New Ser­vice Tax Rules – Again !

FI­NANCE ACT, 2012- CHANGES IN SER­VICE TAX

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TKH FiQDQcH MiQiVtHr Dt tKH timH oI iQtroGX­ciQJ tKH BXGJHt 2012, oQ 16tK MDrcK, 2012 SroSoVHG cKDQJH in the way ser­vices are taxed by in­tro­duc­ing the con­cept oI “1HJD­tivH LiVt oI SHr­vicHV”. 7KH Cen­tral Gov­ern­ment has now is­sued 1oti­ficD­tioQ 1o.19/2012-S7 GDtHG 05.06.2012 DSSoiQtiQJ 01.07.2012 as the date from which the above pro­vi­sions come into force.

SEC­TION 66C :

SEC­TION 66D :

SEC­TION 66E :

SEC­TION 66F

The pro­vi­sions of above clauses in brief, which in­cludes con­cept of “Neg­a­tive LiVt’, DrH DV XQGHr DQG wiOO bH HIIHc­tivH from 01.07.2012.

1. CLAUSE [C] OF SEC­TION 143 OF THE FI­NANCE ACT, 2012

7KiV cODXVH KDG SroSoVHG to iQVHrt SHc­tioQ 65B iQ tKH FiQDQcH Act, 1994, wKicK wiOO Qow comH iQto HIIHct Irom 01.07.2012. This newly in­serted sec­tion pro­vides for in­ter­pre­ta­tion of var­i­ous terms for the pur­pose of tax­able ser­vices pro­vided.

2. CLAUSE [F] OF SEC­TION 143 OF THE FI­NANCE ACT, 2012

7KiV cODXVH KDG SroSoVHG to iQVHrt SHc­tioQ 66B, 66C, 66D, 66E DQG 66F iQ tKH FiQDQcH Act, 1994, wKicK wiOO now come into ef­fect from 01.07.2012. These newly in­serted sec­tions have fol­low­ing pro­vi­sions:

SEC­TION 66B :

i. This is new a charg­ing sec­tion for levy of ser­vice tax and pro­vides for levy of ser­vice tax @12% on the value of all ser­vices, other than those ser­vices VSH­ci­fiHG iQ tKH QHJD­tivH OiVt. ii. This sec­tion pro­vides for de­ter­mi­na­tion oI SODcH oI SroviVioQ oI VHr­vicH. For GHtHr­miQD­tioQ oI SODcH of pro­vi­sion of ser­vice sep­a­rate set of rules are to be made. iii. This is a very im­por­tant sec­tion giv­ing list of ser­vices which would not be sub­jected to ser­vice tDx (1HJD­tivH LiVt) DV SHr cKDrJiQJ SHc­tioQ 66C. AOO VHr­vicH Hx­cHSt tKoVH iQ 1HJD­tivH LiVt wiOO Qow bH VXb­jHc­tHG to OHvy of ser­vice tax. iv. This sec­tion has listed cer­tain ac­tiv­i­ties tKDt KDvH VSH­ci­fiHG DV GHcODrHG VHr­vicHV Ior tKH SXrSoVH of word ‘ser­vice’ as in­ter­preted un­der clause (44) of new SHc­tioQ 65B. MoVt oI tKHVH GHcODrHG VHr­vicHV DrH Dt present sub­jected to tax. v. This sec­tion pro­vides for prin­ci­ples of iQtHrSrHtD­tioQ oI VSH­ci­fiHG GHVcriS­tioQ oI VHr­vicHV or bun­dled ser­vices.

SEC­TION 66D: NEG­A­TIVE LIST.

