amendments in taxation for may, 2013 (1)

7/28/2019 Amendments in Taxation for May, 2013 (1)

1/21

Ascjaipur.com

Basic Amendments In Service Tax for IPCC Exam-2013

I. Approaches for the levy of Service Tax: -

The Service Tax may be levied on the basis of any one of the following approaches: -A. Comprehensive Coverage/approach: - Under this approach, all the

services are taxable and a negative list is given which are exempted from tax. Thisapproach is used in many developed countries. Under this approach it is required todefine the service without any ambiguity/conflict.

B. Selective Coverage/approach: - Under this approach, only selectiveservices are included in the tax bracket. The list of taxable services and scope of

coverage of each service is given under this approach. If any service is not falling in thelist of taxable services then such service will be exempted for Service Tax. As mentionedearlier there were approx. 123 taxable services in the list of taxable services.

In India, selective approach was followed up to 30-6-2012. From 1-7-2012comprehensive approach has been followed and a negative list has beenissued for the levy of service tax. Now only the services in negative list willbe exempted and all the remaining services will be taxable. This will beapplicable from May, 2013 attempt.

II. Statutory Provision for Registration (Section 69 & Rule 4):-

Every person who is liable to pay the Service Tax is under an obligation to get himselfregistered for Service Tax by making an application to the concerned Superintendent ofCentral Excise in specified form no. ST-1(w.e.f. 30-9-2009, On-line filing ofapplication for registration is compulsory now). The Central Government may also bynotification in the Official Gazette, specify the persons or class of persons who shall

make an application for the registration under service tax in such time and in suchmanner and in such form as may be prescribed. The following persons are required formandatory registration: -

1. Service Provider2. Specified Persons {Rule 2(1) (d)} & Section 68(2): - Somespecified persons (and not

the service provider) who are liable to pay Service Tax are liable for registration. Theseare as below -

S. No. Category of Service Specified Person

a) Insurance Auxiliary Serviceprovided by an InsuranceAgent.

Insurance Company

b) Service provided by aGoods Transport Agency fortransport of goods by road.

Person Liable: Specified Consignor /Consignee who pays or is liable to payfreight should pay the Service Tax.

Specified consignor or consignee includes-(i) Factory (ii) Company (iii) Corporation,

(iv) Society (v) Cooperative Society(vi)Registered Dealer of Excisable goods (vii)Body Corporate (viii) Partnership Firm

www.ascjaipur.com


2/21

Ascjaipur.com

c) Legal Services provided by

an Arbitral Tribunal or byan Advocate or firm of

advocates to a businessentity

Such business entity is required to pay

service tax and is required to be registeredfor service tax.

d) Sponsorship Serviceprovided to any Body

Corporation or Firm

Service Tax is to be paid by the BodyCorporate or Firm, which receives the

sponsorship service.

e) Any Taxable Service

provided by any personfrom a country other thanIndia u/s 66A

Person receiving such service [in

accordance with Taxation of Services(Provided from Outside India and Receivedin India)

f) Telecommunication Service The Director General of P&T, Chairman ofMTNL and any person who has been

granted a licence by the Govt. underIndian Telegraph Act.

g) Support services provided

by govt. or local authorityto any business entity

except some services

Such business entity is required to pay

service tax and is required to be registeredfor service tax.

h) Services provided by adirector to company

Such company is liable to service taxregistration and payment

i) Services of renting motorvehicles, supply of manpower, security

services & work contract

Both service provider and service receiverare required to service tax registration andpayment.

III. Adjustment of Excess Payment of Service Tax: -

Possibility of excess payment of service tax may be in the following cases: -

Case (1) Invoice issued or payment received but taxable service is not provided orrenegotiation of amount of invoice [Rule 6(3)] -

If invoice issued or payment received against a service to be provided which

is not provided either wholly or partly for any reason OR where the amountof invoice is renegotiated due to either of the following reasons:

(i)Deficiency in Service(ii)Non-fulfillment of any terms of contract

In above two situations, the assessee may take credit of excessservice tax paid by him if:

(i)He has refunded the to the person from whom it wasreceived or

(ii)He has issued a credit note for the value to the person towhom such an invoice was issued.

Case (2) Service tax paid on estimated basis or on provisional basis [Rule 6(4)]- If anassessee is, for any reason, unable to correctly estimate, on the date of

deposit, the actual amount payable for any particular month or quarter, he

can make a request in writing to the Assistant Commissioner of CentralExcise or the Deputy Commissioner of Central Excise, giving reasons for

www.ascjaipur.com


3/21

Ascjaipur.com

payment of service tax on provisional basis and the AssistantCommissioner of Central Excise or the Deputy Commissioner of CentralExcise, on receipt of such request, may allow payment of service tax on

provisional basis on such value of taxable service as may be specified byhim and the assessee may request for provisional assessment in thatcase.

Provisional assessment [Rule 6(5) & 6(6)]: The assessee requesting forprovisional assessment shall file a statement giving details of the differencebetween the Service Tax deposited and the Service Tax liable to be paid foreach month in a memorandum in Form ST-3A accompanying the half-

yearly return in Form ST-3.

