direct and indirect taxation project

8/3/2019 Direct and Indirect Taxation Project

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DIRECT AND INDIRECT TAXATION PROJECT

TELECOMMUNICATION AND BROADCASTING

SERVICES IN INDIA

SUBMITTED BY:-

NAME: EKLAVYA RATHI

ROLL NO: 99

CLASS: - SYBMS-B


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INDEXTOPIC PAGE NO:-

TELECOMMUNICATION SERVICES:-

MEANING 1-2CHARGEABILITY 3-4

BROADCASTING SERVICES:-

MEANING 5-6

CHARGEABILITY 7

TELECOMMUNICATION AND BROADCASTING SERVICES:-

EXEMPTION 8-11

VALUE OF TAXABLE SERVICES 12

SERVICE TAX RETURNS 13

REGISTRATION 14-16

RETURNS 17


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TELECOMMUNICATION SERVICES

MEANING

Any service provided by a telecommunication provider. A specified set

of user-information transfer capabilities provided to a group of users by atelecommunications system. Telecommunications, also calledtelecommunication, is the exchange of information over significantdistances by electronic means. A complete, single telecommunicationscircuit consists of two stations, each equipped with a transmitter and areceiver. The transmitter and receiver at any station may be combinedinto a single device called a transceiver. The medium of signaltransmission can be electrical wire or cable (also known as"copper"),optical fibre or electromagnetic fields. The free-spacetransmission and reception of data by means of electromagnetic fields is

called wireless. The simplest form of telecommunications takes placebetween two stations. However, it is common for multiple transmittingand receiving stations to exchange data among them. Such anarrangement is called a telecommunications network. The Internet is thelargest example. On a smaller scale, examples include:

yCorporate and academic wide-area networks (WANs)

yTelephone networks

yPolice and fire communications systems

yTaxicab dispatch networks

yGroup of amateur radio operators

Data is conveyed in a telecommunications circuit by means of anelectrical signal called the carrier or carrier wave. In order for a carrier toconvey information, some form of modulations required. The mode ofmodulation can be broadly categorized as either analog or digital. Inanalog modulation, some aspect of the carrier is varied in a continuousfashion. The oldest form of analog modulation is amplitude modulation(AM), still used in radio broadcasting at some frequencies. Digitalmodulation actually predates analog modulation; the earliest formwas Morse code. During the 1900s, dozens of new forms of modulationwere developed and deployed, particularly during the so-called "digitalrevolution" when the use of computers among ordinary citizens becamewidespread. In some contexts, a broadcast network, consisting of a


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single transmitting station and multiple receive-only stations, isconsidered a form of telecommunications. Radio and televisionbroadcasting are the most common examples. Telecommunications andbroadcasting worldwide are overseen by the InternationalTelecommunication Union (ITU), an agency of the United Nations (UN)

with headquarters in Geneva, Switzerland. Most countries have theirown agencies that enforce telecommunications regulations formulatedby their government.

According to the government of India:-

Taxable Service means any service provided or to be provided to any

person, by the telegraph authority in relation to telecommunication

service. Telecommunication service means service of any description

provided by means of any transmission, emission or reception of signs,

signals, writing, images and sounds or intelligence or information of anynature, by wire, radio, optical, visual or other electromagnetic means or

systems, including the related transfer or assignment of the right to use

capacity for such transmission, emission or reception by a person who

has been granted a licence under the first proviso to sub-section (1) of

section 4 of the Indian Telegraph Act, 1885 (13 of 1885 )


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CHARGEABILITY

THE FOLLOWING SERVICES ARE CHARGEABLE UNDER

TELECOMMUNICATION SERVICES:-

(i) Voice mail, data services, audio tex services, video tex services, radiopaging;

(ii) fixed telephone services including provision of access to and use of

the public switched telephone network for the transmission and

switching of voice, data and video, inbound and outbound telephone

service to and from national and international destinations;

(iii) cellular mobile telephone services including provision of access to

and use of switched or non-switched networks for the transmission of

voice, data and video, inbound and outbound roaming service to andfrom national and international destinations.

