Tuesday 20 March 2012

Budget Highlights 2012 - Service Tax

Please find below herewith budget highlights 2012 in respect of service tax.  The most important area in respect of service tax is payment of reversal charges for use of service tax. Now the company is require to pay service tax for number of services used (as the service provided is not paying tax) and then claim the credit of the same in the next month.  More clarity is required on which services now company is  required to pay how much service tax to pay. Further. From when the new forms are applicable , same had not yet been notified. 

Highlights of Budget 2012 – Service Tax.
01.  Rate of Service tax from 1-4-2012 is 12.36%. and for works contract it now become 4.8%  

02.  Negative List of 17 Items introduced on which service tax not applicable.

03.  New Valuation rules introduced for Works Contract and  Restaurant.

04.  Changes were made in rule 6 where it held that any adjustment in amount receivable is subject to service tax except interest and demurrage.

05.  Changes were made in abatements.

06.  Reverse charges provision introduced for Hiring of Motor Vehicle, Supply of manpower and Works Contract Service.

07.  Penalty waiver for renting of immovable service

08.  For Individuals and Firms turnover less than 50 lakhs, now can follow cash basis in place of accrual basis for payment of service tax.

09.  Advance received upto Rs. 1000/- from each customer can be ignored for the purpose of service tax payment.

10.  Service tax exemption is on Gross invoice upto Rs. 10 Lakhs continues.

11.  One page Excise & Service tax return (EST) introduced and assessee having service tax annual payment of Rs. 25 Lakhs are required to file monthly and others quarterly.

12.  Simplified schemes for refunds introduced for exporters. Now, all input are entitled for refund.

13.  Any act by Charitable Trust for receipt of donation is now taxable service.

14.  Now non –monetary consideration services also cover under service tax.

15.  Research Grant with counter obligation on researcher to provide IPR rights are taxable

16.  No tax on Returnable Security Deposit.

17.  Fine, penalties, demurrage or interest received are not liable for service tax.

18.  Transfer of goods without transfer of rights for use is service .

19.   Steps to determine whether taxable services provided.
SN
Question
Answer
1
Is any activity performed other than negative list
Yes
2
Is such activity is for some consideration (Monetary/Non Monetary)
Yes
3
Is such activity involve sale of goods, immovable property transfer, gift
No
4
Is such activity is only transaction in money or actionable claims
No
5
Is such activity is in the nature of court fees
No
6
Is there any employer employee relationship
No





20.  Government means only Central and State Government. It will not include any corporation or company run by the government.

21.  For services received from government, business entities are require to pay service tax under reverse charge mechanism and claim the input credit.

22.  Plantation Crops, Pisiculture, sericulture, floriculture, horticulture and forestry included in agriculture.  Also leasing of vacant land with green house covered but not making of potato chips, tomato ketchup etc.

23.  Commission agent and forwarding agent now covered under service tax.

24.  Trading in NSE & MCDEX etc are not covered under service tax.

25.  If any process is taxable or exempt under excise then not comes under service tax.

26.  Club does not fall under amusement facility.

27.   Now housing society provides electricity by way of genset are covered under Service tax.

28.  Let out of residential houses are not cover under service tax.

29.  Any administrative charges on financial services are taxable.

30.  First Class and AC Coaches of Railways are covered under service tax.

31.  Sale of pre-packaged or canned software is in the nature of goods and is not covered under service tax.

32.  Providing a License is a taxable service.

33.  Services received from advocate are covered under reverse charges.   

34.  Negative List of services are

(a)    Services provided by Government & Local authority.
(b)   Services provided by Reserve bank of India
(c)    Services provided by Foreign Diplomatic Mission in India
(d)   Services related to agriculture
(e)    Trading of Goods
(f)    Manufacture
(g)   Sell of space or time slots for advertisements
(h)   Toll charges on Road & bridges.
(i)     Betting, gambling and lottery.
(j)     Entry to entertainment events and access to Amusement facilities.
(k)   Transmission or distribution of electricity.
(l)     Services related to education
(m)  Letting homes for residential purpose
(n)   Services related to financial services like interest etc.
(o)   Services related to transportation of passengers.
(p)   Services related to transportation of goods.
(q)   Funereal, burial, crematorium etc.
 

4 comments:

Anonymous said...

What does "Small service provider exemption increased from Rs 10L to Rs 50L" mean ?
This is from the Times of India.
j.

taxbymanish said...

It means that small service provider whose turnover is less than 50 Lakhs can pay service tax on cash basis in place of accrual basis.

Dileep Surya Kumar said...

Dear sir, . Negative List contains "Services related to transportation of goods".is it applicable of transportation of Goods by road?

taxbymanish said...

No

Pre-GST taxes cannot be refunded if paid pursuant to an inquiry

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