by way of constructionconstruction, , erection, erection,

commissioning, commissioning, installation, completion, fitting out, repair, maintenance, installation, completion, fitting out, repair, maintenance,

renovation, or renovation, or alteration of,-alteration of,-

a)a) a road, bridge, tunnel, or terminal for road a road, bridge, tunnel, or terminal for road transportation for use by general public; transportation for use by general public;

b)b) a civil structure or any other original works pertaining a civil structure or any other original works pertaining to a scheme under Jawaharlal Nehru National Urban to a scheme under Jawaharlal Nehru National Urban Renewal Mission or Rajiv Awaas Yojana;Renewal Mission or Rajiv Awaas Yojana;

c)c) a building owned by an entity registered under section a building owned by an entity registered under section 12 AA of the Income tax Act, 1961(43 of 1961)12 AA of the Income tax Act, 1961(43 of 1961) and and meant predominantly for religious use by general public;meant predominantly for religious use by general public;

d)d) a pollution control or effluent treatment plant, except a pollution control or effluent treatment plant, except located as a part of a factory; orlocated as a part of a factory; or

e)e) a structure meant for funeral, burial or cremation of a structure meant for funeral, burial or cremation of deceaseddeceased


• Construction of roads for use by general public - ExemptConstruction of roads for use by general public - Exempt• Construction of roads which are not for general public use Construction of roads which are not for general public use

e.g. construction of roads in a factory, residential complex etc e.g. construction of roads in a factory, residential complex etc –Taxable–Taxable

• If assessee is constructing such structures for the If assessee is constructing such structures for the government, a local authority or a governmental authority – government, a local authority or a governmental authority – ExemptExempt

• If assessee is constructing for others – TaxableIf assessee is constructing for others – Taxable• Construction of a building owned by an entity registered Construction of a building owned by an entity registered

under section 12 AA of the Income tax Act, 1961 and meant under section 12 AA of the Income tax Act, 1961 and meant predominantly for religious use by general public – Exemptpredominantly for religious use by general public – Exempt

• Repair, maintenance of airports, ports and railways -Taxable Repair, maintenance of airports, ports and railways -Taxable

Exempted ServicesExempted Services(14) Services by way of construction, erection, commissioning, (14) Services by way of construction, erection, commissioning,

or installation of original works pertaining to,-or installation of original works pertaining to,-a)a) an airport, port or railways, including monorail or metro;an airport, port or railways, including monorail or metro;b)b) a single residential unit otherwise than as a part of a a single residential unit otherwise than as a part of a

residential complex;residential complex;c)c) low- cost houses up to a carpet area of 60 square metres per low- cost houses up to a carpet area of 60 square metres per

house in a housing project approved by competent authority house in a housing project approved by competent authority empowered under the ‘Scheme of Affordable Housing in empowered under the ‘Scheme of Affordable Housing in Partnership’ framed by the Ministry of Housing and Urban Partnership’ framed by the Ministry of Housing and Urban Poverty Alleviation, Government of India; Poverty Alleviation, Government of India;

d)d) post- harvest storage infrastructure for agricultural produce post- harvest storage infrastructure for agricultural produce including a cold storages for such purposes; orincluding a cold storages for such purposes; or

e)e) mechanised food grain handling system, machinery or mechanised food grain handling system, machinery or equipment for units processing agricultural produce as food equipment for units processing agricultural produce as food stuff excluding alcoholic beverages;stuff excluding alcoholic beverages;


• Original works as defined in Valuation Rules means – Original works as defined in Valuation Rules means –

(a) all new constructions; or (a) all new constructions; or

(b) all types of additions and alterations to abandoned or (b) all types of additions and alterations to abandoned or damaged structures on land that are required to make them damaged structures on land that are required to make them workable, workable,

(c) erection, commission or installation of plant, machinery or (c) erection, commission or installation of plant, machinery or equipment or structures, whether prefabricated or otherwise equipment or structures, whether prefabricated or otherwise

• No service tax liability on erection or installation of machineries No service tax liability on erection or installation of machineries or or

equipments for units processing agricultural produce equipments for units processing agricultural produce • Erection or installation of machineries or equipments for dal Erection or installation of machineries or equipments for dal

mills, rice mills, milk dairies or cotton ginning mills -Exempt mills, rice mills, milk dairies or cotton ginning mills -Exempt • Only erection and construction of original works is covered Only erection and construction of original works is covered • Exemption will cover low cost houses under the scheme of Exemption will cover low cost houses under the scheme of

affordable housing in partnership affordable housing in partnership

Exempted ServicesExempted Services(15)Temporary transfer or permitting the use or enjoyment of a (15)Temporary transfer or permitting the use or enjoyment of a

copyright covered under clauses (a) or (b) of sub-section (1) of copyright covered under clauses (a) or (b) of sub-section (1) of section 13 of the Indian Copyright Act, 1957 (14 of 1957), relating section 13 of the Indian Copyright Act, 1957 (14 of 1957), relating to original literary, dramatic, musical, artistic works or to original literary, dramatic, musical, artistic works or cinematograph films;cinematograph films;

(16) Services by a performing artist in folk or classical art forms of (i) (16) Services by a performing artist in folk or classical art forms of (i) music, or (ii) dance, or (iii) theatre, excluding services provided by music, or (ii) dance, or (iii) theatre, excluding services provided by such artist as a brand ambassador;such artist as a brand ambassador;

(17)Services by way of collecting or providing news by an (17)Services by way of collecting or providing news by an independent independent

journalist, Press Trust of India or United News of India;journalist, Press Trust of India or United News of India;

(18) Services by way of renting of a hotel, inn, guest house, club, (18) Services by way of renting of a hotel, inn, guest house, club, campsite or other commercial places meant for residential or campsite or other commercial places meant for residential or lodging purposes, having declared tariff of a unit of lodging purposes, having declared tariff of a unit of accommodation below rupees one thousand per day or equivalent;accommodation below rupees one thousand per day or equivalent;

Exempted ServicesExempted Services(19)Services provided in relation to serving (19)Services provided in relation to serving

of food or beverages by a restaurant, of food or beverages by a restaurant, eating joint or a mess, other than those eating joint or a mess, other than those having (i) the facility of air-conditioning or having (i) the facility of air-conditioning or central air-heating in any part of the central air-heating in any part of the establishment, at any time during the establishment, at any time during the year, and (ii) a licence to serve alcoholic year, and (ii) a licence to serve alcoholic beveragesbeverages

9999

Exempted ServicesExempted Services(20) Services by way of transportation by rail or a vessel from one (20) Services by way of transportation by rail or a vessel from one

place in India to another of the following goods -place in India to another of the following goods -a.a. petroleum and petroleum products falling under Chapter petroleum and petroleum products falling under Chapter

heading 2710 and 2711 of the First Schedule to the Central heading 2710 and 2711 of the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986);Excise Tariff Act, 1985 (5 of 1986);

b.b. relief materials meant for victims of natural or man-made relief materials meant for victims of natural or man-made disasters, calamities, accidents or mishap;disasters, calamities, accidents or mishap;

c.c. defence or military equipments;defence or military equipments;d.d. postal mail or mail bags; postal mail or mail bags; e.e. household effects;household effects;f.f. newspaper or magazines registered with the Registrar of newspaper or magazines registered with the Registrar of

Newspapers; Newspapers; g.g. railway equipments or materials; railway equipments or materials; h.h. agricultural produce;agricultural produce;i.i. foodstuff including flours, tea, coffee, jaggery, sugar, milk foodstuff including flours, tea, coffee, jaggery, sugar, milk

products, salt and edible oil, excluding alcoholic beverages; or products, salt and edible oil, excluding alcoholic beverages; or j.j. chemical fertilizer and oilcakes; chemical fertilizer and oilcakes;

Exempted ServicesExempted Services(21) Services provided by a goods transport agency by way of (21) Services provided by a goods transport agency by way of transportation of -transportation of -a)a) fruits, vegetables, eggs, milk, food grains or pulses in a fruits, vegetables, eggs, milk, food grains or pulses in a

goods carriage;goods carriage;b)b) goods where gross amount charged for the transportation of goods where gross amount charged for the transportation of

goods on a consignment transported in a single goods goods on a consignment transported in a single goods carriage does not exceed one thousand five hundred rupees; carriage does not exceed one thousand five hundred rupees; oror

c)c) goods, where gross amount charged for transportation of all goods, where gross amount charged for transportation of all such goods for a single consignee in the goods carriage does such goods for a single consignee in the goods carriage does not exceed rupees seven hundred fifty;not exceed rupees seven hundred fifty;

