home     |     site map      |     contact us
 
 
 

 
 

CHANGES EFFECTIVE  FROM 1.07.2010
 

The Finance Bill 2010 has finally been enacted and the new / amended provisions of Service Tax have been made effective w.e.f. 1.7.2010.  The major changes are that took place are briefly summarized in the ensuing paragraphs for the benefit of readers.

[A]    Following new Services made effective from 1.7.2010

1.   Services of promoting, marketing or organizing of games of chance, including lottery

2.   Health services

3.   Maintenance of medical records of employees of business entity

4.   Promoting of brand of goods, services, events, business entity, etc.

5.   Commercial use or exploitation of any event organized by a person or organization.

6.   Services provided by Electricity Exchanges

7.   Copyright on cinematographic films and sound recording.

8.   Additional services provided by builder to the prospective buyers

 

The scope of the each of the above service was elaborately discussed in our Budget, 2010 issue of March, 2010.

[B]    Scope of existing services expanded /  amended.

    1.  Air passenger transport service 

      To include domestic journeys and international journeys in any class

2.  Information Technology Software service

     To cover all cases irrespective of its use, i.e. for furtherance of business or commerce or for any other purpose.

3.   Commercial training or coaching service

Term “commercial” means any training or coaching which is provided for a consideration, whether or not for profit – retrospective effect from 1.7.2003.

4.   Sponsorship service

      Sponsorship pertaining to sports also included.

5.   Construction of complex service

      Excluded, if entire consideration for the property is paid after the completion of construction, i.e., after receipt of completion certificate from the competent authority. Taxable, if the builder / promoter / developer provide service to the prospective buyer.

6.   Renting of immovable property service

-     Renting of immovable property, per se, is a taxable service – retrospectively from 1.6.2007.

-     Levy of Service Tax on rent of vacant land where there is agreement / contract between the lessor and lessee, for undertaking construction of buildings or structures on such land for furtherance of business or commerce, during the tenure of the lease.

7.   Airport Service, Port Services and other Port Services.

-     All services provided entirely within the airport / port premises would be classified under this services.

-     An authorization from the Airport / Port authority would not be pre-condition for taxing this service.

8.    Auctioneer’s service

     “Auction by Government” means an auction involving sale of government property, (e.g. goods confiscated by Customs Department) and not when the government acts as an auctioneer for sale of the private property, (e.g. Tobacco Board conducts auction of properties that belong to the private individuals or organizations.)

9.   Management of Investment under ULIP services

The value of taxable service for any year for the operation of policy shall be - the actual amount charged by the insurer for management of funds and ULIP or the maximum amount of fund management charges fixed by the Insurance Regulatory and Development Authority (i.e. at 1.5% of gross yield for the scheme below 10 years and 1.25% for the schemes above ten years), whichever is higher.

10.  Business Entity

Definition of the term “Business Entity” to include an association of persons, body of individuals, company or firm, but not an individual.

[C]   Further concessions announced

1.   Exemption on advance payment received

With respect to the existing services where the scope of the service is expanded and the new services notified w.e.f. 1.07.2010, service tax not payable on the amount of advance payment received before 1.07.2010. (Notification  No. 36/2010-ST dated 28.6.2010)

2.   Refund of Service Tax paid by exporter of goods

Notification No. 17/2009- ST dt. 7.07.2009 has been amended by inserting entry no. 17 providing eligibility of refund of service tax paid on services provided by Airport Authority or any other person in any Airport in respect of export of goods (Notification  No. 37/2010-ST dated 28.6.2010)

3.   Exemption to Commercial or Industrial construction service provided to port

Commercial or Industrial construction service provided wholly within the port or other port, for construction, repair, alteration and renovation of wharves, quays, docks, stages, jetties, piars and railways exempted from whole of service tax.  (Notification No. 38/2010-ST dated 28.6.2010)

4.   Invoice by Aircraft Operator

      A new proviso has been inserted after the 3rd proviso under Rule 4A(1) of Service Tax Rules, 1994 which provides that the invoice under Rule 4A issued by Aircraft Operator shall be an invoice, a bill or a challan including the ticket issued in any form and by whatever name called whether or not containing registration no. of service provider, classification of the services and the address of the service receiver  (Notification  No. 39/2010-ST dated 28.6.2010)

5.   Abatement for specified services provided under port / airport services

      Notification No. 1/2006-ST dt. 1.03.2006 has been amended w.e.f. 1.07.2010 extending the abatement to the services provided under the category of port service, other port service and airport service in respect of description of service applicable to following services –

Renting of Cab (60%)

Erection, Commissioning or Installation    (67%)

Commercial or Industrial construction service (67%)

Construction of complex service (67%)

Transport of goods by rail (70%)                               

(Notification No. 40/2010-ST dated 28.6.2010)

6.   Exemption to specified services provided in port / airport

Following services provided within port or other port or airport are exempted wholly w.e.f. 1.07.2010–

§    Cargo handling service in respect to agriculture produce or goods intended to be stored in a cold storage

§    Storage and warehousing service in respect to agriculture produce or for  storage of any service provided by a cold storage

§    Transport of export goods in an aircraft by aircraft operator

§    Site formation and clearance, excavation and earth moving and demolition and such other similar activities     (Notification  No. 41/2010-ST dated 28.6.2010)

7.    Exemption to commercial or industrial construction within airport

Commercial or Industrial construction service provided wholly within the airport is exempted w.e.f. 1.07.2010             

(Notification No. 42/2010-ST dated 28.6.2010)
 

Readers are requested to take note of the above stated latest changes and more particularly in respect of the services provided wholly in the port or airport, only such services, shall be classified under port or airport services as the case may be.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

top