Service Tax Benefits upto Rs. 2000 on payment by Debit and Credit Cards - Govt.

Govt. to waive off service tax on debit and credit card transactions up to Rs 2000

Government will waive service tax on debit and credit card transactions of up to Rs 2,000 in a bid to promote digital transactions amid cash crunch following withdrawal of old Rs 500 and 1,000 banknotes.

The government has decided to "exempt services by an acquiring bank to any person in relation to settlement of an amount up to Rs 2,000 in a single transaction through credit, debit card or other payment card service", sources said.

A notification to this effect will be tabled by Finance Minister Arun Jaitley in Parliament.

Following demonetisation of old high value notes, there has been a cash crunch in the country as people have been making a beeline for banks and ATMs to withdraw new currency.

The government has been taking steps to promote cashless or digital transactions to take India towards a less-cash economy.

Recently, the government asked banks to install additional 10 lakh PoS terminals by March 31 in different parts of the country.

The service tax notification of June 2012 will be amended to include exemption on credit and debit cards, the sources added.

As of now, services provided by organisations such as United Nations and other international bodies are exempt from tax.

A range of other services provided by arbitral tribunals, testing of newly developed drugs, educational institutions, trade unions, general insurance business and sports bodies, among others, too are exempt from the levy. 

Source - www.deccanherald.com

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Annual Return Form of Central Excise and Service Tax - Circular

Circular No. 1050/38/2016-CX

F.No. 207/0512014-CX.6

Government of India

Ministry of Finance

Department of Revenue

Central Board of Excise and Customs

North Block, New Delhi

Dated the 8th of November, 2016

To,
The Principal Chief Commissioners/ Chief Commissioners of Central Excise (All)
The Principal Chief Commissioners/ Chief Commissioners of Central Excise and Service Tax (All)
The Principal Chief Commissioners/ Chief Commissioners of Service Tax (All)
The Principal Chief Commissioners/ Chief Commissioners of Customs (MI)
The Directors General (All)

Sub: Combined Annual Return Form for Central Excise and Service Tax–reg.

Madam/ Sir,

Kind attention is invited to Notification No. 8/2016-CE(N.T.) (SI.NO.5) dated 01.03.2016 and Notification No.13/2016-CE(N.T.) (Sl.NO.9) dated 01.03.2016 vide which Rule 12 of Central Excise Rules, 2002 and Rule 9A of  CENVAT Credit Rules, 2004, respectively, were amended to replace the existing Central Excise Forms ER-4 to ER-7 with an Annual Return form. On the service tax side, vide Notification No. 19/2016-ST dated 01/03/2016, Rule 7 of the Service Tax Rules, 1994 was amended to prescribe an annual return. In terms of Rule 12 of Central Excise Rules, 2002 and Rule 7 of the Service Tax Rules, 1994, the format of the Annual Return, which was required to be filed by 30th day of November, was to be specified by the Board by notification.

2. In view of impending implementation of Goods & Services Tax (GST) it has been decided that, the aforesaid Annual Return shall not be required to be filed for the year 2015-16, which is due to be filed by 30.11.2016. After implementation of GST, Annual Return for non-GST goods only may be required. A final view on the same would be taken after due consultation with the trade.

3.  Trade may be suitably informed that the aforesaid Combined Annual Return for 2015-16 is not required to be filed. Difficulties, if any, in the implementation of above Circular may be brought to the notice of the Board. Hindi version will follow.

(Shankar Prasad Sarma)

Under Secretary to the Govt. of India

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Simple 3 steps for Service Tax code verification online.

Service tax code verification can be done online using simple 3 steps. It is helpful to determine the genuineness of the party whom we are paying service tax. Here, we have explained the manner of verification of service tax number and basics of service tax number.

SERVICE TAX CODE VERIFICATION ONLINE:

WHY SERVICE TAX NUMBER VERIFICATION IS IMPORTANT?

If we are working with someone in the area of service and we take some services from such persons who provide the same service which we required but how we know about that whether the Service Tax Code Number Provide or mentioned on the bill is genuine or related with such entity who provide us the same service. For this we have an online system to verify the Service Tax Code Online.

Basically the Service Tax Code Number is  PAN Based in the New System of Service Tax, Service Tax Code Number is 15 Digit Code and Based on PAN Number.

First Ten (10) character are same as PAN ,11-12 digit is “ST” in all service tax code(In few cases “SD” is also used) ,13-15 is serial Number no for service tax number allotted against a pan number ,if you have applied for one service tax number against a pan than your service tax number will pan+st+001. So if you have a PAN number of the firm then checks service tax number as below:-

Assessee code to be digitized in case of Service Tax (major account head 0044) as:

1-10 digits: 10-digit PAN / TAN

11-12 digits: ST

13-15 digits: ZZZ

In case the Assessee is unable to provide a valid location code, the location code may be digitized as :

1-2 digits: any Commissionerate Code associated to the bank branch

3-6 digits: ZZZZ

If you have service tax number and just want to verify it is it correct or not than follow this steps:

Step 1:

Go to the  following Link:-

https://cbec-easiest.gov.in/

Following screen will be appeared:

Step 2:

Click on assessee code based search

Step 3:

Input Your Assessee Code and Verification Image you get the following result

INPUT:15 digit SERVICE TAX CODE

OUTPUT:

REGISTER UNDER SERVICE TAX/EXCISE

NAME OF ASSESSEE

ADDRESS OF ASSESSEE

LOCATION CODE.

Similar steps should be followed to determine excise number verification online. I hope this post helps you to do service tax code verification. 

Source: Internet

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Latest Procedure for Verification and Scrutiny of Service Tax Returns.

