Global News Post: Service Tax

Tax on Almost All Services except Funeral, Gambling in India

<div dir="ltr" style="text-align: left;" trbidi="on"><br />
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;"><br />
</div><div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;"><br />
</div><div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;"><span lang="EN-US" style="font-family: "Trebuchet MS","sans-serif"; font-size: 12.0pt; line-height: 115%; mso-ascii-theme-font: major-latin; mso-bidi-font-size: 11.0pt; mso-hansi-theme-font: major-latin;">NEW DELHI, India (NNN-Bernama) -- Funerals, betting and gambling have been exempted while almost all other services will be taxed from July 1, Press Trust of India reported. <o:p></o:p></span></div><div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;"><br />
</div><div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;"><span lang="EN-US" style="font-family: "Trebuchet MS","sans-serif"; font-size: 12.0pt; line-height: 115%; mso-ascii-theme-font: major-latin; mso-bidi-font-size: 11.0pt; mso-hansi-theme-font: major-latin;">Under the new Service Tax regime, only 17 services are in the negative list, which means they will not be subjected to tax. <o:p></o:p></span></div><div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;"><br />
</div><div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;"><span lang="EN-US" style="font-family: "Trebuchet MS","sans-serif"; font-size: 12.0pt; line-height: 115%; mso-ascii-theme-font: major-latin; mso-bidi-font-size: 11.0pt; mso-hansi-theme-font: major-latin;">The government has widened the definition of 'Services' to bring in more activities under the tax net. At present, 119 services that come under 'positive list' are levied. <o:p></o:p></span></div><div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;"><br />
</div><div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;"><span lang="EN-US" style="font-family: "Trebuchet MS","sans-serif"; font-size: 12.0pt; line-height: 115%; mso-ascii-theme-font: major-latin; mso-bidi-font-size: 11.0pt; mso-hansi-theme-font: major-latin;">The 'negative list" approach was proposed in the Budget. <o:p></o:p></span></div><div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;"><br />
</div><div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;"><span lang="EN-US" style="font-family: "Trebuchet MS","sans-serif"; font-size: 12.0pt; line-height: 115%; mso-ascii-theme-font: major-latin; mso-bidi-font-size: 11.0pt; mso-hansi-theme-font: major-latin;">Following assent of the President to the Finance Bill, the Finance Ministry said the new service tax regime will come into force from July 1. <o:p></o:p></span></div><div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;"><br />
</div><div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;"><span lang="EN-US" style="font-family: "Trebuchet MS","sans-serif"; font-size: 12.0pt; line-height: 115%; mso-ascii-theme-font: major-latin; mso-bidi-font-size: 11.0pt; mso-hansi-theme-font: major-latin;">The Budget also hiked the service tax rate by two per cent to 12 per cent.<o:p></o:p></span></div><div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;"><br />
</div><div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;"><span lang="EN-US" style="font-family: "Trebuchet MS","sans-serif"; font-size: 12.0pt; line-height: 115%; mso-ascii-theme-font: major-latin; mso-bidi-font-size: 11.0pt; mso-hansi-theme-font: major-latin;">Services like metered taxis, auto rickshaws, betting, gambling, lottery, entry to amusement parks, transport of goods or passengers and electricity transmission or distribution by discoms have been kept in the negative list. <o:p></o:p></span></div><div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;"><br />
</div><div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;"><span lang="EN-US" style="font-family: "Trebuchet MS","sans-serif"; font-size: 12.0pt; line-height: 115%; mso-ascii-theme-font: major-latin; mso-bidi-font-size: 11.0pt; mso-hansi-theme-font: major-latin;">Other important services which will not attract the tax include funeral, burial, mutate services and transport of deceased. <o:p></o:p></span></div><div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;"><br />
</div><div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;"><span lang="EN-US" style="font-family: "Trebuchet MS","sans-serif"; font-size: 12.0pt; line-height: 115%; mso-ascii-theme-font: major-latin; mso-bidi-font-size: 11.0pt; mso-hansi-theme-font: major-latin;">Coaching classes and training institutions will come under the net, though the tax will not be levied on school, university education and approved vocational courses. <o:p></o:p></span></div><div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;"><br />
</div><div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;"><span lang="EN-US" style="font-family: "Trebuchet MS","sans-serif"; font-size: 12.0pt; line-height: 115%; mso-ascii-theme-font: major-latin; mso-bidi-font-size: 11.0pt; mso-hansi-theme-font: major-latin;">Travel in first class and in air-conditioned rail coaches, too, will attract service tax. <o:p></o:p></span></div><div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;"><br />
</div><div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;"><span lang="EN-US" style="font-family: "Trebuchet MS","sans-serif"; font-size: 12.0pt; line-height: 115%; mso-ascii-theme-font: major-latin; mso-bidi-font-size: 11.0pt; mso-hansi-theme-font: major-latin;">The services sector account for about 60 per cent of the country's Gross Domestic Product. <o:p></o:p></span></div><div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;"><br />
</div><div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;"><span lang="EN-US" style="font-family: "Trebuchet MS","sans-serif"; font-size: 12.0pt; line-height: 115%; mso-ascii-theme-font: major-latin; mso-bidi-font-size: 11.0pt; mso-hansi-theme-font: major-latin;">In order to bring as many services as possible in the net, the government has come out with a very wide definition of service. <o:p></o:p></span></div><div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;"><br />
</div><div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;"><span lang="EN-US" style="font-family: "Trebuchet MS","sans-serif"; font-size: 12.0pt; line-height: 115%; mso-ascii-theme-font: major-latin; mso-bidi-font-size: 11.0pt; mso-hansi-theme-font: major-latin;">With some exception, it has been defined service as "any activity carried out by a person for consideration". <o:p></o:p></span></div><div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;"><br />
</div><div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;"><span lang="EN-US" style="font-family: "Trebuchet MS","sans-serif"; font-size: 12.0pt; line-height: 115%; mso-ascii-theme-font: major-latin; mso-bidi-font-size: 11.0pt; mso-hansi-theme-font: major-latin;">The government aims to garner US$22 billion from the Service Tax during 2012-13. -- NNN-BERNAMA <o:p></o:p></span></div></div>