(iv) carrier services including provision of wired or wireless facilities to

originate, terminate or transit calls, charging for interconnection,

settlement or termination of domestic or international calls, charging for

jointly used facilities including pole attachments, charging for the

exclusive use of circuits, a leased circuit or a dedicated link including a

speech circuit, data circuit or a telegraph circuit;

(v) provision of call management services for a fee including call waiting,

call forwarding, caller identification, three-way calling, call display, call

return, call screen, call blocking, automatic call-back, call answer, voice

mail, voice menus and video conferencing;

(vi) private network services including provision of wired or wireless

telecommunication link between specified points for the exclusive use of

the client;

(vii) data transmission services including provision of access to wired orwireless facilities and services specifically designed for efficient

transmission of data; and

(viii) communication through facsimile, pager, telegraph and telex, but

does not include service provided by- (a) any person in relation to on-

line information and database access or retrieval or both


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referred to in sub-clause of clause (105);

(b) a broadcasting agency or organisation in relation to broadcasting

referred

(c) any person in relation to [internet telecommunication service] referredto in sub-clause

"Telegraph authority" has the meaning assigned to it in clause (6) of

section 3 of the Indian Telegraph Act, 1885 (13 of 1885) and includes a

person who has been granted a licence under the first proviso to sub-

section (1) of section 4 of that Act;

"Facsimile (FAX)" means a form of telecommunication by which fixed

graphic images, such as printed texts and pictures are scanned and the

information converted into electrical signals for transmission over thetelecommunication system;

On-line information and database access or retrieval" means providing

data or information, retrievable or otherwise, to a customer, in electronic

form through a computer network; Internet telecommunication service

includes,-

(I) Internet backbone services, including carrier services of internet traffic

by one Internet traffic by one Internet Service Provider to another

Internet Service provider,

(II) Internet access services, including provision of a direct connection to

the internet and space for the customers web page,

(III)Provision of telecommunication services, including fax, telephony,

audio conferencing and video conferencing, over the internet.

"Pager" means an instrument, apparatus or appliance which is a non-

speech, one way personal calling system which alert and has the

capability of receiving, storing and displaying numeric or alpha-numericmessage. "Telegraph" has the meaning assigned to it in clause (1) of

section 3 of the Indian Telegraph Act, 1885 (13 of 1885).

"Telex" means a typed communication by using teleprinters through

telex exchanges;


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BROADCASTING SERVICES

MEANING

Taxable Service means any service provided or to be provided to a

client, by a broadcasting agency or organization in relation tobroadcasting, in any manner and, in the case of broadcasting agency or

organisation, having its head office situated in any place outside India,

includes service provided by its branch office or subsidiary or

representative in India or any agent appointed in India or by any person

who acts on its behalf in any manner, engaged in the activity of selling of

time slots for broadcasting of any programme or obtaining sponsorships

for programmes or collecting the broadcasting charges or permitting the

rights to receive any form of communication like sign, signal, writing,

picture, image and sounds of all kinds by transmission of electro-magnetic waves through space or through cables, direct to home signals

or by any other means to cable operator, including multisystem operator

or any other person on behalf of the said agency or organisation.

