Changes in Service Tax | Budget 2009-10

There are no major changes in service tax after union budget 2009. Some are new
service has introduced in this budget.

New Services has been levied on following services:

• Transportation of goods through Railways, including government railways.

• Transport of coastal goods, and transport through inland waters.
• Legal Consultancy Services, except services provided by an individual or to an
individual.
• Cosmetic Surgery & Plastic Sergery.
• Certain services have been modified. The definition of job work, under business
auxiliary services has been amended to exclude only those manufacture activity
which result in manufacture of excisable goods.
• Sub brokers have been exempted from payment of service tax.
• Revision provision in Service Tax has been repealed.
• The government has decided that all pending cases related to conditional
abatement in value in GTA services to be disposed off on priority.
• Amendment has been made in the composition scheme of work contract service,
and it has been made necessary to add value of free material supplied by the
service receiver.
• Transportation of passengers through contract carriage permit has been exempted.
• Federation of Indian Exporters Organisation and Export promotion councils has
been exempted from paying service tax on membership subscription.
• Service Tax provisions has been extended to Continental Shelf and Excusive
Economic Zone. Consequential changes have also been made in the Taxation of
Services (Provided from Outside India and Received in India) Rules, 2006
(Notification No. 22/2009-ST dated 07.07.09 refers).
• Refund of Service Tax paid by exporters procedure has been simplified. Now the
exporters are not required to pay service tax on GTA service or Service Tax paid
on Foreign Commission agent.
• Further the service tax paid on refund shall be refunded through self certification
or CA certification

Tax Audit Limit Increased after Budget

2010
Tax audit limit increased from forty lakh rupees to sixty lakh rupees in case of
persons carrying business, and tax audit limit increased from ten lakh rupees to
fifteen lakh rupees in case of persons carrying profession.
Under the existing provisions of section 44AB, every person carrying on business is
required to get his accounts audited if the total sales, turnover or gross receipts in
business exceed forty lakh rupees in the previous year.

See also: Changed threshold limit of TDS after budget 2010

Similarly, a person carrying on a profession is required to get his accounts audited if the
gross receipts in profession exceed ten lakh rupees in the previous year.

In order to reduce compliance burden of small businesses and professionals, it is

proposed to increase the aforesaid threshold limit from forty lakh rupees to sixty lakh
rupees in the case of persons carrying on business and from ten lakh rupees to fifteen lakh
rupees in the case of persons carrying on profession.

See also: Highlights of budget 2010 related to direct and indirect taxes

In view of the amendment proposed above, it is also proposed to increase the maximum
penalty, leviable under section

271B for failure to get accounts audited under section 44AB or to furnish a report of such
audit, from one lakh rupees to one lakh fifty thousand rupees.

It is also proposed that for the purpose of presumptive taxation under section 44AD, the
threshold limit of total turnover or gross receipts would be increased from forty lakh
rupees to sixty lakh rupees.

These amendments are proposed to take effect from 1st April, 2011 and will, accordingly,
apply in relation to the assessment year 2011-12 and subsequent years.