The CBEC vide its circular no 185/4/2015 dated 30th June 2015 has revised the procedure for scrutiny of the service tax returns. This is a step towards ensuring whether the self­assessment carried out by the assessees is in line with the provisions of the prevailing service tax law. A two fold procedure has been prescribed which consists of an online scrutiny of all the service tax returns and a detailed manual scrutiny of the returns of select assessees. The new procedure shall be applicable with effect from 1st August 2015. A brief about the new procedure is as below.

Online Scrutiny

• It shall be carried out for all the returns without exception.
• Purpose / Coverage of Online Scrutiny
• Arithmetic checks of the tax calculation.
• Timely compliance in terms of payments made and filing of returns.
• Ensuring completeness of the information furnished.
• Identification of Non­filers and Stop­filers.
• The online scrutiny is carried out by ACES and the returns containing any errors shall be marked for review and correction by the range officers.

Detailed Manual Scrutiny (“DMS”)

• Applicable from F.Y. 2014 ­15 and onwards and will be carried out on a yearly basis.
• Assessee Selection Criteria
• Tax Paid (Cash + Cenvat) should be less than Rs. 50 Lacs. The Chief Commissioner may select assessee with tax paid more than 50 Lacs in certain cases.
• Equal number of assessees shall be selected in each of the three bands based on the quantum of service tax payments viz. up to 10 Lacs, 10 ­ 25 Lacs and 25 – 50 Lacs.
• Assessees selected for audit in the past three years shall not be selected for DMS.
• An assessee cannot be subjected to both Audit and DMS.

Purpose / Coverage of DMS

• Taxability of Services, whether all taxable services covered, including taxability as per reverse charge mechanism.
• Valuation of services as per valuation rules.
• Appropriateness of Abatements, Exemptions and Tax Rates.
• Appropriateness of Cenvat Credit.
• Detailed reconciliation with the Income Tax Return (ITR) and Records.

Process and level of verification.

• The scrutiny will be carried out at the Range office. No visits to the assessee premises.
• 15 days intimation to be given to the assessee before initiating the DMS process.
• The data as per the service tax returns and the income tax returns shall be compiled and analysed for the past three years viz. FY 2012 – 13 to FY 2014 ­15. This is to facilitate a better understanding of the details of the assessee by the assessing officer. This shall be done by referring to the service tax returns and income tax returns filed by the assessee.
• Sample invoices, debit / credit notes, agreements and any other relevant documents shall be verified for determining the taxability and valuation of service.
• Whether Service tax liability on reverse charge has been discharged appropriately.
• The abatements and exemptions claimed, if any, are after fulfilling the prescribed conditions.
• The eligibility and availment of cenvat credit, with specific reference to Rule 6 of the cenvat credit rules shall be verified. (Rule 6 applies in a case where the assessee is a provider of both taxable services as well as exempted service)
• Appropriate applicability of the various rules, for eg. The place of provision rules to check the export of services.
• Every possible aspect of the service tax return shall be reconciled with the information furnished in the income tax return. Some areas are indicated below:

1. Total amount of output service provided with the total revenue as per ITR.
2. Category wise classification of output service shall be broadly linked with the section under which TDS has been deducted as per the Form 26AS. An indicative list correlating the service categories with the TDS sections is given in annexure III to the above referred circular.
3. Payments made in foreign currency as appearing in ITR along with service tax paid on import of services. (Eg. Legal and professional expenses incurred in foreign currency are required to be disclosed separately in the ITR)
4. Certain expense heads in the ITR which prima facie appears to be of the nature of services covered under the reverse charge mechanism along with the service tax paid on reverse charge basis. (Eg. Freight expense may get covered under reverse charge provisions of transport of goods by road service)
5. Reconciliation of tax amounts – both output tax collected and input credit claimed.
6. Advances received from the customers as appearing as a liability in ITR and whether service tax has been paid on the same.

Time Limits

• The intimation letters for FY 2014 – 15 shall be issued by the 15th July 2015 and the DMS process shall be initiated by 1st August 2015.
• A time limit of one month to three months has been prescribed for completion of the DMS.

Source: www.caclubindia.com - CA Yash Goyal

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Change in Service Tax Rate will effect on expesnes from 1st June, 2015.

Recently, Department of Revenue has been issued a notification about change in service Tax Rate i.e. 14% w.e.f. 1st June, 2015. This new rate of service tax i.e., 14% definately increases expenses from 1st June.  The detailsed Notification is as under:

[TO BE PUBLISHED IN THE GAZETTE OF INDIA, EXTRAORDINARY, PART II, SECTION 3, SUB-SECTION (i)]

GOVERNMENT OF INDIA

MINISTRY OF FINANCE

(DEPARTMENT OF REVENUE)

NOTIFICATION

New Delhi, the 19th May, 2015

No. 14/2015-Service Tax

G.S.R. ---(E).- In exercise of the powers conferred by clauses (a), (c) and (f) of section 107, section 108, sub-sections (2), (3) and (4) of section 109, section 153 and section 159 of the Finance Act, 2015 (No. 20 of 2015), the Central Government hereby appoints the 1st day of June, 2015 as the date on which the provisions of clauses (a), (c) and (f) of section 107, section 108, sub-sections (2), (3) and (4) of section 109, section 153 and section 159 of the said Act shall come into force.

[F.No. 334/5/2015 - TRU]

(Akshay Joshi)

Under Secretary to the Government of India

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Clarification on PAN Mandatory for Service Tax Registration.

Before a days ago, Central Board of Excise and Customs, Department of Revenue had issued a circular regarding simplification of Registration Procedures in Central Excise and Service Tax.  This circular is as under:

Circular No. 997/4/2015-CX

dated the 28th Feb., 2015

F. No. 201/24/2013-CX.6

Government of India

Ministry of Finance

Department of Revenue

Central Board of Excise and Customs

To

 Principal Chief Commissioners / Chief Commissioners of Central Excise (All),

 Principal Chief Commissioners/Chief Commissioners of Central Excise & Service Tax (All).

