1.1. What is service tax?

Transcription

1 1.1. What is service tax? Service tax in an indirect tax levied on the provision of taxable services. It is a tax on valued addition provided by a service provider of taxable services. It is a tax on services and not on service provider Law Governing Service Tax Service tax is governed by following Law, Rules & regulations: Finance Act, 1994 Service Tax Rules, 1994 Central Excise (Appeals) Rules, 2001 CESTAT (Procedure) Rules, 1982 Removal of Difficult Order, 2002 Service Tax (Advance Rulings) Rules, 2003 CENVAT Credit Rules, 2004 CESTAT Procedures Regulations, 2005 Central Excise (Removal of Difficulties) Rules, 2005 Registration of Special Persons Rules, 2005 Export of Service s Rules, 2005 Determination of Value Rules, 2006 Import of Service Rules, 2006 Works Contract Rules, 2007 Dispute Resolution Scheme Rules, 2008 Service Tax Dispute Resolution Scheme, 2008 Provisional Attachment of Property Rules, 2008 Publication of Names Rules, 2008 Service Tax Return Preparer Scheme, 2009 Removal of Difficulty Order, 2010 The Indirect Tax Ombudsman Guidelines 2011 Point of Taxation Rules, 2011 Place of Provision of Services Rules, 2012 Service Tax (Compounding of Offences) Rules, 2012 Service Tax (Settlement of Cases) Rules, 2012 Service Tax Voluntary Compliance Encouragement Rules, Levy of Service Tax

2 Services shall also not include the following : - functions performed by the Members of Parliament, Members of State Legislative, Members of Panchayats, Members of Municipalities and Members of other local authorities in that capacity - Duties performed by any person who holds any post in pursuance of the provisions of the Constitution in that capacity - duties performed by any person as a Chairperson or a Member or a Director in a body established by the Central Government or State Governments or local authority and who is not deemed as an employee Section 66B of Finance Act, 1994 provides that Service Tax is levied on taxable service provided in taxable territory. A taxable service has been defined as a service which is not provided in the negative list. Service has also been defined in the Finance Act, 1994 as any activity carried out by a person for another for consideration. The definition provides for certain specific exclusions and inclusions What is a service A service is defined as under: any activity carried out by a person for another for consideration and includes a declared service but shall not include Only Commercial transactions to get covered. Consideration can be in cash or kind renting of immovable property Construction of a complex, building, civil structure or a part thereof Allowing use of Intellectual Property Activities relating to IT Software Agreeing to do or to refrain from an act Hire purchase or similar activities Supply of goods without Right to use Works contract Servicing of edibles assignment by the Government of the right to use the radiofrequency spectrum and Transaction merely of transfer of title in goods (including deemed sales) or immovable property Transactions merely in money or actionable claim Services under employment Services of Court or Tribunal Exclusions are provided on next page.

3 For the purpose of provision of service from one person to another, An unincorporated association or body of persons and member thereof shall be constituted as separate persons. An establishment in the taxable territory and an establishment in a non-taxable territory even though of the same person, shall be considered as separate persons for the purpose of Service tax. In the above definition, the expression "transaction in money or actionable claim" shall not include (i) any activity relating to use of money or its conversion by cash or by any other mode, from one form, currency or denomination, to another form, currency or denomination for which a separate consideration is charged; (ii) any activity carried out, for a consideration, in relation to, or for facilitation of, a transaction in money or actionable claim, including the activity carried out (a) by a lottery distributor or selling agent on behalf of the State Government, in relation to promotion, marketing, organising, selling of lottery or facilitating in organising lottery of any kind, in any other manner, in accordance with the provisions of the Lotteries (Regulation) Act, 1998; (b) by a foreman of chit fund for conducting or organising a chit in any manner.

4 1.5. Liability to pay Service Tax Once a service qualifies as taxable service, and levy has been established, one shall further check for available exemptions, abatements and liability to determine one s liability to pay service tax. The process of reviewing one s liability of paying service tax on an activity under the new regime as Service is as follows: Examine the definition of "Service" to determine if the activity falls within its ambit. If the answer is affirmative, look out for its exclusion in negative list If not a negative service, then service tax is levied under Section 66B If not exempt, check for abatement under Notification No.26/2012-ST dated March 17, 2012 Once service is taxable, look out for available exemption under Notification No. 25/2012-ST dated March 17, 2012 Are Services provided in Taxable Territory to create the levy under Section 66B on such services Determine Value of taxable service as per the provisions of Section 67 Furhter, In case of export / import of services, check liability as per the provisions of Section 66C If still taxable, determine the applicable rate of service tax, rate of exchange as per provisions of Section 67A Make compliances as required under law Lastly, check Notification No.30/2012-ST dated March 17, 2012 to determine as to whether the liability to deposit service tax is not on the receipient of Service