(22) Services by way of giving on hire -(22) Services by way of giving on hire -

a)a) to a state transport undertaking, a motor vehicle meant to a state transport undertaking, a motor vehicle meant to carry more than twelve passengers; orto carry more than twelve passengers; or

b)b) to a goods transport agency, a means of transportation to a goods transport agency, a means of transportation of goods;of goods;


(23)Transport of passengers, with or without accompanied (23)Transport of passengers, with or without accompanied belongings, by -belongings, by -

a)a) air, embarking from or terminating in an airport located air, embarking from or terminating in an airport located in the state of Arunachal Pradesh, Assam, Manipur, in the state of Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, or Tripura or at Meghalaya, Mizoram, Nagaland, Sikkim, or Tripura or at Bagdogra located in West Bengal; Bagdogra located in West Bengal;

b)b) a contract carriage for the transportation of passengers, a contract carriage for the transportation of passengers, excluding tourism, conducted tour, charter or hire; orexcluding tourism, conducted tour, charter or hire; or

c)c) ropeway, cable car or aerial tramway;ropeway, cable car or aerial tramway;

(24) Services by way of vehicle parking to general public (24) Services by way of vehicle parking to general public excluding leasing of space to an entity for providing such excluding leasing of space to an entity for providing such parking facility;parking facility;


(25)Services provided to Government, a local authority or a (25)Services provided to Government, a local authority or a governmental authority by way of -governmental authority by way of -

a)a) carrying out any activity in relation to any function carrying out any activity in relation to any function ordinarily entrusted to a municipality in relation to water ordinarily entrusted to a municipality in relation to water supply, public health, sanitation conservancy, solid waste supply, public health, sanitation conservancy, solid waste management or slum improvement and upgradation; ormanagement or slum improvement and upgradation; or

b)b) repair or maintenance of a vessel or an aircraft;repair or maintenance of a vessel or an aircraft;

Exempted ServicesExempted Services(26)Services of general insurance business (26)Services of general insurance business

provided under provided under Following schemes Following schemes a.a. Hut Insurance Scheme;Hut Insurance Scheme;b.b. Cattle Insurance under Swarnajaynti Gram Cattle Insurance under Swarnajaynti Gram

Swarozgar Yojna (earlier known as Integrated Swarozgar Yojna (earlier known as Integrated Rural Development Programme);Rural Development Programme);

c.c. Scheme for Insurance of Tribals;Scheme for Insurance of Tribals;d.d. Janata Personal Accident Policy and Gramin Janata Personal Accident Policy and Gramin

Accident Policy; Accident Policy; e.e. Group Personal Accident Policy for Self-Employed Group Personal Accident Policy for Self-Employed

Women;Women;f.f. Agricultural Pumpset and Failed Well Insurance;Agricultural Pumpset and Failed Well Insurance;g.g. premia collected on export credit insurance;premia collected on export credit insurance;


h.h. Weather Based Crop Insurance Scheme or the Weather Based Crop Insurance Scheme or the Modified National Agricultural Insurance Modified National Agricultural Insurance Scheme, approved by the Government of India Scheme, approved by the Government of India and implemented by the Ministry of and implemented by the Ministry of Agriculture;Agriculture;

i.i. Jan Arogya Bima Policy;Jan Arogya Bima Policy;j.j. National Agricultural Insurance Scheme National Agricultural Insurance Scheme

(Rashtriya Krishi Bima Yojana); (Rashtriya Krishi Bima Yojana); k.k. Pilot Scheme on Seed Crop Insurance;Pilot Scheme on Seed Crop Insurance;l.l. Central Sector Scheme on Cattle Insurance;Central Sector Scheme on Cattle Insurance;m.m. Universal Health Insurance Scheme;Universal Health Insurance Scheme;n.n. Rashtriya Swasthya Bima Yojana; orRashtriya Swasthya Bima Yojana; oro.o. Coconut Palm Insurance Scheme; Coconut Palm Insurance Scheme;

Exempted ServicesExempted Services(27) Services provided by an incubatee up to a total turnover (27) Services provided by an incubatee up to a total turnover

of fifty lakh rupees in a financial year subject to the of fifty lakh rupees in a financial year subject to the following conditions, namely:- following conditions, namely:-

a)a) the total turnover had not exceeded fifty lakh rupees the total turnover had not exceeded fifty lakh rupees during the preceding financial year; andduring the preceding financial year; and

b)b) a period of three years has not been elapsed from the a period of three years has not been elapsed from the date of entering into an agreement as an incubatee; date of entering into an agreement as an incubatee;

(28)Service by an unincorporated body or a non- profit entity (28)Service by an unincorporated body or a non- profit entity registered under any law for the time being in force, to its registered under any law for the time being in force, to its own members by way of reimbursement of charges or own members by way of reimbursement of charges or share of contribution - share of contribution -

a)a) as a trade union;as a trade union;b)b) for the provision of carrying out any activity which is for the provision of carrying out any activity which is

exempt from the levy of service tax; orexempt from the levy of service tax; orc)c) up to an amount of five thousand rupees per month per up to an amount of five thousand rupees per month per

member for sourcing of goods or services from a third member for sourcing of goods or services from a third person for the common use of its members in a housing person for the common use of its members in a housing society or a residential complexsociety or a residential complex

Exempted ServicesExempted Services(29)Services by the following persons in respective capacities -(29)Services by the following persons in respective capacities -a)a) sub-broker or an authorised person to a stock broker; sub-broker or an authorised person to a stock broker; b)b) authorised person to a member of a commodity exchange;authorised person to a member of a commodity exchange;c)c) mutual fund agent to a mutual fund or asset management mutual fund agent to a mutual fund or asset management

company;company;d)d) distributor to a mutual fund or asset management distributor to a mutual fund or asset management

company;company;e)e) selling or marketing agent of lottery tickets to a distributer selling or marketing agent of lottery tickets to a distributer

or a selling agent; or a selling agent; f)f) selling agent or a distributer of SIM cards or recharge selling agent or a distributer of SIM cards or recharge

coupon vouchers; coupon vouchers; g)g) business facilitator or a business correspondent to a business facilitator or a business correspondent to a

banking company or an insurance company, in a rural area; banking company or an insurance company, in a rural area; oror

h)h) sub-contractor providing services by way of works contract sub-contractor providing services by way of works contract to another contractor providing works contract services to another contractor providing works contract services which are exempt;which are exempt;


(30)Carrying out an intermediate production process as job work in (30)Carrying out an intermediate production process as job work in relation to -relation to -

(a) agriculture, printing or textile processing; (a) agriculture, printing or textile processing;

(b) cut and polished diamonds and gemstones; or plain and studded (b) cut and polished diamonds and gemstones; or plain and studded jewellery of gold and other precious metals, falling under Chapter 71 jewellery of gold and other precious metals, falling under Chapter 71 of the Central Excise Tariff Act ,1985 (5 of 1986);of the Central Excise Tariff Act ,1985 (5 of 1986);

(c) any goods on which appropriate duty is payable by the principal (c) any goods on which appropriate duty is payable by the principal manufacturer; ormanufacturer; or

(d) processes of (d) processes of electroplating, zinc plating, anodizing, heat electroplating, zinc plating, anodizing, heat treatment, powder coating, painting including spray painting or auto treatment, powder coating, painting including spray painting or auto black,black, during the course of manufacture of parts of cycles or sewing during the course of manufacture of parts of cycles or sewing machinesmachines upto an aggregate value of taxable service of the specified upto an aggregate value of taxable service of the specified processes of one hundred and fifty lakh rupees in a financial year processes of one hundred and fifty lakh rupees in a financial year subject to the condition that such aggregate value had not exceeded subject to the condition that such aggregate value had not exceeded one hundred and fifty lakh rupees during the preceding financial year; one hundred and fifty lakh rupees during the preceding financial year;

Exempted ServicesExempted Services (31) Services by an organizer to any person in (31) Services by an organizer to any person in

respect of a business exhibition held outside respect of a business exhibition held outside India ; India ;

(32) Services by way of making telephone calls (32) Services by way of making telephone calls from -from -

a)a) departmentally run public telephone; departmentally run public telephone;

b)b) guaranteed public telephone operating only for guaranteed public telephone operating only for local calls; orlocal calls; or

c)c) free telephone at airport and hospital where no free telephone at airport and hospital where no bills are being issued ;bills are being issued ;

(33) Services by way of slaughtering of animals;(33) Services by way of slaughtering of animals;