Sub: Simplification of Registration Procedures in Central Excise and Service Tax –reg.

Madam/Sir,

Registration process in Central Excise has been prescribed vide Notification no 35/2001 - C.E(N.T) dt 26-6-2001 as amended from time to time. The prescribed procedure has been amended by notification no. 07/2015-CE (N.T.) dated 01.03.2015 to simplify the procedure and improve the ease in doing business in manufacturing. The salient features of the revised registration procedure are as follows -

2) Registration in Central Excise presently envisages filing of application online on ACES, submission of documents, examination of documents, verification of premises by the departmental officer, submission of verification report, generation of Registration Certificate by the Deputy / Assistant Commissioner, dispatch of signed copy of Registration Certificate to the assessee and enabling the assessee to electronically pay the duty.

3) Under the new simplified procedure, once duly completed application form is received online on ACES, registration would be granted within two working days and issued online 

without any examination of the documents and verification of documents or premises before the grant of registration, thus initiating trust based registration. Simultaneously, assessee would be enabled to electronically pay duty. Further, the assessee would not need a signed copy of Registration Certificate as proof of registration. Registration Certificate downloaded online from ACES system would be accepted as proof of registration. Verification of the documents and premises shall be carried out post facto.

4) Verification of the premises shall be carried out after the registration has been granted. The applicant shall tender self-attested copy of the prescribed documents at the time of the verification of the premises.

5) Henceforth, registration shall mandatorily require that the PAN number of the proprietor or the legal entity being registered be quoted with the exception of the Government Departments for whom this requirement shall be non-mandatory. Applicants, who are not Government Department, shall not be granted registration in the absence of PAN number.

6) Communication with assessee is proposed to be made electronic to reduce transaction time and to achieve this e-mail address and mobile number of the applicant is being made mandatory. Existing registrants, who have not submitted this information, are requested to file this information within three months of the new registration process coming into effect.

7) Document to establish possession of the premises can be any document which establishes that the applicant is in possession of the premises required to be registered such as proof of ownership, lease or rent agreement, allotment letter from the Government, no objection certificate (NOC) from the landlord. Any of the following documents shall be 

submitted to establish identity, viz. PAN card, Ration Card, Passport, Voter I-card, Aadhar Card, Driving licence, or any other Photo-identity card issued by the Central Government, State Government or PSU.

8) The process of De-registration and cancellation of the registration has also been streamlined by prescribing clear procedure for the same so that winding up of business and starting new business of manufacture is made easy .

9) Similarly in service tax, the registration process for single registration has been simplified by providing for grant of registration online within two working days of filing the complete Form ST-1 in ACES, thus initiating trust-based registration. The specified documents should reach the office of the jurisdictional Deputy/Assistant Commissioner within 15 days of the date of filing the registration application. Where the need for the verification of premises arises, the same will have to be authorized by an officer not below the rank of Additional /Joint Commissioner. The conditions relating to the grant of registration in two working days have been specified in the Order No. 1/2015-Service Tax dated 28th Feb., 2015.

10) For further details, notification no. 07/2015-CE (N.T.) dated 01.03.2015 may be referred. The new procedure for registration shall come into effect from 01.03.2015. Difficulty, if any, in implementation of the procedure may please be brought to the notice of the Board. Hindi version would follow.

(ROHAN)

Under Secretary to the Government of India 

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Key Changes in Service Tax in the Finance Budget 2015

Key changes being made in the Service Tax in the Union Budget 2015-16, by amending the clauses 105 to 116 of the Bill under Chapter V of the Finance Act, 1994 and Chapter VI of the Bill (clause 117) to levy Swachh Bharat Cess @ 2% of the value of taxable services. These changes are categorized below based on the dates on which they would come into effect.

Date to be notified after the enactment of the Finance Bill 2015.

Changes in Service Tax rates

The rate of Service Tax is being increased from 12% plus Education Cesses to 14%. The ‘Education Cess’ and ‘Secondary and Higher Education Cess’ shall be subsumed in the revised rate of Service Tax. Thus, the effective increase in Service Tax rate will be from the existing rate of 12.36% (inclusive of cesses) to 14%, subsuming the cesses.

Swachh Bharat Cess

An enabling provision is being incorporated in the Finance Bill, 2014 (Chapter VI/clause 117) to empower the Central Government to impose a Swachh Bharat Cess on all or any of the taxable services at a rate of 2% on the value of such taxable services.

Review of Negative List

• Service Tax is to be levied on the service provided by way of access to amusement facility such as rides, bowling alleys, amusement arcades, water parks, theme parks, etc.
• Service tax to be levied on services by way of admission to entertainment event of concerts, non-recognised sporting events, pagents, music concerts and award functions, if the amount charged for admission is more than Rs. 500. Service by way of admission to exhibition of the cinematographic film, circus, dance, or theatrical performances including drama, ballets or recognized sporting events shall continue to be exempt.
• Service tax to be levied on service by way of carrying out any processes as job work for production or manufacture of alcoholic liquor for human consumption. 
• An enabling provision is being made to exclude all services provided by the government or local authority to a business entity from the Negative List. Once this amendment is given effect to, all service provided by the government to business entities, unless specifically exempt, shall become taxable.

Amendments in Notification No .25/2012-ST.

• To exclude job work in relation to alcoholic liquor for human consumption from the scope of this exemption.
• To exempt services by way of (i) right to admission to exhibition of film, circus, dance or theatrical performances including drama, or ballet; (ii) recognized sporting event; and (iii) admission to other events where the consideration for admission is upto Rs. 500;

Amendments in Service Tax Rules

Amendments in alternative rates of service tax provided for air travel agent, insurance service, money changing service and service provided by a lottery distributor and selling agent in rule 6(7), 6(7A), 6(7B) and 6(7C) of the Service Tax Rules.

