Sevice Tax Sem 4 Final

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    1. Service Tax

    1. Introduction to Service Tax :Basic Terms, CENVAT Credit related to Service tax

    2. Provisions related to ollo!in" Taxa#le Services and Com$utation o Tax

    %ia#ilit& :Courier, Clearin" and 'or!ardin" A"ent, Construction Services, Event(ana"ement services, Advertisin" Services, Arc)itect*s Services,

    +. Pa&ment o Service Tax 'ilin" o return

    -. Interest Penalt&

    2. (VAT 2/(A0S

    1. Introduction:

    3einitions: Sec +, -, 4,5,6,7 8nl& T)eor&

    2. 0e"istration Procedure and 0ules 9S 15

    +. Audit9Section 22 51

    -. Penalt& and interest

    4. Set98, 0eund9 com$osition sc)eme

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    INT083CTI8N T8 SE0VICE TA;

    1.1 8ri"in91

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    2 TA;AB%E SE0VICES

    Section 65 defines "Taxable Service to mean any of the services defined inthat section provided by a person to his customer/ client.The list of taxable servicesis given in Section 65(105) Therefore! the event that attracts the service tax is the

    rendering or provision of service listed in Section 65(105) by a person to hiscustomer/client.s of no#! section 65 of the $inance ct! 1%%& defines as many as11% services! #hich are taxable 's 65(105)

    T)ese services include t)e Advertisin" A"enc& Services, Arc)itect*sServices, Courier Services, Clearin" 'or!ardin" A"ent Services, Commercialor Industrial Construction Services and Event (ana"ement Services,

    Amount o service Tax $a&a#le !ill #e uniorm at 12.+5@ @ or all t)eservices !it) eect rom /19/-92/12 inclusive o, 12@ Service Tax, 2@Education Cess and +@ Secondar& and =i")er Education Cess S=EC exce$tunder t)e com$osition sc)eme.

    + A3VE0TISIN AENC> SE0VICES

    +.1 Taxa#le Service

    An& service $rovided or to #e $rovided to an& $erson, #& an advertisin"a"enc& in relation to advertisement in an& manner is lia#le to service tax us541/4 e !it) eect rom /1.11.1

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    -

    (e Audio Visual re"resentation will include ?

    making of ad!ertisement films or

    2etting ad!ertisements "ublished in news"a"ers or TV or cinema theatres orby way of hoarding, neon signs etc.

    (f er!ice does not include any goods or articles, hence cost of ad!ertisementmaterial, sign boards, hoardings will be excluded.

    (g imilarly, sale of media rights, s"onsorshi" will not amount to ad!ertisingagency ser!ice.

    (h Mere can!assing for ad!ertisement on commission basis also will not beco!ered under this head.

    3.5 Valuation of service and service tax payable

    Amount of ser!ice Tax "ayable will be #3.@4* with effect from +#.+%.3+#3inclusi!e of 6ducation &ess on the gross amount charged from the clients as

    commission. Ad!ertisement charges "aid not on ad!ertisement charges "aid to mediawill not be "art of the !alue of ser!ice. Tax is not "ayable on discount or incenti!esrecei!ed from media

    - A0C=ITECT*S SE0VICES

    -.1 Taxa#le Service

    Any ser!ice "ro!ided or to be "ro!ided to any "erson, by an architect in his"rofessional ca"acity in any manner is liable to ser!ice tax us 4)(#+)(" with effectfrom #4.#+.#$$5 .

    =Architect> means any "erson whose name is, for the time being, entered in theregister of architects maintained under section 3@ of the Architects Act, #$-3 and alsoincludes any commercial concern engaged in any manner, whether directly orindirectly, in rendering ser!ices in the field of architectureection 4)(4

    -.2 Sco$e o Services

    Besigning or "lanning of construction of buildings, bridges, dams etc.

    er!ices concerning "lanning, design or beautification of s"aces. Actual execution of work is not ArchitectCs ser!ice

    -.+ Valuation of service and service tax payable

    Amount of ser!ice Tax "ayable will be #3.@4* with effect from +#+%3+#3inclusi!e of 6ducation &ess on the gross amount charged from the clients as the feescharged (excluding cost of material su""lied for rendering ser!ices in any ca"acity.

