The Finance (No.2) Bill 2009 has proposed certain changes in the service tax law. Some of which are effective from 7 July 2009, some from the date the budget is passed, i.e., the Finance Bill becomes Finance Act, some from the date to be notified. The rate of service tax has been retained at 10% plus cess: effectively 10.3%.
Three new services have been brought under the service tax levy from date to be notified. These include legal consultancy services provided by a business entity to another business entity. Business entity includes association of person, body of individual, company or firm but does not include individuals.
Cosmetics and plastic surgery services like liposuction, forehead lift, and reshaping of nose are now covered. Surgeries to restore body functions affected due to congenital defects, developmental abnormalities, disease, injury, and trauma are excluded.
Services provided for transport of coastal goods and transport of goods through inland/national waterways are subjected to service tax. Only domestic freight (and not international freight) is liable to service tax.
Changes in existing services from the date to be notified are applicable to sub-brokers. They will now be outside the purview of ser-
vice tax. They will neither be taxed for providing stock-broker services nor as commission agents under' Business auxiliary servicess'.
Production and processing of goods for or on behalf of a client will not fall within the purview of service tax under, 'Business auxiliary services' only if the activity results in manufacture of excisable goods.
Goods transported by railways (government or non-government), whether in container or otherwise, are now covered under transport of goods by rail services.
For existing services, export refund and cenvat credit it has been clarified from 7 July 2009 interbank purchase and sale of foreign currency between scheduled banks is now no longer taxable under banking and other financial service. The Federation of
Indian Export Promotion Organization and other specified export promotion councils are exempt from levy of service tax under, 'Club and association services'.
Private bus operators with 'contract carriage permit' are now not covered under 'Tour operator services' provided such service is for point to point transport of passengers and for tourism, conducted tours or charter or hire.
Under works contract service, composition scheme will be available to only such works contracts where the gross value of works contract includes the value of all goods used in or in relation to execution of work contract whether received free of cost or for consideration under any other contract. Amendment is not applicable to current works contract where execution commenced or payment made on or before 7 July 2009.
Scheme for refund of service tax paid by exporter on taxable service received and used in connection with export of goods has been further simplified. A service provider providing both taxable and exempt services and using common input/input services but opting not to maintain separate accounts has to pay 6% of the value of exempted service instead of 8% earlier.
Three new services have been brought under the service tax levy from date to be notified. These include legal consultancy services provided by a business entity to another business entity. Business entity includes association of person, body of individual, company or firm but does not include individuals.
Cosmetics and plastic surgery services like liposuction, forehead lift, and reshaping of nose are now covered. Surgeries to restore body functions affected due to congenital defects, developmental abnormalities, disease, injury, and trauma are excluded.
Services provided for transport of coastal goods and transport of goods through inland/national waterways are subjected to service tax. Only domestic freight (and not international freight) is liable to service tax.
Changes in existing services from the date to be notified are applicable to sub-brokers. They will now be outside the purview of ser-
vice tax. They will neither be taxed for providing stock-broker services nor as commission agents under' Business auxiliary servicess'.
Production and processing of goods for or on behalf of a client will not fall within the purview of service tax under, 'Business auxiliary services' only if the activity results in manufacture of excisable goods.
Goods transported by railways (government or non-government), whether in container or otherwise, are now covered under transport of goods by rail services.
For existing services, export refund and cenvat credit it has been clarified from 7 July 2009 interbank purchase and sale of foreign currency between scheduled banks is now no longer taxable under banking and other financial service. The Federation of
Indian Export Promotion Organization and other specified export promotion councils are exempt from levy of service tax under, 'Club and association services'.
Private bus operators with 'contract carriage permit' are now not covered under 'Tour operator services' provided such service is for point to point transport of passengers and for tourism, conducted tours or charter or hire.
Under works contract service, composition scheme will be available to only such works contracts where the gross value of works contract includes the value of all goods used in or in relation to execution of work contract whether received free of cost or for consideration under any other contract. Amendment is not applicable to current works contract where execution commenced or payment made on or before 7 July 2009.
Scheme for refund of service tax paid by exporter on taxable service received and used in connection with export of goods has been further simplified. A service provider providing both taxable and exempt services and using common input/input services but opting not to maintain separate accounts has to pay 6% of the value of exempted service instead of 8% earlier.
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