In case of provisional assessment after due procedure and furnishing the

returns in Form ST-3A along with Form ST-3, it is the responsibility of theAsstt./Deputy Commissioner to complete the assessment after calling for

from the assessee the relevant documents or records, as may be considerednecessary by him. Wherever the Asstt./Dy. Commissioner, after

considering all the details/documents proposes to re-assess the ServiceTax liability, the finalization of the provisional assessment would be madeafter providing adequate opportunity to the assessee by issuing the showcause notice and giving opportunity of being heard in person.

Case (3) Excess payment is due to any other reason [Rule 6(4A) & 4(B)]

Where due to any other reason, an assessee has paid to the credit of

Central Government any amount in excess of the amount required to bepaid towards service tax liability for a month or quarter, then assessee mayadjust such excess amount paid by him against his service tax liability forthe succeeding month or quarter.

The adjustment of excess amount so paid, shall be subject to the conditionthat the excess amount paid is on account of reasons not involvinginterpretation of law, taxability, classification, valuation or applicability of

any exemption notification.

www.ascjaipur.com


4/21

Ascjaipur.com

Amendments Related to -

Charge of Service Tax(Section 66 & 68)

I. Chargeability of Service Tax (Section 66): -

Service Tax is chargeable @ 12% on the taxable value of services except thosereferred in the negative list or covered under list of mega exemptions. There is asingle rate of charging service tax all over the country. As per the provisions ofsection 68(1) generally the service provider has to pay the service tax. In case of someof the specially notified services, as per section 68(2), service tax shall be collectedfrom the person other than a service provider, in such manner & from such persons

who shall be liable for the payment of service tax on such notified services.

Service tax is generally charged on the services provided or to be provided but it ispayable by the assessee only after the consideration for services actually beenreceived. It means it is taxable on receipt basis (subject to Point of Taxation Rules,2011) and therefore if some amount has been received in advance, the service tax has

to be paid on such advance.

Effective rate of Service Tax: - The effective rate of service tax is calculatedtaking in to consideration Education Cess (EC) and Secondary & Higher Education

Cess (SHEC). The present rate of service tax is 12%, EC is 2% of service tax (w.e.f.

10-9-2004) and SHEC is 1% of the service tax (w.e.f. 11-5-2007). Thus the effectiverate of service tax is 12.36% of the taxable value of services. In an invoice all thethree elements should be indicated separately. Input credit of EC & SHEC is alsoavailable similar like service tax.

II. Meaning of service [Section 65B(44)] - Service means anyactivity carried out by a person for other person for consideration, and include adeclared service, but does not include-

(a) an activity which constitutes merely,

(i) a transfer of title in goods or immovable property, by way of sale, gift orin any other manner or

(ii) such transfer, delivery or supply of any goods which is deemed to be asale within the meaning of clauses (29A) of article 366 of the constitution

(iii) A transaction in money or actionable claim(b) a provision of service by an employee to the employer in the course of or in

relation to his employment(c) fees taken in any court or tribunal established under any law for the timebeing in force.

(1) Activity: - The word activity has not been defined in the Finance Act.In terms of common understanding the word activity would include:-(a) an act done, (b) work done, (c) an operation carried out, (d) execution of

an act, or (e) provision of a facility, etc.

(2) Consideration: - Activity should be carried on for a consideration inmoney or kind or partly for money or partly in kind. Consideration may be

www.ascjaipur.com


5/21

Ascjaipur.com

past, or present or future. If services are provided free of cost, it will not beliable to service tax.As per explanation 1 to section 65B(44), the functions or duties performed

by following the persons shall not be treated as service for this purpose: -1. Functions performed by MP, MLA, Member of Municipality,

Panchayat, Local Authority,

2. Duties performed by a person holding constitutional post by aperson, like Governor of a state or Diplomats etc.,

3. Duties performed by a person who is not deemed as an employee

of the entity where he/she is working. For example chairman ormember or a director of a body established by central or stategovernment of local authority etc.

(3) Meaning of declared service [Section 65(22)]: The meaning of serviceincludes a declared service. Declared service means any activity carried out by a

person for consideration and declared as such under section 66E. As per section66E, the following shall continue declared services:

(a) renting of immovable property(b) construction of a complex, building, civil structure or a part thereof ,including a complex or building intended for sale to a buyer, wholly orpartly, except where the entire consideration is received is received after

issuance of completion certificate by the competent authority.(c) temporary transfer or permitting the use or enjoyment of any intellectual

property right

(d) development, design, programming, customization, adaptation, up-gradation, enhancement, implementation of information technologysoftware

(e) agreeing to the obligation to refrain from an act, or to tolerate an actor a situation, or to do an act(f) transfer of goods by way of hiring , leasing, licensing or in any suchmanner without transfer of right to use such goods(g) activities in relation to delivery of goods on hire purchase or any systemof payment by installments

(h) service portion in the executive of a works contract(i) service portion in an activity wherein goods, being food or any other

article of human consumption or any drink is supplied in any manner as apart of the activity.

III. Negative List [Section 66D of the Finance Act, 1994]The following services which are listed in section 66D known as negative listshall not be liable to service tax:

1. Services provided by Government or a local authority -Services provided by a Government (both Central and State) or alocal authority shall not be liable to service tax. However thefollowing services provided by a Government or a local authorityshall be taxable as it is excluded from the negative list.

