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2% REDUCTION OF SERVICE TAX

SNEHASREE (ARTICLED ASSISTANT) (102 Points)

28 February 2009

How tele communication industries deal with 2% reduction of service tax relating to prepaid cards distributed to dealers and retailers.Because 2% reduction of service tax will increase talk time of those prepaid cards, but prepaid cards distributed to dealers and retailers containing 12% service tax.

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S. Banerjee (Practising Cost Accountant. Core area- Central Excise. Service Tax Costing system installation including maintenance of Cost Records and Cost Audit and Management Audit mainly Revenue leakages Audit) (622 Points)
Replied 28 February 2009

Snehasree,

Do you mean SIM card?

If so, SIM card containing chips with pre-recorded instructions which would, upon activation, enable the customer access to the service of celluar phone.

SIM Card is "excisable goods" covered under sub-heading 8523 5210 in Central Excise Tariff. Sale of SIM Card has been held as 'sale of goods' and liable to sales tax not service tax.

Hope this will serve your problem,

Thanks, S. Banerjee

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ANANDH SUNDAR (Bharti Airtel) (1623 Points)
Replied 01 March 2009

These companies should increase the customer's talk time accordingly. Practically, this would be possible by increasing talk time for all activations made on/after 24 Feb 09

SNEHASREE (ARTICLED ASSISTANT) (102 Points)
Replied 03 March 2009

Originally posted by :S. Banerjee
"	Snehasree, Do you mean SIM card? If so, SIM card containing chips with pre-recorded instructions which would, upon activation, enable the customer access to the service of celluar phone. SIM Card is "excisable goods" covered under sub-heading 8523 5210 in Central Excise Tariff. Sale of SIM Card has been held as 'sale of goods' and liable to sales tax not service tax. Hope this will serve your problem, Thanks, S. Banerjee	"

sir, I doesn't mean SIM cards. Iam saying about recharge cards which is liable to service tax.

(Guest)

Prepaid recharge cards have ST and talk value printed thereon. Hence, without recalling all these cards, ST incidence will remain 12.36%.

Telcos may reprint these cards with 10.30%.

gaurav (30000000) (25 Points)
Replied 04 March 2009

Originally posted by :Dinesh Kumar Agrawal
"	Prepaid recharge cards have ST and talk value printed thereon. Hence, without recalling all these cards, ST incidence will remain 12.36%. Telcos may reprint these cards with 10.30%.	"