8/9/2019 Final Indore Rishabh
1/57
1
Overview of Service Tax Provisions
AndImportant Services under the ServiceTax
Rishabh R. [email protected]
098198-61049
CA Final Student, Mumbai
mailto:[email protected]:[email protected]8/9/2019 Final Indore Rishabh
2/57
2
AGENDA
Introduction
Administration of Service Tax
Act & Rules Applicable
Category of Services
Finance Bill (No.2),2009 Amendments
Few Important Services
Question & Answer Session
8/9/2019 Final Indore Rishabh
3/57
3
INTRODUCTION
Recommended by Dr. Raja Chelliah Committee (Tax
Reforms Committee)
No separate law
First introduced in the year 1994 vide Chapter V (Section
64 to 96) of Finance Act,1994
Chapter VA (Section 96A to 96I) was inserted by
Finance Act,2003
Applicable to whole of India except the state of Jammu and
Kashmir and its provisions were made applicable witheffect from July 1,1994.Ex:
In India the service sector contributes nearly 53% of GDP Rate Applicable as of now is 10.3%
3
8/9/2019 Final Indore Rishabh
4/57
4
Administration of ServiceTax
Administered by the Excise department working under Department of Revenue ,
Ministry of Finance , Government of India
The responsibility of administration and collection of service tax has been vested with
CBEC (Central Board of Excise and Customs)
Section 93 and 94 of Chapter V and section 96 I of Chapter VA of Finance Act ,
1994 empowers the Central Government to issue Notifications to exempt any
service or part of service from service tax
Accordingly Notifications have been issued by Department of Revenue
,Ministry of Finance from time to time
4
8/9/2019 Final Indore Rishabh
5/57
5
Act and Rules Applicable toService Tax
1. Chapter V and Chapter VA of Finance Act 1994
2. Service Tax Rules,1994
Forms
Procedure for Registration
Due dates
Records
1. Service Tax (Removal of Difficulty) Order,2002
2. Service Tax (Advance Rulings) Rules, 2003
3. Cenvat Credit Rules 2004(Earlier Service Tax CreditRules,2002)
4. Export of Service Rules,2005
5
8/9/2019 Final Indore Rishabh
6/57
6
Act and Rules Applicable toService Tax(Contd.)
8. Service Tax (Registration of Special Category of Persons)Rules, 2005
9. Service Tax (Determination of Value) Rules, 2006
10. Taxation of Services (Provided from Outside India and
Received in India) Rules, 200611. Works Contract (Composition Scheme for Payment of
Service Tax) Rules, 2007
12. Service Tax (Publication of Names) Rules, 2008
13. Service Tax Dispute Resolution Scheme, 2008
14. Service Tax (Provisional Attachment of Property) Rules,2008
15. Service Tax Return Preparer Scheme,2009
6
8/9/2019 Final Indore Rishabh
7/57
77
Acid Test to decideTaxability
Service
Provider
Place Where
service is
delivered
Taxable Service
Section 65(105)
Recipient
of ServiceService
Threshold limit of Rs 10 lakhs for service
providers
8/9/2019 Final Indore Rishabh
8/57
8
Taxable services
8
8/9/2019 Final Indore Rishabh
9/57
9
Category of Services
Communication Services 5 Travel & Transport Services 14
Entertainment Services 13
Professional/Marketing/Agency 20
Real Estate 5
Insurance 4
Cargo/Port 7
Financial 13
Business/Commercial 17
Others 8
TOTAL 106
8/9/2019 Final Indore Rishabh
10/57
10
3 New services added
Finance(No. 2) Bill, 2009
Cosmetic and Plastic surgery services introduced [Sec65(105)(zzzzk)]
Transport of goods by National waterways and Inland
Waters introduced [Sec 65(105)(zzzzl)] Legal services to a business entity, by any other business
entity introduced [Sec 65(105)(zzzzm)]
10
t t
8/9/2019 Final Indore Rishabh
11/57
11
. ract c ng artereAccountant/CS/CWA
Services Introduced : 16.10.1998
Definition: Sec 65(83)