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    4 C%EA0IN '80HA03IN AENT SE0VICE

    4.1. Taxa#le Service

    Any ser!ice "ro!ided or to be "ro!ided by a "erson to a client in relation to

    clear ing and for#arding operat ions in any manner is taxable ser!ice us4)(#+) (j with effect from #4.-.#$$-.

    *learing and $or#arding gent means any person #ho is engaged inproviding any service! either directly or indirectly! connected #ith the clearing andfor#arding operations in any manner to any other person and incl'des a consignmentagent + S 65(,5)-

    4.2 Scope:

    The ser!ice is for &learing A1B 0orwarding 1DT &learing D' 0orwarding.Eence the ser!ice must include both the o"eration clearing and forwarding. Dnlyclearing or only forwarding ser!ice is not sufficient. These ser!ices may include

    'ecei!ing goods, warehousing or storage of goods,

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    5 C8((E0CIA%, IN3ST0IA% 80 0ESI3ENTIA% C8(P%E;C8NST0CTI8N SE0VICES

    5.1. Taxa#le Service:

    9s ection 4)(#+)(::/ , any ser!ice "ro!ided or to be "ro!ided to any"erson, by any other "erson, in relation to commercial or industrial constructionser!ice is liable to ser!ice tax on commercial or industrial construction ser!icetaxable w.e.f. #+$3++%and and in , in relation to construction of residentialcomplex us section 4)(#+)(:::h w.e.f. #443++).

    s 54 24# commercial or industrial constructionDmeans (a &onstruction of a ne# b'ilding or a civi l str'ct're or a "art thereofG

    or (b &onstruction of pipeline or cond'itG or (c com"letion and f inishingservices such as gla:ing, "lastering, "ainting, floor and wall tiling, wall co!ering andwall "a"ering, wood and metal joinery and car"entry, fencing and railing, constructionof swimming "ools, acoustic a""lications or fittings and other similar ser!ices, inrelation to building or ci!il structureG or (d re"air, alteration, reno!ation or restorationof, or similar ser!ices in relation to, building or ci!il structure, "i"eline or conduit,which is (i 'sed!or to be used, "rimarily forG or (ii occ'pied! or to be occu"ied,"rimarily withG or(iii engaged!or to be engaged, "rimarily in, commerce or industry,or work intended for commerce or industry, but does not include such ser!ices"ro!ided in res"ect of roads, airports, railways, transport terminals, bridges,tunnels and dams

    imilarly, us ection 4)(@+a !"onstruction of complex# means (aconstruction of a new residential com"lex or a "art thereofG or (b com"letion and

    finishing ser!ices in relation to residential com"lex such as gla:ing, "lastering,"ainting, floor and wall tiling, wall co!ering and wall "a"ering, wood and metal joineryand car"entry, fencing and railing, construction of swimming "ools, acoustica""lications or fittings and other similar ser!icesG or (c re"air, alteration, reno!ationor restoration of, or similar ser!ices in relation to, residential com"lex .

    H$esidential complex% means any com"lex com"rising of(i a building or buildings, ha!ing more than twel!e residential unitsG

    (ii a common areaG and (iii any one or more of facilities or ser!ices such as"ark, lift, "arking s"ace, community hall, common water su""ly or effluenttreatment system, located within a "remises and the layout of such "remises

    is a""ro!ed by an authority under anylaw for the time being in force, but does not include a com"lex which is constructed

    by a "erson directly engaging any other "erson for designing or "lanning of thelayout, and the construction of such com"lex is intended for "ersonal use asresidence by such "erson.

    The section further ex"lains that (a ="ersonal use> includes "ermitting thecom"lex for use as residence by another "erson on rent or without consideration (b

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    =residential unit> means a single house or a single a"artment intended for use as a"lace of residence ection 4)($#a.