Download Key Changes in Service Tax in the Finance Budget-2015

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Relaxation in Penalty for non-payment/short-payment of service tax provision in Finance Act

The Budget 2015 has the intention of the government to align the penal provisions as contained in the Excise and Service tax laws. The penalty section 11AC of the Excise has been substituted and similar changes have been made in the section 76 and 78 of the Finance Act.

Erstwhile section 76 (Penalty for failure to pay service tax) provides:

Any person, liable to pay service tax fails to pay such tax, shall pay, in addition to such tax and the interest on that tax, a penalty which shall not be less than

• one hundred rupees for every day during which such failure continues or
• at the rate of one percent of such tax, per month, whichever is higher, starting with the first day after the due date till the date of actual payment of the outstanding amount of service tax:

Provided that the total amount of the penalty payable in terms of this section shall not exceed fifty per cent of service tax payable.

Amendment:

The amendment in section 76, seeks to simplify the computation of the amount of penalty payable under this section. The substituted section simplifies the computation of penalty under this section and restricts the penalty to 10% of the amount of service tax payable. Not only this, the amended section also seeks to provide additional benefit that no penalty shall be leviable, if service tax and interest is paid within 30 days from the date of service of show cause notice.

Note: After this amendment, the assessee can get waiver from penalty imposed under section 76 for non-payment/short-payment of service tax. Thus, there is relaxation in penalty for non-payment/short-payment of service tax provision in Finance Act.

Amended Section 76:

(1) Where service tax has not been levied or paid, or has been short-levied or short-paid, or erroneously refunded, for any reason, other than the reason of fraud or collusion or willful misstatement or suppression of facts or contravention of any of the provisions-

the person who has been served notice under section 73(1) shall, in addition to the service tax and interest specified in the notice, be also liable to pay a penalty not exceeding ten per cent of the amount of such service tax:

Provided that where such service tax and interest is paid within a period of thirty days of–

• the date of service of notice under sub-section (1) of section 73, no penalty shall be payable;
• the date of receipt of the order of the Central Excise Officer determining the amount of service tax under sub-section (2) of section 73, the penalty payable shall be twenty-five per cent of the penalty imposed in that order, only if such reduced penalty is also paid within such period.

(2) Where the Commissioner (Appeals), the Appellate Tribunal or, the court, as the case may be, modifies the service tax determined under section 73(2)-

the amount of penalty payable thereon, shall also stand modified accordingly, and the benefit of reduced penalty under the proviso to sub-section (1) shall be available if such service tax, interest and reduced penalty so payable, is paid within a period of thirty days from the date of receipt of the order by which such modification is made.”

Source: www.taxmantra.com

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Rate of Service Tax and Swachh Bharat Cess for Fin. Year 2015-16

In the first full year budget 2015-2016, Hon'ble Prime Minister Modiji and Mr. Jaitley has tried to boost the confidence of people by giving many exemptions, pension schemes and so on. However, to meet all these expectations there must be increase in government's revenue. To meet the requirement of revenue, the rate of service tax which is currently 12.36% (inclusive of Education Cess and Higher & Secondary Education Cess) has been proposed to be increased to 14%. The increased rate of 14% will come into effect from the date to be notified after the enactment of Finance Bill.

The new chapter VI has also been added for introduction of "Swachh Bharat Cess".The relevant text of chapter VI of fianance bill reads as under.

"117(2) There shall be levied and collected in accordance with the provisions of this chapter, a cess to be called the Swachh Bharat Cess, as service tax on all or any of the taxable seervices at the rate of two per cent on the value of such serevices for the purposes of financing and promoting Swachh Bharat initiatives or for any other purpose relating thereto.

(3) The Swachh Bharat Cess leviable under sub-section (2) shall be in addition to any cess or service tax leviable on such taxable services under chapter V of the Fiance Act, 1994, or under any other law for the time being in force."

Swachh Bharat Cess will be 2% on all or any of the taxable services in addition to the service tax. Therefore, it may be imposed on all the taxable services or it may be imposed only on the selective services. The statutory provisions will be amendmed accordingly. It will be used for financing and promoting Swatchh Bharat initiatives or for any other purposes relating to Swatchh Bharat. It will come into effect from the date to be notified after the enactment of Finance Bill.

Therefore, overall increase in rate of service tax is approximately3.64%. This increase in rate of service tax shows that government is gearing up for GST and I feel that it is sign of GST percentage which will be between 16% to 19%. This is step towards fixation of GST percentage and simultaneously preparing the service segment for higher percentage.

It is to be noted that till the timedate has not been notified for increase in rate of service tax, there is no change in it. It will be same i.e. 12% service tax, 2% education cess on service tax and 1% Higher & Secondary education cess on service tax.

Only after the enactment of finance bill, the date will be notified and from the notified date the rate of service tax &Swachh Bharat Cesswill be as follows.

  ➢ Service Tax – 14%

  ➢ Swachh Bharat Cess – 2% in addition to service tax.

It is to be noted that from the date to be notified after enactment of finance bill, there will not be any education cess or higher & secondary education cess seperately.

The effect of increase in rate of service tax will be triggered by rule 4 of the Point of Taxation Rules. The applicability of change in rate of service tax &Swachh Bharat Cess (SBC) under different situation is analysed below. While analyzing the different situations below, it is assumed that rules for point of Taxation has been amended accordingly to apply to SBC and SBC has also been levied and imposed on all taxable serviceson the same date.