"practicing chartered accountant" means a person who is a memberof the Institute of Chartered Accountants of India and is holding a
certificate of practice granted under the provision of the CharteredAccountants Act, 1949 (38 of 1949) and includes any concernengaged in rendering services in the field of Chartered accountancy;
Taxable service- Taxable service means any service provided or to beprovided to any person, by a practising chartered accountant in hisprofessional capacity, in any manner-S.65(105)(s);
11
8/9/2019 Final Indore Rishabh
12/57
12
Practicing CharteredAccountant/CS/CWA
Services(Contd.) CA in practice may act as Liquidator, Trustee, Executor,
Administrator, Arbitrator, Receiver, or representative in
taxation or financial matter Services rendered in professional capacity subject to
service tax
Services rendered in a professional capacity relating torepresenting the client before any statutory authority in the
course of proceedings initiated under any law- exempt fromtax from 13.07.2006 (Notification No. 25/2006)
12
8/9/2019 Final Indore Rishabh
13/57
13
Issues What is professional capacity ?
Is Royalty income from authorship of bookstaxable ?
Personal/Group tutions given by practicing CAstaxable ?
Whether receipts from Manpower recruitmentwork or Management Consultancy will be taxedunder this head ?
Persons not holding COP and rendering Tax
advisory services liable to pay service tax ?
8/9/2019 Final Indore Rishabh
14/57
14
2.Legal Services
Introduced : yet to be effective
Finance (No.2) Bill,2009 Legal services to a business entity, by any other
business entity introduced [Sec 65(105)(zzzzm)]
In relation to :
Advice
Consultancy Assistance in any branch of law
8/9/2019 Final Indore Rishabh
15/57
15
Issues
What is a Law ?
Whether Non advocates are taxable ?
Firm of advocates giving consultancy onany matter other than branch of law ?
Advice on Package Scheme ofIncentives,other schemes of State or
Central Government ?
8/9/2019 Final Indore Rishabh
16/57
16
3.Commercial Training &Coaching Services
Introduced: 01.07.2003
Definitions-
Sec 65(27)- "commercial training or coaching centre
Any institute or establishment
Imparting skill,knowledge,lessons Any subject other than sports
Excludes pre school coaching
Also excludes any institute or establishment issuing certificatesrecognized by law
Taxable service- any service provided or to be provided Toany person, by a commercial training or coaching centre inrelation to commercial training or coaching -Sec 65(105)(zzc)
8/9/2019 Final Indore Rishabh
17/57
17
Issues
What is the meaning of word Commercial ? NGO making surplus out of training,Does
NGO become commercial ?
Person taking group tutions,is it commercial
coaching ? Certification courses provided by colleges
and universities not recognized by law,Will itbe taxed ?
8/9/2019 Final Indore Rishabh
18/57
18
4.Stock Broker Services
Introduced : 1.7.1994
Definition: Sec 65(101)
Stock Broker means
Application made for registration
Registered as a stock broker or
Sub broker Taxable service- Taxable service means any service
provided or to be provided to any person, by a stock
broker in connection with sale or purchase of securitieslisted on recognized stock exchange-S.65(105)(s);
The Finance (No.2) Bill,2009 has proposed to omit the wordsSub Broker from definition of Stock Broker
8/9/2019 Final Indore Rishabh
19/57
19
Issues
Services provided by Unregistered StockBroker,taxable ?
Services provided by one broker to anotherbroker,taxable ?
Whether arbitrage,jobbing done by thebroker on his own account,taxable ?
Transactions of unlisted securities of listed
companies I.e Debentures,CommercialPapers,taxable ?