5 1.6. Negative List The following services have been included in negative list: Provider of Service Recipient of Nature of Services service Government Any person All Services of government are in negative list except the following: (i) services by the Department of Posts by way of speed post, express parcel post, life insurance, and agency services provided to a person other than Government; (ii) services in relation to an aircraft or a vessel, inside or outside the precincts of a port or an airport; (iii) transport of goods or passengers; or (iv) any service, other than services covered under clauses (i) to (iii)above, provided to business entities Reserve Bank of India Any person Any Service Foreign diplomatic Any person Any Service mission located in India Any person in relation to agriculture Any person services relating to agriculture or agricultural produce by way of (i) agricultural operations directly related to production of any agricultural produce including cultivation, harvesting, threshing, plant protection or 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 do not alter the essential characteristics of agricultural produce but make it only marketable for the primary market; (iv) renting or leasing of agro machinery or vacant land with or without a

6 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 or purchase of agricultural produce Any person Any person trading of goods Any person Any person services by way of carrying out any process amounting to manufacture or production of goods excluding alcoholic liquor for human consumption Any person Any person selling of space for advertisements in print media Any person Any person service by way of access to a road or a bridge on payment of toll charges Any person Any person betting, gambling or lottery an electricity Any person transmission or distribution of electricity transmission or distribution utility Any person Any person renting of residential dwelling for use as residence Any person Any person extending deposits, loans or advances in so far as the consideration is represented by way of interest or discount Banks or authorized Banks or sale or purchase of foreign currency dealers of foreign authorized amongst either of such persons exchange or amongst dealers of banks and such foreign dealers exchange or amongst banks and such dealers railways in a class Any person service of transportation of passengers, other than first with or without accompanied belongings class; or an airconditioned coach; metro, monorail or tramway; inland waterways; public transport,

7 other than predominantly for tourism purpose, in a vessel between places located in India; and metered cabs or auto rickshaws; Any person, except Any person services by way of transportation of goods the services of by road goods transportation agency; or a courier agency Any person Any person services by way of transportation of goods by inland waterways Any person Any person funeral, burial, crematorium or mortuary services including transportation of the deceased 1.7. Exemptions Exemption Vide Notification No 25/2012-ST The list of exempted services is as follows: S.No. Nature of Service Provided by Conditions 1. Any Service Any Person Provided to the United Nations or a specified international organization 2. Health care services A clinical establishment, an authorized medical practitioner or paramedics 2. Services provided by way of Any person transportation of a patient in an ambulance 2A. Services in relation to Cord Blood Banks preservation of Stem cells or any other services in relation to such preservation -

8 S.No. Nature of Service Provided by Conditions 2B. Services in relation to treatment or disposal of biomedical waste or the process incidental thereto provided 3. Services in relation to health care of animals or birds 4. Services by way of charitable activities 5. Services by way of : renting of precincts of a religious place meant for general public; or conduct of any religious ceremony Operators of To a clinical establishment. Common Bio-medical Waste Treatment Facility Veterinary clinic - An entity registered under section 12AA of the Income tax Act, 1961 Any person - 5A. Services in respect of a religious pilgrimage Specified organisation 6. Any service An arbitral tribunal When provided to: An advocate or partnership firm of advocates providing legal service any person other than a business entity; or a business entity with a turnover up to rupees ten lakh in the preceding financial year; 6. Legal Service A senior advocate When provided to: 8. Services by way of training or coaching in recreational activities relating to arts, culture or sports Any Person - 9. All Services An educational institution any person other than a business entity; or a business entity with a turnover up to rupees ten lakh in the preceding financial year; or To its Staff, Faculty and Students.

9 S.No. Nature of Service Provided by Conditions 9. Services in relation to : i) Transportation of students, faculty and staff. ii) Catering, including any mid day meal sponsored by Government. iii) Security or cleaning or house-keeping services performed in such educational institution iv) Admission to or conduct of examination by such educational institution. 9A. Services in relation to (a) the National Skill Development Programme implemented by the National Skill Development Corporation; or (b) a vocational skill development course under the National Skill Certification and Monetary Reward Scheme; or (c) any other Scheme implemented by the National Skill Development Corporation; Any Person (i) the National Skill Development Corporation set up by the Government of India; (ii) a Sector Skill Council approved by the National Skill Development Corporation; (iii) an assessment agency approved by the Sector Skill Council or the National Skill Development Corporation; (iv) a training partner approved by the National Skill Development Corporation or the Sector Skill Council 9B. Services provided to students Indian Institutes of Management, as per the guidelines of the Central Government 9C. services of assessing bodies empanelled centrally by way of assessments under Skill Development Initiative (SDI) Scheme 9D. services provided by training providers (Project Directorate General of Training, Ministry of Skill Development and Entrepreneurship Training providers To an educational institution Such exemption is for specified educational programmes, except Executive Development Programme