    5.2. Sco$e o t)e Service:

    (a The o"ening words of the section refer to construction. er!ices are to be

    "ro!ided by one person to the another

    (b 8t also means that any such construction undertaken by a "erson in his ownright will not be co!ered under this clause as no one can render ser!ice tohimself. ection itself excludes a com"lex which is constructed by a "ersondirectly engaging any other "erson for designing or "lanning of the layout,and the construction of such com"lex is intended for personal 'se asresidence by s'ch person .ersonal 'se also incl'des let t ing o'tthe premises

    (c 0ollowing ty"es of constructions are coveredin this ser!ice ?

    i. &ommercial or industrial construction

    ii. 'esidential &om"lex ha!ing MD'6 TEA1 #3 residential units, tenements, flats orhouses

    iii. 'e"airs, alteration, reno!ation of existing building

    i!.

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    !i. &onstruction by builder or de!elo"er for "ersonal use of customer e!en if it isin residential com"lex is also excluded .

    !ii. &onstruction of one house in residential com"lex is not taxable if directcontract gi!en by indi!idual for residential "ur"oses to builder or de!elo"er.

    !iii.&onstruction and works contract ser!ices relating to "ort or other "ort areexem"t. Eowe!er, ser!ices of com"letion and finishing, re"air, alteration,reno!ation, restoration, maintenance or re"air "ro!ided in relation to existing"ort or other "ort are not exem"t 1otification 1o. 3)3++-T dated 33)3++-

    5.+. Valuation o Service and Service Tax %ia#ilit&

    0ollowing 'ules are a""licable in regard to !aluation of ser!ice and ser!ice tax liability.

    i. &laim abatement of 4-* and "ay ser!ice tax on the @@* of gross !alue ofthe ser!ice. This means an effecti!e rate of %.+-55*

    ii. This o"tion is not a!ailable if only com"letion and finishing ser!ices are"ro!ided , in which case gross !alue charged shall be the !alue of ser!ice

    iii. The "artial exem"tion is a!ailable only if the gross amount charged includes!alue of goods and materials su""lied or "ro!ided or used by "ro!ider of thecommercial or industrial construction of ser!ice for "ro!iding such ser!ice(6x"lanation to 1otification 1o. #3++4T dated#@3++4I.

    Eowe!er, !alue of land is not re/uired to be added as it is neither goods nor material.This sim"le method is not a""licable in case of This sim"le method is not a!ailable incase the ser!ice "ro!ider "ro!ides only com"letion and finishing ser!ices, as in such

    cases, material content will be much less

    i!. 8n the alternati!e, the ser!ice "ro!ider may take the gross amount billed asthe !alue of the construction ser!ice and claim &61VAT.

    6 C80IE0 SE0VICE

    6.1 Taxa#le Service

    Any ser!ice "ro!ided or to be "ro!ided to any "erson, by a courier agency inrelation to doortodoor trans"ortation of time sensiti!e documents, goods or articlesis taxable us 4)(#+)(f with effect from +#.##.#$$4.

    H&ourier Agency> means any "erson engaged in the doorto doortrans"ortation of timesensiti!e documents, goods or articles utilising the ser!ices of a"erson, either directly or indirectly, to carry or accom"any such documents, goods orarticlesG Jection 4)(@@I

    As "er section 4)()+ 2oodsC has the same meaning as us 3(- of ale of2oods Act. Accordingly, H2oods> means e!ery kind of mo!able "ro"erty other than

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    means taxable ser!ices which are exem"t from the wholeof the ser!ice tax le!iable thereon, and includes ser!ices on which no ser!ice tax isle!iable under section 44 of the 0inance ActG

    +.+ MIn$utD 0ule 92 :

    8n"ut means ?