8/9/2019 Final Indore Rishabh
20/57
20
5.Management or BusinessConsultants Services
Introduced : 16/10/1998
Definition : 65(65)
Management or Business Consultant means
any person who is engaged in providing anyservice,either directly or indirectly,inconnection with the management of anyorganisation or business in any manner and
includes any person who renders anyadvice,consultancy or technical assistance inrelation to :
anagement or us ness
8/9/2019 Final Indore Rishabh
21/57
21
anagement or us nessConsultants
Services(Contd.) Financial management Human Resources Management
Marketing Management
Production Management
Logistics Management
Procurement & Management of Information Technologyresources ;or
other similar areas of management Taxable service-Taxable service means any service provided or to be provided
to any person by a management or business consultant in connection withthe management of any organisation or business in any manner-S.65(105)(r);
8/9/2019 Final Indore Rishabh
22/57
22
Issues
Are the following activities management ?
Service of Drafting of Whistle Blower Policy
Drafting a Risk Management Framework
Corporate Governance Rating
Internal Audit by a non practicing CA/CS/CWA
Advisory services in getting ISO certification,variousgovernment approvals like SEZ,environmentclearances,FDA approvals
8/9/2019 Final Indore Rishabh
23/57
23
6.Sponsorship Services
Introduced : 01.05.2006
Definition: Sec 65(99a)
sponsorship" includes naming an event after thesponsor,displaying the sponsors company logo or tradingname,giving the sponsor exclusive or priority booking
rights,sponsoring prizes or trophies for competition;But does not include any financial or other support in the formof donations or gifts,given by the donors subject to thecondition that the service provider in under no obligation toprovide anything in return to such donors;
Taxable service-Taxable service means any service provided or
to be provided to any body corporate or firm,by any personreceiving sponsorship,in relation to such sponsorship,in anymanner but does not include services in relation to sponsorshipof sports events-S.65(105)(s);
8/9/2019 Final Indore Rishabh
24/57
24
Issues
What is a Sports event?
What is a body corporate?
What is a firm ? In respect of Services provided from
outside India and received in
India,Whether services provided toother than body corporate and firmscan be taxed ?
8/9/2019 Final Indore Rishabh
25/57
25
7.Security Agency Services
Introduced : 16.10.1998
Definition: Sec 65(94) Security Agency means
Any person engaged in business
Security of any property,movable & immovable
Includes services of investigation
Detection or verification
Of any fact or activity
Supply of security personnel
Taxable service- any service provided or to be provided To anyperson, by a security agency in relation to security of anyproperty or person and detection,etc services -Sec 65(105) (zzc)
8/9/2019 Final Indore Rishabh
26/57
26
Issues
Is security agency service providedby a Police Department taxable ?
Is security agency service providedby a NGO taxable ?
Is security agency service providedby animal keepers likedog,horse,other pets taxable ?
8/9/2019 Final Indore Rishabh
27/57
27
8.Cosmetic & PlasticSurgery Services
Introduced : yet to be effective
Finance (No.2) Bill,2009
Services by any person to any personin relation to
Costmetic & Plastic surgery
Excludes any surgery undertaken torestore or reconstruct anatomy orfunctions of body due to diseases
8/9/2019 Final Indore Rishabh
28/57
28
Issues
Removal of Fat
Smile surgery
Dental Surgery
8/9/2019 Final Indore Rishabh
29/57
29
Useful Links
Directorate of Service Tax, Ministry of Finance
http://www.servicetax.gov.in/
Union Budget
http://www.indiabudget.nic.in/ub2009-10/fb/bill5.pdf
29
8/9/2019 Final Indore Rishabh
30/57
30
QUESTIONS?
SUGGESTIONS??
COMMENTS???