(i) services provided by the Department of Posts by way of (1)speed post, (2) Express parcel post, (3) life insurance and

www.ascjaipur.com


6/21

Ascjaipur.com

agency services carried out on payment of commission to aperson other than government (i.e., on non-Governmentbusiness)

(ii) services in relation to an aircraft or a vessel, irrespective of thefact whether the services are provided inside or outside thearea of a port or an airport

(iii) transport of goods and/or passengers or(iv) support services, other than services covered under clauses

(i) to (iii) above, provided to business entitles;2. Services provided by the Reserve Bank Of India -

Any service provided by the Reserve Bank of India to any person isnot liable to service tax. But services provided to RBI are not in thenegative list and would be taxable unless the same is covered in any

other entry of negative list. For example service provided by a Bankto RBI is liable to service tax.

3. All services provided by a foreign diplomatic mission in India-

All services provided by a foreign diplomatic mission located in Indiato any person are not liable to service tax. However, this entry doesnot cover services, if any, provided by any office or establishment ofan international organisation

4. Services relating to agriculture -Services relating to agriculture or agricultural produce by way of (i) agricultural operations directly related to the production of

an agricultural produce including cultivation, harvesting,threshing, plant protection, or seed testing

(ii) supply of farm labour(iii) processes carried out at an agricultural farm including

tending, pruning , cutting, harvesting, drying, cleaning,trimming, sun drying, fumigating, curing, sorting, grading,cooling or bulk packaging and such like operations which donot alter the essential characteristics of agricultural producebut make it only marketable for the primary market

(iv) renting or leasing of agro machinery or vacant land with or

without a structure incidental to its use(v) loading, unloading, packing, storage or warehousing of

agricultural produce(vi) agricultural extension services(vii) services by any Agricultural Produce Marketing Committee or

Board or Services provided by a commission agent for sale orpurchase of agricultural produce

5. Trading of goods -Goods which are purchased and sold are not liable to service tax.The negative list contains the entry the trading of goods and not theservices provided in relation to trading of goods. Activities of a

commission agent or a clearing and forwarding agent who sell goodson behalf of another for a commission are not in the nature of

www.ascjaipur.com


7/21

Ascjaipur.com

trading of goods and hence such services provided by the agent shallbe liable for service tax.

Meaning of goods: - Goods means every king of movable propertyother than actionable claims and money and includes securities,growing crops, grass, and things attached to or forming part of theland which are agreed to be served before sale or under the contractof sale.Thus, every kind of moveable property other than these two shall fallwithin the definition of goods - (a) Achievable claims (b) Money

6. Any process amounting to manufacture or production ofgoods -

Any process amounting to manufacture or production of goods on

which excise duty is leviable under the Central Excise Act or StateExcise Act will not be liable to service tax. Further, it will alsoinclude manufacturing activities carried on contract or job workbasis provided duty of excise is leviable on the same under theCentral Excise Act or State Excise Act.

7. Selling of space or time slots for advertisements other thatadvertisements broadcast by Radio or Television - Sale of spacefor advertisements in prints media or in bill boards, public places,building, conveyances, etc. will not be liable to service tax but sale ofspace or time for advertisement broadcast by radio or television shall

be taxable.However, services provided by advertisement agencies relating tomaking or preparation of advertisement shall not be covered in thenegative list and hence would be taxable.

8. Service provided by way of access to a road or a bridge onpayment of toll charges -Service provided by way of access to a road or a bridge on payment oftoll charges shall not be liable to service tax whether the road is aNational highway or State highway. The above entry in negative listcovers access to a road or a bridge on payment of toll charges.

Services of toll collection on behalf of an agency authorized only tolevy toll are in the nature of services used for providing the negativelist services. Hence such service is liable to tax.

9. Betting, gambling or lottery -The tax on betting and gambling is a State subject and hence theCentral Government cannot levy tax on the same.Betting or gambling mean putting on stake something of value,particularly money, with consciousness of risk and hope of gain onthe outcome of a game or a contest, whose result may be determinedby chance or accident, or on the likelihood of anything occurring ornot occurring.

www.ascjaipur.com


8/21

Ascjaipur.com

Auxiliary services that are used for organizing or promoting bettingor gambling events are not covered in this entry and hence liable toservice tax.

10. Admission to entertainment events or access to amusementfacilities -

Any entry fee paid for entertainment events such as movie tickets, aticket for music events, drama, etc. or access to amusement facilitiesshall not be liable to service tax. Any cultural programme, drama ora dance whether held in open or in a theatre shall also fall in thenegative list.Entertainment events has been defined in section 65B of the Act asan event or a performance which is intended to provide recreation,activity, fun or enjoyment, such as exhibition of cinematographic

films, circus, concerts, sporting events, fairs, award functions, danceperformances, musical performances, theatrical performancesincluding cultural programs, drama, dance or any such event orprogramme.Amusement facility has been defined in the Act as a facility wherefun or recreation is provided by means of rides, gaming devices orbowling alleys in amusement parks, amusement arcades, waterparks, theme parks or such other places does not include a placewithin such facility where other services are provided.

