Indirect Taxes

Service Tax Updates

110. Withdrawal of exemption – online information and database access or retrieval services 

Notification No. 5/2017-ST dated 30. 01. 2017

CBEC has withdrawn the exemption for services by way of online information database access or retrieval services which is being provided by a person located in a non-taxable territory and received by an entity providing charitable activities and  registered u/s. 12AA of the Income-tax Act,1961.

111. Relaxation for deposit of tax – services provided by way online information and database access or retrieval services

Notification No. 6/2017-ST dated 30. 01. 2017

CBEC has provided relaxation on due date for payment of service tax payable on services provided by any person located in a non-taxable territory and received by non-assessee online recipient, for the month of December, 2016 & January 2017, so as to deposit the same by the 6^th day of March, 2017 to the credit of Central Government.

112. Budget Notification enabling various changes under the present exemption structure

Notification No. 7/2017-ST dated 02 02 2017

Manufacturing related exemption:

– Hitherto, manufacturing related activities are  excluded from the scope of service tax. However, the proposed amendment omits the same from negative list and the exemption to the same is being placed here. The amendment provides categorical exemption to any intermediate production process as job work not amounting to manufacture or production in relation to agriculture, printing or textile processing etc. [Effective from date of enactment of Finance Bill, 2017]

– The term “process amounting to manufacture or production of goods” has been defined in Notification 25/2012 dated 20.06.2012 to mean a process on which duties of excise are leviable u/s. 3 of the Central Excise Act, 1944 (1 of 1944), or the Medicinal and Toilet Preparation (Excise Duties) Act, 1955(16 of 1955) or any process amounting to manufacture of opium, Indian hemp and other narcotic drugs and narcotics on which duties of excise are leviable under any State Act for the time being in force.

Transport related exemptions:

– Exemption scope widened under the said sector to provide relief to Government employees. Accordingly, services of transport of passengers, with or without accompanied belongings, by air embarking from or terminating at Regional Connectivity Scheme and consideration received in form of Viability Gap Funding is exempted from payment of service tax. [Applicable from 02.02.2017]

Education related exemptions:

–  Education being a primary role for country’s development, broadens the scope of exemption which is as under:

•    Services provided by the Indian Institutes of Management, as per the guidelines of the Central Government, to their students, by way of the following educational programmes, except Executive Development Programme –

     (a) two year full time Post Graduate Programmes in Management for the Post Graduate Diploma in Management, to which admissions are made on the basis of Common Admission Test (CAT), conducted by Indian Institute of Management;

     (b) fellow programme in Management;

     (c) five year integrated programme in Management.

[Applicable from 02.02.2017]

•    The word “residential” is deleted from the above mentioned exemption entry which substantiates that fees collected for both residential and non-residential or online Post Graduate Programmes in Management for the Post Graduate Diploma in Management, to which admissions are made on the basis of Common Admission Test (CAT), conducted by Indian Institute of Management are exempted from payment of service tax. 

Insurance related exemption:

•   Services of life insurance business provided or agreed to be provided by the Army, Naval and Air Force Group Insurance Funds to members of the Army, Navy and Air Force, respectively, under the Group Insurance Schemes of the Central Government are  exempted from payment of service tax. [Applicable from 02.02.2017]

113.  Exemption – services provided by operators of Common Effluent Treatment Plant

Notification No. 8/2017-ST dated 20. 02. 2017

CBEC has provided relaxation by way of exemption on services provided by operators of Common Effluent Treatment Plant by way of treatment of effluent for the period from 1^st July, 2012 to 31^st March 2015.

114.  Introduction of Minor head code for accounting of Refund

Circular No: 203/1/2017 – Service Tax dated 02.02.2017

CBEC has introduced minor head code for accounting of refund to identify the appropriate head of account under which the service wise refunds are to accounted for eventually leading to better compliance with respect to accounting of refunds.

115.  Clarification on applicability of service tax on services by way of transportation of goods by a vessel from a place outside India to the customs station in India w.r.t. goods intended for transhipment to any country outside India

Circular No: 204/1/2017 – Service Tax dated 16.02.2017

CBEC has clarified the long lasting issue w.r.t. applicability of service tax on services provided to goods intended for transhipment to any country outside India. Thus, the said clarification is in line with position under the Customs Act, 1962 which states that no customs duty is payable in cases where the goods entered into territorial waters for transhipment and the destination of goods which is other than India is mentioned in the import manifest/import report.

Accordingly, in case of transhipped goods, services by way of transportation of goods by a vessel from a place outside India to the customs station in India are not taxable in India as the destination of such goods is a country other than India.

MVAT UPDATE 

116. Go live of :  1) Improved functionality of new registration with integrated payment gateways. 2) Functionality of amendment and cancellation of registration certificate.

Trade Circular 4T of 2017 dated  02.02.2017

The SAP based system for online registration has been upgraded with effect from 19.12.2016 with additional features of Integration of Payment Gateways for payment of fee or Deposit or both along with application for new registration as well as online facility of application for  amendment or cancellation of registration certificate.