109109

Exempted ServicesExempted Services (34) Services received from a provider of service (34) Services received from a provider of service

located in a non- taxable territory by -located in a non- taxable territory by -a)a) Government, a local authority, a governmental Government, a local authority, a governmental

authority or an individual in relation to any authority or an individual in relation to any purpose other than commerce, industry or any purpose other than commerce, industry or any other business or profession; other business or profession;

b)b) an entity registered under section 12AA of the an entity registered under section 12AA of the Income tax Act, 1961 (43 of 1961) for the Income tax Act, 1961 (43 of 1961) for the purposes of providing charitable activities; orpurposes of providing charitable activities; or

c)c) a person located in a non-taxable territory;a person located in a non-taxable territory;

110110

Exempted ServicesExempted Services (35) Services of public libraries by way of lending of books, (35) Services of public libraries by way of lending of books,

publications or any other knowledge- enhancing content or publications or any other knowledge- enhancing content or material;material;

(36) Services by Employees’ State Insurance Corporation to (36) Services by Employees’ State Insurance Corporation to persons persons

governed under the Employees’ Insurance Act, 1948 (34 of governed under the Employees’ Insurance Act, 1948 (34 of 1948);1948);

(37) Services by way of transfer of a going concern, as a whole or (37) Services by way of transfer of a going concern, as a whole or an an

independent part thereof ; independent part thereof ;

(38) Services by way of public conveniences such as provision of (38) Services by way of public conveniences such as provision of facilities of bathroom, washrooms, lavatories, urinal or facilities of bathroom, washrooms, lavatories, urinal or toilets;toilets;

(39)Services by a governmental authority by way of any activity in (39)Services by a governmental authority by way of any activity in relation to any function entrusted to a municipality under relation to any function entrusted to a municipality under article 243 W of the Constitution ;article 243 W of the Constitution ;

DECLARED SERVICESDECLARED SERVICESSECTION 66SECTION 66EE

112112

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As defined in clause 44 of section 65B, ‘service’ includes a declared service. As defined in clause 44 of section 65B, ‘service’ includes a declared service.

There are 9 categories of services or activities as declared servicesThere are 9 categories of services or activities as declared services implying that on all such nine declared services, Service Tax shall be payable 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 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 deemed to be a sale within the meaning of Article 366 (29A) of the Constitution of India. of India.

What is declared services is defined in section 65B(22) to mean any activity 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 carried out by a person for another person for a consideration and declared as such under section 66E of the Act.such under section 66E of the Act.

They are amply covered by the definition of service but have been declared 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 with a view to remove any ambiguity for the purpose of uniform application of law all over the country law all over the country

114

Following constitute Declared Services (Section 66E)Following constitute Declared Services (Section 66E) Renting of immovable property; Renting of immovable property;

Construction of a complex, building, civil structure or a part Construction of a complex, building, civil structure or a part thereof, including a complex or building intended for sale to a thereof, including a complex or building intended for sale to a buyer, wholly or partly, except where the entire consideration buyer, wholly or partly, except where the entire consideration is received after issuance of certificate of completion by a is received after issuance of certificate of completion by a competent authority; competent authority;

Temporary transfer or permitting the use or enjoyment of any Temporary transfer or permitting the use or enjoyment of any intellectual property right; intellectual property right;

Development, design, programming, customization, Development, design, programming, customization, adaptation, up gradation, enhancement, implementation of adaptation, up gradation, enhancement, implementation of information technology software; information technology software;

115

Agreeing to the obligation to refrain from an act, or to Agreeing to the obligation to refrain from an act, or to tolerate an act or a situation, or to do an act; tolerate an act or a situation, or to do an act;

Transfer of goods by way of hiring, leasing, licensing or any Transfer of goods by way of hiring, leasing, licensing or any such manner without transfer of right to use such goods; such manner without transfer of right to use such goods;

Activities in relation to delivery of goods on hire purchase or Activities in relation to delivery of goods on hire purchase or any system of payment by installments any system of payment by installments ; ;

Service portion in execution of a works contract; Service portion in execution of a works contract;

Service portion in an activity wherein goods, being food or Service portion in an activity wherein goods, being food or any other article of human consumption or any drink (whether any other article of human consumption or any drink (whether or not intoxicating) is supplied in any manner as part of the or not intoxicating) is supplied in any manner as part of the activity. activity.

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Renting of Immovable PropertyRenting of Immovable Property

Renting (Section 65B(41)) allowing, permitting or granting access, Renting (Section 65B(41)) allowing, permitting or granting access, entry, occupation, usage or any such facility, wholly or partly, in an entry, occupation, usage or any such facility, wholly or partly, in an immovable property, with or without the transfer of possession or immovable property, with or without the transfer of possession or control of the said immovable property and includes letting, leasing, control of the said immovable property and includes letting, leasing, licensing or other similar arrangements in respect of immovable licensing or other similar arrangements in respect of immovable propertyproperty

Renting of certain kinds of immovable properties is specified in the Renting of certain kinds of immovable properties is specified in the negative list negative list • Renting of vacant land, with or without a structure incidental to Renting of vacant land, with or without a structure incidental to

its use, relating to agriculture.its use, relating to agriculture.• Renting of residential dwelling for use as residenceRenting of residential dwelling for use as residence• Renting out of any property by Reserve Bank of IndiaRenting out of any property by Reserve Bank of India• Renting out of any property by a Government or a local authority Renting out of any property by a Government or a local authority

to a non-business entityto a non-business entity


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Exemptions to Renting of Immovable property Exemptions to Renting of Immovable property

Threshold level exemption up to Rs. 10 lakh.Threshold level exemption up to Rs. 10 lakh.

Renting of precincts of a religious place meant for general public is exempt.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 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 meant for residential or lodging purposes, having declared tariff of a room below rupees one thousand per day or equivalent is exempt.rupees one thousand per day or equivalent is exempt.

Renting to / by an exempt educational institutionRenting to / by an exempt educational institution

Municipal taxes (Notification No. 29/2012-ST dated 20.6.2012)Municipal taxes (Notification No. 29/2012-ST dated 20.6.2012)

to be contd…to be contd…

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The immovable property could be – The immovable property could be – factoriesfactories office buildingsoffice buildings warehouseswarehouses theatrestheatres exhibition hallsexhibition halls multiple use buildingsmultiple use buildings commercial markets commercial markets shops / shopping centreshops / shopping centre hotel, guest houses hotel, guest houses community centre community centre Vacant land for commercial use etc.Vacant land for commercial use etc.

Allowing or permitting the usage of immovable property Allowing or permitting the usage of immovable property without transferring possession of such property is also renting without transferring possession of such property is also renting of immovable property. of immovable property.


Nature of ActivityNature of Activity TaxabilityTaxability

Renting of property to educational body Renting of property to educational body Not chargeable to service tax; exemption Not chargeable to service tax; exemption

Renting of vacant land for animal husbandry Renting of vacant land for animal husbandry or floriculture or floriculture

Not chargeable to service tax as it is covered in the Not chargeable to service tax as it is covered in the negative list entry relating to agriculture negative list entry relating to agriculture

Permitting use of immoveable property for Permitting use of immoveable property for placing vending/dispensing machines placing vending/dispensing machines

Chargeable to service tax as permitting usage of Chargeable to service tax as permitting usage of space is covered in the definition of renting space is covered in the definition of renting

Allowing erection of communication tower Allowing erection of communication tower on a building for consideration. on a building for consideration.

Chargeable to service tax as permitting usage of Chargeable to service tax as permitting usage of space is covered in the definition of renting space is covered in the definition of renting

Renting of land or building for entertainment Renting of land or building for entertainment or sports or sports

Chargeable to service tax as there is no specific Chargeable to service tax as there is no specific exemption. exemption.

Renting of theatres by owners to film Renting of theatres by owners to film distributors distributors

Chargeable to service tax as the arrangement Chargeable to service tax as the arrangement amounts to renting of immovable property. amounts to renting of immovable property.

Renting of immovable property outside India not taxable in India even if owners are in India

120

Construction ActivitiesConstruction Activities

Construction Activities [Section 66E (b)] Construction Activities [Section 66E (b)] Construction activities means construction of a complex, Construction activities means construction of a complex, building, civil structure or a part thereof, including a complex building, civil structure or a part thereof, including a complex or building or building intendedintended for sale to a buyer, wholly or partly, for sale to a buyer, wholly or partly, except where the entire consideration is received after except where the entire consideration is received after issuance of completion certificate by the competent authority.issuance of completion certificate by the competent authority.It includes construction of -It includes construction of -

Complex Complex Building Building Civil structure or part thereof Civil structure or part thereof Complex or building intended for sale to a buyer except Complex or building intended for sale to a buyer except

where entire consideration is received after issuance of where entire consideration is received after issuance of completion certificate by the completion certificate by the competent authoritycompetent authority..

