Service Tax – More than budgeted?
The new and expanded services are to be effective from 16th June. Why 16th June? Read on. The Government did not stop just with notifying the new and expanded services but introduced several changes – good, bad and ugly.
Service Tax on Job Work. The Service Tax on Business Auxiliary Service includes a tax on production or processing of goods for or on behalf of the client. The job work by individuals - other than factories, corporates etc was exempted by Notification No. 14/2004. Now the Notification is amended to restrict the exemption to certain areas like agriculture, printing etc,. This would mean expansion of the existing service beyond the scope of budget.
Computer training institutes – not vocational? – The controversy regarding exemption to computer training institutes is at last settled – in favour of state. As per Notification No. 9/2003 dated 20.6.2003, computer training institutes were exempted. But the later version, Notification No. 24/2004 did not include computer training institutes in the exemption but there was a school of thought that believed that vocational training included computer training. There was a controversy whether computer institutes would fall under the exempted category of vocational training. Now the Notification No. 24/2004 is amended to specifically exclude computer training institutes from the purview of the exemptions thereby making all computer institutes in the purview of service tax. >From 16th June, we will have swarms of officers descending on computer institutes.
Photography studio – Service provided by a photographic studio other than a commercial concern was exempted under Notification No. 6/2001-ST, dated 9-7-2001. Now this notification is rescinded.
Videotape production – Videotape production by individual professional videographer was exempted. Now they are brought under the tax net by rescinding Notification No. 7/2001-ST, dated 9-7-2001. Every videographer is under the tax net.
You want to look young by dyeing your hair? Do pay service tax. Hair dyeing under the beauty parlour Service was exempted. Now if you want to look younger with the dyed hair, pay a little service tax. Notification No. 11/2002-ST, dated the 1-08-2002 is rescinded. Why was hair dyeing earlier exempted and why is it withdrawn now?
Indian service tax extended abroad, but mercifully exempted in some areas - Service provided by certain Service providers like Customs House Agent , Steamer Agent, C & F Agent etc,. are exempted if the Service provider is a non-resident person and the service is consumed out side India in the course of sailing of a ship. Is the Indian government competent to levy service tax on Services rendered abroad? But that seems to be what the Government believes. They have levied a tax on services provided abroad and even granted certain exemptions on services availed abroad.
Exemption to service provided abroad – While the government has expanded its jurisdiction to levy service tax on Services rendered abroad, they have been kind enough to expand Services provided to an individual who is abroad if there is no commerce or industry involved. If a barber in India provides a hair cut in Paris, the Service is perhaps exempted if the hair is not sold.