"Broadcasting" has the meaning assigned to it in clause (c ) of section 2of the Prasar Bharati (Broadcasting Corporation of India) Act, 1990 (25 of1990) and also includes programme selection, scheduling orpresentation of sound or visual matter on a radio or a television channelthat is intended for public listening or viewing, as the case may be; and in

the case of a broadcasting agency or organisation, having its head officesituated in any place outside India, includes the activity of selling of timeslots or obtaining sponsorships for broadcasting of any programme orcollecting the broadcasting charges or permitting the rights to receiveany form of communication like sign, signal, writing, picture, image andsounds of all kinds by transmission of electro-magnetic waves throughspace or through cables, direct to home signals or by any other means tocable operator including multisystem operator or any other person onbehalf of the said agency or organisation, by its branch office orsubsidiary or representative in India or any agent appointed in India or by

any person who acts on its behalf in any manner;

"Broadcasting Agency or Organization" means any agency ororganization engaged in providing service in relating to broadcasting inany manner and, in the case of a broadcasting agency or organization,having its head office situated in any place outside India, includes itsbranch office or subsidiary or representative in India or any agent


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appointed in India or any person who acts on its behalf in any manner,engaged in the activity of selling of time slots for broadcasting ofany programme or obtaining sponsorships for programme or collectingthe broadcasting charges or permitting the rights to receive any form ofcommunication like sign, signal, writing, picture, image and sounds of all

kinds by transmission of electro-magnetic waves through space orthrough cables, direct to home signals or by any other means to cableoperator including multisystem operator or any other person on behalf ofthe said agency or organisation;

Programme means any audio or visual matter, live or recorded, whichis intended to be disseminated by transmission of electro-magneticwaves through space or through cables intended to be received by thegeneral public either directly or indirectly through the medium of relaystations;


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CHARGEABILITY

Chargeability of Taxable Services:(1) The chargeability of taxable services shall be determined accordingto the terms of the sub-clauses (105) of section 65;

(2) When for any reason , a taxable service is prima facie, classifiableunder two or more sub-clauses of clause (105) of section 65,classification shall be effected as follows :-

(a) the sub-clause which provides the most specific description shall be

preferred to sub-clauses providing a more general description;

(b) composite services consisting of a combination of different services

which cannot be classified in the manner specified in clause (a), shall be

classified as if they consisted of a service which gives them their

essential character, in so far as this criterion is applicable;

(c) when a service cannot be classified in the manner specified in

clause(a) or clause (b), it shall be classified under the sub-clause which

occurs first among the sub-clauses which equally merits consideration.


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TELECOMMUNICATION AND BROADCASTING SERVICES

Exemption

1. Exemption to Small Scale Service Providers:

In exercise of the powers conferred by sub-section (1) of section 93 of

the Finance Act, 1994 (32 of 1994) (hereinafter referred to as the said

Finance Act), the Central Government, on being satisfied that it is

necessary in the public interest so to do, hereby exempts taxable

services of aggregate value not exceeding Ten lakh* rupees in any

financial year from the whole of the service tax leviable thereon under

section 66 of the said Finance Act: Provided that nothing contained in

this notification shall apply to,-

(i) taxable services provided by a person under a brand name or trade

name, whether registered or not, of another person; or

(ii) such value of taxable services in respect of which service tax shall be

paid by such person and in such manner as specified under sub-section

(2) of section 68 of the said Finance Act read with Service Tax

Rules,1994.

2. The exemption contained in this notification shall apply subject to thefollowing conditions, namely:-

(i) the provider of taxable service has the option not to avail the

exemption contained in this notification and pay service tax on the

taxable services provided by him and such option, once exercised in a

financial year, shall not be withdrawn during the remaining part of such

financial year;

(ii) the provider of taxable service shall not avail the CENVAT credit of

service tax paid on any input services, under rule 3 or rule 13 of theCENVAT Credit Rules, 2004 (herein after referred to as the said rules),

used for providing the said taxable service, for which exemption from

payment of service tax under this notification is availed of;

(iii) the provider of taxable service shall not avail the CENVAT credit

under rule 3 of the said rules, on capital goods received in the premises


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of provider of such taxable service during the period in which the service

provider avails exemption from payment of service tax under this

notification;

(iv) the provider of taxable service shall avail the CENVAT credit only on

such inputs or input services received, on or after the date on which theservice provider starts paying service tax, and used for the provision of

taxable services for which service tax is payable;

