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1. Applicable rate of service tax should be the rate applicable at the time when the services are deemed to have been provided.
2. Service tax shall be payable upon deemed provision of services.
3.
When an invoice has been issued or a payment is received for a service
which is not subsequently provided, the service provider can take credit
of service tax paid earlier, provided the amount has been refunded to
the payer.
4. Maximum amount admissible for adjustment of excess
service tax under Rule 6(4B)(iii) has been increased from Rs.1 lac to
Rs.2 lac.
5. Self-assessed amount of service tax, if not paid,
shall be recovered along with interest as per the provisions of section
87 of the Finance Act, 1994.
6. Composition rate applicable in
relation to purchase or sale of foreign currency including money
changing has been reduced from 0.25% to 0.10%.
• Amendments have been brought about in the manner of valuation and composition scheme for services in relation to sale of foreign currencies. These amendments are effective from 1st April 2011.
• Substantial changes were made in the CENVAT Credit Rules, 2004. Further amendments are proposed to permit the claim of credit on the basis of invoices rather than on the basis of payments. These amendments are effective from 1st April 2011.
• Substantial changes are made in the Point of Taxation Rules. 2011. While in general, the point of taxation has been shifted to the earliest of invoicing or receipt of advance, in the following cases, the receipt basis for payment of tax is being continued: a. Services rendered by specified professionals (CAs, CWAs, CSs, Interior Decorators, Advocates, Architects, Scientific Testing, etc.) b. Services subjected to reverse charge mechanism (subject to condition of receipt of payment within specified period) c. Export of Services (subject to condition of receipt of payment in specified period)
• It is further provided that the new rules will not apply in cases where the services are rendered prior to 31.03.2011. Further, an assessee can opt to defer the applicability of the new rules to 01.07.2011. An option is granted to discharge the service tax on receipt basis upto 30. 06. 2011.
• An adjustment is provided for deficiency of service but no adjustment is provided on account of bad debts.
• CENVAT Credit on input services can be availed on the basis of supplementary invoices. This amendment is effective from 01.04.2011. For details visit: http://www.servicetax.gov.in/stnotfns- home.htm
Part B : INDIRECT
TAXES
SERVICE TAX UPDATE
50 Certain general insurance
business services exempted — Notification No. 58/2010-ST, dated 21-12-2010.
By this Notification,
taxable services in relation to general insurance business provided under the
Weather-based Crop Insurance Scheme or the Modified National Agricultural
Insurance Scheme, approved by the Government of India and implemented by the
Ministry of Agriculture, have been exempted.
Part B : INDIRECT
TAXES
SERVICE TAX UPDATE
49 Transport services
provided by Government Railways exempted — Notifications Nos. 55/2010-ST,
56/2010-ST & 57/2010-ST, all dated 21-12-2010.
By these Notifications, levy
of service tax on taxable services as referred in S. 65(105)(zzzp) provided by
Government Railways to any person in relation to transport of goods by rail has
been deferred to 1st April 2011.
Part B : INDIRECT
TAXES
SERVICE TAX UPDATE
48 Further amendments to
Notification No. 24/2009-ST, dated 27-7-2009 — Notification No. 54/2010-ST,
dated 21-12-2010.
By this Notification,
earlier Notification No. 24/2009-ST, dated 27th July, 2009 has been further
amended whereby the exemption to taxable services of management, maintenance or
repair of roads is extended to management, maintenance or repair of bridges,
tunnels, dams, airports, railways and transport terminals.
Part B : INDIRECT
TAXES
SERVICE TAX UPDATE
47 Taxable service of
packaged or canned software exempted — Notification No. 53/2010-ST, dated
21-12-2010.
