N. K. SHETH & COMPANY

Transcription

1 Western Region of Institute of Charted Accountants of India Seminar on Budget Demystified (Indirect ) Subject : Exemption / Abatement in service tax and Amendments in valuation Rules Day & Date : Saturday, 26 th May, 2012 Venue Faculty ID : J.S.Lodha Auditorium, ICAI Bhawan, Cuffe Parade, Mumbai : CA. Naresh K. Sheth : nksheth25@gmail.com nksheth@vsnl.com N. K. SHETH & COMPANY 1 Preamble Presentation covers following service tax related amendments as proposed in Finance Bill 2012 Exemptions Abatements Amendments in valuation Rules. Finance Bill, 2012 is passed by the parliament Presidential assent is awaited Amendments will be effective from date to be notified by CBEC Post enactment of Finance Bill, 2012 N. K. SHETH & COMPANY 2 1

2 This notification will be effective from notified date Services provided to the United Nations/specified international organizations - Presently also exempted Health care services by clinical establishment, authorized medical practitioner or para-medics - Presently non-taxable Services by a veterinary clinic - Presently non-taxable Specified Charitable activities by an entity registered u/s 12AA of the Income-tax Act - Presently no such specific exemption for trust N. K. SHETH & COMPANY 3 Services of: renting of precincts (land or building) of a religious place meant for general public conduct of any religious ceremony - Presently non taxable. Services provided to any person (other than a business entity) by - an individual as an advocate; or - Presently legal consultancy provided by an individual to individual, representation services provided by an individual to an individual / non-business entity is not taxable. a person represented on and as arbitral tribunals - Presently arbitration service is exempted under Notification No.45/2011-ST dt Technical testing/analysis of newly developed drugs/vaccines /herbal remedies on human participants by an approved clinical research organization - Presently exempted under Notification No. 11/2007-ST dated N. K. SHETH & COMPANY 4 2

3 Training / coaching in recreational activities relating to arts, culture or sports - Presently services relating to sports is not taxable. - Presently services relating to recreational activities such as dance, singing, martial arts or hobbies are exempted under Notification No.3/2010-ST dt Sponsorship of tournaments or championships organized by notified organizations - Presently exempt vide Notification No.30/2010-ST dt Services of : Catering to an educational institution under centrally assisted mid-day meals scheme sponsored by Government - Presently exempt vide Notification No.47/2010-ST dt Transportation of students/staff provided to or by an educational institution - No formal exemption notification. However on the basis of trade notice same is treated as non-taxable. Admission related services provided to or by an institution N. K. SHETH & COMPANY 5 Services provided to a recognized sports body by- an individual as a player, referee, umpire, coach or manager for participation in a tournament or championship another recognized sports body - Presently non taxable. Services provided to the Government or local authority for erection, construction, maintenance, repair, alteration, renovation or restoration of : a civil structure meant predominantly for non-industrial/noncommercial use a historical monument or archaeological site a structure meant predominantly for use as an educational, clinical, art or cultural establishment canal, dam or other irrigation works pipeline, conduit or plant for drinking water supply, water treatment, sewerage treatment or disposal; or N. K. SHETH & COMPANY 6 3

4 a residential complex predominantly meant for self-use or use of their employees or other persons such as MP, MLA, Member of local authority, etc - Presently above services are non taxable. Erection, construction, maintenance, repair, alteration, renovation or restoration of road, bridge, tunnel, transport terminal for use by general public; - Presently non-taxable, even it is provided to private parties (subject to controversy of maintenance and repairs) building owned by an entity registered under section 12AA of the Income-tax Act, 1961 and meant predominantly for religious use by general public (Being non-commercial construction, presently it is non-taxable subject to controversy of maintenance and repairs) pollution control or effluent treatment plant except located as a part of a factory; or (Presently no specific exemption) electric crematorium (Being non-commercial construction, presently it is non-taxable subject to controversy of maintenance and repairs) N. K. SHETH & COMPANY 7 Erection or construction of original works pertaining to airport, port or railways - Presently non taxable. single residential unit otherwise as a part of a residential complex?? - Presently complex having 12 or less residential units in complex and construction for personal use are non taxable. low-cost houses up to a carpet area of 60 square metres per house in a approved housing project - Presently only specified schemes are exempt. Storage infrastructure for agricultural produce including a cold storages for such purposes; or - Presently erection of cold storage equipments exempt under Notification No. 12/2010-ST dt mechanized food grain handling system, machinery or equipment for units processing agricultural produce - Presently exempted under Notification No. 12/2010-ST dt N. K. SHETH & COMPANY 8 4