11. Transmission or distribution of electricity by an electricitytransmission or distribution utility -

Any transmission or distribution of electricity by central or stateelectricity authority or board or any other entity entrusted with suchfunction by the Central or State Government shall not be liable toservice tax. Services provided by way of installation of Gensets orsimilar equipments by a private contractor for distribution ofelectricity does fall in the negative list and hence would be liable toservice tax.

12. Specified services relating to education -The following services relating to education shall not be liable toservice tax as these falls in the negative list: -

(i) Pre-school education and education up to higher secondaryschool or equivalent

(ii) Education as a part of a curriculum for obtaining a

qualification recognised by any law for the time being in force:

(iii) Education as a part of an approved vocational education

course.

13. Service by way of renting of residential dwelling for use asresidence -

Services by way of renting of residential dwelling for use as residenceshall not be liable to service tax. However, it does not include hotel,

www.ascjaipur.com


9/21

Ascjaipur.com

motel, guest house, lodge, house boat or like places meant fortemporary stay.

14. Certain services provided by financial sector -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) Sale or purchase of foreign currency amongst banks or

authorised dealers of foreign exchange or amongst banks and

such dealers.

15. Services relating to transportation of passengers -The following services of transportation of passengers, with or

without accompanied belongings shall not be liable to service tax.Service of transportation of passengers by(i) A stage carriage

(ii) Railways in a class other then-

(a) First class or

(b) An air-conditioned coach

(iii) Metro, monorail or tramway

(iv) Inland waterways

(v) Public transport, other than predominantly for tourism

purpose, in a vessel of less than fifteen tonne net and

(vi) Metered cabs, radio taxies or auto rickshaws.

16. Services provided by way of transportation of goods -The following services provided by way of transportation of goodsshall not be liable to service tax. Services provided: -

(i) By road except the services of

(a) A goods transportation agency or

(b) A courier agency

(ii) By an aircraft or a vessel from a place outside India to the first

customs station of landing in India or

(iii) By inland waterways.

17. Funeral, burial, crematorium or mortuary services includingtransportation of the deceased.

www.ascjaipur.com


10/21

Ascjaipur.com

IV. Service Tax on the services received from outside India

(non-taxable territory) (Section 66A): -

If any service (other than those covered in negative list or mega exemptions), isprovided by a service provider who has

i. established any business or any fixed establishment outside India

from where services are provided, orii. his unusual place of residence or permanent address outside India

and

if such services have been received by any person (i.e., recipient of service) who ishaving his place of business or any fixed establishment or permanent address or

unusual place of residence in India (taxable territory) then such services will bechargeable to tax in the hands of recipient of services assuming that such services

have been provided by the recipient himself in India. Such services shall not betaxable for the service provider. Although if such services were received by anindividual assessee then such services shall be taxable only if these were received byhim in any business or commerce.

V. Exemptions from Service Tax: -As mentioned earlier powers are given to the Central Govt. U/S 93 & 94 of chapter Vof Finance Act, 1994, for certain exemptions from the service tax through specificnotifications issued on time to time. These exemptions are as below: -

(A) Basic exemption of Rs. 10 Lacs (Notification No.33/2012 dated 20-6-2012): - If we go by the provisions of Income Tax Act,1961 & Central Excise Act, 1944 then we find some basic or minimumexemptions. Like under Income Tax Act, no income tax is payable by an

individual & HUF if the total income is not exceeding Rs 2,00,000/- andsimilarly no excise duty is payable if the turnover of an industrial unit doesnot exceed Rs. 1.50 Crores. In case of service tax no such basic exemption wasthere till 31.05.2005 and therefore the small service providers were facingcompetition, problems & hardship in the real market.

To resolve this hardship, w.e.f. 1-4-2005, the Central govt. has exempted the

small service providers from service tax levy if the aggregate value of taxableservices does not exceed Rs. 10 Lacs in any financial year (this limit was Rs. 8

Lacs for the financial year 2007-08 & Rs. 4 Lacs prior to financial year 2007-08, vide notification no. 6/2005 dated 1-3-2005). Although this basicexemption shall not be available to a person providing such services under thebrand name or trade name of other person (like franchisee). Also such basic

exemption will be available to the service providers only and not to the servicerecipients. Following are some of the important points regarding such basic

exemptions: -i. The service provider has an option not to avail the basic exemption

of Rs. 10 Lacs but once this option is exercised in any financial yearthen it cannot be withdrawn during the remaining part of financial

year.

ii. If services are provided in one or more premises/offices by theservice provider then for the purpose of limit of Rs. 10 Lacs,

www.ascjaipur.com


11/21

Ascjaipur.com

aggregate of services provided in all such offices/premises would betaken in to consideration.

iii. The basic exemption of Rs. 10 Lacs is available for every individual

financial year. For a newly started business, the basic exemptionlimit would be applicable from the date of start of business up to 31 st

March of end of such financial year.iv. The service provider cannot avail input credit/ CENVAT Credit of

service tax during the period of exemption from service tax up tolimit of Rs. 10 Lacs.

v. The service tax shall be applicable on the service provider during afinancial year if the limit crossed of Rs. 10 Lacs during such

financial year. Suppose the total of bills of services provided from 1-4-2011 to 31-10-2011 was Rs. 9,80,000/- & the next bill is of Rs.50,000/- then total goes to Rs. 10,30,000/- & thus it exceed Rs. 10

Lacs therefore service tax would be applicable on Rs. 30,000/- @10.3%.vi. A service provider is allowed to avail exemption of Rs. 10 Lacs only if

during the just preceding financial year the taxable value of servicesdoes not exceeded Rs. 10 Lacs. If during preceding financial year thelimit of taxable services already crossed Rs. 10 Lacs then all theservices will be taxable from the first day of current financial year.