Actual sale after construction-if consideration received before Actual sale after construction-if consideration received before such completion will also be taxedsuch completion will also be taxed. .

121


Construction is not defined Construction is not defined

Construction Includes Construction Includes additions,additions,

alteration,alteration,

replacement, orreplacement, or

remodeling remodeling

of any existing civil structure of any existing civil structure

122


Who is Competent Authority to Issue Completion Who is Competent Authority to Issue Completion

Certificate Certificate

Government Government

Any authority authorized to Issue CC under any lawAny authority authorized to Issue CC under any law

In absence of any requirement to issue CC,In absence of any requirement to issue CC,

• architect under Architect Act, 1972 architect under Architect Act, 1972

• Chartered Engineer register with 10E Chartered Engineer register with 10E

• licensed surveyor (of local body / development or licensed surveyor (of local body / development or

planning authority) planning authority)

123


Residential ComplexResidential Complex

Complex comprising of one or more buildings having more Complex comprising of one or more buildings having more

than one residential unit than one residential unit

Even two units would be called ‘complex’ Even two units would be called ‘complex’

Single residential unit – self contained residential unit Single residential unit – self contained residential unit

designed for use, wholly / principally, for residence of one designed for use, wholly / principally, for residence of one

familyfamily

Original work – new construction and all type of addition / Original work – new construction and all type of addition /

alteration to abandoned / damaged structures on land as alteration to abandoned / damaged structures on land as

are required to make them workable / erection , are required to make them workable / erection ,

commissioning, installation. commissioning, installation.


Circular F. No. V/ST –I /Tech –II /463/11 Mumbai Circular F. No. V/ST –I /Tech –II /463/11 Mumbai dated 31.08.2012dated 31.08.2012 Intended for personal use of residence – not in the Intended for personal use of residence – not in the new definitionnew definitionIf the construction is provided to the existing flat If the construction is provided to the existing flat owner under SRA Project, Service tax will be owner under SRA Project, Service tax will be applicableapplicableFloor rising charges are also taxable because the Floor rising charges are also taxable because the construction cost increases as per increase in the construction cost increases as per increase in the floor but it is eligible for abatement of 75% in N. No. floor but it is eligible for abatement of 75% in N. No. 26/2012-ST dated 20.6.201226/2012-ST dated 20.6.2012

124124

125

Intellectual Property RightIntellectual Property Right

Temporary transfer or permitting the use or enjoyment of any Temporary transfer or permitting the use or enjoyment of any intellectual property right [Section 66 E (c)]intellectual property right [Section 66 E (c)]Intellectual property right has not been defined but Intellectual property right has not been defined but Intellectual Property Right includes :Intellectual Property Right includes :• Copyright Copyright

Patents Patents

Trademarks Trademarks

Designs Designs

Any other similar right to an intangible property Any other similar right to an intangible property

126


Examples of IPRsExamples of IPRs Patents Patents - - New technical concepts, New technical concepts,

inventionsinventions Copyright Copyright - - Text, graphics, software, data Text, graphics, software, data

compilations, art, musiccompilations, art, music Trademarks - Brands (Services/ Products) Trademarks - Brands (Services/ Products)

image and reputation image and reputation Confidential Information Confidential Information - - Ideas, information, know-how Ideas, information, know-how

etc.etc. Design Rights Design Rights - - Form and appearance, Form and appearance,

decorationdecoration

127


What is taxed in IPRWhat is taxed in IPR

all IPRs (whether recognized in law or not) all IPRs (whether recognized in law or not)

excluding copy rights excluding copy rights

temporary transfer of IPRs temporary transfer of IPRs

permitting the use of IPRspermitting the use of IPRs

enjoyment of IPRsenjoyment of IPRs

128


Copyrights as IPRs are exempted which Copyrights as IPRs are exempted which

include :include :

literary workliterary work

dramatic work dramatic work

musical work musical work

artistic works artistic works

cinematograph films cinematograph films

129

Works contract [65B(54)]Works contract [65B(54)]

““Works Contract” means a Works Contract” means a contractcontract wherein wherein transfer transfer

of property in goods involved of property in goods involved in the execution of such in the execution of such

contract is contract is leviable to tax as sale of goods leviable to tax as sale of goods and such and such

contract is for the purpose of contract is for the purpose of carrying out carrying out

construction, erection, commissioning, installation, construction, erection, commissioning, installation,

completion, fitting out, repair, maintenance, completion, fitting out, repair, maintenance,

renovation, alteration of renovation, alteration of any movable or immovable any movable or immovable

property property or for carrying out or for carrying out any other similar activityany other similar activity

or a part thereof or a part thereof in relation to such propertyin relation to such property. .

130

Works contract covers Works contract covers ConstructionConstruction Erection Erection Commissioning Commissioning CompletionCompletion Fitting out Fitting out Repair Repair Maintenance Maintenance RenovationRenovation Alteration, or Alteration, or Any other similar activity or part there of Any other similar activity or part there of

131

Such activities could be in relation to Such activities could be in relation to any – any –

Movable property (plant, machinery, Movable property (plant, machinery, equipments etc) equipments etc)

Immovable property (land, building, Immovable property (land, building, structures etc) structures etc)

This definition is very vast and This definition is very vast and covers almost everythingcovers almost everything

132

Some issues in works contracts Some issues in works contracts Labour contracts Labour contracts ExcludedExcluded

Repair & Maintenance of motor Repair & Maintenance of motor vehicles vehicles

yes if property in goods yes if property in goods transferred in execution of transferred in execution of WCWC

Construction of pipeline / conduit Construction of pipeline / conduit yes, structures on land yes, structures on land

Painting/repair/renovation of Painting/repair/renovation of building building

yes if involves provision of yes if involves provision of material also material also

Erection/commissioning Erection/commissioning installation of plant/ machine etc installation of plant/ machine etc

yes if transfer of property in yes if transfer of property in goods is involvedgoods is involved

BUNDLED SERVICESBUNDLED SERVICESSECTION 66FSECTION 66F

133133

134

Principles of Interpretation of specific description of services Principles of Interpretation of specific description of services [section 66F] [section 66F]

Section 65A dealing with classification of taxable services Section 65A dealing with classification of taxable services omitted w.e.f. 1.7.2012 omitted w.e.f. 1.7.2012

useful in deciding whether a service falls in negative list / useful in deciding whether a service falls in negative list / exemptions / declared services exemptions / declared services

composite v. bundled servicecomposite v. bundled service bundled service – bundled service –

collection of services / tied up servicescollection of services / tied up services more than one service more than one service element of one service combined with element of provision element of one service combined with element of provision

of other service (s). of other service (s). Examples - Mailing done by RTI, Air traveling and catering Examples - Mailing done by RTI, Air traveling and catering

therein therein Earlier issue – which taxable service Earlier issue – which taxable service Now – whether any activity is a ‘service’ or not a ‘service’. Now – whether any activity is a ‘service’ or not a ‘service’.

135

Rule 1 Rule 1 Reference to main service can not be used for services Reference to main service can not be used for services

used for providing the main serviceused for providing the main service If some service is provided with reference to If some service is provided with reference to

provision of main service, it does not become main provision of main service, it does not become main service,service,

Related services do not take the colour of main Related services do not take the colour of main service.service.

