CURRENT CHANGES IN SERVICE TAX

As most of you are aware Finance Act 2012 has brought about a paradigm shift in the service tax regime. Post-Finance Act 2012 all services have become liable for service tax except, those services which are covered in the negative list and those services which are specifically exempted. The note on changes being circulated hereunder is with particular reference to our industry and the line of activities being undertaken by us and therefore not exhaustive. FOLLOWING ARE THE IMPORTANT CHANGES: * * * * * * * Transfer of goods without transfer of rights to use goods is taxable; Renting of vacant plot with or without structure, is taxable. Non Compete Fees to be taxable; Service portion of the Works contract is taxable; Services by renting of residential dwelling for use of residence is non taxable; Trading of goods not taxable; Erection, construction, maintenance, repair, alteration, renovation, restoration to Government, local authority, of civil structure and other original work meant for non commercial use, canal, dam and other irrigation work, pipe line, conduit or plant for drinking water, supply water treatment and other sewage treatment for disposal are exempt. Erection, construction, maintenance of roads, bridges, road terminals general public use are exempt. Pollution control or factory are exempt. effluent treatment plant except when for part of

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Services by a goods transport agency by way of gross amount charged up to Rs.1500/- of total consignment / Rs.750/- for individual consignment are exempt. Carrying out intermediate production process as a job work in relation to any goods on which appropriate duty is payable by principal manufacturer is exempt. Services by way of erection, construction of original work pertaining to Airport, Railways are exempt.

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Another important change that has been brought about in the service tax regime is service tax liability on recipient of service. Hitherto we have been discharging service tax as receiver of services provided / to be provided only by a goods transport agency in respect of transportation of goods by road. However, W.E.F

2012. Tax on Services liable to be discharged by service receiver on reverse charge mechanism on payment basis for such services are :        Service provided \ to be provided by an Arbitral Tribunal Service provided \ to be provided by an individual advocate . HUF.1st July 2012. U/s 68 of the Finance Act the quantum of service tax to be discharged by the service provider and receiver for the above categories of services are as follows: % Value of services on which ST to be discharged Services provided or agreed to be provided by goods transport agency Services provided by Arbitral Tribunal Services provided by Advocate Rent/hiring charges of motor vehicles with abatement(60%) Rent/hiring charges of motor vehicles without abatement Man-power supply Works contract Services provided from non-taxable territory to taxable territory By provider NIL NIL NIL NIL 60% 25% 50% NIL By receiver 100% 100% 100% 100% 40% 75% 50% 100% From the above it could be seen that W. Taxable le services provided or agreed to be provided by any person located on a non-taxable territory received by any person located in the taxable territory. F 1st July. service tax with respect to the above category of services shall have to be discharged by service receiver and by the provider as indicated in the table. few other services have also been added on which the service receiver is bound to pay service tax on receipt of services. partnership whether registered or not including AOP to a Company or business entity. The service tax so paid by the service receiver and &provider shall be eligible for CENVAT credit. . Taxable services provided or agreed to be provided by way of renting or hiring of motor vehicle for carrying passenger Services provided or agreed to be provided for supply of man-power Work contract services by any individual. E. proprietor.

therefore. hiring/renting of motor vehicles. . Care may also be taken while effecting payments to such service providers on the service tax component billed for their services. In view of above clarification. man-power supply. which is being given on a back-toback basis.Please take note that service tax compliance have become more complex and monitoring of expenses on goods transportation. petty works contractor and discharging service tax thereon have become mandatory for us. monthly report on such expenditure incurred by various sites including details of payments made etc shall have to be intimated to Taxation. RAILWAYS may specifically note non-compete fees being paid to Joint Venture partners shall be liable for tax. Please note this will not be applicable in case of Works Contract. Gurgaon for discharge of Service Tax obligation without fail. Expenses incurred for in Railway Projects towards various services shall be subjected to service tax and shall have to be discharged though corresponding CENVAT Credit shall not be available for the same as the out-put service provided to Railways is exempt.