5 Temporary transfer or permitting the use or enjoyment of a copyright relating to original literary, dramatic, musical, artistic works or cinematograph films - Presently all such services are non-taxable except service in relation to cinematograph films. Services by a performing artist in folk or classical art forms of music, dance or theatre excluding services as a brand ambassador - Presently non-taxable. Collecting or providing news by an independent journalist, Press Trust of India or United News of India - Presently non-taxable. Accommodation in hotel, inn, guest house, club, campsite or other commercial places having declared tariff of less than Rs.1000/- per day - Presently non-taxable. Restaurant, eating joint or a mess not having air-conditioning/central air heating or license to serve alcoholic beverages - Presently also non-taxable. - Restaurants having central heating system with license to serve alcoholic beverage is now covered under service tax levy. N. K. SHETH & COMPANY 9 Rail or water transportation of specified/essential goods - Presently exempt under various notifications. Road Transportation of : fruits, vegetables, eggs, milk, food grains or pulses in a goods carriage - Presently exempt under notification No.33/2004-ST dt goods in a single carriage where gross freight is less than Rs. 1500/- - Presently exempt under notification No.34/2004-ST dt goods where gross freight for single consignment is less than Rs.750/- - Presently exempt under notification No.34/2004-ST dt Hiring of : a motor vehicle (meant to carry more than twelve passengers) to a state transport undertaking motor vehicle for goods transportation to goods transport agency - Presently exempt under notification No.1/2009-ST dt N. K. SHETH & COMPANY 10 5

6 Transport of passengers by : air where passengers are embarking or terminating in airports located in specified states - Presently exempt under Notification 27/2010-ST dt contract carriage other than for tourism, conducted tour, charter / hire - Presently non taxable. Motor vehicle parking to general public excluding leasing of space to an entity for providing such parking facility - Presently non taxable. Following Services provided to the Government or a local authority : repair of a ship, boat or vessel effluents and sewerage treatment waste collection or disposal storage, treatment or testing of water for drinking purposes; or transport of water by pipeline or conduit for drinking purposes - Presently no such specific exemption. However, services number 2 to 5 are non taxable. N. K. SHETH & COMPANY 11 General insurance under specified schemes - Presently exemption is available for most of the specified schemes. Services provided by an incubatee up to a total business turnover of Rs.50 lacs in a financial year subject to certain conditions - Presently exempt under Notification No.10/2007-ST dt Service by an unincorporated body or an entity registered as a society to own members by way of reimbursement of charges or share of contribution as a trade union; (Presently no such specific exemption) for the provision of exempt services by the entity to third persons; or (Presently also exempt) up to an amount of Rs. 5000/- per month per member of housing society/residential complex towards common services. (Presently exempt up to Rs.3,000/- p.m. Notification 8/2007-ST dt ) Services by an organizer to any person in respect of business exhibition held outside India - Presently exempt under Notification No.5/2011-ST dt N. K. SHETH & COMPANY 12 6

7 Services provided by : sub-broker or an authorized person to a stock broker authorized person to a member of a commodity exchange mutual fund agent/distributor to mutual fund/asset management company selling/marketing agent of lottery tickets to a distributor or a selling agent selling agent / distributor 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 - Presently only services provided by sub-broker to stock broker are exempt under Notification No.10/2007-ST dt Other proposed exemption are new exemptions. N. K. SHETH & COMPANY 13 Carrying out an intermediate production process as job work in relation to: agriculture, printing or textile processing - Presently exempt under Notification 14/2004-ST dt cut and polished diamondsd and gemstones; or plain and studded d jewellery of gold and other precious metals - Presently exempt under Notification 19/2006-ST dt goods on which appropriate duty is payable by the principal manufacturer; - Presently exempt under Notification 8/2005-ST dt specified processes in the course of manufacture of parts of cycles or sewing machines upto specified limits - Presently exempt N. K. SHETH & COMPANY 14 7

8 Services of : departmentally run public telephones guaranteed public telephones operating only for local calls; or free telephone at airport and hospitals where no bills are being issued - Presently exempt under Notification 3/2006-ST dt Services of slaughtering of bovine animals - Presently non taxable. Services received from a service provider located in a non-taxable territory by : the Government, a local authority or an individual in relation to any purpose other than industry, business or commerce; or an entity registered under section 12AA of the Income-tax Act, 1961 for the purposes of providing charitable activities - Presently no such specific exemption N. K. SHETH & COMPANY 15 MEGA EXEMPTION Other Exemptions NOTIFICATION Proposed 12/2012-ST to be Retained DATED Small service provider exemption or threshold exemption Refund of service tax to the exporter of goods able services received by SEZ unit or developer of SEZ Services provided to diplomatic mission Services provided by: Recognized technology business incubator (TBI) Recognized Science and Technology Entrepreneurship Park (STEP) Exemption in respect research and development cess (R&D cess) Exemption in respect of property tax on renting of immovable property N. K. SHETH & COMPANY 16 8