10 S.No. Nature of Service Provided by Conditions implementation agencies) under Deen Dayal Upadhyaya Grameen Kaushalya Yojana under the Ministry of Rural Development by way of offering skill or vocational training courses certified by National Council For Vocational Training 10. Any Service an individual as a player, referee, umpire, coach or team manager for participation in a sporting event organized by a recognized sports body; another recognised sports body When provided to a recognised sports body 11. Services by way of sponsorship Any person Such sponsorship is for sporting events organised,- by a national sports federation, or its affiliated federations, where the participating teams or individuals represent any district, state, zone or Country; by Association of Indian Universities, Inter- University Sports Board, School Games Federation of India, All India Sports Council for the Deaf, Paralympic Committee of India or Special Olympics Bharat; by Central Civil Services Cultural and Sports Board;

11 S.No. Nature of Service Provided by Conditions 12. Services by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration when provided to the Government, a local authority or a governmental authority Any person as part of national games, by Indian Olympic Association; or under Panchayat Yuva Kreeda Aur Khel Abhiyaan (PYKKA) Scheme Such services should be performed on: a historical monument, archaeological site or remains of national importance etc. canal, dam or other irrigation works pipeline, conduit or plant for (i) water supply (ii) water treatment, or (iii) sewerage treatment or disposal 12A. Services by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration when provided to the Government, a local authority or a governmental authority. The exemption shall not apply on or after the 1st April, 2020 Any person Services under a contract which had been entered into prior to the 1st March, 2015 and on which appropriate stamp duty, where applicable, had been paid prior to such date: a civil structure or any other original works meant predominantly for use other than for commerce, industry, or any other business or profession; a structure meant predominantly for use as (i) an educational, (ii) a clinical, or(iii) an art or cultural establishment; or a residential complex predominantly meant for self-use or the use of their employees or other persons specified in the

12 S.No. Nature of Service Provided by Conditions 13. Services provided by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration Any person Explanation 1 to clause (44) of section 65 B of the said Act; Performance should be of: a road, bridge, tunnel, or terminal for road transportation for use by general public; a civil structure or any other original works pertaining to a scheme under Jawaharlal Nehru National Urban Renewal Mission or Rajiv Awaas Yojana; a civil structure or any other original works pertaining to the In-situ rehabilitation of existing slum dwellers using land as a resource through private participation under the Housing for All (Urban) Mission/Pradhan Mantri Awas Yojana, only for existing slum dwellers. a civil structure or any other original works pertaining to the Beneficiary led individual house construction / enhancement under the Housing for All (Urban) Mission/Pradhan Mantri Awas Yojana; a building owned by an entity registered under section 12 AA of the Income tax Act, 1961 and meant predominantly for religious use by general public;

13 S.No. Nature of Service Provided by Conditions 14. Services by way of construction, erection, commissioning, or installation of original works Any person a pollution control or effluent treatment plant, except located as a part of a factory; a structure meant for funeral, burial or cremation of deceased Should be pertaining to,- railways, excluding monorail or metro; [contracts for monorail or metro were entered into before 1st March, 2016, on which appropriate stamp duty will be covered under the above exemption] a single residential unit otherwise than as a part of a residential complex; low- cost houses in a housing project approved by competent authority low cost houses up to a carpet area of 60 square metres per house in a housing project approved by the competent authority under: (i) the Affordable Housing in Partnership component of the Housing for All (Urban) Mission/ Pradhan Mantri Awas Yojana; (ii) any housing scheme of a State Government. post- harvest storage infrastructure for agricultural produce mechanised food grain

14 S.No. Nature of Service Provided by Conditions 14A. Services by way of construction, erection, commissioning, or installation of original works pertaining to an airport or port provided under a contract which had been entered into prior to 1st March, 2015 and on which appropriate stamp duty, where applicable 15. Temporary transfer or permitting the use or enjoyment of a copyright covered under clauses (a) or (b) 16. Services in folk or classical art forms of (i) music, or (ii) dance, or (iii) theatre 17. Services by way of collecting or providing news 18. Services by way of renting A hotel, inn, guest house, club, campsite meant for residential or lodging purposes handling system, machinery or equipment for units processing agricultural produce as food stuff excluding alcoholic beverages Any person provided that Ministry of Civil Aviation or the Ministry of Shipping in the Government of India, as the case may be, certifies that the contract had been entered into before the 1st March, 2015: provided further that nothing contained in this entry shall apply on or after the 1st April, 2020 Any person When relating to original literary, dramatic, musical, artistic works or cinematograph films. Cinematograph films will only include those films which will be exhibited in a cinema hall or theater. A performing artist - Such services should not be performed as a brand ambassador - The consideration charged for such performance is not more than Rs 1.5 Lakh An independent journalist, Press Trust of India or United News of India Such unit should have declared tariff of a unit of accommodation below rupees one thousand per day or equivalent 19. Services provided in relation to A restaurant, eating Such premises should not