Examples Examples • Provision of access to any road or bridge on Provision of access to any road or bridge on

payment of toll payment of toll Security services Security services IT related servicesIT related services Contract commission Contract commission

• Transportation of passengers by rail Transportation of passengers by rail Air travel agency Air travel agency Tour operators Tour operators

136

Rule 2Rule 2

Most specific description to be preferred over more Most specific description to be preferred over more general general

description for services capable of differential description for services capable of differential treatment for treatment for

any purpose based on its description any purpose based on its description ExamplesExamples

Real estate agent for immovable propertyReal estate agent for immovable property• If taxed as intermediary, his location is important If taxed as intermediary, his location is important • If taxed as immovable property, location of If taxed as immovable property, location of

property is important property is important Outdoor catering by pandal & shamiana / convention Outdoor catering by pandal & shamiana / convention

to be taxed as specific combined entry exist for to be taxed as specific combined entry exist for abatement and not as individual servicesabatement and not as individual services

137

Taxability of naturally bundled services in ordinary Taxability of naturally bundled services in ordinary course course

of business (Rule 3)of business (Rule 3)If various elements of a bundled service are naturally If various elements of a bundled service are naturally bundled in the ordinary course of business, it shall be bundled in the ordinary course of business, it shall be treated as provision of a single service which gives treated as provision of a single service which gives such bundle its essential charactersuch bundle its essential character

Perception of service provider / service receiver Perception of service provider / service receiver Trade practice Trade practice Example Example

• Packaged hotel accommodation for convention Packaged hotel accommodation for convention delegates may include delegates may include

Hotel room accommodationHotel room accommodation Breakfast Breakfast Tea / coffee during conferenceTea / coffee during conference

to be contd……to be contd……

Access to gym / health club / pool Access to gym / health club / pool Internet Internet Business centre Business centre Sight seeing Sight seeing

Could be considered as naturally bundled convention services as Could be considered as naturally bundled convention services as each activity is taxable but does not provide essential character each activity is taxable but does not provide essential character and taxed accordingly and taxed accordingly

Indicators of naturally bundled services Indicators of naturally bundled services There is a single price or the customer pays the same There is a single price or the customer pays the same

amount, no matter how much of the package they actually amount, no matter how much of the package they actually receive or usereceive or use

The elements are normally advertised as a package.The elements are normally advertised as a package. The different elements are not available separately.The different elements are not available separately. The different elements are integral to one overall supply – if The different elements are integral to one overall supply – if

one or more is removed, the nature of the supply would be one or more is removed, the nature of the supply would be affected.affected.

Each case to be individually examined Each case to be individually examined

Bundled ServicesBundled ServicesRule 4 Rule 4 Taxability of services not naturally bundled ink ordinary Taxability of services not naturally bundled ink ordinary

course of business course of business If various elements of a bundled service are not If various elements of a bundled service are not

naturally bundled in the ordinary course of business, naturally bundled in the ordinary course of business, it shall be treated as provision of a service which it shall be treated as provision of a service which attracts the highest amount of service tax.attracts the highest amount of service tax.

Examples Examples Renting of two floors or two portions of building by Renting of two floors or two portions of building by

a common agreement (treated as commercial a common agreement (treated as commercial use) use)

Management of event covering advertisement, Management of event covering advertisement, promotion, space booking, photography, promotion, space booking, photography, videography, public relation etc.videography, public relation etc.

ABATEMENTSABATEMENTS[[N. No. 26/2012-ST dated N. No. 26/2012-ST dated

20.6.2012]20.6.2012]

140140

AbatementsAbatements

• Besides full exemption to 39 categories of services vide Besides full exemption to 39 categories of services vide Notification No. 25/2012-ST dated 20.06.2012Notification No. 25/2012-ST dated 20.06.2012

• Earlier there were a number of exemption notifications that Earlier there were a number of exemption notifications that prescribed the abatements for various categories of services prescribed the abatements for various categories of services (including 1/2006)(including 1/2006)

• Abatements merged into a single Notification No 26/2102 - Abatements merged into a single Notification No 26/2102 - ST dated 20/6/12 ST dated 20/6/12

• Valuation rules contain abatement for Works Contract and Valuation rules contain abatement for Works Contract and Supply of Food ServicesSupply of Food Services

Specific AbatementsSpecific AbatementsSl. No.Sl. No. Description of taxable serviceDescription of taxable service Taxable Taxable

value(%)value(%)

ConditionsConditions

1 1 Financial leasing services including Financial leasing services including

equipment leasing and hire purchase equipment leasing and hire purchase

10 10 Nil Nil

2 2 Transport of goods by rail Transport of goods by rail (exempted upto (exempted upto

30.9.2012) 30.9.2012)

30 30 NilNil

3 3 Transport of passengers, with or without Transport of passengers, with or without

accompanied belongings by rail ( exempted accompanied belongings by rail ( exempted

upto 30.9.2012) upto 30.9.2012)

30 30 NilNil

4 4 Supply of food or any other article of human Supply of food or any other article of human

consumption or any drink, in a premises, consumption or any drink, in a premises,

including hotel, convention center, club, including hotel, convention center, club,

pandal, shamiana or any place specially pandal, shamiana or any place specially

arranged for organizing a function arranged for organizing a function

70 70 CENVAT credit on any CENVAT credit on any goods goods

classifiable under chapter 1 classifiable under chapter 1

to 22 of the Central Excise to 22 of the Central Excise

Tariff Act, 1985 has not been Tariff Act, 1985 has not been

taken under the provisions taken under the provisions

of the CENVAT Credit Rules, of the CENVAT Credit Rules,

2004. 2004.

Specific AbatementsSpecific AbatementsSl. Sl.

NoNo

Description of taxable serviceDescription of taxable service Taxable Taxable

value(%)value(%)


5 5 Transport of passengers by air, with Transport of passengers by air, with

or without accompanied belongings or without accompanied belongings

40 40 CENVAT credit CENVAT credit on inputs or capitalon inputs or capital goods, goods,

used for providing the taxable service, has used for providing the taxable service, has

not been taken under the provisions of the not been taken under the provisions of the

CENVAT Credit Rules, 2004. CENVAT Credit Rules, 2004.

6 6 Renting of hotels, inns, guest Renting of hotels, inns, guest

houses, clubs, campsites or other houses, clubs, campsites or other

commercial places meant for commercial places meant for

residential or lodging purposes residential or lodging purposes

60 60 Same as above.Same as above.

7 7 Transport of goods by road by Transport of goods by road by

Goods Transport Agency Goods Transport Agency

25 25 CENVAT credit on CENVAT credit on inputs, capital goods inputs, capital goods

and input servicesand input services, used for providing the , used for providing the

taxable service, has not been taken taxable service, has not been taken under under

the provisions of the CENVAT Credit the provisions of the CENVAT Credit

Rules, 2004. Rules, 2004.

8 8 Services provided in relation to chit Services provided in relation to chit 70 70 Same as above. Same as above.

Specific AbatementsSpecific Abatements

Sl. Sl.

NoNo

Description of taxable serviceDescription of taxable service Taxable Taxable

value(%)value(%)


9 9 Renting of any motor vehicle Renting of any motor vehicle

designed to carry passengers designed to carry passengers

40 40 Same as above. Same as above.

10 10 Transport of goods in a vessel from Transport of goods in a vessel from

one port to another one port to another

50 50 Same as above. Same as above.

11 11 Tour operator services Tour operator services

(i) provided by a tour operator in relation (i) provided by a tour operator in relation

to a package tour to a package tour

25 25 (i) CENVAT credit on (i) CENVAT credit on inputs, capital inputs, capital

goods and input services,goods and input services, used for used for

providing the taxable service, has not providing the taxable service, has not

been taken under the provisions of the been taken under the provisions of the


(ii) The bill issued for this purpose (ii) The bill issued for this purpose

indicates that it is inclusive of charges indicates that it is inclusive of charges

for such a tour. for such a tour.

Sl. NoSl. No Description of taxable Description of taxable

serviceservice

Taxable Taxable

value(%)value(%)


(ii) provided by a tour operator in (ii) provided by a tour operator in

relation to a tour, solely arranging relation to a tour, solely arranging

or booking accommodationor booking accommodation

10 10 (i) CENVAT credit on (i) CENVAT credit on inputs, capital goods inputs, capital goods

and input services,and input services, used for providing the used for providing the

taxable service, has not been taken under taxable service, has not been taken under

the provisions of the CENVAT Credit Rules, the provisions of the CENVAT Credit Rules,

2004. 2004.

(ii) The invoice, bill or challan issued (ii) The invoice, bill or challan issued

indicates that it is towards the charges for indicates that it is towards the charges for

such accommodation. such accommodation.

(iii) This exemption shall not apply in such (iii) This exemption shall not apply in such

cases where the invoice, bill or challan cases where the invoice, bill or challan

issued by the tour operator, in relation to a issued by the tour operator, in relation to a

tour, only includes the service charges for tour, only includes the service charges for

arranging or booking accommodation for arranging or booking accommodation for

any person and does not include the cost any person and does not include the cost

of such accommodation. of such accommodation.