By this Notification, the
Central Government has exempted the taxable service referred to in item (v) of
S. 65(105)(zzzze) in respect of packaged or canned software, subject to the
following conditions :
(1) value of the said
goods domestically produced or imported for the purpose of levy of central
excise duty or additional duty of customs as the case may be has been
determined u/s.4A of the Central Excise Act, 1944 and(2) (a) appropriate duties
of excise have been paid by manufacturer, duplicator or the person holding
copyright to software manufactured in India; or(b) appropriate duties of
customs including the additional duty of customs have been paid by the
importer in respect of the software imported into India(3) a declaration is made
by the service provider on the invoice that no amount in excess of the retail
sale price has been recovered from the customer.
Part B : INDIRECT
TAXES
SERVICE TAX UPDATE
46 Notifications Nos.
02/2010-ST and 17/2010-ST, both dated 27-2-2010 rescinded — Notification No.
51/2010-ST and 52/2010-ST, both dated 21-12-2010.
By these Notifications, the
Central Govt. has rescinded the earlier Notifications Nos. 02/2010-ST &
17/2010-ST, both dated 27th February, 2010 which exempted the right to use
packaged or canned software, subject to specified conditions.
Part B : INDIRECT
TAXES
SERVICE TAX UPDATE
45 Hire charges on
installation of electricity meter in consumer’s premises exempted — Notification
No. 131/13/2010-ST, dated 7-12-2010.
By this Notification, it has
been clarified that hire charges collected by electricity
transmission/distribution companies towards installation of electricity meters
at the premises of the consumers are exempt from service tax, since supply of
electricity meters is an essential activity having direct and close nexus with
transmission and distribution of electricity and that such service is covered by
the exemption Notification No. 11/2010-ST, dated 27-2-2010 and/or 32/2010-ST,
dated 22-6-2010.
Part B : INDIRECT
TAXES
MVAT UPDATE
44 Amendment to Central
Sales Tax Act, 1956 —Trade Circular 2T of 2011, dated 17-1-2011.
By this Circular salient
features of the amendments made by the Finance Act, 14 of 2010 to S. 6A of the
CST Act, 1956 have been explained.
Provisions of S. 6A(2) allow
the Assessing Authority to be satisied that no interstate sale has been
effected, apart from verifying the correctness of particulars furnished in Form
F before allowing claims of Branch Transfer.
New Ss.(3) has been added to
provide that the cases of interstate transfer of goods otherwise than by way of
sale can be reopened in the event of discovery of new facts for re-assessment by
the Assessing Authority or for revision by higher authority on the ground that
findings of the Assessing Authority are contrary to the law.
S. 18A of newly inserted
Chapter VA allows a person aggrieved by an order made u/s.6A(2) or (3) to appeal
to the highest Appellate Authority of the State against such an order.
The Ss.(1) of S. 20 has been
amended to provide for appeal to the Central Sales Tax Appellate Authority
against the Tribunal order in respect of issues relating to stock transfer or
consignment of goods insofar as it involves a dispute of inter-state nature.
The Ss.(1A) of S. 22 has
been amended to allow filing of appeal to the Appellate Authority under CST Act,
1956 without pre-deposit of amount that was required under earlier provisions.
New Ss.(1B) is inserted in
S. 22 empowering the Central Sales Tax Appellate Authority to issue directions
for refund of tax not due to that State or alternatively direct the State to
transfer refundable amount to the State to which CST is due.
Proviso to Ss.(2) of S. 25
is deleted so that the highest Appellate Authority shall not forward the cases
to first Appellate Authority.
Part B : INDIRECT
TAXES
MVAT UPDATE
43 Mandatory e-returns for
employers registered under Profession Tax Act, 1975 —Trade Circular 1T of 2011
under Profession Tax, dated 14-1-2011.
By this Circular, e-service
of filing e-returns for registered employers (PTRC holders) has been introduced.
By Notification issued on
26-11-2010 it was provided that from 1-2-2011, every PTRC holder whose tax
liability during the previous year was rupees twenty thousand or more shall
mandatorily file electronic return.
PTRC holders, eligible to
file quarterly or annual returns, may get themselves enrolled and file e-returns
voluntarily.
Detailed procedures for
enrolment for PTRC e-services and procedure for uploading PTRC e-returns are
explained in the Circular.