(B) Exemption in case of export of services: - As persection 66B, if any service is provided or agreed to be provided in the taxableterritory then it is taxable but if a service is provided outside the taxableterritory then it is exempted. Vide section 66C of the Finance Act, the central

govt. has power to determine the place of service where it is provided ordeemed to have been provided. As per rule 3 of Place of Provisions of ServiceRules, 2012, the place of service provided shall be the location of therecipient of service. As per this rule it is implied that service tax is notapplicable on export of service because the place of recipient of service isoutside India.

Any service is considered as export of service if the following conditions aresatisfied

1. The service provider is located in India2. The service receiver is located outside India

3. The service is not covered in negative list4. The place of provision of service is outside India

5. The payment of such service has been received to the service provider inconvertible foreign exchange.

Note: Vide notification no. 39/2012-ST dated 1-7-2012, the central governmenthas granted rebate in respect of excise duty, service tax and cess paid byassessee on all the inputs used in providing the export service as per rule 6A ofthe Service Tax Rules, 1994 to any country except Nepal & Bhutan.

(C) Specific exemptions (i.e., Lower rate abatements): -(Notification No. 26/2012-ST dated 20-06-2012) - As per the service

tax rules there are some specific services which are although taxable but anabatement is given to the service provider and the full amount of service is not

www.ascjaipur.com


12/21

Ascjaipur.com

taxable. The basis of such rebate/abatement is the cost of material sold in theprocess of providing such services. Some exemptions of lower rates are asmentioned below: -

S. No. Type of service Rate of Abatement

TaxableAmount

of service

Remarks

1. Transport of passengers by Airwith or without luggage

60% 40% No CENVAT crediton inputs andcapital goods

2. Transport of goods &passengers by Rail with orwithout luggage

70% 30% ----

3. Transport of goods in a Vessel 75% 25% No CENVAT credit

4. Rent-a-Cab services 60% 40% No CENVAT credit

5. Chit fund services 30% 70% No CENVAT crediton inputs andcapital goods

6. Finance Lease & HirePurchase services

90% 10% ----

7. Services of supply of food &drinks in hotel, club,convention centres, pandal,shamiana etc., in any functionwith renting of the premises

30% 70% No CENVAT crediton food items

8. Lodging & boarding services inhotels, guest houses and

other commercial places

40% 60% No CENVAT crediton inputs and

capital goods9. Construction of a complex,

civil structure or building etc.for sale to buyers

75% 25% CENVAT creditshould have notbeen taken

10. Tour operator services a) For Package tourb) For Accommodationbooking only

c) For tour other than apackage tour

75%90%

60%

25%10%

40%

11. Goods transport agency 75% 25% No CENVAT credit

(D) If sale value of goods cannot be separately determined In case of work contracts generally value of goods and value of service cannotbe determined separately therefore the following rules shall be applied

S. No. Type of work contract Taxable value of bill amount

1. Work contract of execution of original work

Service tax will be charged on 40% of thegross amount of billing

2. Work contract entered formaintenance or restoration orservicing of any goods

Service tax will be charged on 70% of thegross amount of billing

3. Work contracts except above two Service tax will be charged on 60% of thegross amount of billing

www.ascjaipur.com


13/21

Ascjaipur.com

(E) Generally the service provider is liable for the payment ofservice tax but in some of the exceptional cases u/s 68(2), Service Tax Rule2(1)(d), service tax is payable by service recipient also. Some of such

exceptional cases are as below: -S. No. Type of the Service % of service

tax payableby ServiceProvider

% of servicetax payableby ServiceRecipient

1. Services by an insurance agent toinsurer or insurance company

--- 100%

2. Services by goods transportagency to for transportation ofgoods

--- 100% of 25%of freight

3. Services of sponsorship --- 100%

4. Services by an Arbitral Tribunal --- 100%5. Legal Services by an individual

advocate or firms of advocate--- 100%

6. Services by director to a company --- 100%

7. Support services by Govt. or Localauthority except renting ofimmovable property.

--- 100%

8. Services of renting of motorvehicle to carry passengers on

abated value basis, to any personwho is not engaged in similarbusiness

--- 100%

9. Services of renting of motorvehicle to carry passengers onnon-abated value basis, to any

person who is not engaged insimilar business

60% 40%

10. Services of supply of manpowerfor security purpose

25% 75%

11. Services of work contract 50% 50%

12. Services by persons from non-

taxable territory to person intaxable territory

--- 100%

(F) Alternate rate of service tax in case of certainservices: - Although service tax is levied at the basic rate of 12% but in caseof certain services, an alternative rate is also provided. Some of these are asunder:

S.No.