66D. 7KH QHJD­tivH ser­vices, namely:––

OiVt VKDOO comSriVH tKH IoOOow­iQJ (a) Ser­vices by Gov­ern­ment or a lo­cal author­ity ex­clud­ing the fol­low­ing ser­vices to the ex­tent they are not cov­ered else­where— (i) SHr­vicHV by tKH DHSDrt­mHQt oI PoVtV by wDy oI VSHHG post, ex­press par­cel post, life in­sur­ance and agency ser­vices pro­vided to a per­son other than Gov­ern­ment; (ii) Ser­vices in re­la­tion to an air­craft or a ves­sel, inside or out­side the precincts of a port or an air­port; (iii) Trans­port of goods or pas­sen­gers; or (iv) Sup­port ser­vices, other than ser­vices cov­ered un­der clauses (i) to (iii) above, pro­vided to busi­ness en­ti­ties; (b) SHr­vicHV by tKH RHVHrvH BDQN oI ,QGiD; (c) Ser­vices by a for­eign diplo­matic mis­sion lo­cated in In­dia; (d) ser­vices re­lat­ing to agri­cul­ture by way of— (i) Agri­cul­tural op­er­a­tions di­rectly re­lated to pro­duc­tion of any agri­cul­tural pro­duce in­clud­ing cul­ti­va­tion, har­vest­ing, thresh­ing, plant pro­tec­tion or seed test­ing; (ii) Sup­ply of farm labour; (iii) ProcHVVHV cDr­riHG oXt Dt DQ DJricXOtXrDO IDrm iQcOXGiQJ tend­ing, prun­ing, cut­ting, har­vest­ing, dry­ing, clean­ing, trim­ming, sun dry­ing, fu­mi­gat­ing, cur­ing, sort­ing, grad­ing, cool­ing or bulk pack­ag­ing and such like op­er­a­tions which do not al­ter the es­sen­tial char­ac­ter­is­tics of agri­cul­tural pro­duce but make it only mar­ketable for the pri­mary mar­ket; (iv) RHQtiQJ or OHDViQJ oI DJro mDcKiQHry or vDcDQt ODQG with or with­out a struc­ture in­ci­den­tal to its use; (v) LoDGiQJ, XQOoDGiQJ, SDcNiQJ, VtorDJH or wDrHKoXViQJ of agri­cul­tural pro­duce; (vi) Agri­cul­tural ex­ten­sion ser­vices; (vii) SHr­vicHV by DQy AJricXOtXrDO ProGXcH MDrNHtiQJ Com­mit­tHH or BoDrG or VHr­vicHV SroviGHG by D com­miVVioQ agent for sale or pur­chase of agri­cul­tural pro­duce; (f) Any process amount­ing to man­u­fac­ture or pro­duc­tion of goods; (g) Sell­ing of space or time slots for ad­ver­tise­ments other than ad­ver­tise­ments broad­cast by ra­dio or tele­vi­sion; (h) Ser­vice by way of ac­cess to a road or a bridge on pay­ment of toll charges; (i) BHt­tiQJ, JDm­bOiQJ or Oot­tHry; (j) Ad­mis­sion to en­ter­tain­ment events or ac­cess to amuse­ment fa­cil­i­ties; (k) Trans­mis­sion or dis­tri­bu­tion of elec­tric­ity by an elec­tric­ity trans­mis­sion or dis­tri­bu­tion util­ity;

(l) Ser­vices by way of— (i) PrH-VcKooO HGXcD­tioQ DQG HGXcD­tioQ XS to KiJKHr VH­coQGDry VcKooO or HqXivDOHQt; (ii) EGXcD­tioQ DV D SDrt oI D cXr­ricXOXm Ior obtDiQiQJ D qXDOi­ficD­tioQ rH­coJQiVHG by DQy ODw Ior tKH timH bHiQJ iQ force; (iii) EGXcD­tioQ DV D SDrt oI DQ DSSrovHG vocD­tioQDO ed­u­ca­tion course; (m) Ser­vices by way of rent­ing of res­i­den­tial dwelling for use as res­i­dence; (n) Ser­vices by way of— (i) Ex­tHQGiQJ GHSoVitV, OoDQV or DGvDQcHV iQ Vo IDr DV 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; (o) Ser­vice of trans­porta­tion of pas­sen­gers, with or with­out ac­com­pa­nied be­long­ings, (q) FXQHrDO, bXriDO, crHmD­toriXm or mortXDry VHr­vicHV in­clud­ing trans­porta­tion of the de­ceased. To cut the long story short, the Ser­vice Tax will not be ap­pli­ca­ble, from July 01, 2012, on charges paid for

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