Scenario 1 - In case where Taxable services are provided before the date to be notified after the enactment of Finance Bill

Scenario 2 - In cases where Taxable services are provided after the date to be notified after the enactment of Finance Bill

The alternative service tax rates has been provided under Rule 6 of Service Tax Rules, 1994 with repsect to the services provided by Air Travel Agent, Insurance Service, Money Chaging, Lottery Distributor & Selling Agent. Consequent to the increase in rate of service tax, alternative rate has also been increased proportionately. This will also come into effect when the new rates of service tax comes into effect.

 (a) New rate of service tax on Air Travel Agent will be as follows.

  ➢ 0.7% of the basic fare in the case of domestic bookings.

  ➢ 1.4% of the basic fare in the case of international bookings.

 (b) Rate of service Tax on Life Insurance business will be as follows.

  ➢ 3.5% of the premium charged from policy holder in the first year and

  ➢ 1.75% of the premium charged from policy holder in the subsequent years.

 (c) Rate of Service Tax on purchase and sale of Foreign Currency will be as follows.

The rate of service tax on purchase and sale of foreign currency has been also been increased proportionately and the slab-wise rate chart is as follows.

(d) Rate of Service Tax on promotion, marketing, organising or in any other manner assisting in organising lottery will be as follows.

The rate of service tax on promotion, marketing, organising or in any other manner assisting in organising lottery has been increased proportionately and the new slab-wise rate chart is as follows.

In all the above cases enumerated in points a) to d) Swachh Bharat Cess will be additionally levied.

This increased rates of service tax reminds me the wordings of "Benjamin Franklin"

"Nothing is certain but death and Tax".

Source: www.taxmann.com

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Procedure of Service Tax Refund / Exemption to SEZ

Department of Revenue, Tax Research Unit of Government of India, Ministry of Finance has issued a Notification No. F. No. B1/6/2013-TRU dated 25th November, 2014 regarding latest procedure of Service Tax Refund / Exempt to SEZ.  The Notification is as under :

F.No.B1/6/2013-TRU
Government of India
Ministry of Finance
Department of Revenue
Tax Research Unit
North Block, New Delhi

25th November, 2014

To,
Chief Commissioners of Central Excise and Service Tax (All),
Commissioners of Service Tax (All),
Commissioners of Central Excise and Service Tax (All).

Madam/Sir,

Subject: Procedure of service tax refund/exemption to SEZreg.

Certain representations have been received through Ministry of Commerce raising the issue that SEZ unit or developer has to approach two authorities (the SEZ authority and with the Jurisdictional Service Tax authority) for upfront exemption under notification No. 12/2013 dated 01.07.2013 as amended.

2. The issue has been examined. The procedure prescribed under the notification No. 12/2013 dated 01.07.2013 as amended is for proper accounting and monitoring of benefit availed by SEZ Unit and developer under the exemption. Further compliance verification at the service provider’s end (in domestic tariff area) would only be feasible if an institutional mechanism for accounting and verification procedure is in place.  However, SEZ units and developer may, if they so desire, route their application for issuance of authorization by department through the specified officer of SEZ instead of submitting directly to the department. Similarly SEZ units and developer, may also route quarterly statement in Form A-3 through the specified officer in the SEZ.  Notification No. 12/2013 dated 01.07.2013 as amended does not put any restriction in this regard.

3. Accordingly the field formations should not object if such requests/intimations are routed through the specified officer in the SEZ.

Dr. Abhishek Chandra Gupta
(Technical Officer, TRU)

Copy to: 1. Director General (Service Tax), Director General (Audit).
         2. Director General (Export Promotion).
         3. Joint Secretary (Customs)

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Due Date of ST Return 1st Quarter extended to 14.11.2014

CBEC has issued an order to extend due date of Service Tax Return for 1st Quarter to 14.11.2014 vide No. 02/2014-ST dated 24th Oct., 2014 for the period from April-2014 to Septermber-2014.  The Actual due date of Service Tax Return is 25th October, 2014. The extended due date of filing of Service Tax Return order is as under :

F.No.137/99/2011-Service Tax

Government of India

Ministry of Finance

Department of Revenue

Central Board of Excise & Customs

***

New Delhi, the 24th October, 2014

ORDER NO. 02/2014-SERVICE TAX

In exercise of the powers conferred by sub-rule (4) of rule 7 of the Service Tax Rules, 1994, the Central Board of Excise & Customs hereby extends the date of submission of the Form ST-3 for the period from 1st April 2014 to 30th September 2014, from 25th October, 2014 to 14th November, 2014.

The circumstances of a special nature, which have given rise to this extension of time, are as follows:

“Natural calamities in certain parts of the country.”

Himani Bhayana

Under Secretary (Service Tax)

Central Board of Excise and Customs

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Updated Interest Rates on late deposit of service tax

Simple interest rate enhanced, where there is short payment or delay in payment of service tax, vide notification no. 12/2014-ST, dated 11th July, 2014

As per section 75, interest on delayed payment of service tax would be as follows:

• Turnover below Rs. 60lacs in F.Y/preceding F.Y.–15% p.a
• Turnover above Rs. 60lacs in F.Y/preceding F.Y. – 18% p.a.

Another Simple interest rates per annum payable under section 75, to vary on the basis of extent of delay in payment of service tax w.e.f. 1st October, 2014 are as under :

Extent of delay Simple interest rate per annum:

• Up to six months            18%
• From six months and up to one year    24%
• More than one year            30%

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What are changes in Service Tax w.e.f. 1st Oct., 2014 ?

By the latest amendment in Serve Tax Act, there are so many little changes takes place w.e.f. 01st October, 2014 for the fin. Year 2014-15.  All the changes' summery are as under :
 

E PAYMENTMandatory E-payment for every assessee;

CHANGE IN INTEREST RATEOLD :- @18% P.A.