8/9/2019 Final Indore Rishabh
31/57
3131
8/9/2019 Final Indore Rishabh
32/57
32
2.Insurance AuxillaryServices
Introduced : 16.10.1998
Definition: Sec 65(83)
"practicing chartered accountant" means a person who is amember of the Institute of Chartered Accountants of India
and is holding a certificate of practice granted under theprovision of the Chartered Accountants Act, 1949 (38 of1949) and includes any concern engaged in renderingservices in the field of Chartered accountancy;
Taxable service- Taxable service means any service
provided or to be provided to any person, by a practisingchartered accountant in his professional capacity, in anymanner-S.65(105)(s);
8/9/2019 Final Indore Rishabh
33/57
33
3. Event ManagementServices
Introduced: 16.08.2002
Definition : Sec 65(40)- Event Management
: Sec 65(41) Event manager
Taxable service - any service provided or to be provided to
to any person, by an event manager in relation to eventmanagement [Sec 65(105) (zu)]
33
8/9/2019 Final Indore Rishabh
34/57
34
Event ManagementServices(Contd.)
An event manager is hired to execute an event such as aproduct launch of any corporate, promotional activities,exhibitions and private functions, etc.
Event manager uses his expertise and ideas to manage anevent
Includes any consultation provided for organizing event
No service tax on sale proceeds of tickets or revenuegenerated from the sale of space
Services provided by an organizer of trade fairs and
exhibitions to an exhibitor in relation to business exhibitionis liable to service tax under Business Exhibition Service
34
8/9/2019 Final Indore Rishabh
35/57
35
5. Information TechnologySoftware Services
Introduced: 16.05.2008
Definition Sec 65(53a)
"information technology software means anyrepresentation of instructions, data, sound or image,
including source code and object code, recorded in amachine readable form, and capable of being manipulatedor providing interactivity to a user, by means of a computeror an automatic data processing machine or any otherdevice or equipment
35
8/9/2019 Final Indore Rishabh
36/57
36
Taxable service
Sec 65(105) (zzzze) any service provided or to be provided
To any person, by any other person in relation to informationtechnology software for use in the course, or furtherance, of
business or commerce, including,(i) development of information technology software,(ii) study, analysis, design and programming of informationtechnology software,(iii) adaptation, upgradation, enhancement, implementation andother similar services related to information technology software
36
8/9/2019 Final Indore Rishabh
37/57
37
(iv) providing advice, consultancy and assistance on mattersrelated to information technology software, includingconducting feasibility studies on implementation of a system,specifications for a database design, guidance and assistanceduring the startup phase of a new system, specifications to
secure a database, advice on proprietary informationtechnology software,(v) acquiring the right to use information technology softwarefor commercial exploitation including right to reproduce,distribute and sell information technology software and rightto use software components for the creation of and inclusionin other information technology software products,(vi) acquiring the right to use information technology softwaresupplied electronically
37
8/9/2019 Final Indore Rishabh
38/57
38
Points to note
Software consists of carrier medium such as CD, Floppy andcoded data
Packaged software sold off the shelf, being treated asgoods, is leviable to excise duty
IT software services provided for use in business orcommerce are included
Supply of IT software electronically included
Services provided in relation to advice, consultancy on ITsoftware included
38
d d i
8/9/2019 Final Indore Rishabh
39/57
39
Amendment proposed inFinance Bill 2009
the word providing is to be substituted for acquiring inSec 65(105)(zzzze)- Information Technology SoftwareServices with retrospective effect from 16.05.2008
39
8/9/2019 Final Indore Rishabh
40/57
40
6. Consulting Engineer
Introduced : 07.07.1997
Definition Sec 65(31)
"consulting engineer" means any professionally qualified engineeror anybody corporate or any other firm who, either directly orindirectly, renders any advice, consultancy or technical assistance in
any manner to any person in one or more disciplines of engineering Taxable service- Sec 65(105) (g)
Taxable service means any service provided or to be provided
to any person, by a consulting engineer in relation to advice,consultancy or technical assistance in any manner in one or moredisciplines of engineering including the discipline of computerhardware engineering
40
8/9/2019 Final Indore Rishabh
41/57
41
Consulting Engineer
Includes self-employed professionally qualified engineer,whether or not employing others for assistance.
