The Government seems to be serious about implementing the new Service Tax regime by 1st July. On 20/06/2012, they have issued 16 Service Tax and one Central Excise Notification. The short summary of which is given below.
1. Notification No. 25/2012-Service Tax; Dated June 20, 2012: Mega Exemption - These services include:
a. Services provided to the United Nations
b. Health care services by a clinical establishment, an authorised medical practitioner or para-medics
c. Services by a veterinary clinic
d. Advocate to advocate
e. Technical testing or analysis of newly developed drugs
f. Training or coaching in recreational activities
g. Certain construction activity provided to Government
h. Construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of road, bridge, pollution control or effluent treatment plant
i. Services by way of collecting or providing news by an independent journalist, Press Trust of India or United News of India
j. Vehicle parking to general public
k. Hut insurance
l. Business exhibition held outside India
m. Slaughtering of bovine animals
n. Public libraries
o. Public conveniences such as provision of facilities of bathroom, washrooms, lavatories, urinal or toilets.
2. Notification No. 26/2012-Service Tax; Dated June 20, 2012: 75% Abatement for Construction of Complex; Abatement for 11 other services notified: Unconditional abatement of 75% for GTA is given a neat burial. Now the abatement will be available only if the GTA does not take CENVAT Credit. How to prove this? Old litigation in new bottle? 75% abatement is allowed for Construction of Complex if the value of the land is included in the amount charged. What happens if the value of the land is not included? No abatement?
3. Notification No. 27/2012-Service Tax; Dated June 20, 2012: Services provided to Foreign Diplomatic Missions Exempted.
4. Notification No. 28/2012-Service Tax; Dated June 20, 2012: “Place of Provision of Services” Notified – Export of Services Rules and Taxation of Services (Provided from outside and Received in India) Rules superseded. Apart from various situations described in the new Rules, the Government shall have the power to notify any description of service or circumstances in which the place of provision shall be the place of effective use and enjoyment of a service.
5. Notification No. 29/2012-Service Tax; Dated June 20, 2012: Exemption to Property tax paid on renting of immovable property. This like many other notifications issued yesterday was already in existence – which are being re issued to bring in the new Section 66B in the Finance Act. The example given in the rescinded notification No. 24/2007-Service Tax, dated the 22 nd May, 2007 also remains intact.
6. Notification No. 30/2012-Service Tax; Dated June 20, 2012: Extent of tax payable by provider and receiver for certain services notified: From 1st July there is a dual system of part payment of Service Tax by the provider and part payment by the receiver.
a. In case of services of insurance agent, GTA for transportation of goods by Road, sponsorship, arbitral tribunal, individual advocates or a firm of advocates, Certain services provided by Government or local authorities, certain types of renting of motor vehicle and services received from abroad – 100% of the tax is to be paid by the receiver and the service provider need not pay any tax.
b. In case of manpower supply, 25% tax is to be paid by service provider and 75% by the receiver.
c. For Works Contract, it is 50 – 50 between the provider and recipient.
7. Notification No. 31/2012-Service Tax; Dated June 20, 2012: Exempts certain services received by exporter of Goods: A complicated exemption for Service provided to an exporter for transport of the said goods by goods transport agency in a goods carriage from any container freight station or inland container depot to the port or airport, as the case may be, from where the goods are exported; or
Service provided to an exporter in relation to transport of the said goods by goods transport agency in a goods carriage directly from their place of removal, to an inland container depot, a container freight station, a port or airport, as the case may be, from where the goods are exported.
8. Notification No. 32/2012-Service Tax; Dated June 20, 2012: Exempts services provided by a Technology Business Incubator (TBI) or a Science and Technology Entrepreneurship Park (STEP)
9. Notification No. 33/2012-Service Tax; Dated June 20, 2012: Exempts Small service providers whose value of taxable service does not exceed Rs 10 lakhs.
This notification exempts small service providers upto taxable value of Rs 10 lakhs. As per condition No 3 of the Notification, in case of GTA service, where the service tax is paid by the receiver of the service under Section 68(2), the value of such service shall not be taken into account while computing the 10 lakhs limit. But, with effect fro 1.7.2012, in case of services like Works contract, Manpower supply and Rent a cab etc, partial reverse charge system has been introduced. How to compute exemption limit for these services?
10. Notification No. 34/2012-Service Tax; Dated June 20, 2012: Rescinds 81 Service Tax notifications from 01.07.2012
11. Notification No. 35/2012-Service Tax; Dated June 20, 2012: Works Contract Composition Rules, 2007 rescinded. Why a separate Notification when this can be simply added to the list of 81 Notifications rescinded. Different Notifications for different sections in TRU?
12. Notification No. 36/2012-Service Tax; Dated June 20, 2012: Service Tax Rules amended: Export of services included in Service Tax Rules:
The provision of any service provided or agreed to be provided shall be treated as export of service when,-
a. the provider of service is located in the taxable territory ,
b. the recipient of service is located outside India,
c. the service is not a service specified in the section 66D of the Act,
d. the place of provision of the service is outside India,
e. the payment for such service has been received by the provider of service in convertible foreign exchange, and
f. the provider of service and recipient of service are not merely establishments of a distinct person in accordance with item (b) of Explanation 2 of clause (44) of section 65B of the Act
Rebate on Export: Where any service is exported, the Central Government may, by notification, grant rebate of service tax or duty paid on input services or inputs, as the case may be, used in providing such service and the rebate shall be allowed subject to such safeguards, conditions and limitations, as may be specified, by the Central Government, by notification.
13. Notification No. 37/2012-Service Tax; Dated June 20, 2012: Point of Taxation Rules, 2011 amended – agreed to be provided added: for the words, "provided or to be provided" wherever they occur, the words "provided or agreed to be provided" shall be substituted.
14. Notification No. 38/2012-Service Tax; Dated June 20, 2012: “telecommunication service and service portion in execution of a works contract” to be treated as continuous supply of service: Notification No. No.28/2011-Service Tax, dated the 1st April, 2011, is amended
15. Notification No. 39/2012-Service Tax; Dated June 20, 2012: Rebate of Service Tax - conditions, limitations and procedures specified
16. Notification No. 40/2012-Service Tax; Dated June 20, 2012: Exemption to services received in SEZ: exempts the services on which service tax is leviable under section 66B of the said Act, received by a unit located in a Special Economic Zone or Developer of SEZ and used for the authorised operations, from the whole of the service tax, education cess and secondary and higher education cess leviable thereon. Notification No. 17/2011-Service Tax, dated the 1st March 2011, is superseded.
CENVAT Credit Rules Amended
APART from several change in definitions, a new Rule 5B is inserted:
Refund of CENVAT credit to service providers providing services taxed on reverse charge basis.- A provider of service providing services notified under sub-section (2) of section 68 of the Finance Act and being unable to utilise the CENVAT credit availed on inputs and input services for payment of service tax on such output services, shall be allowed refund of such unutilised CENVAT credit subject to procedure, safeguards, conditions and limitations, as may be specified by the Board by notification in the Official Gazette.
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