9 Retrospective Beneficial Amendments w.e.f Enactment date Retrospective exemption granted for Management, Maintenance or repair services during the period to in respect of: Road Non-Commercial Government Buildings Service provider entitled to claim refund of such tax within 6 months from the enactment of Finance Bill, Retrospective exemption granted to a Club or Association (including registered co-operative societies) in respect of common facility setup for specified effluent treatment plants w.e.f Service provider entitled to claim refund of such tax within 6 months from the enactment of Finance Bill, Immunity from Penalty for failure to pay service tax on renting of immovable property services where assessee pays service tax due as on along with interest within 6 month from the date of enactment of Finance Bill, N. K. SHETH & COMPANY 17 Works Contract [Section 65B (54)] w.e.f Notified date Works contract service means: Contract involving transfer of property and goods in execution of such contract Such transfer of goods is leviable to tax as sale of goods And such contract is for Construction Erection Commissioning Installation Fitting out Repair Maintenance Alteration Renovation of movable or immovable property or for carrying out any other similar activity or part thereof in relation to such property N. K. SHETH & COMPANY 18 9

10 Works Contract [Section 65B (54)] w.e.f Notified date Original work means all new constructions and all types of additions and alteration to abandoned structures on land to render them workable Other works means other than original works including: Completion and finishing Glazing Plastering Floor and wall tiling Installation of electric fitting N. K. SHETH & COMPANY 19 Amendments in Valuation Rules w.e.f Notified date Rule 2A of Valuation Rules has been substituted to provide : of service shall be total amount charged for contract reduced by value of goods for State VAT purpose If value of the goods is not declared to State VAT, service provider can still calculate actual value of goods to workout service value If value of service is not deduced as above, value of the service would be specified percentage of contract value [Refer Slide No.21 and 22] Rule 2C prescribes the value of taxable service involved in Supply of Food & Drinks [Refer Slide No. 22]. VAT / Sales to be excluded from gross amount charged for Rules 2A and 2C Rule 6 of Valuation Rules provides for: Inclusion of demurrage in value of service Exclusion of interest on deposits and delayed payment for any consideration for provision of goods or service Exclusion of accidental damage received due to unforeseen action not relatable to provision of service N. K. SHETH & COMPANY 20 10

11 of able Service in Case of Specified Composite Contract w.e.f Notified date able Service Post Amendment able Pre Amendment able Cenvat Availability Post Amendment Erection, Commissioning or Cenvat of installation, under a contract Capital for supplying a plant, Goods and machinery or equipment and Input erection, commissioning or Services installation of such plant, available machinery or equipment. Commercial or industrial construction service Same as above Construction of complex Same as above Sale of flats under construction Same as above N. K. SHETH & COMPANY 21 of able Service in Case of Specified Composite Contract w.e.f Notified date able Service Works contract other than original work Service portion in the supply of food or any other article of human consumption or drink at a restaurant Service portion in the supply of good or any other article of human consumption or drink provided from premises elsewhere (outdoor catering) Post Amendment able Pre Amendment able Cenvat Availability Post Amendment Same as above Cenvat of Capital Goods, Input Services and Nonspecified inputs available Same as above N. K. SHETH & COMPANY 22 11

12 able Service Changes in Abatement w.e.f Notified date Post Amendment able Pre Amendment able Cenvat Availability Financial leasing services Yes including equipment leasing and hire purchase Transport of Goods by rail Yes Transport passengers by rail New --- Yes Service Supply of food or drink in hotel, Cenvat of convention center, club, pandal, shamiana or any place specially Capital Goods, Input arranged for organizing a function Services and - Shamiana and Pandal non-specified inputs available Transport of passengers by air Cenvat of only input services available N. K. SHETH & COMPANY 23 Changes in Abatement w.e.f Notified date able Service Renting of hotels, inns, guest houses, clubs, campsites or other commercial places meant for residential or lodging purposes Transport of goods by road by Goods Transport Agency Services provided in relation to chit Renting of any motor vehicle designed to carry passengers Transport of goods in a vessel from one port in India to Another Post Amendment able Pre Amendment able Cenvat Availability Cenvat of only input services available No No No No N. K. SHETH & COMPANY 24 12

13 able Service Changes in Abatement w.e.f Notified date Post Amendment able Pre Amendment able Cenvat Availability Tour Operator: (i) Services provided or to be No provided to any person, by a tour operator in relation to a package tour (ii) Services provided or to be No provided to any person, by a tour operator in relation to a tour, if the tour operator is providing services solely of arranging or booking accommodation for any person in relation to a tour (iii) Services, other than services specified in (i) and (ii) above, No provided or to be provided to any person, by a tour operator in relation to a tour N. K. SHETH & COMPANY 25 Words of Caution Views expressed are the personal views of faculty based on his interpretation of law. Application/implications of various provisions will vary on facts of the case and law prevailing on relevant time. Contents of this presentation should not be construed as legal or professional advice. This is an educational meeting arranged with clear understanding that neither Faculty nor WIRC will be responsible for any error, omission, commission and result of any action taken by participant or anyone on the basis of this presentation. N. K. SHETH & COMPANY 26 13

14 THANK YOU N. K. SHETH & COMPANY 27 14