15 S.No. Nature of Service Provided by Conditions serving of food or beverages joint or a mess have the facility of airconditioning or central airheating in any part of the establishment, at any time during the year 19A. Services provided in relation to serving of food or beverages 20. Services by way of transportation from one place in India to another 21. Services by way of transportation A canteen maintained in a factory covered under the Factories Act, 1948 (63 of 1948) Rail or vessel A goods transport agency When provided for transportation of: relief materials meant for victims of natural or man-made disasters, calamities, accidents or mishap; defence or military equipments; registered newspaper or magazines railway equipments or materials; agricultural produce; transportation of milk, Salt and food grains including flours, pulses and rice. chemical fertilizer, organic manure and oilcakes cotton, ginned or baled Transportation of: relief materials meant for victims of natural or man-made disasters, calamities, accidents or mishap; defence or military equipments; registered newspaper or

16 S.No. Nature of Service Provided by Conditions 22. Services by way of giving on hire 23. Transport of passengers, with or without accompanied belongings Any person By air magazines railway equipments or materials; agricultural produce; transportation of milk, Salt and food grains including flours, pulses and rice. chemical fertilizer, organic manure and oil cakes and goods where gross amount charged for a consignment transported in a single goods carriage does not exceed Rs goods, where gross amount charged for a single consignee in the goods carriage does not exceed Rs 750 cotton, ginned or baled When provided to: to a state transport undertaking, a motor vehicle meant to carry more than twelve passengers; or to a goods transport agency, a means of transportation of goods When embarking from or terminating in an airport located in the Seven north eastern states or at Bagdogra A non air - conditioned contract carriage other than radio taxi Should not be for tourism, conducted tour, charter or hire

17 S.No. Nature of Service Provided by Conditions 25. Services by way of carrying out any activity in relation to any functions in relation to water supply, public health, sanitation conservancy, solid waste management or slum improvement and upgradation. 26. Services of general insurance business stage carriage other than air-conditioned stage carriage Insurance Company 26A. Services of life insurance under following schemes: Any person (a) Janashree Bima Yojana (JBY); or (b) Aam Aadmi Bima Yojana (AABY). (c) Life micro-insurance product as approved by the insurance regulatory and development authority, having maximum amount of cover of fifty thousand rupees. (d) Varishtha Pension Bima Yojna 26B. collection of contribution Any person under Atal Pension Yojana (APY) 26C. life insurance business provided Any person by way of annuity under the National Pension System regulated by Pension Fund Regulatory and Development Authority of India (PFRDA) under the Pension Fund Regulatory and Development Authority Act, 2013 (23 of 2013) 27. Any service An incubatee up to a total turnover of fifty lakh rupees in a financial year. Such services should be provided to Government, a local authority or a governmental authority. When provided under specified schemes. the total turnover had not exceeded fifty lakh rupees during the preceding financial year; and a period of three years has not been elapsed

18 S.No. Nature of Service Provided by Conditions 28. Services by way of reimbursement of charges or share of contribution 29. Services by the following persons in respective capacities By an unincorporated body or a non- profit entity registered under any law for the time being in force sub-broker or an authorised person from the date of entering into an agreement as an incubate Such services should be provided: as a trade union; for the provision of carrying out any activity which is exempt from the levy of service tax; or up to an amount of Rs 5000 p.m. per member for sourcing of goods or services from a third person for the common use of its members in a housing society or a residential complex To a stock broker Authorised person; to a member of a commodity exchange selling agent or a distributer of SIM cards or recharge coupon vouchers business facilitator or a business correspondent to a banking company or an insurance company, in a rural area

19 S.No. Nature of Service Provided by Conditions sub-contractor providing services by way of works contract to another contractor providing works contract services which are exempt 30. Services of carrying out an intermediate production process as job work 31. Services in respect of a business exhibition held outside India Any person An organizer Services by way of slaughtering of animals 34. Any Services received Provider of service located in a nontaxable territory Any person - When undertaken in relation to- agriculture, printing or textile processing; cut and polished diamonds and gemstones etc. any goods excluding alcoholic liquors for human consumption, on which appropriate duty is payable by the principal manufacturer processes of electroplating etc. during the course of manufacture of parts of cycles or sewing machines upto an aggregate value of taxable service of the specified processes of Rs. 150,000 in a financial year subject to the condition that such aggregate value had not exceeded Rs. 150,000 during the preceding financial year When received by: Government, a local authority, a

20 S.No. Nature of Service Provided by Conditions 35. Services by way of lending of books, publications or any other knowledge- enhancing content or material Public libraries Any service Employees' State Insurance Corporation 37. Services by way of transfer of a going concern, as a whole or an independent part thereof 38. Services by way of public conveniences 39. Services by way of any activity in relation to any function entrusted to a municipality under article 243 W of the Constitution 40. Service by way of loading, unloading, packing, storage or warehousing of rice, cotton, ginned or baled. Any person - Any person - Governmental authority Any person governmental authority (the exemption shall not apply to online information and database access or retrieval services received by such persons) an individual in relation to any purpose other than commerce, industry or any other business or profession; an entity registered under section 12AA of the Income tax Act, 1961 for the purposes of providing charitable activities; or a person located in a non-taxable territory When provided to persons governed under the Employees' Insurance Act, 1948 (34 of 1948) -