Particulars Service Tax Rate

1. In case of Air Travel Agentservices

0.6% of the basic fare of Domestic bookings &

1.2% of basic fare of International bookings.

2. In case of Works ContractServices

4.8% on Gross Amount charged

3. In case of life insurancebusiness services

3%of gross premium in the first year & 1.5%in next years, if break-up of risk & investment

www.ascjaipur.com


14/21

Ascjaipur.com

portion not given.

4. Services of purchase & sale offoreign currency including

money changing services - For amount up to Rs.

1,00,000

After Rs. 1 Lac to Rs. 10Lac

Above/After Rs. 10 Lacs

= 0.12% of the gross amount of currencyexchanged (Minimum Rs. 30)= Rs. 120 Plus 0.06% of gross amount= Rs. 660 Plus 0.012% of gross amount butMaximum Rs. 6,000

5. Service tax for a distributor orselling agent of lotteries

If guaranteed lottery prizeamount is 80% or more

If guaranteed lottery prizeamount is less than 80%

= Rs. 7,000 on every Rs. 10 Lacs (or partthereof) of total face value of lottery tickets

= Rs. 11,000 on every Rs. 10 Lacs (or partthereof) of total face value of lottery tickets

Note: EC & SHEC will be added separately to all the above service tax liability.

(G) Exemption of services provided to the diplomaticmissions for their office use (Notification No. 27/2012-ST dated 20-06-2012): - All type of taxable services provided by the service providers tothe Foreign Diplomatic Missions or Consular posted in India for their officeuse. For this purpose an entitlement certificate must be issued by the Protocol

Division of the Ministry of External Affairs, with or without condition.Exemption would be allowed on the basis of such certificate.

(H) Exemption of services provided to the diplomatic

persons for their personal use (Notification No. 27/2012-ST dated20-06-2012): - Taxable Services those mentioned u/s 65(105) provided by aservice provider to the Diplomatic Mission Agents or Career Consular officerworking in a Foreign Diplomatic Mission or Consular posted in India for theirpersonal use or for their family members are fully exempted from service tax.Again the aforesaid entitlement certificate would be required for the exemption.Also a photo identification card is issued by the Protocol Division of theMinistry of External Affairs with unique serial number.

(I) Exemption of services provided to Units in SpecialEconomic Zone (SEZ) (Notification No. 40/2012-ST dated 20-06-2012): - Services provided to the developer of SEZ or the units situated in

SEZ are fully exempted from service tax. The following conditions must besatisfied: -

i. Proper accounting of the receipts & utilization of such taxableservices is required to be maintained by the developer or the unit

existing in SEZ.ii. The unit of SEZ must be approved from the Board of Approvals or

Development Commissioner to establish such unit in SEZ,iii. The developer must have been approved by the Board of Approvals

for the development & maintenance of SEZ.

(J) Exemption to service provided by Technologybusiness incubator / science and Technology Entrepreneurship

Park (Notification No. 32/2007 dated 20-06-2012): - All the taxableservices provided or to be provided by Technology business incubator / science

www.ascjaipur.com


15/21

Ascjaipur.com

and Technology Entrepreneurship Park recognised by the National Scienceand Technology Entrepreneurship Board (NSTEBD) of the department ofscience and technology have been exempted from the whole of service tax

leviable thereon. The exemption contained in this notification shall be subjectto some conditions.

(K) Exemption to the services provided by incubateelocated within the premises of a technology business incubator /science and technology Entrepreneurship park - (Notification No.32/2007 dated 20-06-2012): - W.e.f. 1-4-2007, taxable services providedor to be provided by an (incubatee) Entrepreneur located within the premisesof a technology business incubator (TBI) / science and technologyEntrepreneurship park (STEP) recognised by the National Science and

Technology Entrepreneurship Board (NSTEBD) of the department of science

and technology have been exempted from the whole of service tax leviablethereon. The exemption contained in this notification shall be subject to some

conditions.

(L) Mega Exemption Notification No.25/2012- Servicetax, Dated 20.6.2012 -The exemptions provided in the mega exemption notification are asunder -1. Service provided to the United Nations or a specified internationalorganization2. Health care service by a clinical establishment, an authorized medical

practitioner or Para-medics3. Service by a veterinary clinic in relation to health care of animals orbirds4. Service by an entity registered u/s 12AA of the Income Tax act, 1961by way of charitable activities5. Service by a person by way of: -

(a) renting of precincts of a religious place meant for general public or

(b) conduct of any religious ceremony6. Service provided by: -

(a) an arbitral tribunal to: -

(I) any person other than a business entity or(II)a business entity with a turnover upto rupees ten Lakh in the

preceding financial year(b) an individual as an advocate or a partnership firm of advocates

by way of legal service to -(I) any person other than business entity or(II) A business entity with a turnover upto rupees ten Lakh in the

preceding financial year or(c) a person represented on an arbitral tribunal to an arbitral

tribunal 7. Service by way of technical testing or analysis of newly developeddrugs including vaccines and herbal remedies, on human participants

www.ascjaipur.com


16/21

Ascjaipur.com

by a clinical research organization approved to conduct clinical trials bythe Drug Controller General of India8. Services by way of training or coaching in recreational activitiesrelating to arts, culture or sports9. Service provided to or by an educational institution in respect ofeducation exempted firm service tax, by way of -