NOW, INTEREST WILL BE CHARGED BASED ON DELAY IN TIME
DELAY FOR FIRST SIX MONTH @ 18%
DELAY UPTO 1YEAR, @ 18% FOR FIRST SIX MONTH & @ 24% BALANCE PERIOD
DELAY MORE THAN ONE YEAR, @ 18% FOR FIRST SIX MONTH & @ 24% FOR NEXT SIX MONTH & @ 30% FOR PERIOD
BEYOND ONE YEAR.
 

PLACE OF PROVISION OF SERVICE RULE-2012
CHANGES IN RULE 4 :- Provision for prescribing conditions for determination of place of provision of repair service carried out on temporarily imported goods is being omitted.
CHANGES IN RULE 9 :- The definition of intermediary is being amended to include the intermediary of goods in its scope Service consisting of hiring of Vessels (excluding yachts) and Aircraft is being excluded from rule 9(d)

CENVAT CREDIT OF INPUT SERVICERenting of motor cab is allowed to a Rent a Cab Service provider subject to Notification 08/2014-ST.  Tour Operator Service is allowed to a Tour Operator taking the benefit subject to 08/2014-ST.
REDUCTION IN %Taxable portion in respect of transport of goods by vessel is being reduced from 50% to 40%.

SUBSTITUTE WORDSThe word ‘motor cab’ will be substituted for the word ‘motor vehicle. For Renting of any motor vehicle designed to carry Passengers.

POINT OF TAXATIONPoint of Taxation in respect of reverse charge will be the payment date or the first day that occurs immediately.  after a period of three months from the date of invoice, whichever is earlier.

ST APPLICABLE ON RADIO TAXIService Tax is applicable on Radio Taxi (the abatement presently available to rent-a-cab service would also be made available to radio taxi service.

ST ON ADVERTISEMENTSAdvertisements in internet websites, out-of-home media, on film screen in theatres, bill boards, conveyances, buildings, cell phones, Automated Teller Machines, tickets, commercial publications, aerial advertising, etc. (sale of space for advertisements in newspapers, book other than business directories/yellow pages/trade catalogues would continue to be non-taxable) are leviable to Service Tax

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Important amendents in Service Tax applicable w.e.f. 01.10.2014

The CBEC has issued a notificated dated 25th August, 2014 regarding fixed the date of applicability of provision of section 114(A), (B), (C) of the Finance (No.2) Act, 2014 which is as under:

[TO BE PUBLISHED IN THE GAZETTE OF INDIA, EXTRAORDINARY, PART II, SECTION 3, SUB-SECTION (i)]

Government of India
Ministry of Finance
(Department of Revenue)

Notification  No. 18 /2014-Service Tax

New Delhi, the 25th August, 2014

G.S.R...... (E).– In exercise of the powers conferred by clauses (A), (B) and (C) of section 114 of the Finance (No.2) Act, 2014 (25 of 2014), the Central Government hereby appoints the 1st day of October, 2014 as the date on which the provisions of clauses (A), (B) and (C) of the said section of the said Act shall come into force.

[F. No. 334 /15 /2014-TRU]

(Akshay Joshi)

Under Secretary to the Government of India

Again, the CBEC has amemed and inserted two new rules i.e. Rule 11 & 12m after Rule 10 of the Service Tax Rules by its Notificated No. 19/2014-ST dated August 25, 2014 which is as under:

[TO BE PUBLISHED IN THE GAZETTE OF INDIA, EXTRAORDINARY, PART II,SECTION 3, SUB-SECTION (i)]

Government of India

Ministry of Finance

(Department of Revenue)

Notification

No. 19 /2014-Service Tax

New Delhi, the 25th August, 2014

G.S.R..... (E).–In exercise of the powers conferred by sub-section (1) read with sub-section (2) of section 94 of the Finance Act, 1994 (32 of 1994), the Central Government hereby makes the following rules further to amend the Service Tax Rules, 1994, namely:—
1. (1) These rules may be called the Service Tax (Second Amendment) Rules, 2014.
   (2) They shall come into force on the 1st day of October, 2014.

2. In the Service Tax Rules, 1994, after rule 10, the following rules shall be inserted,namely:-

   "11. Determination of rate of exchange."

        The rate of exchange for determination of value of taxable service shall be the applicable rate of exchange as per the generally accepted accounting principles on the date when point of taxation arises in terms of the Point of Taxation Rules, 2011.
   "12. Power to issue supplementary instructions."

        The Board or the Chief Commissioners of Central Excise may issue instructions for any incidental or supplemental matters for the implementation of the provisions of the Act.

[F. No. 334 /15 /2014-TRU]

(Akshay Joshi)

Under Secretary to the Government of India

Note.
The principal rules were published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i) vide notification No. 2/94 - SERVICE TAX, dated the 28th June, 1994 vide number G.S.R. 546 (E), dated the 28th June, 1994 and last amended vide notification No.9/2014 - Service Tax, dated the 11th July, 2014 vide number G.S.R. 478 (E), dated the 11th July, 2014.

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Impact of Budget-2014 on Income Tax, Excise Duty, Service Tax, Custom Duty and others for Asstt. Year 2015-16

The Finance Minister announced the Union Budget for Fin. Year 2014-15 i.e. Asstt. Year 2015-16 on 10th July, 2014.  In this Budget the Finance Minister is trying to give better results of revenue for Government as well as get benefit to all Indians.  The analytical clarification of Budget-2014 which Impact's on  Income Tax, Excise Duty, Service Tax, Custom Duty and others for Asstt. Year 2015-16 are as under:

Income Tax Proposals

• Income Tax exemption limit increases from Rs. 2 lacs to Rs. 2.5 lacs in the case of individual taxpayers who are below the age of 60 years.
• Income Tax exemption limit increases from Rs. 2.5 lacs to Rs. 3 lacs in the case of senior citizens. 
• Deduction of investments made under section 80C increases from Rs. 1 lacs to Rs. 1.50 Lacs.
• Investment allowance of 15% to a manufacturing company will be given who invests more than Rs. 25 Crore in any year in new plant & machinery. This benefit will be available for three years i.e. for investments made upto 31.03.2017.
• Extention of Investment linked deductions to new sectors namely, slurry pipelines for the transportation of iron ore, and semi- conductor water facbrication manufacturing units.
• Deduction of Interest on housing loan increases to Rs. 2 Lacs from Rs. 1.50 Lacs in the last year.
• Extention of 10 years tax holiday to power companies which begins generation, distribution and transmission of power by 31st March’2017.
  