21 S.No. Nature of Service Provided by Conditions 41. Services in relation to management of foreign exchange reserves. 42. Services in relation to tour conducted wholly outside India 43. Services in relation to Common Effluent Treatment Plant (CETP) 44. Services in relation to Pre Market activities relating to Fruits and Vegetables 45. Services in relation to admission to museum, national park, wildlife sanctuary, tiger reserve or zoo 46. Services in relation to exhibition of movie to distributors/association of exhibitor. 47. Services in relation to right to admission to : Exhibition of cinematographic film, circus, dance or theatrical performance including drama or ballet ecognised sporting event Award function, concert, pageant, musical, performance or any sporting event where consideration for admission is not more than Rs 500 per person. 48. Services to a business entity with a turnover upto Rupees ten lakhs in the preceding Any person outside India Tour Operator Operator of CETP Any Person Any person Any Person Government or a local authority Received by Reserve bank of India To Foreign Tourist When undertaken in relation to Pre-Conditioning, Pre-Cooling, ripening, waxing, retail, packing, labeling of fruits and vegetables The above activities should not change or alter the essential characteristics of fruit or vegetable

22 S.No. Nature of Service Provided by Conditions financial year 49. Any Services Employees' Provident Fund Organisation (EPFO) 50. Any Services Insurance Regulatory and Development Authority of India (IRDA) 51. Services by way of protecting the interests of investors in securities and to promote the development of, and to regulate, the securities market 52. cold chain knowledge dissemination 53. Services by way of transportation of goods by an aircraft 54. Services provided to another Government or local authority 55. Services provided by way of issuance of passport, visa, driving licence, birth certificate or death certificate 56. Services provided where the gross amount charged for such services does not exceed Rs Services provided by way of tolerating non-performance of a contract for which consideration in the form of fines or liquidated damages is payable to the Government or the local authority under such Services provided by Securities and Exchange Board of India (SEBI) National Centre for Cold Chain Development under Ministry of Agriculture, Cooperation and Farmer's Welfare Any Person Government or a local authority Government or a local authority Government or a local authority Government or a local authority When provided to persons governed under the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 (19 of 1952) When provided to insurers under the Insurance Regulatory and Development Authority of India Act, 1999 Only from a place outside India upto the customs station of clearance in India. Such exemption is not applicable to services specified in sub-clauses (i), (ii) and (iii) of clause (a) of section 66D of the Finance Act, 1994 Such exemption is not applicable to services specified in sub-clauses (i), (ii) and (iii) of clause (a) of section 66D of the Finance Act, 1994

23 S.No. Nature of Service Provided by Conditions contract 58. Services provided by way of: registration required under any law for the time being in force; testing, calibration, safety check or certification relating to protection or safety of workers, consumers or public at large, required under any law for the time being in force 59. Services provided by way of assignment of right to use natural resources to an individual farmer for the purposes of agriculture 60. Services of any activity in relation to any function entrusted to a Panchayat under article 243G of the Constitution 61. Services by way of assignment of right to use any natural resource where such right to use was assigned by the Government or the local authority before the 1stApril, Services by way of allowing a business entity to operate as a telecom service provider or use radio frequency spectrum during the financial year on payment of licence fee or spectrum user charges, as the case may be 63. Services by way of deputing officers after office hours or on holidays for inspection or container stuffing or such other duties in relation to import export cargo on payment of Merchant Overtime charges (MOT) Other Exemptions Government or a local authority Government or a local authority Government or a local authority Government or a local authority Government or a local authority Government or a local authority Provided that the exemption shall apply only to service tax payable on one time charge payable, in full upfront or in instalments, for assignment of right to use such natural resource

24 Small Service Provider Vide Notification No 33/2012-ST, dated Exemption to Small service providers having taxable turnover of less than 10 Lakhs and providing services other than by way of under a brand name Import of Technology Vide Notification No. 14/ 2012-ST, dated March 17, 2012 Exemption in respect of Taxable service involving import of technology, from so much of service tax, as is equivalent to the extent of amount of R&D Cess payable on the said transfer of technology under the provisions of section 3 of the Research and Development Cess Act, To Foreign Diplomat Vide Notification No 27/2012-ST, dated Exemption for all the taxable services provided by any person, for the official use of a foreign diplomatic mission or consular post in India, or for personal use or for the use of the family members of diplomatic agents or career consular officers posted therein Services by TBI or STEP Vide Notification No 32/2012-ST, dated All taxable services provided by TBI or STEP have been exempted Services provided to SEZ Vide Notification No 40/2012-ST, dated , all taxable services received by a Unit located in a Special Economic Zone (SEZ) or Developer of SEZ for the authorized operations, has been exempted from the levy of whole of the service tax. Property tax in renting Exemption has been granted in computing Service tax on the value in case of Renting Services from so much of the value which relates to property tax on such property Exemption against Scrips Vide Notification No. 6/2013, 7/2013, 8/2013, Central Government has exempted the taxable services provided or agreed to be provided against a scrip by a person located in the taxable territory under following schemes from the whole of the service tax leviable thereon under section 66B of the said Act:

25 - Focus Market Scheme - Focus Product Scheme - Vishesh Krishi and Gram Udyog Yojana The exemption shall be subject to the following conditions, namely:- The scrip is issued against exports to the countries notified by the Government of India in accordance with provisions of Foreign trade policy and Handbook of Procedures. The scrip is registered with the Customs Authority at the port of registration The holder of the scrip, to whom taxable services are provided or agreed to be provided shall be located in the taxable territory; The holder of the scrip, presents the scrip to the said Customs Authority along with a letter and an invoice or challan or bill, by the service provider indicating details of his jurisdictional Central Excise Officer and the description, value of the taxable service provided or agreed to be provided and service tax leviable thereon; The said Customs Authority, shall debit the service tax leviable, but for this exemption in or on the reverse of the scrip and also mention the necessary details thereon, updates its own records and sends written advice of these actions to the said Officer; The date of debit of service tax leviable, in the scrip, by the said Customs Authority shall be taken as the date of payment of service tax; In case the service tax leviable as per the point of taxation determined in terms of the Point of Taxation Rules, 2011 is prior to date of debit or that the rate of tax determined in terms of rule 4 of the Point of Taxation of Rules, 2011, is in excess of the rate of service tax mentioned in the invoice, bill or challan, as the case may be, the holder of the scrip shall pay such interest or short-paid service tax along with interest, as the case may be; The holder of the scrip presents the scrip debited by the said Customs Authority within thirty days to the said Officer, along with an undertaking addressed to the said Officer, that in case of any service tax short debited in the scrip, shall pay such service tax along with applicable interest; that based on the said written advice and undertaking, the said Officer shall verify and validate, on the reverse of the scrip, the details of the service tax leviable, which were debited by the said Customs Authority, and keep a record of payment of such service tax and interest, if any; The service provider retains a copy of the scrip, debited by the said Customs Authority and verified by the said Officer and duly attested by the holder of the scrip, in support of the provision of taxable services under this notification; and

26 The said holder of the scrip, to whom the taxable services were provided or agreed to be provided shall be entitled to avail the drawback or CENVAT credit of the service tax leviable under section 66B of the said Act, against the service tax debited in the scrip and validated by the said Officer Exemption from Service Tax against scrip under MEIS and SEIS Exemption has been granted to taxable services provided or agreed to be provided against a scrip by a person located in the taxable territory from the whole of the service tax leviable thereon under section 66B of the said Act. Scrips as against exemption provided by the Notifications are as under: a. Service Exports from India Scheme duty credit scrip issued by the Regional Authority in accordance with paragraph 3.10 read with paragraph 3.08 of the Foreign Trade Policy. Notification No. 11/2015 dated b. Merchandise Exports from India Scheme duty credit scrip issued to an exporter by the Regional Authority in accordance with paragraph 3.04 read with paragraph 3.05 of the Foreign Trade Policy Notification No. 10/2015 dated The exemption has been granted in line with the two schemes announced by Government of India in Foreign Trade Policy, Abatements S.No. Nature of Service 1 Services in relation to financial leasing including hire purchase 2A Transport of Goods in containers by rail by any person other than Indian Railways 2 Transport of Goods by Rail other than as specified above 3 Transport of Passengers with or without accompanied belongings Rates Effective From CENVAT credit Condition (Note -2) Taxable Value Total Effective Tax Rate incl. Cess Input Capital Goods Input Services 10% 1.50% 40% 6.00% Not 30% 4.50% Not 30% 4.50% Not Not Not Not

27 Rates Effective From S.No. Nature of Service by Rail Taxable Value Total Effective Tax Rate incl. Cess CENVAT credit Condition (Note -2) Input Capital Goods Input Services 4 Bundled service by way of supply of food or any other article of human consumption or any drink, in a premises (including hotel, convention center, club, pandal, shamiana or any other place, specially arranged for organizing a function) together with renting of such premises 70% 10.50% except goods falling in Chapter 1 to 22 5 Transport of passengers by air with or without accompanied belongings in economy class 40% 6.00% Not Not 5A Transport of passengers by air in higher class 6 Renting of inns, hotels, Guest houses, clubs, campsites or other commercial places meant for residential or lodging purposes 6A Transport of passengers, with or without accompanied belongings, by air, embarking from or terminating in a Regional Connectivity Scheme Airport. 7 Services of goods transport agency in relation to transportation of goods other than household goods 60% 9.00% 60% 9.00% Not 10% 1.50% Not 30% 4.50% Not Not Not Not Not Not 7A Services of goods transport 40% 6.00% Not Not Not