Tax on Almost All Services except Funeral, Gambling in India

NEW DELHI, India (NNN-Bernama) -- Funerals, betting and gambling have been exempted while almost all other services will be taxed from Ju...

New Service Tax Structure a Step Closure Towards Proposed GST

<div dir="ltr" style="text-align: left;" trbidi="on"><div style="text-align: center;"><span class="Apple-style-span" style="font-weight: bold;"><i><span class="Apple-style-span" style="font-family: Georgia, 'Times New Roman', serif;">Service Tax Regime on Hotel Accommodation, Restaurant Services Restructured</span></i></span></div><div style="text-align: center;"><span class="Apple-style-span" style="font-weight: bold;"><i><span class="Apple-style-span" style="font-family: Georgia, 'Times New Roman', serif;"><br /></span></i></span></div><div style="text-align: center;"><span class="Apple-style-span" style="font-weight: bold;"><i><span class="Apple-style-span" style="font-family: Georgia, 'Times New Roman', serif;"><br /></span></i></span></div><div style="text-align: center;"><span class="Apple-style-span" style="font-weight: bold;"><i><span class="Apple-style-span" style="font-family: Georgia, 'Times New Roman', serif;"><span class="Apple-style-span" style="font-style: normal; font-weight: normal;"></span></span></i></span></div><div class="MsoNormal" style="font-size: 11pt; line-height: 17px; margin-bottom: 10pt; margin-left: 0cm; margin-right: 0cm; margin-top: 0cm; text-align: justify;"><i><span class="Apple-style-span" style="font-family: Georgia, 'Times New Roman', serif;"><span lang="EN-US" style="font-size: 12pt; line-height: 18px;">Hotel accommodation, in excess of declared tariff of Rs. 1000 per day and service provided by air conditioned restaurants that have license to serve liquor are the new services <span class="GramE">which</span>have been brought under the service tax net.  While proposing to levy service tax on these services, the Union Finance Minister, <span class="SpellE">Shri</span> <span class="SpellE">Pranab</span> <span class="SpellE">Mukherjee</span> has said that the hotel accommodation with declared tariff of over Rs. 1000 per day will have to pay the service tax with an abatement of 50 per cent.  This will mean an effective burden of only 5 per cent of the amount charged. Air conditioned restaurants with license to serve liquor will now be paying service tax with an abatement of 70 per cent.  The effective burden will be 3 per cent of the bill only in this case. <o:p></o:p></span></span></i></div><div class="MsoNormal" style="font-size: 11pt; line-height: 17px; margin-bottom: 10pt; margin-left: 0cm; margin-right: 0cm; margin-top: 0cm; text-align: justify;"><i><span class="Apple-style-span" style="font-family: Georgia, 'Times New Roman', serif;"><span lang="EN-US" style="font-size: 12pt; line-height: 18px;"><span>            </span><span class="SpellE">Shri</span> <span class="SpellE">Mukherjee</span> has also proposed various measures to achieve a closure fit between the present service tax regime and its GST (service and goods tax) successor.<span>  </span>These measures would include:<o:p></o:p></span></span></i></div><div class="MsoListParagraphCxSpFirst" style="font-size: 11pt; line-height: 17px; margin-bottom: 0.0001pt; margin-left: 38.7pt; margin-right: 0cm; margin-top: 0cm; text-align: justify; text-indent: -18pt;"><i><span class="Apple-style-span" style="font-family: Georgia, 'Times New Roman', serif;"><span lang="EN-US" style="font-size: 12pt; line-height: 18px;"><span>·<span style="font: normal normal normal 7pt/normal 'Times New Roman';">         </span></span></span><span lang="EN-US" style="font-size: 12pt; line-height: 18px;">Bringing in a few new services into the tax net to expand the tax base while ensuring that the impact is predominantly on sections of society that have the ability