Service Tax on Chartered Accountants
This query is : Resolved
07 May 2009
Hi experts,
Our Auditor has charged service tax on professional fees( Related to filing form A under Sick industries act), Xerox charges, and travelling expenses. Please not that he has raised individual bills for all of the three services (?) above.
The Tax law says
"Value of Taxable Service:
In the case of practising Chartered Accountant, Practising Cost Accountant and Practising Company Secretary– “Value of taxable service shall be the gross amount charged by the service provider for such services rendered by him.” (Section 67 of Finance Act, 1994 as amended)". Further to add, the law defined the taxable services can be provided by a Chartered accountant, and I believe the above said service is not falling under the tax net.
Is the tax charged by the auditor for reimbursement of Travelling exp. and xerox charges is correct. Pls clarify with possible arguement.
Thanks.
Our Auditor has charged service tax on professional fees( Related to filing form A under Sick industries act), Xerox charges, and travelling expenses. Please not that he has raised individual bills for all of the three services (?) above.
The Tax law says
"Value of Taxable Service:
In the case of practising Chartered Accountant, Practising Cost Accountant and Practising Company Secretary– “Value of taxable service shall be the gross amount charged by the service provider for such services rendered by him.” (Section 67 of Finance Act, 1994 as amended)". Further to add, the law defined the taxable services can be provided by a Chartered accountant, and I believe the above said service is not falling under the tax net.
Is the tax charged by the auditor for reimbursement of Travelling exp. and xerox charges is correct. Pls clarify with possible arguement.
Thanks.
07 May 2009
I think, as per rule 5(1) of Service tax(Determination of value)Rules 2006,the service provider has done correctly.
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07 May 2009
Thankyou Warrier sir, I agree with you. It is clearly mentioned that travelling is not a reimbursement.
But what about the list of services mentioned by the Dept. vide Notification no.53/98 dt.07.10.98 and under sl.no.4.
The service which I have mentioned does not fall within the category am I correct and can I deny the service tax charged by the service provider.
But what about the list of services mentioned by the Dept. vide Notification no.53/98 dt.07.10.98 and under sl.no.4.
The service which I have mentioned does not fall within the category am I correct and can I deny the service tax charged by the service provider.
07 May 2009
vernment of India
Ministry of Finance
(Department of Revenue
NOTIFICATION
No. 53/98 – Service Tax
New Delhi, dated the 7th October, 1998
G.S.R.(E) – In exercise of the powers conferred by section 116 of the Finance (No. 2) Act, 1998 (21 of 1998), the Central Government hereby appoints the 16th October, 1998, as the date on which the Finance Act, 194 (32 of 1994) shall be amended as provided in the said section 116 and the service tax shall be levied under sub-section 4 and sub-section 5 of section 66 of the Finance Act, 1994 (32 of 1994).
(ATUL GUPTA)
UNDER SECRETARY TO THE GOVERNMENT OF INDIA
F.No. B. 11/3/98-TRU
53/2008 IS REPRODUCED ABOVE. aM I WRONG IN SAYING THAT CITATION IS WRONG.
Ministry of Finance
(Department of Revenue
NOTIFICATION
No. 53/98 – Service Tax
New Delhi, dated the 7th October, 1998
G.S.R.(E) – In exercise of the powers conferred by section 116 of the Finance (No. 2) Act, 1998 (21 of 1998), the Central Government hereby appoints the 16th October, 1998, as the date on which the Finance Act, 194 (32 of 1994) shall be amended as provided in the said section 116 and the service tax shall be levied under sub-section 4 and sub-section 5 of section 66 of the Finance Act, 1994 (32 of 1994).
(ATUL GUPTA)
UNDER SECRETARY TO THE GOVERNMENT OF INDIA
F.No. B. 11/3/98-TRU
53/2008 IS REPRODUCED ABOVE. aM I WRONG IN SAYING THAT CITATION IS WRONG.
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07 May 2009
Please read the extract from CBEC Site :-
4 The following services, which are provided by practising Chartered Accountant, a practising Cost Accountant or Company Secretaries in their professional capacity to a client and are rendered by them either exclusively or are common to their profession, are liable for payment of Service Tax. In case of service provided by the practising Chartered Accountant, a practising cost accountant or company secretaries, the taxable services are,
(i) accounting and auditing; or
(ii) cost accounting and cost auditing; or
(iii) secretarial auditing; or
(iv) verification of declarations in prescribed forms of compliance's for obtaining a Certificate of commencement of business or commencement of other business under section 149 of the companies Act, 1956 ( 1 of 1956); or
(v) signing of the annual return of listed companies under section 161 of the companies act, 1956( 1 of 1956) ; or
(vi) certification that requirement of Schedule XIII to the Companies Act, 1956 (1of 1956) have been complied with as regards statutory guidelines for appointment of managerial personnel and payment of managerial remuneration to them without the approval of the Central Government under Section 269 and Schedule XIII of the Companies Act, 1956( 1 of 1956) ; or
(vii) Certification of documents to be filed by Companies with the registrar of Companies under Companies Act, 1956(1 of 1956); or
(viii) Certification in Form 1 that the whole of the amount remaining unpaid or unclaimed for a period of three years from the date of transfer to the special account under subsection (1) and sub-section (2) of section 205A of the Companies Act, 1956 (1 of 1956) has been transferred to the General Revenue Account of the Central Government under the Companies unpaid Dividend (Transfer to General revenue Account of the Central Government) rules, 1978; or
(ix) Certification of documents under the Exports and Imports Policy (1997-2002) of the Government of India; or
(x) Certification for exchange control purposes which a practising chartered accountant can issue as documentary evidence in support of certain applications under the Foreign Exchange Regulation Act, 1973 (46 of 1973); or
(xi) Certification in respect of valuation of instrument or assets as per rule 8A (7) of the wealth tax rules, 1957 (Notification No.59/98-ST dt.16.10.1998)
Thus, in case any of the above mentioned services are rendered to a client by either a practising chartered accountant or a practising company secretary or a practising cost accountant, the same would attract Service Tax. For example, Certification services for exchange control purposes provided by a practising chartered accountant or a practising company secretary or a practising cost accountant under the Foreign Exchange Regulation Act, 1973 to a client shall attract Service Tax. Similarly in a case where services of accounting or auditing or costing or certification related thereto are provided by a practicing chartered accountant or a practising company secretary or a practising cost accountant, the same shall attract Service Tax. Another example are the cases where a practising chartered accountant or a practising company secretary or a practising cost accountant provides services to a client of appearing before the Foreign Exchange Appellate tribunal or the Income Tax Appellate Tribunal as his authorized representative. He shall be exempt from paying Service Tax on such services to the client, as the service in question is not covered in the list of services mentioned above.