(v) the provider of taxable service who starts availing exemption under

this notification shall be required to pay an amount equivalent to the

CENVAT credit taken by him, if any, in respect of such inputs lying in

stock or in process on the date on which the provider of taxable service

starts availing exemption under this notification;

(vi) the balance of CENVAT credit lying unutilised in the account of the

taxable service provider after deducting the amount referred to in sub-

paragraph (v), if any, shall not be utilised in terms of provision under

sub-rule (4) of rule 3 of the said rules and shall lapse on the day such

service provider starts availing the exemption under this notification;

(vii) where a taxable service provider provides one or more taxable

services from one or more premises, the exemption under this

notification shall apply to the aggregate value of all such taxable

services and from all such premises and not separately for each

premises or each services;

(viii) the aggregate value of taxable services rendered by a provider of

taxable service from one or more premises, does not exceed rupees

*ten lakhs in the preceding financial year.

3. For the purposes of determining aggregate value not exceeding

ten*lakh rupees, to avail exemption under this notification, in relation to

taxable service provided by a goods transport agency, the payment

received towards the gross amount charged by such goods transport

agency under section 67 for which the person liable for paying service

tax is as specified under subsection (2) of section 68 of the said Finance

Act read with Service Tax Rules, 1994, shall not be taken into account.

2.Services to UN Agencies


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Services provided to United Nations or an International Organizations

are exempt.

3. Export of service: Any service which is taxable under clause 105 of

Section 65 may be exported without payment of service tax.

4. Exemption to services provided to a developer of SEZ or a unit of

SEZ: Exempts the taxable services specified in clause (105) of section

65 of the said Finance Act, which are provided in relation to the

authorized operations in a Special Economic Zone, and received by a

developer or units of a Special Economic Zone, whether or not the said

taxable services are provided inside the Special Economic Zone, from

the whole of the service tax leviable thereon under section 66 of the said

Finance Act subject to certain conditions

5. Exemption to value of goods & material sold by service provider: In

exercise of the powers conferred by section 93 of the Finance Act, 1994

(32 of 1994), the Central Government, being satisfied that it is necessary

in the public interest so to do, hereby exempts so much of the value of

all the taxable services, as is equal to the value of goods and materials

sold by the service provider to the recipient of service, from the service

tax leviable thereon under section (66) of the said Act, subject to

condition that there is documentary proof specifically indicating the value

of the said goods and materials.

6. Exemption to taxable services provided by TBI and STEP: All

taxable services, provided by a Technology Business Incubator (TBI) or

a Science and Technology Entrepreneurship Park (STEP) recognized by

the National Science and technology Entrepreneurship Development

Board (NSTEDB) of the Department of Science and Technology, Govt.

of India from the whole of the service tax leviable thereon subject to

certain conditions and procedures.

7. Exemption to taxable services provided by entrepreneurs locatedwithin the premises of TBI or STEP: All taxable services, provided by

an entrepreneur located within the premises of a Technology Business

Incubator (TBI) or a Science and Technology Entrepreneurship Park

(STEP) recognized by the National Science and technology

Entrepreneurship Development Board (NSTEDB) of the Department of


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Science and Technology, Govt. of India from the whole of the service

tax leviable thereon subject to certain conditions and procedures.

8. Exemption to services provided to Foreign Diplomatic Missions or

Consular Post in India: All services provided by any person, for the

official use of a Foreign Diplomatic Mission or Consular Post in India areexempted from service tax subject to certain conditions and procedures.

9. Exemption to services provided for personal use of a family member

of Diplomatic Agent or Career Consular Officers posted in Foreign

Diplomatic Mission/Consular Post in India: All services provided by any

person, for personal use of family member of Diplomatic Agents or

Career Consular officers posted in a Foreign Diplomatic Mission or

Consular Post in India are exempted from service tax subject to certain

conditions and procedures.