Sl. NoSl. No Description of taxable serviceDescription of taxable service Taxable Taxable

value(%)value(%)


(iii) Services, other than (iii) Services, other than

services specified above in (i) services specified above in (i)

or (ii) or (ii)

40 40 (i) CENVAT credit on (i) CENVAT credit on inputs, capital inputs, capital

goods and input services,goods and input services, used for used for

providing the taxable service, has not providing the taxable service, has not

been taken under the provisions of the been taken under the provisions of the


(ii) The bill issued indicates that the (ii) The bill issued indicates that the

amount charged in the bill is the gross amount charged in the bill is the gross

amount charged for such a tour. amount charged for such a tour.


Sl. NoSl. No Description of taxable serviceDescription of taxable service Taxable Taxable

value(%)value(%)


12.12. Construction of a complex, Construction of a complex, building, civil structure or a building, civil structure or a part thereof, intended for a part thereof, intended for a sale to a buyer, wholly or sale to a buyer, wholly or partly except where entire partly except where entire consideration is received consideration is received after issuance of completion after issuance of completion certificate by the competent certificate by the competent authority authority

25 25 (i) CENVAT credit on (i) CENVAT credit on inputs inputs used for providing the taxable used for providing the taxable service has not been taken service has not been taken under the provisions of the under the provisions of the CENVAT Credit Rules, 2004.CENVAT Credit Rules, 2004.

(ii) The value of land is (ii) The value of land is included in the amount included in the amount charged from the charged from the

service recipient. service recipient.


Specific AbatementsSpecific AbatementsDraft Circular F. No.354 /146/2012 – TRU dated 27.09.2012 Draft Circular F. No.354 /146/2012 – TRU dated 27.09.2012 (Air (Air Travel)Travel)Charges which are directly related to journey such as re-Charges which are directly related to journey such as re-confirmation fee, date change fee, seat upgrade fee, preferred confirmation fee, date change fee, seat upgrade fee, preferred seat charges etc. will be covered by abatementseat charges etc. will be covered by abatement

Charges which are not related to journey such as meal Charges which are not related to journey such as meal charges, escort charges etc. will not be covered by charges, escort charges etc. will not be covered by abatement.abatement.

Excess baggage charge may be leviable to service tax Excess baggage charge may be leviable to service tax without abatementwithout abatement

Pet charges may be leviable to service tax without Pet charges may be leviable to service tax without abatementabatement

For cancellation charges billed separately as administrative For cancellation charges billed separately as administrative charge, abatement will not be applicablecharge, abatement will not be applicable

148148

149

Value of service portion in execution of work contract = gross amount Value of service portion in execution of work contract = gross amount charged for works contact less value of transfer of property in goods charged for works contact less value of transfer of property in goods involved in execution of works contractinvolved in execution of works contract

Gross amount includesGross amount includes Gross amount does not includeGross amount does not include

Labour charges for execution Labour charges for execution of the works of the works

Amount paid to a sub-Amount paid to a sub-contractor for labour and contractor for labour and servicesservices

Charges for planning, Charges for planning, designing and architect’s fees designing and architect’s fees

Value of transfer of property in goods involved in the Value of transfer of property in goods involved in the execution of the said works contract.execution of the said works contract.

Note:Note:

As per Explanation (c) to sub-rule (i), where value As per Explanation (c) to sub-rule (i), where value added tax or sales tax has been paid or payable on added tax or sales tax has been paid or payable on the actual value of property in goods transferred in the actual value of property in goods transferred in the execution of the works contract, then such value the execution of the works contract, then such value adopted for the purposes of payment of value added adopted for the purposes of payment of value added tax or sales tax, shall be taken as the value of tax or sales tax, shall be taken as the value of property in goods transferred in the execution of the property in goods transferred in the execution of the said works contract. said works contract.

Cost of establishment of the Cost of establishment of the contractor relatable to supply contractor relatable to supply of labour and services and of labour and services and other similar expenses other similar expenses relatable to supply of labour relatable to supply of labour and services and services

Value Added Tax (VAT) or sales tax, as the case may Value Added Tax (VAT) or sales tax, as the case may be, paid, if any, on transfer of property in goods be, paid, if any, on transfer of property in goods involved in the execution of the said works contract involved in the execution of the said works contract

Profit earned by the service Profit earned by the service provider relatable to supply of provider relatable to supply of labour and services labour and services

150

Alternative valuation model (Rule 2A of Valuation Rules) Alternative valuation model (Rule 2A of Valuation Rules)

Where works contract is for…Where works contract is for… Value of the service portion shall Value of the service portion shall be…be…

(A) execution of original works (A) execution of original works forty percent of the total amount forty percent of the total amount charged for the works contract charged for the works contract

(B) maintenance or repair or (B) maintenance or repair or reconditioning or restoration or reconditioning or restoration or servicing of any goods servicing of any goods

seventy per cent of the total amount seventy per cent of the total amount charged including such gross amountcharged including such gross amount

(C) in case of other works contracts, (C) in case of other works contracts, not included in serial nos. (A) and not included in serial nos. (A) and (B) above, including contracts for (B) above, including contracts for maintenance, repair, completion maintenance, repair, completion and finishing services such as and finishing services such as glazing, plastering, floor and wall glazing, plastering, floor and wall tiling, installation of electrical tiling, installation of electrical fittings. fittings.

sixty percent of the total amount sixty percent of the total amount charged for the works contract charged for the works contract

151

Total Value Total Value == Sum total of Sum total of ++ gross amount charged gross amount charged ++ value of goods and services supplied free of value of goods and services supplied free of

cost for use in or in relation to execution of cost for use in or in relation to execution of

WCWC Same ContractSame Contract Any other ContractAny other Contract

++ value of land charged as part of total value of land charged as part of total considerationconsideration

-- amount charged for such goods / services, if amount charged for such goods / services, if any any

-- VAT levied, if any VAT levied, if any If value of FOC goods / services is not ascertainable, it will be If value of FOC goods / services is not ascertainable, it will be

determined on basis of fair market value having close determined on basis of fair market value having close resemblanceresemblance

FMV based on generally accepted accounting principles FMV based on generally accepted accounting principles No Cenvat available on goods / inputs used in works contract No Cenvat available on goods / inputs used in works contract

Restaurants provided conditional exemptionRestaurants provided conditional exemption Services provided in relation to serving of food or Services provided in relation to serving of food or

beverages by a restaurant, eating joint or a mess, other beverages by a restaurant, eating joint or a mess, other then those having the facility of air-conditioning or then those having the facility of air-conditioning or central air-heating in any part of the establishment, at central air-heating in any part of the establishment, at any time during the year, and which has a license to any time during the year, and which has a license to serve alcoholic beverage.serve alcoholic beverage.

Threshold exemption Threshold exemption What activities are covered – What activities are covered –

• Supply of food or drinks in a restaurant; Supply of food or drinks in a restaurant; • Supply of food and drinks by an outdoor caterer. Supply of food and drinks by an outdoor caterer.

Valuation of Supply of foodValuation of Supply of food

153

in a restaurant in a restaurant -40% of total value charged -40% of total value charged

by outdoor catering - 60% of total value chargedby outdoor catering - 60% of total value charged

Exemption under Notification No. 25/2012-ST to mid day meal Exemption under Notification No. 25/2012-ST to mid day meal scheme and restaurants without bar license / air conditioning / scheme and restaurants without bar license / air conditioning / central heating facility central heating facility

Abatement @ 30% Notification No. 26/2012-ST provided Abatement @ 30% Notification No. 26/2012-ST provided Cenvat credit is not taken on goods Cenvat credit is not taken on goods

Valuation of Supply of food

Total Value Total Value == Sum total of Sum total of ++ gross amount charged gross amount charged ++ Value of goods and services supplied free of Value of goods and services supplied free of

cost for use cost for use in or in relation to supply of food underin or in relation to supply of food under Same contactSame contact

Any other contractAny other contract

++ value of land charged as part of total value of land charged as part of total considerationconsideration

-- amount charged for such goods / services, if any amount charged for such goods / services, if any -- VAT levied, if any VAT levied, if any

If value of FOC goods / services is not ascertainable, it will be determined If value of FOC goods / services is not ascertainable, it will be determined on basis of fair market value of having close resemblanceon basis of fair market value of having close resemblance

FMV based on generally accepted accounting principles FMV based on generally accepted accounting principles No Cenvat available on goods used in supply of foodNo Cenvat available on goods used in supply of food

Valuation of Supply of foodValuation of Supply of food

155

Amendment in Rule 6Amendment in Rule 6Inclusion -Inclusion - a) Any amount realized as demurrage, or by any other name, for the a) Any amount realized as demurrage, or by any other name, for the provision of a service beyond the period originally contracted or in any provision of a service beyond the period originally contracted or in any other manner relatable to the provision of service will be included in other manner relatable to the provision of service will be included in taxable value taxable value Exclusions -Exclusions - a) Accidental damages due to unforeseen actions not relatable to the a) Accidental damages due to unforeseen actions not relatable to the provision of service will be excluded from the value of serviceprovision of service will be excluded from the value of service b) Interest on loan has been substituted withb) Interest on loan has been substituted with

I.I. Interest on Deposits and Interest on Deposits and II.II. Interest on delayed payments. (Interest on loans will now be exempt)Interest on delayed payments. (Interest on loans will now be exempt)

c) subsidies and grants disbursed by the Government, not directly affecting c) subsidies and grants disbursed by the Government, not directly affecting the value of service.the value of service.