(a) auxiliary educational service or(b) training of immovable property

10. Service provided to recognized sports body by: -(a) an individual as a player, referee, umpire, coach or team

manager for participation in a sporting event organized by recognizedsports body

(b) another recognized sports body

11. Services by way of sponsorship of sporting events organized: -(a) by a national sports federation, or its affiliated federations,

where the participating teams or individuals represent any district, stateor zone

(b) by Association of Indian Universities, Inter-University SportsBoard, School Games Federation of India, All India Sports Council forthe Deaf, Paralympics Committee of India or Special Olympics Bharat

(c) by General Civil Service Cultural and Sports Board (d) a parts of national games by Indian Olympic Association or

(e) under Panchayat Yuva Kreeda Aur Khel Abhiyan (PYKKA)Scheme

12. Service provided to the Government, a local authority or agovernmental authority by way of construction, erection,commissioning, installation, completion, fitting out, repair ,maintenance, renovation, or alteration of :-

(a) a civil structure of any other original works meant predominantlyfor use other than for commerce, industry, or any other business orperson

(b) a historical monument, archaeological site or remains of nationalimportance, archaeological excavation, or antiquity specified under theAncient Monuments and archaeological sites and remains act, 1958 (24

of 1958)(c) a structure meant predominantly for use as (i) an educational,

(ii) clinical, or (iii) an art or cultural establishment(d) canal, dam or other irrigation works(e) pipeline, conduit or plant (i) water supply (ii) water treatment,

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

of their employees or other persons specified in the Explanation 1 toclause 44 of section 65B of the said Act13. Service provided by way of construction, irrigation, commissioning,installation, completion, fitting-out, repair, maintenance, renovation, or

alteration of -

www.ascjaipur.com


17/21

Ascjaipur.com

(a) a road bridge , tunnel, or terminal for road transportation foruse by general public

(b) a civil structure or any other original works pertaining to ascheme under Jawaharlal Nehru National Urban Renewal Mission orRajiv Awaas Yojana

(c) a building owned by an entity registered U/s 12AA of the IncomeTax Act, 1961 and meant predominantly for religious use by generalpublic

(d) a pollution control of effluent treatment plant, except located asa part of a factory or a structure meant for funeral, burial or cremationof deceased 14. Service by way of construction, erection, commissioning, installationof original works pertaining to,

(a) an airport, port of railways, including mono rail or metro(b) a single residential unit otherwise than as a part of a residential

complex(c) low-cost houses upto a carpet area of 60 sq. meters per house

in a housing project approved by competent authority empowered underthe Scheme of affordable housing in partnership framed by theministry of housing a urban poverty Alleviation Government of India

(d) post-harvest storage infrastructure for agriculture produceincluding a cold storages for such purposes or

(e) mechanized food grain handling system, machinery orequipment for units processing agriculture produce as food stuff

excluding alcoholic beverages15. Temporary transfer of permitting the use or enjoyment of acopyright covered under clauses (a) or (b) of sub-section (i) of section 13of the Indian Copyright Act, 1957, relating to original literary, dramatic,musical, artistic work of cinematograph films16. Service by a performing artist in folk or classical art forms of (i)music, (ii) dance, (iii) theatre, excluding services provided by such artistas a brand ambassador17. Services by way of collecting or providing news by an independentjournalist, Press Trust of India or United Trust of India

18. Services by way of renting of a hotel, inn, guest house, club,campsite or other commercial places meant for residential or lodgingpurposes, having declared tariff of a unit of accommodation belowrupees one thousand per day or equivalent19. Services provided in relation to serving of food or beverages by arestaurant, eating joint or a mess, other than those having (i) thefacility air-conditioning or central air-heating in any part of theestablishment, at any time during the year, and (ii) a license to servealcoholic beverages20. Services by way of transportation by rail or a vessel from one placein India to another of the following goods -

www.ascjaipur.com


18/21

Ascjaipur.com

i. petroleum and petroleum products filling under chapterending 2710 and 2711 of the first schedule to the CentralExcise Tariff Act, 1985

ii. relief materials meant for victims of natural or man-madedisasters, calamities, accidents, mishap

iii. defence or military equipmentsiv. postal mail or mail bagsv. household effectsvi. newspaper or magazines registered with the registrar of news

papersvii. railways equipments or materialsviii. agricultural produceix. food stuff including flours, tea, coffee, jiggery, sugar, milk

products, salt and edible oil, excluding alcoholic beverages orx. chemical fertilizers and oil cakes

21. Services provided by a goods transport agency by way oftransportation of

(a) fruits, vegetables, eggs, milk, food grains or pulses in a goodscarriage

(b) goods where gross amount charged for the transportation ofgoods on a consignment transported in a single goods carriage does notexceed one thousand five hundred rupees or

(c) goods, where gross amount charged for transportation of all suchgoods for a single consignee in the goods carriage does not exceed

rupees seven hundred fifty22. Services by way of giving on hire

(a) to a state transport undertaking, a motor vehicle meant to carrymore than twelve passengers or