(Ministry’s F. No. 11/3/98-TRU dt.20.10.1998)
In this no specification relating to service provided under Sick Industires act. Hence can I claim the service is not taxable. Pls guide.
4 The following services, which are provided by practising Chartered Accountant, a practising Cost Accountant or Company Secretaries in their professional capacity to a client and are rendered by them either exclusively or are common to their profession, are liable for payment of Service Tax. In case of service provided by the practising Chartered Accountant, a practising cost accountant or company secretaries, the taxable services are,
(i) accounting and auditing; or
(ii) cost accounting and cost auditing; or
(iii) secretarial auditing; or
(iv) verification of declarations in prescribed forms of compliance's for obtaining a Certificate of commencement of business or commencement of other business under section 149 of the companies Act, 1956 ( 1 of 1956); or
(v) signing of the annual return of listed companies under section 161 of the companies act, 1956( 1 of 1956) ; or
(vi) certification that requirement of Schedule XIII to the Companies Act, 1956 (1of 1956) have been complied with as regards statutory guidelines for appointment of managerial personnel and payment of managerial remuneration to them without the approval of the Central Government under Section 269 and Schedule XIII of the Companies Act, 1956( 1 of 1956) ; or
(vii) Certification of documents to be filed by Companies with the registrar of Companies under Companies Act, 1956(1 of 1956); or
(viii) Certification in Form 1 that the whole of the amount remaining unpaid or unclaimed for a period of three years from the date of transfer to the special account under subsection (1) and sub-section (2) of section 205A of the Companies Act, 1956 (1 of 1956) has been transferred to the General Revenue Account of the Central Government under the Companies unpaid Dividend (Transfer to General revenue Account of the Central Government) rules, 1978; or
(ix) Certification of documents under the Exports and Imports Policy (1997-2002) of the Government of India; or
(x) Certification for exchange control purposes which a practising chartered accountant can issue as documentary evidence in support of certain applications under the Foreign Exchange Regulation Act, 1973 (46 of 1973); or
(xi) Certification in respect of valuation of instrument or assets as per rule 8A (7) of the wealth tax rules, 1957 (Notification No.59/98-ST dt.16.10.1998)
Thus, in case any of the above mentioned services are rendered to a client by either a practising chartered accountant or a practising company secretary or a practising cost accountant, the same would attract Service Tax. For example, Certification services for exchange control purposes provided by a practising chartered accountant or a practising company secretary or a practising cost accountant under the Foreign Exchange Regulation Act, 1973 to a client shall attract Service Tax. Similarly in a case where services of accounting or auditing or costing or certification related thereto are provided by a practicing chartered accountant or a practising company secretary or a practising cost accountant, the same shall attract Service Tax. Another example are the cases where a practising chartered accountant or a practising company secretary or a practising cost accountant provides services to a client of appearing before the Foreign Exchange Appellate tribunal or the Income Tax Appellate Tribunal as his authorized representative. He shall be exempt from paying Service Tax on such services to the client, as the service in question is not covered in the list of services mentioned above.
(Ministry’s F. No. 11/3/98-TRU dt.20.10.1998)
In this no specification relating to service provided under Sick Industires act. Hence can I claim the service is not taxable. Pls guide.
07 May 2009
Notification No 59/1998-ST,dt 16.10.1998,all the services other rendered by a practicing chartered accountant than those specified in the said notification were given exemption.This exemptions were withdrawn with effect from 01.03.2006 and all the services provided by a practicing chartered accountant in his profession capacity in any manner were made taxable.
However, vide notification no 25/2006 dated 13.07.2006 exemption was granted to the services provided by CAs in relation to representation before statutory authorities against notice and this is the only service specific exemption available to them as on date.
Regarding, charging of service tax on reimbursable expenses, it may be said that such out of pocket expsenses form a part of the taxable value as per the service tax valuation rules but may be he was wrong in raising separate bill for reimbursable components also.
However, vide notification no 25/2006 dated 13.07.2006 exemption was granted to the services provided by CAs in relation to representation before statutory authorities against notice and this is the only service specific exemption available to them as on date.
Regarding, charging of service tax on reimbursable expenses, it may be said that such out of pocket expsenses form a part of the taxable value as per the service tax valuation rules but may be he was wrong in raising separate bill for reimbursable components also.
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08 May 2009
Your auditors course of action(ie charging ST) is correct because Service tax (Determination of value rules)2006 has to be followed.
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