Budget 2006 – Service Tax provisions to come into force from May 1st.
While the 12% Tax is already in force, the rest of the provisions come into effect from 1st May 2006. While one section of the Board was busy with the Service Tax notifications, another section was buzz with transfer of Commissioners. And we in TIOL were busy with frantic calls from officers wanting to know who goes where and from assessees wanting to know the latest on Service Tax. DDT lists below the notifications issued yesterday with brief comments on what they are all about.
Notification ( all dated 25.4.2006) | Effect |
|---|---|
10/2006 CE(NT) | In the CENVAT Credit Rules, 2004, in rule 9 relating to the documents for taking credit, sub clause (vii) of Rule 2(d) of the Service Tax Rules, dealing with the sponsorship service has been added, which means that a challan issued by the recipient of the service in case of sponsorship service is an eligible document for credit. What is this challan? Are they referring to TR6 Challan or an invoice? |
15/2006-Service Tax | The new services and expanded services come into effect from 1st May 2006 . The changes made in Section 65 like replacing the “Commercial Concern with “any person” comes into effect from 1st May 2006 |
16/2006 Service Tax | 36/2004-Service Tax, dated the 31st December, 2004 has been amended to include sponsorship service provided to any body corporate or firm at sl no (vi) to facilitate specifying the person liable to pay service tax. |
17/2006 Service Tax | Amends service tax rules · to increase the rate of service tax to be paid by Air Travel Agents from 0.5% to 0.6% of the basic fare for domestic bookings and from 1.0% to 1.2% for International bookings. This is because the Service Tax now is 12% instead of 10%. · To specify that In relation to Sponsorship service, the person who receives the service is liable to pay service tax. |
18/2006 Service Tax | The provisions of sub rule 8 of Rule 4 of the Service Tax Rules relating to cancellation of the Registration are also made applicable for Input service distributors and the like categories. |
19/2006-Service Tax | “Commercial Concern” appearing in several Notifications has been replaced with “ any other person” or “ any person” as the case may be with effect from 1st May 2006. The Finance Act did this for the Act. · Notification No.13/04 is amended to replace “commercial concern” “with any person”. This particular notification seeks to exempt service provided by Banks or NBFC in providing service in relation collection of duties or taxes levied by Government of India or any State Govt. Now any person, providing such services also qualifies for exemption. Why was this amendment done blindly? Will there be any individuals involved in such tax collection? Or is the Government planning to allow individuals to collect taxes on behalf of the government? · Similarly the words “Commercial concern “was replaced in 29/04 with “any person “. This notification seeks to exempt certain services like- overdraft facility, cash credit facility, discounting of bills – which are normally the domain of Banks or NBFC or other commercial concerns. Will an individual do these services (legally) in India? · Truck owners to come under service tax net from 1st May 2006. What happens to assurance given to parliament in this regard? · Speed Post Service provided by Postal Department will come under Service tax as courier service provided. Really the Finance Ministry created a level playing field even before the proposed amendment to Indian Postal Act which is at draft stage. · |
20/2006 Service Tax | 1/2006 ST dated 1.3.2006 has been amended with effect from 1st May 2006 to provide 70% abatement for Transport of goods in containers by rail. Consequently, service tax will be chargeable only on 30% of the gross amount charged for transport of goods in containers by rail. This is as per the assurance given in TRU letter dt.28/02/2006. |