Service Tax - 'online information and database access or retrieval services'
GOVERNMENT has made several changes with regard to the Service Tax on "online information and database access or retrieval services":
1. Place of Provision of Services Rules, 2012: Notification No. , Dated: November 09 2016
a. amends the definition of provision of 'online information and database access or retrieval services' with effect from 01.12.1016. "online information and database access or retrieval services" has the same meaning as assigned to it in clause (ccd) of sub-rule 1 of rule 2 of the Service Tax Rules, 1994
b. Amends rule 3 proviso which read as Provided that in case the location of the service receiver is not available in the ordinary course of business, the place of provision shall be the location of the provider of service and which will now read as, "Provided that in case of services other than online information and database access or retrieval services, where the location of the service receiver is not available in the ordinary course of business, the place of provision shall be the location of the provider of service."
c. As per Rule 9, the place of provision of following services shall be the location of the service provider:-
(a) Services provided by a banking company, or a financial institution, or a non-banking financial company, to account holders;
(b) Online Information And Database Access Or Retrieval Services;
(c) Intermediary services;
(d) Service consisting of hiring of means of transport, upto a period of one month.
(b) above is now deleted.
2. Notification No. 25/2012-Service Tax, dated the 20th June, 2012 - the Mega Exemption - Withdraws exemption from service tax for services provided by a person in non-taxable territory to Government, a local authority, a governmental authority or an individual in relation to any purpose other than commerce, industry or any other business or profession, located in taxable territory.: Notification No. , Dated: November 09 2016
a. A proviso is added to entry 34 to stipulate that the exemption shall not apply to online information and database access or retrieval services received by persons specified in clause (a); Clause (a) exempts Services received from a provider of service located in a non- taxable territory by Government, a local authority, a governmental authority or an individual in relation to any purpose other than commerce, industry or any other business or profession
b. A new definition (xab) is added - "online information and database access or retrieval services" has the same meaning as assigned to it in clause (ccd) of sub-rule 1 of rule 2 of the Service Tax Rules, 1994
3. Service Tax Rules Amended - so as to prescribe that the person located in non-taxable territory providing online information and database access or retrieval services to 'non-assesse online recipient', as defined therein, is liable to pay service tax and the procedure for payment of service tax.: Notification No. , Dated: November 09 2016
a. A new definition 2(1)(ccba) added - "non-assesse online recipient" means Government, a local authority, a governmental authority or an individual receiving online information and database access or retrieval services in relation to any purpose other than commerce, industry or any other business or profession, located in taxable territory
b. A new definition 2(1)(ccd) added - "online information and database access or retrieval services" means services whose delivery is mediated by information technology over the internet or an electronic network and the nature of which renders their supply essentially automated and involving minimal human intervention, and impossible to ensure in the absence of information technology and includes electronic services such as,---------
c. As per 2(1)(d)(i)(G), in relation to any taxable service provided or agreed to be provided by any person which is located in a non-taxable territory and received by any person located in the taxable territory, the recipient of such service is the person liable for paying service tax; This is now amended to read as in relation to any taxable service "other than online information and database access or retrieval services," provided or agreed to be provided by any person which is located in a non-taxable territory and received by any person located in the taxable territory
d. A new item is added as 2(1)(d)(i)(H) regarding the person liable for paying service tax - in relation to services provided or agreed to be provided by way of online information and database access or retrieval services, by any person located in a non-taxable territory and received by any person in the taxable territory other than non- assesse online recipient, recipient of such service
e. New Provisos are added to Rule 2(i)(d)(ii) to prescribe that in case of online information and database access or retrieval services provided or agreed to be provided by any person located in a non-taxable territory and received by non-assesse online recipient, provider of service located in a non-taxable territory shall be the person liable for paying service tax, and other details.
4. Notification No. 30/2012-Service Tax, dated the 20th June, 2012 - liability of the Service recipient - amended - so as to put compliance liability of service tax payment and procedure on to the service provider located in the non-taxable territory with respect to online information and database access or retrieval services provided in the taxable territory to 'non- assesse online recipient'.: Notification No. , Dated: November 09 2016
Consequential amendments are made in this notification also.
In all these notifications, the Central Government wants us to believe that the correct spelling of "assessee" is "assesse". Assesse is a Belgian town.