28 S.No. Nature of Service agency in relation to transportation of household goods 8 Services provided by a foreman of chit fund in relation to chit 9 Renting of motor cab designed to carry passengers 9A Transport of passengers, with or without accompanied belongings, by a contract carriage other than motorcab or a radio taxi or a stage carriage 10 Transport of goods in a vessel 11 Services by Tour operator in relation to Solely of arranging or booking accommodation Taxable Value Rates Effective From Total Effective Tax Rate incl. Cess 70% 10.50% Not 40% 6.00% Not 40% 6.00% Not 30% Not 4.50% 10% 1.50% Not CENVAT credit Condition (Note -2) Capital Input Input Goods Services Not Not Not Not Not Not Not (Except rent a cab operator) Not Not (except Tour operator services) 11A Services by Tour operator in relation to tours other than Construction of a complex, building, civil structure or a part thereof, intended for a sale to a buyer, wholly or partly except where entire consideration is received after issuance of completion certificate by the competent authority 30% 4.50% 30% 4.50% Not 1.9. Person responsible for payment of service tax (Reverse Charge Mechanism)

29 The person responsible for payment of service tax is service provider, however, there were certain exceptions to this rule which has been notified under Section 68(2) of Finance Act, 1994: Description of Service In respect of services provided or agreed to be provided by an insurance agent to any person carrying on insurance business In respect of services provided or agreed to be provided in respect of transportation of goods by road Service Provider Insurance Agent Goods Transport Agency Service Recipient Person carrying on insurance business o Any factory registered under or governed by the Factories Act, 1948 (63 of 1948) o Any society registered under the Societies Registration Act, 1860 (21 of 1860) or under any other law for the time being in force in any part of India o Any co-operative society established by or under any law o Any dealer of excisable goods, who is registered under the Central Excise Act, 1944 (1 % of service tax payable by the person providi ng service Nil 100% Nil 100% % of service tax payable by the person receivin g the service

30 Description of Service In respect of services provided or agreed to be provided by way of sponsorship Service Provider Service Recipient of 1944) or the rules made there under o Any body corporate established, by or under any law o Any partnership firm whether registered or not under any law including association of persons Any person Body Corporate or partnership firm located in taxable territory % of service tax payable by the person providi ng service Nil 100% % of service tax payable by the person receivin g the service In respect of services provided or agreed to be provided by an arbitral tribunal Arbitral Tribunal To any business entity located in taxable territory Nil 100% In respect of services provided or agreed to be provided by individual advocate or a firm of advocates by way of legal services Individual Advocate or a firm of advocates Business entity located in taxable territory Nil 100%

31 Description of Service Service Provider Service Recipient % of service tax payable by the person providi ng service % of service tax payable by the person receivin g the service In respect of services provided or agreed to be provided by Government or local authority excluding renting of immovable property and services specified in Section 66D(a)(i),(ii) & (iii) In respect of services provided or agreed to be provided by way of renting of any motor vehicle designed to carry passenger on abated value to any person who is not in the similar line of business In respect of services provided or agreed to be provided by way of renting of any motor vehicle designed to carry passenger on non Government or local authority Any individual, Hindu Undivided Family or partnership firm, whether registered or not, including association of persons located in the taxable territory Any individual, Hindu Undivided Family or partnership firm, whether registered or Business entity located in taxable territory A business entity registered as body corporate located in the taxable territory To any business entity registered as body corporate located in the taxable territory Nil 100% Nil 100% 50% 50%

32 Description of Service abated value to any person who is not engaged in the similar line of business In respect of services provided or agreed to be provided by way of supply of manpower (including security services) for any purpose In respect of services provided or agreed to be provided in execution of works contract In respect of any taxable service provided or agreed to be provided by any Service Provider not, including association of persons located in the taxable territory Any individual, Hindu Undivided Family or partnership firm, whether registered or not, including association of persons located in the taxable territory Any individual, Hindu Undivided Family or partnership firm, whether registered or not, including association of persons By any person who is located in non-taxable territory Service Recipient To any business entity registered as body corporate located in the taxable territory To any business entity registered as body corporate located in the taxable territory Any person located in taxable territory % of service tax payable by the person providi ng service Nil 100% 50% 50% Nil 100% % of service tax payable by the person receivin g the service

33 Description of Service person who is located in a nontaxable territory and received by any person located in the taxable territory Services provided or agreed to be provided by a director of a company or a body corporate to the said company or the body corporate Services provided by an Aggregator Services provided by a Mutual Fund agents and Distributor Services provided in relation to lottery in any manner to a lottery distributor or selling agent of the State Government under the provisions of Service Provider Service Recipient % of service tax payable by the person providi ng service Any individual By the Company Nil 100% Aggregator Mutual Fund Agents and Distributors Selling or Marketing Agent of Lottery Tickets Any person including other aggregator Mutual Fund or Asset Management company Lotery Distributor or Selling Agent Nil 100% Nil 100% Nil 100% % of service tax payable by the person receivin g the service

