Author: CA Tarannum Khatri

Service tax on manpower supply service ( security service)

Budget 2015 brings lots of changes in service tax. Service tax on manpower supply service and security services is covered under full reverse charge now. For better under standing, read detailed article.   Service tax on manpower supply service – Definition: Manpower supply means supply of manpower , temporarily or otherwise, to another person to work under his ( service receiver-employer) superintendence or control.(Rule 2(g) of service tax rules) Reference : cbec notification read here.  Service tax rate for manpower supply service: Service tax rate for manpower supply service is 12.36% until 1st June, 2015. New rate 14% will be...

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EXEMPTION TO CERTAIN CONSTRUCTION SERVICES

We all know that construction service is taxable if turnover of services exceeds 10 lacks. But notification 26/2012 service tax provides various exemptions to construction services. Let’s have a look. If any person provides non commercial construction services to government or local authority or government authority, the whole service is exempt. Construction services (original) related to single residential unit other than part of a complex is also exempt.Single residential unit means a self contained residential unit which is designed for use, wholly or partially for residential purposes for one family.So service tax is payable if construction work is for more than one residential unit.If title of each floors is capable of being transferred to another person by municipal records , both the floors may be considered as separate single residential unit. Construction of Pipelines for water supply for government board is exempt. As per case law of Dinesh Chandra Agarwal Infracon vs CCE (2011) Service related to construction, erection, commissioning, installation, completion, fitting out , repair, maintenance, renovation, alteration of road, bridge, tunnel or termination for road transport for use by general public are exempt from service tax. General public means the body of people at large sufficiently defined by some common quality of public or impersonal nature. Construction, erection, commissioning, installation, completion, fitting out,repair, maintenance, renovation or alteration of a civil structure or any other work pertaining to...

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SERVICE TAX ON WORK CONTRACT

Meaning of Work Contract “Work Contract” means a contract wherein transfer of property in goods involved in the execution of such contract is leviable to tax as sale of goods and such contract is for purpose of carrying out construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, alteration of any movable or immovable property or for carrying out any other similar activity or a part thereof in relation to such property.-SEC 65(54) of Finance Act, 1994. Scope of work contract work contract is joint contract in which service is provided and some material is also transfer as sale. Vat should be payable on transfer of material.So activity of sale under contract is necessary. Following activities are covered under work contract: commission, erection and installation of plant, machinery, equipment, structure ; construction of buildings; turnkey projects; maintenance services -AMC contracts; Job work contracts. Valuation for service tax: Method Tax rate Input tax credit Calculate value as per rule 2A(i) of service tax rules, 2006 14.5% Input services and capital goods, input consumed during work contract Pay service tax under rule 2a(ii) 14.5%*40%/70% Input services and capital goods, input consumed during work contract       Note that cenvat credit for duty paid on material on which vat is paid and property in goods is transferred is not available.  *Budget 2015 service tax rate update Service tax calculation as...

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SERVICE TAX ON EDUCATIONAL SERVICES

ExemptionsFollowing educational services are exempt. Pre school educational and education up to higher secondary school or equivalent Education as a part of curriculum for obtaining a qualification recognized by any law for the time being in force. Recognized by law meaning:It means recognized by any university (under UGC act) .If private centers recognized by university, the services will be exempt.In CCE vs. Tandem Integrated services , center provide coaching to students who appear for university examination.After completion  of coaching , fees are shared with university. It has held that services will be exempt.  Approved vocational educational course: Approved courses means courses run by an industrial training institute or an industrial training center affiliated to National council for vocational training.A course run by NSDC set up by the government will be subject to service tax. with effect from 10/5/2013. Transport services provided by school to students are exempt because it is naturally bundled service. services of training in the field of arts,culture or sports are exempt. as per Sr. no. 8 Notification No 25/2012. International schools and boarding schools giving international certificate like IB up to HSC and boarding schools are also exempt. Taxable services: Private coaching Placement services Postal coaching  online coaching Exemption to auxiliary services: services provided  to an educational institutions by way of  Auxiliary services  Renting of immovable property services  are exempt from service tax.Sr no 9...

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SERVICE TAX ON FOOD RELATED SERVICES

According to financial act ,1994 , section 66E(i) , Service portion in an activity wherein goods, being food or any other article of human consumption or any drink (whether or not intoxicating) is supplied in any manner is DECLARED SERVICE. What is taxable? Service portion while supplying the food is taxable under service tax act.Value of food on which vat is levied is not taxable under the act. Exemption: Services provided for serving of food or beverages by restaurant, eating joint or mess which has no air conditioning or central heating facility are exempt from service tax. w.e.f. 1/4/13. Services to an educational institution by way of catering under mid day meals scheme sponsored by government are exempt. Notification no 25/2012 , sr no 9 (a). Before 1/4/13, there were two conditions for taxability under food related services The restaurant should have AC or central heating And The restaurant serves alcoholic beverages. The second condition is removed with effect from 1/4/13. So now all the restaurant which has AC or heater are liable to pay service tax. In spite of this, small service provider exemption is available to them. Service Tax on 40% value: The restaurants with AC or central heating are required to pay service tax on 40% of the value of services. So rate will be 4.944%. CBEC circular no 139/8/2011 Sometimes service provider has more than...

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