For services rendered by the sub-consultant to the primeconsultant, the levy of Service Tax, on the prime ormain consulting engineer who raises a bill on his client(which would include the charge for services by the sub-consultant).
41
8/9/2019 Final Indore Rishabh
42/57
42
Illustrative list
(i) Feasibility study
(ii) Pre-design services/project report
(iii) Basic design engineering
(iv) Detailed design engineering
(v) Procurement(vi) Construction supervision and project management
(vii) Supervision of commissioning and initial operation
(viii) Manpower planning and training
(ix) Post-operation and management
(x) Trouble shooting and technical services,including establishing systems and procedures for an existingplant.
42
8/9/2019 Final Indore Rishabh
43/57
43
Specific Exemption
taxable services provided by a consulting engineer to aclient on transfer of technology
43
8/9/2019 Final Indore Rishabh
44/57
44
Taxable services
Communication Services1. Telecommunication Service
65(105)(zzzx)
2. Mailing List Compilation and Mailing
65(105)(zzzg)3. Internet Telephony
65(105)(zzzu)
4. Internet Cafe65(105)(zzf)
5. Development and Supply of Contents65(105)(zzzzb)
44
8/9/2019 Final Indore Rishabh
45/57
45
Travel and Transport
6. Air Travel Agent 65(105)(l)
7. Airport Services 65(105)(zzm)
8. Transport of Goods by Aircraft 65(105)(zzn)
9. Transport of passenger embarking in India for
international journey by air 65(105)(zzzo)
10. Tour operator 65(105)(n)
11. Rent-A-Cab scheme operator 65(105)(o)
12.Rail Travel Agent 65(105)(zz)
13. Transport of goods by road 65(105)(zzp)
14. Travel Agent Other 65(105)(zzx)
15. Transport of goods other than water through
pipeline or other conduit 65(105)(zzz)
45
8/9/2019 Final Indore Rishabh
46/57
46
Travel and Transport..
16. Transport of goods in Container by Rail65(105)(zzzp)
17. Ship Management65(105)(zzzt)
18. Transport by Cruise Ship 65(105)(zzzv)
19. Courier 65(105)(f)
46
8/9/2019 Final Indore Rishabh
47/57
47
Entertainment20. Photography 65(105)(zb)
21. Online Information & Data Base Access or retrieval 65(105)(zh)22. Video-tape Production 65(105)(zi)
23. Sound Recording 65(105)(zj)
24. Broadcasting agency or organization 65(105)(zk)
25.Cable Operator 65(105)(zs)
26. Event Management 65(105)(zu)
27. Fashion Designer 65(105)(zv)
28. Club or Association 65(105)(zzze)
29. Mandap Keeper 65(105)(m)
30. Convention Centre 65(105)(zc)
31. Outdoor Caterer 65(105)(zzt)
32. Pandal or shamiana 65(105)(zzw)
47
P f i l /
8/9/2019 Final Indore Rishabh
48/57
48
Professional /Marketing/Agency
33. Consulting Engineer 65(105)(g)
34. Architect 65(105)(p)
35. Interior decorator 65(105)(q)
36. Management or Business consultant 65(105)(r)
37. Chartered Accountant 65(105)(s)
38. Cost Accountant 65(105)(t)
39. Company Secretary 65(105)(u)
40. Scientific and Technical consultancy 65(105)(za)
41. Beauty Treatment 65(105)(zq)
42. Health Club & Fitness 65(105)(zw)
43. Opinion Poll 65(105)(zzs)
44. Programme Producer 65(105)(zzu)
48
P f i l /
8/9/2019 Final Indore Rishabh
49/57
49
Professional /Marketing/Agency..