    (i all goods, exce"t light diesel oil, high s"eed diesel oil and motor s"irit, commonlyknown as "etrol, used in or in relation to the manufacture of final "roducts whetherdirectly or indirectly and whether contained in the final "roduct or not and includeslubricating oils, greases, cutting oils, coolants, accessories of the final "roducts

    cleared along with the final "roduct, goods used as "aint, or as "acking material, or asfuel, or for generation of electricity or steam used in or in relation to manufacture offinal "roducts or for any other "ur"ose, within the factory of "roductionG(ii all goods, exce"t light diesel oil, high s"eed diesel oil, motor s"irit, commonly knownas "etrol and motor !ehicles, used for "ro!iding any out"ut ser!iceG

    6x"lanation #.The light diesel oil, high s"eed diesel oil or motor s"irit, commonly knownas "etrol, shall not be treated as an in"ut for any "ur"ose whatsoe!er.

    6x"lanation 3. 8n"ut include goods used in the manufacture of ca"ital goods which arefurther used in the factory of the manufacturerG

    +.- Min$ut service 0ule 92n:

    )8n"ut ser!ice> means any ser!ice,

    (i used by a "ro!ider of taxable ser!ice for "ro!iding an out"ut ser!iceG or

    (ii used by the manufacturer, whether directly or indirectly, in or in relation to themanufacture of final "roducts and clearance of final "roducts u"to the "lace ofremo!al,and includes ser!ices used in relation to setting u", moderni:ation, reno!ation or

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    re"airs of a factory, "remises of "ro!ider of out"ut ser!ice or an office relating to suchfactory or "remises, ad!ertisement or sales "romotion, market research, storage u"to the"lace of remo!al, "rocurement of in"uts, acti!ities relating to business, such asaccounting, auditing, financing, recruitment and /uality control, coaching and training,com"uter networking, credit rating, share registry, and security, inward trans"ortation of

    in"uts or ca"ital goods and outward trans"ortation u"to the "lace of remo!alG butexcludes ser!ices

    (&( s"ecified in subclauses (", (:n, (::l, (::m, (::/, (:::h and (::::a of clause(#+) of section 4) of the 0inance Act (hereinafter referred as s"ecified ser!ices, in sofar as they are used for

    (a construction of a building or a ci!il structure or a "art thereofG or

    (b laying of foundation or making of structures for su""ort of ca"ital goods, exce"t for the"ro!ision of one or more of the s"ecified ser!icesG or

    B s"ecified in subclauses (o and (::::j of clause (#+) of section 4) of the 0inance Act,in so far as they relate to a motor !ehicle which is not a ca"ital goodsG or

    '*&( s"ecified in subclauses (d and (:o of clause (#+) of section 4) of the 0inanceAct, exce"t when used by S

    (a a manufacturer of a motor !ehicle in res"ect of a motor !ehicle manufactured by himG or

    (b a "ro!ider of out"ut ser!ice as s"ecified in subclause (d of clause (#+) of section 4)of the 0inance Act, in res"ect of a motor !ehicle insured or reinsured by himG or.

    C such as those "ro!ided in relation to outdoor catering, beauty treatment, healthser!ices, cosmetic and "lastic surgery, membershi" of a club, health and fitness centre,

    life insurance, health insurance and tra!el benefits extended to em"loyees on !acationsuch as 7ea!e or Eome Tra!el &oncession, when such ser!ices are used "rimarily for"ersonal use or consum"tion of any em"loyeeG

    +.4 Min$ut service distri#utorD9 0ule 2m:

    =in"ut ser!ice distributor> means an office of the manufacturer or "roducer of final "roducts or "ro!ider of out"ut ser!ice, whichrecei!es in!oices issued under rule %A of the er!ice Tax 'ules, #$$% towards "urchasesof in"ut ser!ices and issues in!oice, bill or, as the case may be, challan for the "ur"osesof distributing the credit of ser!ice tax "aid on the said ser!ices to such manufacturer or"roducer or "ro!ider, as the case may beG

    +.5 MKo# !orD9 0ule 2n

    Pob Work means "rocessing or working u"on of raw material or semifinishedgoods su""lied to the job worker, so as to com"lete a "art or whole of the

    "rocess resulting in themanufacture or finishing of an article or any o"eration which is essential for aforesaid"rocess and the ex"ression =job worker> shall be construed accordinglyG

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