• Increase in ceiling limit of PPF investment to Rs. 1.50 Lacs from Rs. 1.00 Lacs.
• Government will review Direct Tax Code Bill, 2011 and take view in the related matter of introduction.
• Tax deducted at source (TDS), not deducted on specified payments to residents will now be disallowed to the extent of only 30 percent while computing taxable income.
• Mutual funds other than equity oriented funds will attract rate of tax of 20 percent on long term capital gains as compared to 10 percent prevailing. Budget also proposes to increase period of holding of such units to 36 months from 12 months.
• Corporates and Mutual funds are now required to pay income distribution tax on gross income distributed.
• Budget speech clears that Government will not ordinarily bring about any changes in tax regime retrospectively which creates a fresh liability. all fresh cases arising out of the retrospective amendments of 2012 in respect of indirect transfers and coming to the notice of the Assessing Officers will be scrutinized by a High Level Committee to be constituted by the CBDT before any action is initiated in such cases.

Excise Duty Proposals

• Excise Duty on cigarettes, cigars and cigarillos increased in the range of 11 percent to 72 percent.
• Excise Duty on pan masala increased from 12 percent to 16 percent.
• Excise Duty on Guthka and chewing tobacco increased from 60 percent to 70 percent.
• Excise Duty on specified food processing and packaging machinery reduced to 6 percent from 10 percent.
• Footwears having retail selling price ranging between Rs. 501 to Rs. 1000 will be levied duty @ 6 percent as compared to 12 percent presently charged. Footwears having retail selling price upto Rs. 500 will remain exempt from duty.
• Excise Duty on unmanufactured tobacco increased from 50 percent to 55 percent.
• Exemption provided from Excise Duty to the below mentioned products:
• EVA sheets and solar back sheets and specified inputs used in their manufacture.
• Solar tempered glass used in the manufacture of solar photovoltaic cells and modules.
• Flat copper wire for the manufacture of PV ribbons for use in solar cells and modules.
• Machinery & Equipments required for setting up of a solar energy production project.
• Forged steel rings used in the manufacture of bearings of wind operated generators.
• Machinery & Equipments required for setting up of compressed biogas plants(Bio-CNG)

• Government exempts duty on PSF and PFY manufactured from plastic bottles, for the period 29th June, 2010 to 7th May, 2012. Now PSF and PFY will attract duty @ 2 percent without and @6 percent with Cenvat benefits on such products.
• Sports gloves will now attract duty of 2 percent without Cenvat benefit and 6 percent with Cenvat benefits on such products.

Service Tax Proposals

• Now, online and mobile advertisements of sale of space or time for advertisements will also be covered under purview of Service Tax.
• Service provided by radio-taxis will also attract service tax with rent a cab service. (Applicable w.e.f. date of passing of Bill by president)
• Services by Air Conditioned Contract Carriages & technical testing of newly developed drugs on human participants to be taxable.
• Micro Insurance Scheme will also include all life insurance schemes where the sum assured does not exceed Rs. 50000 per life insured. Micro Insurance Scheme is covered under exemption list therefore it does not attract Service Tax.„Ï Services provided by Indian tour operators to foreign tourists in relation to a tour wholly conducted outside India is not taxable.
• Cenvat Credit will be allowed to service providers of rent-a-cab, tour operators and same line of business.
• Services of loading, unloading, storage, warehousing & transportation of cotton, whether grinned or baled is being exempted
• Services provided by common biomedical waste treatment facilities are being exempted.
• Following changes will be noted in respect of reverse charge mechanism (RCM) of Service Tax:

• Following changes are made in valuation rules of Service Tax w.r.t. works contract service:

• Changed mechanism of interest payable for delayed payment of Service Tax are as under:

• Service Tax payment will be made through internet banking by every assessee w.e.f. 01st Oct, 2014. (Exceptional permission from AC/DC will be required for otherwise payment mode)

Custom Duty Proposals 

Basic Custom Duty (BCD) reduced on below mentioned products:

• Fatty acids, crude palm stearin, RBD and other palm stearin, specified industrial grade crude oils from 7.5 percent to Nil for manufacture of soaps and oleo-chemicals.
• Crude glycerin from 12.5 percent to 7.5 percent and crude glycerine used in the manufacture of soaps from 12.5 percent to Nil.
• Steel grade limestone and steel grade dolomite from 5 percent to 2.5 percent. Battery waste and battery scrap from 10 percent to 5 percent. Coal tar pitch from 10 percent to 5 percent.
• Specified inputs for manufacture of spandex yarn from 5 percent to Nil.

Imposition of Basic Customs Duty at 10 percent on specified telecommunication products that are outside the purview of the Information Technology Agreement and education cess on imported electronic products.

• Exemption of 4 percent special additional duty (SAD) for all inputs/components used in the manufacture of personal computers and on PVC sheet and ribbon used for the manufacture of smart cards.
• BCD reduced from 10 percent to Nil on LCD and LED TV panels of below 19 inches.
• BCD increased on imported flat-rolled products of stainless steel from 5 percent to 7.5 percent.
• Increase in duty free entitlement for import of trimmings, embellishments and other specified items from 3 percent to 5 percent of the value of their exports.
• Free baggage allowance increased to Rs. 45000 from Rs. 35000. Other Important Announcements.
• Government will set up a High Level Committee to interact with industry on a regular basis and ascertain areas where clarity in tax laws is required. Based on the recommendations of the Committee, the Central Board of Direct Taxes and the Central Board of Excise and Customs shall issue appropriate clarifications, wherever considered necessary, on the tax issues within a period of two months.

