TMI BlogBudget 2007 - Service Tax - New Services shall be liable to Service TaxX X X X Extracts X X X X X X X X Extracts X X X X ..... Budget 2007 - Service Tax - New Services shall be liable to Service Tax - Commentaries / Editorials Dated:- 28-2-2007 - News - Service Tax - New Services shall be liable to Service Tax " In continuation of the policy of widening of the service tax base, the Finance Bill, 2007 proposes to levy service tax on the following services 1 TELECOMMUNICATION SERVICE: Following telecommunication related services, which are presently specified as separate taxable services, namely: (i) telephone connection [sub-clause (b) of section 65(105)] (ii) pager [sub-clause (c) of section 65(105)] (iii) leased circuit [sub-clause (zd) of section 65(105)] (iv) communication through telegraph[sub-clause (ze) of section 65(105)] (v) communicat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion through telex[sub-clause (zf) of section 65(105)] (vi) facsimile communication[sub-clause (zg) of section 65(105)] are being merged under the proposed ¡§telecommunication service¡¨ [sub-clause (zzzx) of section 65(105)], and the term ¡§telecommunication service¡¨ [section 65(109a)] is being defined comprehensively. Specific inclusion and exclusion of telecom services may be seen in the definition. Services provided by the telegraph authority to any person in relation to telecommunication are covered under this service. It may be noted that the present condition namely, recipient of service needs to be a subscriber, under telecommunication related services has been changed under the proposed Telecommunication S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ervice. Telecommunication Service includes services provided to any person and not confined only to subscriber. 2 MINING SERVICE [section 65(105)(zzzy)]: Presently, geological, geophysical or other prospecting, surface or sub-surface surveying or map-making services relating to location or exploration of deposits of mineral, oil or gas are leviable to service tax under ¡§survey and exploration of mineral service¡¨ [section 65(105)(zzv)]. Services such as- - site formation and clearance, and excavation and earth moving, drilling wells for production / exploitation of hydrocarbons (development drilling) - well testing and analysis services - sub-contracted services such as deploying workers and machinery for extraction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... / breaking of rocks into stones, sieving, grading, etc. - outsourced services, provided for mining are individually classified under the appropriate taxable service. Services provided in relation to mining of mineral, oil and gas are comprehensively covered under this proposed service. With this, services provided in relation to both exploration and exploitation of mineral, oil or gas will be comprehensively brought under the service tax net. The trend is to outsource part or whole of the mining activities. Since exploration and mining of mineral, oil or gas are comprehensively brought under the service tax, field formations may undertake necessary action. 3 RENTING OF IMMOVABLE PROPERTY SERVICE: Renting of immovable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... property for use in the course or furtherance of business or commerce [section 65(105)(zzzz)] is the taxable service. Renting includes letting, leasing, licensing or other similar arrangement. The contract is for right-to-use an immovable property for a consideration. Immovable properties excluded from the scope of this service are: - residential properties - residential accommodation such as hotels, hostels, boarding houses, holiday accommodation, tents, camping facilities - vacant land solely used for agriculture, aquaculture, farming, forestry, animal husbandry, mining purposes - vacant land, whether or not having facilities clearly incidental to the use of such vacant land - land used for educational, sports, circu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, entertainment and parking purposes Similarly, renting of immovable property in the following cases is also excluded from the scope of this taxable service, namely:- (i) renting of immoveable property by a religious body (ii) renting of immoveable property to a religious body, (iii) renting of immoveable property to an educational body, other than commercial training or coaching centre. Commercial coaching or training centre is defined under section 65 ( 27). Where renting of immovable property is a single composite contract involving part of property for use in commerce or business and part of it for residential / accommodation purposes, for the purpose of levy of service tax under this sub-clause, entire ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... property under the contract is treated as property for use in commerce or business and accordingly the total value of the contract shall be the taxable value. 4 SERVICE INVOLVED IN THE EXECUTION OF A WORKS CONTRACT [section 65(105)(zzzza)]: VAT / sales tax is leviable on transfer of property in goods involved in the execution of a works contract. The proposed taxable service is to levy service tax on services involved in the execution of a works contract. It may be noted that under this service only the following works contracts wherein transfer of property in goods involved in execution of such works contract is leviable to VAT / sales tax, are covered, namely:- (i) works contract for carrying out erection, commissioning or inst ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allation (ii) works contract for commercial or industrial construction (iii) works contract for construction of complex (iv) works contract for turnkey projects including Engineering Procurement and Construction or Commissioning (EPC) projects. Works contract in respect of specified infrastructure projects namely roads, airports, railways, transport terminals, bridges, tunnels and dams are specifically excluded from the scope of the levy. Taxable value under this service is that part of the value of the works contract which is relatable to services provided in the execution of a works contract. Such value is to be determined on actual basis based on the records maintained by the assessee. However, it is propos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to give an option to an assessee to opt for a composition scheme. Under the composition scheme, the assessee is required to pay 2% of the total value of the works contract as service tax. Assessee opting for the composition scheme is not entitled to avail CENVAT credit of capital goods, inputs and input services required for use in the works contract. Valuation of works contract and details of the composition scheme will be notified separately. 5 DEVELOPMENT AND SUPPLY OF CONTENT SERVICE [section 65 (105) (zzzzb)]: Content developed for use in telecommunication, advertisement and internet or websites are leviable to service tax presently under ¡§business support service¡¨. It is proposed to separately specify services provided b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y content developers in relation to development and supply of content for use by telecommunication service providers, advertising agencies and on-line information and database access or retrieval services such as internet or website service providers under this service. The term ¡§development and supply of content¡¨ is defined separately [section 65(36c)] 6 ASSET MANAGEMENT INCLUDING PORTFOLIO MANAGEMENT AND ALL FORMS OF FUND MANAGEMENT SERVICE [section 65(105)(zzzzc)]: Asset management including portfolio management and all forms of fund management, provided by a banking company or a financial institution including a non-banking financial company or any other body corporate or commercial concern is leviable to service tax under bank ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing and other financial service[ section 65 (105)(zm)]. Similar services are also provided by individual service providers especially to high net worth individuals. This taxable service proposes to cover separately, similar services provided by person, other than those already covered under banking and other financial services. 7 DESIGN SERVICES [section 65(105)(zzzzd )]: Services in relation to conceptualizing, outlining, creating the designs and preparing patterns for costumes, apparels, garments, clothing accessories, jewellery or any other articles intended to be worn by human beings are leviable to service tax under fashion designing service [section 65 (105) (zv)] and services in relation to planning, design or beautificat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of spaces is leviable to service tax under interior decorator¡¦s service [section 65(105)(q)]. Design services, other than the above specifically mentioned taxable services, like furniture design, aesthetic design, consumer or industrial products, logos, packaging, production of three dimensional models, etc. will be taxable under this category. - News - Press release - PIB Tax Management India - taxmanagementindia - taxmanagement - taxmanagementindia.com - TMI - TaxTMI - TMITax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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