to pay;<o:p></o:p></span></span></i></div><div class="MsoListParagraphCxSpMiddle" style="font-size: 11pt; line-height: 17px; margin-bottom: 0.0001pt; margin-left: 38.7pt; margin-right: 0cm; margin-top: 0cm; text-align: justify; text-indent: -18pt;"><i><span class="Apple-style-span" style="font-family: Georgia, 'Times New Roman', serif;"><span lang="EN-US" style="font-size: 12pt; line-height: 18px;"><span>·<span style="font: normal normal normal 7pt/normal 'Times New Roman';">         </span></span></span><span lang="EN-US" style="font-size: 12pt; line-height: 18px;">Suitably expanding or rationalizing the scope of existing service categories;<o:p></o:p></span></span></i></div><div class="MsoListParagraphCxSpMiddle" style="font-size: 11pt; line-height: 17px; margin-bottom: 0.0001pt; margin-left: 38.7pt; margin-right: 0cm; margin-top: 0cm; text-align: justify; text-indent: -18pt;"><i><span class="Apple-style-span" style="font-family: Georgia, 'Times New Roman', serif;"><span lang="EN-US" style="font-size: 12pt; line-height: 18px;"><span>·<span style="font: normal normal normal 7pt/normal 'Times New Roman';">         </span></span></span><span lang="EN-US" style="font-size: 12pt; line-height: 18px;">Rationalizing certain provisions relating to import of services and valuation;<o:p></o:p></span></span></i></div><div class="MsoListParagraphCxSpMiddle" style="font-size: 11pt; line-height: 17px; margin-bottom: 0.0001pt; margin-left: 38.7pt; margin-right: 0cm; margin-top: 0cm; text-align: justify; text-indent: -18pt;"><i><span class="Apple-style-span" style="font-family: Georgia, 'Times New Roman', serif;"><span lang="EN-US" style="font-size: 12pt; line-height: 18px;"><span>·<span style="font: normal normal normal 7pt/normal 'Times New Roman';">         </span></span></span><span lang="EN-US" style="font-size: 12pt; line-height: 18px;">Modifying provisions of the <span class="SpellE">Cenvat</span> Credit scheme to achieve a more realistic balance between input credits and output tax and harmonizing the provisions of the scheme across goods and services;<o:p></o:p></span></span></i></div><div class="MsoListParagraphCxSpMiddle" style="font-size: 11pt; line-height: 17px; margin-bottom: 0.0001pt; margin-left: 38.7pt; margin-right: 0cm; margin-top: 0cm; text-align: justify; text-indent: -18pt;"><i><span class="Apple-style-span" style="font-family: Georgia, 'Times New Roman', serif;"><span lang="EN-US" style="font-size: 12pt; line-height: 18px;"><span>·<span style="font: normal normal normal 7pt/normal 'Times New Roman';">         </span></span></span><span lang="EN-US" style="font-size: 12pt; line-height: 18px;">Rationalizing penal provisions to reinforce the message that honest taxpayers would be facilitated and deviants would be dealt with severely; and<o:p></o:p></span></span></i></div><div class="MsoListParagraphCxSpLast" style="font-size: 11pt; line-height: 17px; margin-bottom: 10pt; margin-left: 38.7pt; margin-right: 0cm; margin-top: 0cm; text-align: justify; text-indent: -18pt;"><i><span class="Apple-style-span" style="font-family: Georgia, 'Times New Roman', serif;"><span lang="EN-US" style="font-size: 12pt; line-height: 18px;"><span>·<span style="font: normal normal normal 7pt/normal 'Times New Roman';">         </span></span></span><span lang="EN-US" style="font-size: 12pt; line-height: 18px;"> Adoption of Point of Taxation rules for services which would shift the basis for tax collection from “cash” towards “accrual” basis as with Central Excise duty.<span style="font-family: 'Times New Roman', serif;"> </span></span></span></i></div></div>

New Service Tax Structure a Step Closure Towards Proposed GST

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Service Tax Provisions to be Rationalised

Service Tax Provisions to be Rationalised

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