Changes in Reverse Charge Changes in Reverse Charge MechanismMechanism

W.e.f. 1.7.2012 a new scheme of taxation is applicable W.e.f. 1.7.2012 a new scheme of taxation is applicable whereby the liability of payment of service tax shall be both whereby the liability of payment of service tax shall be both on the service provider and the service recipient on the service provider and the service recipient (Notification No. 30/2012 dated 20.6.2012 )(Notification No. 30/2012 dated 20.6.2012 )

The extent to which tax liability has to be discharged by the The extent to which tax liability has to be discharged by the service receiver specified in the notification.service receiver specified in the notification.

Credit of tax paid by service recipient if it is input serviceCredit of tax paid by service recipient if it is input service

The credit of tax paid by the service recipient under partial The credit of tax paid by the service recipient under partial reverse charge would be available on the basis on the tax reverse charge would be available on the basis on the tax payment challanpayment challan

Reverse Charge Mechanism under various Reverse Charge Mechanism under various servicesservices

Sr. NoSr. No Description of ServiceDescription of Service ServiceService providerprovider Service receiverService receiver

1.1. Services provided by an insurance Services provided by an insurance agent to any person carrying on agent to any person carrying on insurance businessinsurance business

NilNil 100%100%

2.2. Services provided by a goods Services provided by a goods transport agency in respect transport agency in respect of transportation of goods by roadof transportation of goods by road

NilNil 100%100%

3.3. Services provided by way of Services provided by way of sponsorshipsponsorship

NilNil 100%100%

Reverse Charge Mechanism Reverse Charge Mechanism under various under various servicesservices

Sr.NoSr.No Description of ServiceDescription of Service ServiceService providerprovider

Service receiverService receiver

4.4. Services provided by an arbitral Services provided by an arbitral tribunaltribunal

NilNil 100%100%

5.5. Services provided by individual Services provided by individual advocate or a firm of advocates by way advocate or a firm of advocates by way of legal servicesof legal services

NilNil 100%100%

5A.5A. in respect of services provided or agreed to be provided by a director of a company to the said company ( w.e.f 7.08.2012)

NilNil 100%100%

6.6. Services provided by Government or Services provided by Government or local authority by way of support local authority by way of support services excluding,- services excluding,- (1)(1) renting of immovable property, renting of immovable property, (2)(2) postal services postal services (3)(3) transport of goods / passengers transport of goods / passengers (4)(4) air craft or vessel air craft or vessel

NilNil 100%100%


Sr.NoSr.No Description of ServiceDescription of Service ServiceService providerprovider Service receiverService receiver

7.7. Hiring of Motor Vehicle Hiring of Motor Vehicle (a) renting of a motor vehicle (a) renting of a motor vehicle designed to carry passengers designed to carry passengers on on abated valueabated value to any person not to any person not engaged in the similar line of engaged in the similar line of businessbusiness(b) renting of a motor vehicle (b) renting of a motor vehicle designed to carry passengers designed to carry passengers on non on non abated valueabated value to any person who is to any person who is not engaged in the similar line of not engaged in the similar line of businessbusiness

NilNil

60%60%

100 %100 %

40%40%

8.8. Services provided by way of supply Services provided by way of supply of manpower for any purpose of manpower for any purpose or or security services ( w.e.f 07.08.2012)security services ( w.e.f 07.08.2012)

25%25% 75 %75 %


Sr.NoSr.No Description of ServiceDescription of Service ServiceService providerprovider Service receiverService receiver

9.9. Services provided in service portion in Services provided in service portion in execution of works contractexecution of works contract 50%50% 50%50%

10.10. Services provided by any person who Services provided by any person who is located in a non-taxable territory is located in a non-taxable territory and received by any person located in and received by any person located in the taxable territorythe taxable territory

NilNil 100%100%

Place of Provision of Services Rules, 2012 Place of Provision of Services Rules, 2012 (Section 66C)(Section 66C)

These rules are primarily meant for persons who deal in cross-border services and These rules are primarily meant for persons who deal in cross-border services and state of Jammu and Kashmir.state of Jammu and Kashmir.

The service providers operating within India from multiple locations, without The service providers operating within India from multiple locations, without

having centralized registration and services that are wholly consumed within a having centralized registration and services that are wholly consumed within a SEZ, to avail the outright exemption will find them useful in determining the SEZ, to avail the outright exemption will find them useful in determining the precise taxable jurisdiction. precise taxable jurisdiction.

What is the place of provision of servicesWhat is the place of provision of services

Performance based services – Location of performancePerformance based services – Location of performance

Immovable property related services – Location of immovable property.Immovable property related services – Location of immovable property.

Services relating to events – Location of event held.Services relating to events – Location of event held.

Place of Provision of Services Rules, 2012 Place of Provision of Services Rules, 2012 (Section 66C)(Section 66C)

Services provided at more than one location – Location in the taxable territory Services provided at more than one location – Location in the taxable territory where the greatest proportion of service is provided. where the greatest proportion of service is provided.

Services where both service provider and receiver are located in the taxable Services where both service provider and receiver are located in the taxable territory – Location of service receiverterritory – Location of service receiver

Specified services – Location of service provider.Specified services – Location of service provider.

Goods transportation services – Place of destination of goods. (In GTA Service – Goods transportation services – Place of destination of goods. (In GTA Service – Location of the person liable to pay taxLocation of the person liable to pay tax

Passenger Transportation service – Place were the passenger embarks. Passenger Transportation service – Place were the passenger embarks.

Services provided on board a conveyance – Location of first scheduled point of Services provided on board a conveyance – Location of first scheduled point of departure.departure.

Appeal before Commissioner Appeal before Commissioner (Appeals)(Appeals)

Time Period for Appeal Time Period for Appeal

Prior to 28.5.2012Prior to 28.5.2012 (sub-section 3)(sub-section 3)

To appeal within three months from date of To appeal within three months from date of communication of order appealed against communication of order appealed against

Period of 3 months can be extended by further 3 months Period of 3 months can be extended by further 3 months (total 6 months) by Commissioner (Appeals)(total 6 months) by Commissioner (Appeals)

Condonation of delay/ extension beyond 3 months is Condonation of delay/ extension beyond 3 months is beyond the power of Commissioner (Appeal)beyond the power of Commissioner (Appeal)

to be contd……….to be contd……….

Appeal before Commissioner Appeal before Commissioner (Appeals)(Appeals)

w.e.f. 28.5.2012 (sub-section 3A)w.e.f. 28.5.2012 (sub-section 3A)

To appeal within two months from date of To appeal within two months from date of

communication of order passed after 28.05.2012 communication of order passed after 28.05.2012

Period of 2 months can be extended by further 1 month Period of 2 months can be extended by further 1 month (total 3 months) by Commissioner (Appeals)(total 3 months) by Commissioner (Appeals)

Condonation of delay/ extension beyond 1 month is Condonation of delay/ extension beyond 1 month is beyond the power of Commissioner (Appeal)beyond the power of Commissioner (Appeal)

Revision MechanismRevision Mechanism

Introduced by Finance Act, 2012Introduced by Finance Act, 2012 Section 35EE of Central Excise Act, 1944 made applicable to Section 35EE of Central Excise Act, 1944 made applicable to

Service Tax w.e.f. 28.05.2012 Service Tax w.e.f. 28.05.2012 All appeals against Commissioner (Appeals) orders lied All appeals against Commissioner (Appeals) orders lied

before Tribunal prior to 28.05.2012.before Tribunal prior to 28.05.2012. Like Excise, in Service Tax also, revision authority shall hear Like Excise, in Service Tax also, revision authority shall hear

matters relating to –matters relating to – Cenvat Credit Cenvat Credit Rebate of Exports Rebate of Exports

to be contd……..to be contd……..

