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SERVICE TAX- BUDGET 2012-134th August, 2012TAXPERT PROFESSIONALS PRIVATE LIMITEDBy : CA. Garima Agarwal
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Budget 2012-13 | Major Amendments in Service Tax
Contents
1 | Budget at a glance
2 | Negative list concept
4 | Rules of interpretation
5 | Place of Provision Rules, 2012
8 | Point of Taxation
14 | Construction Industry
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Budget 2012-13 | Major Amendments in Service Tax
Budget at a glance…
ALL SERVICES
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Remaining services
Mega Exemption List
of Services
Negative List of
Services
10.
3%
12.36%
Remaining Services
Place of Provision Of Services Rules,
2012
Point of Taxation Rules
Alignment with Central Excise..
Move towards GST
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Budget 2012-13 | Major Amendments in Service Tax
Negative List Concept…. W. e.f 1st July, 2012, all the services will be taxable except
for 17 services provided in Section 66D, popularly known
as Negative List of Services.
Notification No. 25/ 2012, has notified 39 specified
services which will be exempt from service tax. This list of
services are popularly known as Mega- Exemption List of
services. 4
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• List II i.e. tolls, betting, gambling, entertainment & amusement, advertisement other than radio and TV, specified transportation
• Services by diplomatic missions in India
Legal Constraints
• Manufacture or production: both centre & state law: may not amount to transfer of title
• Trading of goods: forward marketsTaxed as goods
• Margin-based financial services: interest• Services by Government or RBI
Administrative difficulties
Others 51.Education 2.Agriculture 3. Renting of residential dwellings4.Funeral
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Budget 2012-13 | Major Amendments in Service Tax
Rules of interpretation…..
Normally uniform rate
When differential treatment
Specific over general
Bundled services
Natural bundle: Essential Character
Unnatural bundle: Highest Liability
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Finance Act 2012-13 | Major Amendments in Service Tax
Taxable Territory (TT):
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TT = India minus J & K; India defined in the Act to include EEZ
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Budget 2012-13 | Major Amendments in Service Tax
Main Rule:-Taxable Territory Non-Taxable Territory
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ABC Service Provider
DEF Receiver
PQR Receiver
XYZ Service Provider
Taxable (SP)
Not Taxable
Taxable (SR)
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Budget 2012-13 | Major Amendments in Service Tax
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• Location of Performance
Presence of goods or receiver
• Location of Property
Property
Admission & organization of
events
Specifiedservices
• Embarkation
• Destination of Goods
Transportation
• Location of Event
• Location of Provider
Service Place of Provision of Service Objectives
To determine the place closest to the point of consumption Further if a service is covered under more than one rule then Later rule will prevail over previous rule.
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Point of Taxation
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Process – Service Tax
Provision of Service
Invoice
Payment Receipt/ Advance
Service Tax Payment
It may be through the Contract/
Agreement. It can be provided or to
be providedWithin 30 Days from the Date of Completion of
provision of Service
Service Consideration can
be received after or before the provision
of Service Within 5th of Next Month & 31st
March
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Budget 2012-13 | Major Amendments in Service Tax
Point of Taxation Rules
Date of payment has been defined by inserting rule 2A to mean the earlier of the date of entry in the books of accounts or credited to the bank account of the person liable to pay tax.
However, in the following cases , the date of payment would always be date of credit in bank:
1) In case of change in rate between such entry and payment.
2) In case the credit in bank is beyond four days from the date of change in rate.
3) Payment made by an instrument which is credited to a bank account.
Small Service Provider (less than Rs. 50 Lakhs per year) being individuals/ partnership firms could discharge the tax on receipt basis
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Budget 2012-13 | Major Amendments in Service Tax
Point of Taxation Determination of point of taxation in case of change in Effective Rate of Tax:
In case Service has been provided BEFORE the change of effective rate of tax:
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Event Condition Point of Taxation
Invoice Issued after the Change of Rate
Point of taxation shall be date of payment or issuing of invoice whichever is earlier
Payment Received after the Change
Event Condition Point of Taxation
Invoice Issued Prior to Change of Rate
Point of taxation shall be date of issuing of invoice
Payment Received after the Change of rate
Event Condition Point of Taxation
Invoice Issued after the Change of Rate
Point of taxation shall be date of payment
Payment Received before the change
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Budget 2012-13 | Major Amendments in Service Tax
Point of Taxation:
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Determination of point of taxation in case of change in Effective Rate of Tax:
In case Service has been provided AFTER the change of effective rate of tax:
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Event Condition Point of Taxation
Invoice Issued prior to the Change of Rate
Point of taxation shall be date of payment.
Payment Received after the Change
Event Condition Point of Taxation
Invoice Issued Prior to Change of Rate
Point of taxation shall be date of issuing of invoice or receipt of payment whichever is earlier.
Payment Received prior the Change of rate
Event Condition Point of Taxation
Invoice Issued after the Change of Rate
Point of taxation shall be date of issue of invoice.
Payment Received before the change
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Budget 2012-13 | Major Amendments in Service Tax Impact on Construction Industry….
• Construction for own use is now taxable if > one residential dwelling unit unless otherwise exempted (low-cost housing)
• Resale by individuals before payment of all installments: not taxable; for remaining installments; new allottee liable
Main Rule: Service Tax Not Applicable when:
• Builder sells a ready flat/ shop/ industrial unit after Building Completion Certificate is
obtained from a competent authorities.
• Entire Consideration is obtained only after building completion certificate is obtained.
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Build -Operate – Transfer Model
Budget 2012-13 | Major Amendments in Service Tax
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TRIPARTITE BUSINESS MODEL
REDEVELOPMNT EINCLUDING SLUM REHABILITATION PROJECTS
I INVESTMENT MODEL
• CONVERSION MODEL
• JOINT DEVELOPMENT AGREEMENT MODEL
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Thanks,Garima [email protected] : [email protected] PROFESSIONALS PRIVATE LIMITED
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