Many new notifications have been issued by the Central Board of Excise & Customs on 25-4-2011 in the field of Service Tax. They have been compiled here along with relevant inputs from the Letter by Joint Secretary(TRU-II)
1. DATE OF COMING INTO EFFECT OF FINANCE ACT, 2011 :
The Central Govt has appointed 1st May, 2011 as the date from which provisions relating to Service Tax will come into effect [ Notification No 29/2011 dated 25.04.11]
2. HEALTH SERVICES EXEMPTION
Vide Notification No 30/2011 dated 25.04.2011, Health services defined u/s. 65(105)(zzzzo) have been fully exempted. This is effective from 1st May, 2011.
3. EXEMPTION FOR SERVICES PROVIDED BY HOTELS, INNS, RESORTS ETC. AND ABATEMENT
The Finance Act, 2011 had brought into the service tax net, services provided/to be provided to any person by a hotel, inn, guest house, club or camp-site, by whatever name called, for providing of accommodation for a continuous period of less than three months
The Central Government has provided full exemption where the declared tariff is less than 1000 Rs. Per day. “Declared tariff” includes charges for all amenities provided in the unit of accommodation like furniture, air-conditioner, refrigerators etc., but does not include any discount offered on the published charges for such unit. [Notification No.31/2011 dated 25.04.2011]
Thus it will include cost of all electronic gadgets installed in the room and any other facility normally provided by a hotel as part of the stay. Cost of extra bed will not form a part of the declared tariff. No further exclusions are provided from the declared tariff e.g. on account of breakfast or any other meal whose cost is included in the declared tariff including any discount given to the customer.
This service also now enjoys abatement of 50% vide Notification No. 34/2011 dated 25/04/2011.
Both are effective from 1st May,2011
4. REPRESENTATION SERVICES OF CA,CWA,CS NOW TAXABLE
Notification no. 25/2006 dated 13th July, 2006 had exempted services provided or to be provided by a practicing chartered accountant, a practicing cost accountant and a practicing company secretary respectively, in his professional capacity, to a client, relating to representing the client before any statutory authority in the course of proceedings initiated under any law for the time being in force, by way of issue of notice, from the whole of service tax leviable thereon under section 66 of the said Finance Act.
Vide Notification 32/2011, the above-mentioned notification stands withdrawn w.e.f. 1st May,2011
5. EXEMPTIONS FROM COMMERCIAL COACHING AND TRAINING SERVICES
Vide Notification No33/2011 dated 25.04.2011, the following services stand exempted :
(i) Any preschool coaching and training;
(ii) Any coaching or training leading to grant of a certificate or diploma or degree or any educational qualification which is recognised by any law for the time being in force;
when provided by any commercial coaching or training centre from the whole of the service tax leviable.
This is effective from 1st May,2011.
6. ABATEMENT TO SERVICES PROVIDED BY RESTAURANTS , HOTELS
Section 65(105)(zzzzv) taxes the following service:
“Services provided or to be provided, to any person, by a restaurant, by whatever name called, having the facility of air-conditioning in any part of the establishment, at any time during the financial year, which has licence to serve alcoholic beverages, in relation to serving of food or beverage, including alcoholic beverages or both, in its premises”
Vide Notification No. 34/2011, an abatement of 70% of gross value has been provided.
The exemption is available provided no Cenvat credit is availed either of inputs or input services. It is clarified that the exemption is available on the gross price charged by the restaurant for the taxable service, including any portion shown separately e.g. service charge. However the amount paid by the customer ex-gratia e.g. as tip to any member of the staff doesn’t constitute consideration paid to the restaurant and shall remain outside this levy.
This is effective from 1st May, 2011.
7. SCHEME FOR INSURER CARRYING ON LIFE INSURANCE BUSINESS
According to the newly inserted Rule 6(7A) of The Service Tax Rules, 1994,
An insurer carrying on life insurance business shall have the option to pay tax:
(i) on the gross premium charged from a policy holder reduced by the amount allocated for investment, or savings on behalf of policy holder, if such amount is intimated to the policy holder at the time of providing of service;
(ii) 1.5 per cent of the gross amount of premium charged from a policy holder in all other cases;
towards the discharge of his service tax liability instead of paying service tax at the rate specified in section 66 of Chapter V of the said Act:
Provided that such option shall not be available in cases where the entire premium paid by the policy holder is only towards risk cover in life insurance.”.
The new definition will include all services provided by a life insurance company. The optional scheme available in rule 6(7A) of the Service Tax Rules, 1994 has been amended vide notification No. 35/2011-ST dated April 25, 2011. The assessee will have the option to pay tax on that portion of the premium which is not invested, when such break-up is given to the policy holder. Where the break-up is not so provided, tax amount shall be 1.5% of the gross premium. However, where the entire premium is only for the risk portion the same shall constitute the taxable value of the service.
This is effective from 1st May, 2011
8. AMENDMENT TO EXPORT OF SERVICES RULES, 2005
Rule 3(1)(i) of Export of Services Rules, 2005 provides that in respect of services specified in Rule 3(1)(i), export of taxable service, in relation to taxable services, shall be the provision of such services as are provided in relation to an immovable property situated outside India.
Additions have been made to this list of specified services vide Notification No. 36/2011 dated 25.04.2011, namely :
65(105)(zzzzv) : Services of Hotel, Restaurant etc.
65(105)(zzzzw) : Services of Hotels, Inns, resorts etc.
This is effective from 1st May, 2011.
9. AMENDMENT TO TAXATION OF SERVICES (PROVIDED FROM OUTSIDE INDIA AND RECEIVED IN INDIA) RULES, 2006
The above rules have been amended to provide that taxable services provided from outside India and received in India, in relation to taxable services specified in Section 65(105)(zzzzw) and Section 65(105)(zzzzv), be such services as are provided or to be provided in relation to an immovable property situated in India. [Notification No 37/2011dated 25.04.2011]
This is effective from 1st May, 2011.
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