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VALUE OF TAXABLE SERVICES

(1) Service tax chargeable on any taxable service with reference to its

value shall,

(i) in a case where the provision of service is for a consideration inmoney, be the gross amount charged by the service provider for such

service provided or to be provided by him;

(ii) in a case where the provision of service is for a consideration not

wholly or partly consisting of money, be such amount in money, with the

addition of service tax charged, is equivalent to the consideration; (iii) in

a case where the provision of service is for a consideration which is not

ascertainable, be the amount as may be determined in the prescribed

manner.

(2) Where the gross amount charged by a service provider, for the

service provided or to be provided is inclusive of service tax payable, the

value of such taxable service shall be such amount as, with the addition

of tax payable, is equal to the gross amount charged.

(3) The gross amount charged for the taxable service shall include any

amount received towards the taxable service before, during or after

provision of such service.

(4) Subject to the provisions of sub-sections (1), (2) and (3), the value

shall be determined in such manner as may be prescribed.


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SERVICE TAX RATES

RATE OF TAX ACCOUNTING

CODE

ACCOUNTING

CODESERVICE TAX 10% of the valueof services

00440398 00440165

EDUCATIONALCESS

2% of the servicetax payable

00440298 00440298

SECONDARYAND HIGHEREDUCATION

CESS

1% of the servicetax payable

00440426 00440426

Other

Penalty/interest

As levied or

applicable

00440399 00440166


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REGISTRATION

Service Tax is administered by the Central Excise & Service taxCommissionerates and the Service Tax Commissionerates workingunder the Central Board of Excise & Customs, Department of Revenue,

Ministry of Finance, Government of India.LTUs are also collectingService Tax in respect of the Large Tax Paying units registered withthem. The unique feature of Service Tax is reliance on collection of tax,primarily through voluntary compliance.Government has from the verybeginning adopted a flexible approach concerning Service Taxadministration so that the assessees and the general public gain faithand trust in the tax measure so that voluntary tax compliance, one of theavowed objectives of the Citizens Charter, is achieved. Substantive andprocedural liberalization measures, adopted over the years for thispurpose, are clear manifestations of the above approach. Following are

some of the measures adopted in that direction:(i) Under Section 67 of the Finance Act, 1994, Service Tax is levied onthe gross or aggregate amount charged by the service provider on thereceiver. Rule 6(1) of the Service Tax Rules, 1994 has provided thatService Tax shall be paid to the credit of the Government account inrespect of the services deemed to be provided as per the rules framed inthis regard. Point of Taxation Rules, 2011 has provided the point in timewhen a service shall be deemed to have been provided; Rule 3 of thesaid rule provides that for the purposes of these rules, unless otherwiseprovided, point of taxation shall be,-

(a) the time when the invoice for the service provided or to be providedis issued: Provided that where the invoice is not issued within 14 days ofthe provision of the service, the point of taxation shall be date of suchcompletion.

(b) In a case, where the person providing the service, receives a paymentbefore the time specified in clause (a), the time, when he receives suchpayment to the extent of such payment.

Explanation For the purpose of this rule, wherever any advance bywhatever name known, is received by the service provider towards theprovision of taxable service, the point of taxation shall be the date of

receipt of each such advance.

Rule 4. Determination of point of taxation in case of change in effectiverate of tax. Notwithstanding anything contained in rule 3, the point oftaxation in cases where there is a change in effective rate of tax inrespect of a service, shall be determined in the following manner,namely:-


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(a) In case a taxable service has been provided before the change ineffective rate of tax,-

(i) Where the invoice for the same has been issued and the paymentreceived after the change in effective rate of tax, the point of taxationshall be date of payment or issuing of invoice, whichever is earlier; or

(ii) Where the invoice has also been issued prior to change in effective rateof tax but the payment is received after the change in effective rate oftax, the point of taxation shall be the date of issuing of invoice; or

