(1) The Finance Act, 2010
has added eight new services to the list of taxable services and modified
scope of nine existing services. These changes become effective from 1-7-2010
being the appointed date notified by Notification No. 24/2010-Service Tax,
dated 22nd June 2010. It has been decided to specifically exempt service tax
on the partial or full amount of consideration received by the service
provider before the appointed date which pertains to services provided after
the appointed date.
(2) In case of domestic
air journey, service tax will be leviable @ 10% of the gross value of the
ticket or Rs.100 per journey, whichever is less. In case of international air
journey undertaken in economy class, service tax will be leviable @ 10% of the
gross value of the ticket or Rs.500 per journey, whichever is less. The
aforesaid rates are subject to non-availment of CENVAT credit. And for the
purpose of gross value of the ticket, all the charges except statutory levies
shall be considered.
(3) It is clarified that
when ticket covers more than one domestic journey/flight/sector (say,
Mumbai-Delhi-Mumbai) or in case of
round-trip journey ticket, tax would be separately chargeable for each
journey/flight/sector since the taxability is on embarkation in India for
domestic journey.
(4) Tickets involving
multiple journies/flights with one of the sectors involving embarkation or
disembarkation at North-Eastern States/Bagdogra, the journey/flight that
involves embarkation or disembarkation at North-Eastern States/Bagdogra would
alone be covered under exemption from service tax under Notification No.
27/2010-ST, dated 22nd June, 2010.
(5) The scheme of tax on
passengers embarking in India for an international journey in higher class
remains unchanged.
(6) In respect
of aircraft operations services, the airlines or the agent may not issue a
separate invoice to the passenger, but the ticket in any form showing
specified particulars would be deemed to be the invoice/bill/challan for the
purpose of Rule 4A of the Service Tax Rules, 1994.
(7) With intent to ease
the classification disputes, the definitions of port, other port and airport
services were amended to comprehensively cover under their ambit, all services
provided within an airport, or a port or other port whether or not they are
otherwise classifiable as distinct taxable services. But some apprehensions
have been raised that these changes may have certain unintended effects with
reference to exemptions, abatements, etc. To address these issues, various
measures as enlisted at (a) to (g) in this letter have been taken by way of
promulgating post-budget Notifications.
(8) The definition of
existing taxable service, namely, ‘Sponsorship Service’ is amended to remove
exclusion available for sponsorship pertaining to sports events organised by
private organisations or business entities. However, exemption is provided for
sponsorship service with reference to certain sports championships or
tournaments, such as national tournament.
(9) The Finance Act, 2010
has, in respect of commercial & residential complex construction services,
inter alia introduced concept ‘completion certificate’ to be issued by
‘competent authority’. As the practice regarding issuance of completion
certificates varies from State to State, the scope of the phrase ‘competent
authority’ to issue completion certificate has been widened by including
therein architect, chartered engineer and local licensed surveyor.
(10) Abatement of 75% of
the gross value of construction of industrial or commercial complex or
residential complex is available where the gross value includes cost of land
and 67% of the gross value where the gross value does not include cost of the
land.
(11) Two flagship schemes
of the Government of India, namely, Jawaharlal Nehru National Urban Renewal
Mission (JNNURM) and Rajiv Awaas Yojana are kept outside the ambit of the
service tax under construction of residential complex service.
(12) Service tax on
transport of goods by railways though leviable is not yet operational and this
levy will now take effect from 1st January, 2011.
(13) Taxable services
provided by distribution licensee or a distribution franchisee authorised to
distribute power under the Electricity Act, 2003 for distribution of
electricity is exempt from levy of service tax.