(b) to a goods transport agency, a means of transportation ofgoods23. Transport of passengers, with or without accompanied belongings,by

(a) air, embarking from or terminating in an airport located in thestate of Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram,

Nagaland, Sikkim, or Tripura or at Bagdogra located in West Bengal(b) a contract carriage for the transportation of passengers,

excluding tourism conducted tour, character or hire or(c) ropeway, cable car or aerial tramway

24. Services by way of vehicle parking to general public excludingleasing of space to an entity for providing such parking facility25. Services provided to Government, a local authority or agovernmental authority by way of: -

(a) carrying out any activity in relation to any function ordinarilyinterested to a municipality in relation to water supply , public health ,sanitation conservancy , solid waste management or slum improvement

an up gradation or(b) repair or maintenance or a vessel or an aircraft

www.ascjaipur.com


19/21

Ascjaipur.com

26. Service of general insurance business provided under followingschemes :-

(a) Hut insurance scheme(b) Cattle insurance under Swarnajayanti Gram Swarozgar Yogana

(earlier known as integrated Rule Development Programme )(c) Scheme for Insurance of Travels(d) Janta Personal Accident Policy and Gramin Accident Policy(e) Group Personal Accident Policy for Self-employed Women (f) Agricultural Pump set And Failed Well Insurance(g) Premium collected on export credit insurance(h)Weather Based Crop Insurance Scheme or the Modified National

Agricultural Insurance Scheme, approved by the Government of Indiaand implemented by the Ministry of Agriculture

(i) Jan Arogya Bima Policy(j) National Agricultural Insurance Scheme (Rashtrya Krishi Bima

Yojana)(k) Pilot Scheme on Seed Crop Insurance(l) Central Sector Scheme on Cattle Insurance(m) Universal Health Insurance Scheme(n) Rashtriya Swasthya Bima Yojna or(o) Coconut Palm Insurance Scheme

27. Service provided by an incubate upto a total turnover of fifty lakhrupees in a financial year subject to the following conditions, namely: -

(a) the total turnover had not exceeded fifty lakh rupees during the

preceding financial year and(b) a period of three year has not been elapsed from the date of

entering into an agreement as an incubate 28. Service by an unincorporated body or an non- profit entityregistered under any law for the time being in force, to its own membersby way of reimbursement of charged or share of contribution -

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

from levy of service tax or(c) up to an amount of five thousand rupees per month per member

for sourcing of goods or services from a third person for the commonuse of its members in a housing society or residential complex29. Services by the following persons in respective capacities-

(a) sub-broker or an authorized person to a stock broker(b) authorized person to a member of a commodity exchange

(c) mutual fund agent to a mutual fund or asset managementcompany

(d) distributor to a mutual fund or asset management company(e) selling or marketing agent of lottery tickets to a distributer or a

selling agent(f) selling agent or a distributer of SIM cards or recharge coupon

vouchers

www.ascjaipur.com


20/21

Ascjaipur.com

(g) business facilitator or a business correspondent to a bankingcompany or an insurance company, in rural area

(h) sub-contractor providing service by way of works contract toanother contractor providing works contract services which are exempt 30. Crime out an intermediate production process as job work inrelation to :-

(a) agriculture printing or textile processing (b) cut and polished diamonds and gemstones or plain and studded

Jewellary of gold and other precious metals, filling under chapter 71 ofthe Central Excise Tariff Act, 1985

(c) any goods on which appropriate duty is payable by the principalmanufacturer or

(d) process of electroplating, zinc plating, anodizing, heat treatment,

powder coating, painting including spray painting or auto black, duringthe course of manufacture of parts of cycles or sewing machines up toan aggregate value of taxable service of the specified processes of rupeesof one hundred and fifty lakh rupees in a financial year subject to thecondition that such aggregate value had not exceeded one hundred andfifty lakh rupees during the preceding financial year31. Services by an organizer to any person in respect of a businessexhibition held outside India32. Services by way of making telephone calls from-

(a) departmentally run public telephone(b) guaranteed public telephone operating only for local calls or

(c) free telephone at airport and hospital where no bills are beingissued33. Services by way of slaughtering of bovine animals34. Services received from a provider of service located in an non-taxable territory by -

(a) Government, a local authority, a governmental authority or anindividual in relation to any purpose other than commerce, industry orany other business or profession

(b) an entity registered under section 12AA of the Income Tax Act,1961 for the purposes of providing charitable activities

(c) a person located in a non-taxable territory35. Services of public libraries by way of lending books, publications orany other knowledge-enhancing content or material36. Services by Employees State Insurance Corporation to personsgoverned under the Employees Insurance Act, 194837. Services by way of transfer of a going concern, as a whole or anindependent part thereof38. Services by way of public conveniences such as provision of facilitiesof bathroom, washrooms, lavatories, urinal or toilets39. Services by a governmental authority by way of any activity inrelation to any function entrusted to a municipality under article 243W

of the constitution.

www.ascjaipur.com


21/21

Ascjaipur.com

*******

www.ascjaipur.com

amendments in taxation for may, 2013 (1)

Documents