(iii) Where the payment is also received before the change in effective rateof tax, but the invoice for the same has been issued after the change ineffective rate of tax, the point of taxation shall be the date of payment;

(b) In case a taxable service has been provided after the change ineffective rate of tax,(i) Where the payment for the invoice is also made after the change in

effective rate of tax but the invoice has been issued prior to the change ineffective rate of tax, the point of taxation shall be the date of payment; or(ii)Where the invoice has been issued and the payment for the invoice

received before the change in effective rate of tax, the point of taxationshall be the date of receipt of payment or date of issuance of invoice,whichever is earlier; or

(iii)Where the invoice has also been raised after the change in effective rateof tax but the payment has been received before the change in effectiverate of tax, the point of taxation shall be date of issuing of invoice.Explanation for the purposes of this rule, change in effective rate of

tax shall include a change in the portion of value on which tax is payablein terms of a notification issued under the provisions of Finance Act,1994 or rules made thereunder.

(ii)Corporate assessees are given the liberty to pay tax on the value oftaxable service, provided by them in a month, by the 6th of the followingmonth if tax is deposited electronically and 5th of the following month iftax is deposited in any other manner. Further, in case the assessee isindividual or proprietary firm or partnership firm, tax payment is requiredto be made only once in a quarter i.e by 6thof the following quarter if

tax is deposited electronically and 5

th

of the following quarter if tax isdeposited in any other manner.

(iii)The process of registration of assessees has been considerablysimplified.

(iv) No separate accounts have been prescribed for the purposes ofService Tax. It has been provided that accounts being maintained by the


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assessees under any other law in force would be sufficient. This hasplaced the Department at considerable inconvenience to itself, so as tominimize difficulties for the assessees.

(v) The Finance Act, 2001 has introduced self assessment for service tax

returns; thereby sparing the assessees from the rigours of routinescrutiny and assessment.

(vi)Frequency of filing the returns in the form of ST 3 or ST3A as thecase may be is minimized. Filing of Statutory return has been made halfyearly and by the 25th of the month following the half-year ending on31st arch and 30th September. This is in replacement of themonthly/quarterly returns prescribed earlier.

(vii)Penal provisions do exist in respect of Service Tax also. Failure to

obtain registrations, failure to pay the tax, failure to furnish the prescribedreturns, suppression of the correct value of the taxable services andfailure to comply with notice do attract penal provisions as prescribed.But, it is specifically provided that no penalty is imposable on theassessee for any of the above failures, if the assessee proves that therewas reasonable cause for the failure. This provision has been inserted totake care of the genuine difficulties of the new assessees.

(viii) Service Tax Credit Rules, 2002, have been replaced by theCENVAT Credit Rules, 2004, introduced by the Finance Act, 2004,

where under CENVAT credit has been extended across the sectors i.e.goods and services.


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RETURNS

Service tax is levied on specified services and the responsibility ofpayment of the tax is generally cast on the service provider but for fewexceptions. System of self-assessment of Service Tax Returns by

service tax assessees has been introduced w.e.f. 01.04.2001. The jurisdictional Superintendent of Central Excise is authorized to crossverify the correctness of self assessed returns. These tax returns have tobe filed half yearly. The Central Excise officers are authorized to conductsurveys to bring the prospective service tax assessees under the tax net.Directorate General of Service Tax at Mumbai oversees the activities atthe field level for technical and policy level coordination.


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BIBLIOGRAPHY

www.wikipedia.com

www.google.com

http://searchtelecom.techtarget.com

http://www.servicetax.gov.in


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ACKNOWLEDGEMENT

I would like to thank Professor Parag Thakkar for giving us theopportunity to explore taxation in a unique way through conducting deepresearch on taxation of services. The project enabled me to understand

the taxation laws in India relating to telecommunication and broadcastingservices. I am highly obliged for being given this opportunity to look attaxation in a whole different way.

direct and indirect taxation project

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