Revision MechanismRevision Mechanism

Revision by Central Government (Joint Secretary in MOF)Revision by Central Government (Joint Secretary in MOF) Revision application to be heard and order passedRevision application to be heard and order passed Order may be annulled or modifiedOrder may be annulled or modified Minimum amount of dispute Rs. 5000Minimum amount of dispute Rs. 5000 To be filed within 3 months of communication of orderTo be filed within 3 months of communication of order Revision can be sought by CCE/ assesseeRevision can be sought by CCE/ assessee Central Government can also Central Government can also suo motosuo moto revise revise No provisions for appeal against revisionary orderNo provisions for appeal against revisionary order Only remeady is writ Jurisdiction Only remeady is writ Jurisdiction Quasi judicial proceedingsQuasi judicial proceedings

Settlement Provisions in Service Settlement Provisions in Service TaxTax

Introduced by Finance Act, 2012 w.e.f. 28.5.2012Introduced by Finance Act, 2012 w.e.f. 28.5.2012 Sections 31, 32 and 32A to 32P of Central Excise Act, 1944 Sections 31, 32 and 32A to 32P of Central Excise Act, 1944

made applicable to Service Tax (section 83 of Finance Act, made applicable to Service Tax (section 83 of Finance Act,

1994) 1994) Service Tax (Settlement of Cases) Rules, 2012 notified Service Tax (Settlement of Cases) Rules, 2012 notified

(N.No. 16/2012-ST dated 28.05.2012)(N.No. 16/2012-ST dated 28.05.2012) Objective to encourage quick settlement of disputes and Objective to encourage quick settlement of disputes and

save business from prosecution / penalties save business from prosecution / penalties Principal bench at Delhi (benches at Mumbai, Calcutta, Principal bench at Delhi (benches at Mumbai, Calcutta,

Chennai) Chennai)

Benefits of SettlementBenefits of Settlement

Quick settlement of disputes to avoid prolonged litigation Quick settlement of disputes to avoid prolonged litigation A one time tax evader or an un-intending defaulter can A one time tax evader or an un-intending defaulter can

make clean his affairs through Settlementmake clean his affairs through Settlement Any defaulting person can admit his guilt, pay taxes with Any defaulting person can admit his guilt, pay taxes with

applicable interest and avoid further liabilitiesapplicable interest and avoid further liabilities Settlement Commission can grant waiver/ reduction of Settlement Commission can grant waiver/ reduction of

penalty, fine or interest penalty, fine or interest Settlement Commission can grant immunity from Settlement Commission can grant immunity from

prosecution to assessee, its directors and partnersprosecution to assessee, its directors and partners

Settlement of CasesSettlement of Cases

Any assessee can approach the Settlement Commission Any assessee can approach the Settlement Commission The proceedings / cases should be pending with aggregate The proceedings / cases should be pending with aggregate

amount of more than Rs 3 lakh involved amount of more than Rs 3 lakh involved Application to Settlement Commission should be made with Application to Settlement Commission should be made with

prescribed fee and in prescribed formprescribed fee and in prescribed form Application once made, can not be withdrawnApplication once made, can not be withdrawn Application can be made by any assessee including Application can be made by any assessee including

directors or partners of firmsdirectors or partners of firms Application can also be filed by two or more Application can also be filed by two or more assessees and joint / co - noticeesassessees and joint / co - noticees proceedings or case must be pending before the proceedings or case must be pending before the

adjudicating authority on the date of application. adjudicating authority on the date of application. A show cause notice should have been issuedA show cause notice should have been issued

Settlement of CasesSettlement of Cases

Application must make full and true disclosures before the Application must make full and true disclosures before the Settlement Commission which is the very basis of Settlement Commission which is the very basis of settlement.settlement.

Issues relating to recovery of Cenvat credit can also be Issues relating to recovery of Cenvat credit can also be taken up before the Settlement Commissiontaken up before the Settlement Commission

Cases involving only penalty or cases which are pending Cases involving only penalty or cases which are pending before court or Appellate Tribunal shall not be entertained before court or Appellate Tribunal shall not be entertained by the Settlement Commission.by the Settlement Commission.

Cases involving interpretation of classification and valuation Cases involving interpretation of classification and valuation can not be taken up by Settlement Commissioncan not be taken up by Settlement Commission . .

Retrospective AmendmentsRetrospective Amendments

• Special provision for exemption in certain cases Special provision for exemption in certain cases relating to management etc of roads (Section 97) relating to management etc of roads (Section 97)

• Special provision for exemption in certain cases Special provision for exemption in certain cases relating to management etc of non-commercial relating to management etc of non-commercial Government buildings (Section 98) Government buildings (Section 98)

• Exemption to club & association including Exemption to club & association including cooperative societies for projects meant for cooperative societies for projects meant for treatment of effluents / solid waste w.e.f. treatment of effluents / solid waste w.e.f. 16.6.2005 (Section 145) 16.6.2005 (Section 145)

Service Tax Rules - Changes effective from Service Tax Rules - Changes effective from 01.04.201201.04.2012

Invoice to be issued within 30 days (earlier 14 days)Invoice to be issued within 30 days (earlier 14 days)

In case of Banking & Financial Services – Invoice within 45 daysIn case of Banking & Financial Services – Invoice within 45 days

No Invoice for minor receiptsNo Invoice for minor receipts-- If an amount upto Rs.1, 000/- is received in excess of the amount If an amount upto Rs.1, 000/- is received in excess of the amount indicated in the invoice and the provider has opted to determine indicated in the invoice and the provider has opted to determine

Point of Taxation based on the option in Point of Taxation Rules, Point of Taxation based on the option in Point of Taxation Rules, no invoice is required to be issued.no invoice is required to be issued.

Service Tax Rules - changes effective from Service Tax Rules - changes effective from 01.04.201201.04.2012

Self adjustment of excess tax paidSelf adjustment of excess tax paid Excess amount can be adjusted without any monetary limits provided Excess amount can be adjusted without any monetary limits provided

excess payment is not on account of interpretation of law, taxability, excess payment is not on account of interpretation of law, taxability, classification, valuation or applicability of any exemption Notification. classification, valuation or applicability of any exemption Notification. (Rule 6 (4A))(Rule 6 (4A))

Small service providers to pay tax on receipt basisSmall service providers to pay tax on receipt basis In respect of individual / firms whose value of taxable services from In respect of individual / firms whose value of taxable services from

multiple locations is Rs.50 lakhs or less in the previous financial year multiple locations is Rs.50 lakhs or less in the previous financial year option available to pay tax upto Rs.50 lakhs in the current financial year option available to pay tax upto Rs.50 lakhs in the current financial year based on receipt of payment.based on receipt of payment.

Amendments in Finance Act, 1994- changes Amendments in Finance Act, 1994- changes effective from 28.05.2012effective from 28.05.2012

Special audit in service tax (Section 72A)Special audit in service tax (Section 72A) If Commissioner has reasons to believe that tax payer If Commissioner has reasons to believe that tax payer

has failed to declare the correct value of service, has failed to declare the correct value of service, taken CENVAT by fraud, services in multiple locations taken CENVAT by fraud, services in multiple locations etc, he can order special audit by CA/CWA even if it etc, he can order special audit by CA/CWA even if it is already audited under any other law.is already audited under any other law.

Service Tax Return – Modified ST-3 Service Tax Return – Modified ST-3

N. No. 47/2012-ST dated 28.09.2012 – for April –June N. No. 47/2012-ST dated 28.09.2012 – for April –June 2012, quarterly return shall be filed.2012, quarterly return shall be filed.

Order No. 3/2012 - last date of return extended upto Order No. 3/2012 - last date of return extended upto 25.11.201225.11.2012

A format of Modified ST-3 issued and available at A format of Modified ST-3 issued and available at www.aces.gov.in/download.jsp

More or less, it is same as previous ST-3 return. Only the More or less, it is same as previous ST-3 return. Only the year and return period column is pre-filled and year and return period column is pre-filled and constantconstant

Return format and time for next quarter/ period to be Return format and time for next quarter/ period to be notifiednotified

175175

http://www.aces.gov.in/download.jsp

THANK YOU THANK YOU

FOR FOR

YOUR YOUR

PRECIOUS TIMEPRECIOUS TIME

AND AND

ATTENTIONATTENTION

Dr. Sanjiv AgarwalDr. Sanjiv Agarwal

FCA, FCS, JaipurFCA, FCS, Jaipur

[email protected]@gmail.com

[email protected]@gmail.com

Mansorovar ppt

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