45. Security Agency 65(105)(w)
46. Credit Rating Agency65(105)(x)
47. Market Research Agency 65(105)(y)
48. Advertisement Agency 65(105)(e)49. Manpower Recruitment and Supply Agency
65(105)(k)
50. Registrar to an issue65(105)(zzzi)
51. Share Transfer Agent65(105)(zzzj)
52. Design Services 65(105)(zzzzd)
49
8/9/2019 Final Indore Rishabh
50/57
50
Real estate
53. Real Estate Agent 65(105)(v)
54. Commercial or Industrial Construction Service65(105)(zzq)
55. Site formation and clearance, excavation and
earthmoving and demolition and such other activities65(105)(zzza)
56. Construction of Complex65(105)(zzzh)
57. Survey and Map Making 65(105)
(zzzc)
50
8/9/2019 Final Indore Rishabh
51/57
51
Insurance
58. General Insurance65(105)(d)
59. Insurance auxiliary services concerning general
insurance business65(105)(zl)
60. Life insurance in relation to risk cover65(105)(zx)
61. Insurance auxiliary services concerning
life insurance business
65(105)(zy)
51
8/9/2019 Final Indore Rishabh
52/57
52
Cargo/Port
62. Custom House Agent65(105)(h)
63. Steamer Agent 65(105)(i)
64. Clearing & Forwarding Agent65(105)(j)
65. Cargo Handling 65(105)(zr)
66. Port65(105)(zn)
67. Other Port
65(105)(zzl)68. Dredging Service 65(105)
(zzzb)
52
Fi i l
8/9/2019 Final Indore Rishabh
53/57
53
Financial69. Stock-Broker 65(105)(a)
70. Underwriter 65(105)(z)
71. Banking or Financial Services 65(105)(zm)
72. Foreign Exchange Broker 65(105)(zzk)
73. Forward Contract 65(105)(zzy)
74. ATM operations, maintenance or management 65(105)(zzzk)
75. Recovery Agent 65(105)(zzzl)
76. Credit / Debit / Charge or Other payment Card65(105)(zzzw)77. Asset management service 65(105)(zzzzc)
78. Management of Investment ULIP Service 65(105)(zzzzf)
79. Stock Exchange Service 65(105)(zzzzg)
53
8/9/2019 Final Indore Rishabh
54/57
54
Financial
80. Commodity Exchange Service65(105)(zzzzh)
81. Processing and Clearing House Service65(105)(zzzzi)
54
8/9/2019 Final Indore Rishabh
55/57
55
Business/ Commercial
82. Authorized Service Station 65(105)(zo)
83. Dry Cleaning 65(105)(zt)
84. Storage and warehousing 65(105)(zza)
85. Business Auxiliary Service 65(105)(zzb)
86. Commercial Training or Coaching Centre 65(105)(zzc)87. Franchise 65(105)(zze)
88. Management, maintenance or repair 65(105)(zzg)
89. Technical testing and analysis 65(105)(zzh)
90. Technical inspection and certification 65(105)(zzi)
91. Business Exhibition 65(105)(zzo)
92. Intellectual Property 65(105)(zzr)
55
8/9/2019 Final Indore Rishabh
56/57
56
Business/ Commercial
93. Cleaning Activity 65(105)(zzzd)
94. Packing Activity 65(105)(zzzf)
95. Sale of space or time for advertisement65(105)(zzzm)
96. Sponsorship65(105)(zzzo)
97. Support services of business or commerce
65(105)(zzzq)98. Information Technology Software Services
65(105)(zzzze)
56
8/9/2019 Final Indore Rishabh
57/57
Others
99. Erection, Commissioning or Installation65(105)(zzd)
100.Survey and Exploration of Mineral Oil and Gas 65(105)(zzv)
101.Auctioneers 65(105)(zzzr)
102.Public Relation 65(105)(zzzs)
103. Mining 65(105)(zzzy)
104.Renting of immovable property 65(105)(zzzz)
105.Works contract 65(105)(zzzza)
106.Supply of Tangible Goods Service 65(105)(zzzzj)