34 Description of Service the Lottery (Regulations) Act, 1998 (17 of 1998) Services provided or agreed to be provided by a recovery agent Service Provider Recovery Agent Service Recipient Banking company or a financial institution or a non-banking financial company % of service tax payable by the person providi ng service Nil 100% % of service tax payable by the person receivin g the service Determination of place of provision of services (Export / Import) The Place of Provision Rules, 2012 in different situations is as follows: Description of Rule Conditions Place of performance of Service General Rule (Rule 3) Location of the receipient of service In case the location of receipient of service is not available in the ordinary course of business, the place of provision shall be the location of the provider of service (for services other than online information and database access or retrieval services). Performance based services (Rule 4) Services requiring physical delivery of goods Provision from a remote Location electronically on goods Services requiring Location where the services are actually performed. Actual location of the goods and not the place of performance Place of actual performance of service

35 Description of Rule Conditions Place of performance of Service In relation to immovable property (Rule 5) Service relating to events (Rule 6) Performance at more than one place wherein part performance in taxable territory (Rule 7) Both service provider and receipient of service are located in taxable territory (Rule 8) Specified Services (Rule9): Services provided by a banking company, or a financial institution, or a non-banking financial company, to account holders; Intermediary services; Service consisting of hiring of means of transport other than aircraft and vessel except yachts, upto a period of one month. Services of transportation of goods, other than by way of mail or courier (Rule 10) Goods transport agency (Rule 10) Passenger transportation service (Rule 11) Services provided on board a conveyance during the course of a passenger transport operation (Rule 12) physical presence of an individual Place where the immovable property is located or intended to be located. Place where event is held Place in taxable territory where maximum performance has taken place Location of receipient of service Location of the service provider Place of destination of the goods Location of the person liable to pay tax Place where passenger embarks on the conveyance for a continuous journey First scheduled point of departure of that conveyance for the journey

36 1.11. Valuation of Services Section 67 provides for the method of valuation of taxable services i.e., the value on which service provider is required to discharge service tax. Value for the purpose of charging service tax is the gross amount received as consideration for provision of service. All expenditures or costs incurred by the service provider in the course of providing a taxable service forms integral part of the taxable value and are includible in the value. It is not relevant that various expenditure or costs are separately indicated in the invoice or bill issued by the service provider to his client. The Section provides for the following values to be taken for payment of service tax: Nature of Consideration Provision of service is for a consideration in money Provision of service is for a consideration not wholly or partly consisting of money Provision of service is for a consideration which is not ascertainable Taxable Value Gross amount charged by the service provider Such amount in money as is equivalent to the consideration Amount as may be determined in the prescribed manner. The manner has been prescribed in Service Tax (Determination of Value) Rules, 2006 It is further provided that in case where Gross amount charged is inclusive of service tax, value of taxable services shall be determined considering gross amount as cum tax i.e. Value of Taxable Services = Gross Amount x 100 (100 + Applicable rate of Service Tax) It has also been provided that 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. For the purpose of determining consideration which is not ascertainable, Service Tax (Determination of Value) Rules, 2006 provides that the value should be determined in the following manner: Value of such taxable service = Gross amount charged by the service provider to provide similar service to any other person in the ordinary course of trade and the gross amount charged is the sole consideration In case, value cannot be determined as above, value of taxable services shall be determined by the service provider. However, in no case such value can be less than the cost of provision of such taxable service. Further, in respect of specific services, certain specific valuation method as percentage of gross value has been prescribed as under: a. Works Contract Service

37 Option I: Determination of Actual value of services in works contract A working formula has been provided for determining the actual value of services in a works contract viz., Value of works contract service shall be equivalent to the gross amount charged for the works contract less the value of transfer of property in goods involved in the execution of the said works contract. Option II: When value has not been determined under Option I Nature of contract In case of original work (includes additions and alterations) 40% Maintenance or repair or reconditioning or restoration or servicing of any goods; or maintenance or repair or completion and finishing services such as glazing or plastering or floor and wall tiling or installation of electrical fittings of immovable property 70% Taxable value b. Money Changing Transaction Options Method of determination of Value When exchanged from or to Indian Rupees When Reserve Bank of India (RBI) reference rate for that currency is available at the time of exchange Value = (Buying rate or the selling rate - RBI reference rate) * total units of currency. When RBI reference rate for that currency is not available at the time of exchange Value = 1% of the gross amount of Indian Rupees provided or received Neither of the currencies exchanged is Indian Rupee Value = 1% of the lesser of the two amounts as arrived by converting any of the two currencies into Indian Rupee on that day at the reference rate provided by RBI. c. Restaurant and Outdoor Catering S.No. Description of Taxable Services Value of Service 1 Service portion in an activity wherein goods, being food or any other article of human consumption or any drink (whether or not intoxicating) is supplied in any manner as a part of the activity, at a restaurant 40% of the Total amount