Indian Accounting Standards (Ind AS) will be adopted by the Indian companies from the financial year 2015-16 voluntarily and from the financial year 2016-17 on a mandatory basis.

• Budget reintroduces Kissan Vikas Patra (KVP) instrument to encourage people, who may have banked and unbanked savings to invest in this instrument.
• Budget also proposes extend a liberalized facility of 5% withholding tax to all bonds issued by Indian corporate abroad for all sectors and extend the validity of the scheme to 30.06.2017.
• Budget recommends to follows single “Know Your Customer” norms for all financial services in the country.
• Budget recommends to use single “Demat Account” for all financial transaction.
• Budget proposes 49 percent FDI in insurance sector through FIPB.
• Clean energy cess increased from Rs. 50 per tonne to Rs. 100 per tonne on coal, peat and lignite.
• Government will look after for a solution which enables introduction of Goods & Service Tax (GST) by this year.

Source: www.caclubindia.com

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All amendments in Service Tax changes by Budget-2014.

The Hon'ble Finance Minister Mr. Arun Jaitley had placed an Union Budget 2014-15 on 10th July, 2014, while presenting Budget Finance Minister introduced the Finance (No.2) Bill-2014, In this Finance Bill-2014 Finance Minister amendments made in Chapter V of Service Tax. The services sector has been ensure to its stability and continuity.  The Finance Minister further carry with some little changes which has been made in Service Tax by limited figers. These all changes in previous Service Tax a set of notifications are as under:

All New amended Notifications in service Tax after India Budget 2014

Notification No. 06/2014-Service Tax
Amendment in Notification No.25/2012-Service Tax - Mega exemption notification

Notification No. 07/2014-Service Tax
Amendment in Notification No.12/2013 - Exemption on services provided to SEZ authorised operations

Notification No. 08/2014-Service Tax
Amendment in Notification No. 26/2012 - Abatement rates

Notification No. 09/2014-Service Tax
Service Tax (Amendment) Rules, 2014

Notification No. 10/2014-Service Tax
Amendment in Notification No. 30/2012 - Notification under sub-section (2) of section 68 - Reverse Charge

Notification No. 11/2014-Service Tax
Service Tax (Determination of Value) Amendment Rules, 2014

Notification No. 12/2014-Service Tax
Prescribes rate of Interest for late payment of service tax - Section 75

Notification No. 13/2014-Service Tax
Point of Taxation (Amendment) Rules, 2014

Notification No. 14/2014-Service Tax
Place of Provision of Services (Amendment) Rules, 2014

Notification No. 15/2014-Service Tax
Resident private limited company specified as class of person for the purpose of Advance Ruling

Circular 178-4-2014-Service Tax

Increased Interest Rate on Late Deposit of Service Tax w.e.f. 01.10.2014

Extent of Delay	Simple Interest Rate per Annum
Up to 6 Months	18%
More than 6 months and upto 1 Year	18% for 1st Six Months and 24% for the period of delay beyond 6 months
More than 1 year	18% for 1st Six Months,  24% for 6 months and 30% for the period of Delay beyond one year.

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In the matter of refunds CBEC wants special attention to judicial discipline.

The CBEC i.e. Central Board of Excise & Customs has issued a Instruction F. No. 201/01/2014-CX.6 dated 26.06.2014 regarding need to follow Judicial discipline in adjudication proceedings to all The Commissioners of Central Excise, Central Secise and Service Tax and Customs.  For more information regarding this Refunds of CBEC read the following instruction-

F. No. 201/01/2014-CX.6

Government of India
Ministry of Finance
Department of Revenue
Central Board of Excise & Customs

New Delhi, the 26th June, 2014

To

All Chief Commissioners of Central Excise,
All Chief Commissioners of Central Excise and Service Tax,
All Chief Commissioners of Customs.

Sirs,

Subject – Instructions regarding need to follow Judicial discipline in adjudication proceedings.

Kind attention is invited to the order of Hon’ble High Court of Gujarat at Ahmedabad in case of M/s E. I. Dupont India Pvt Ltd (hereinafter referred to as M/s Dupont) in Special Civil Application no 14917 to 14921 of 2013 dated 25-10-2013 [2013-TIOL-1172-HC-AHM-CX]. M/s Dupont had filed appeal before the Hon’ble High Court against rejection of a refund claim on an issue which had earlier been decided by the Hon’ble High Court against the revenue, though in a matter relating to a different assessee. Thus for deciding the refund, a binding precedent judgment existed.

2) However the binding precedent was not followed which led to litigation before the Hon’ble High Court to which Hon’ble High Court took a serious view. It may be noted that on the subject of consequential refund, where the department has gone in appeal, there already exists a circular no 695/11/2003 –CX dated 24-02-2003. This circular of the Board is binding on all field officers. Had this circular been followed in the case, unnecessary litigation as well as adverse observation of the Hon’ble High Court could have been avoided. This circular is once again brought to the notice of field officers with direction that it is followed scrupulously.

3) The judgment of Hon’ble High Court in M/s Dupont case (supra) under reference may be perused by the field officers for complete understanding of the issues involved and directions of the Hon’ble High Court on need to follow judicial discipline. Judgment of the Hon’ble Supreme Court in case of Union of India vs. Kamlakshi Finance Corporation Ltd. [1991 (55) E.L.T. 433 (S.C.) = 2002-TIOL-484-SC-CX-LB] may also be perused as this is an authoritative pronouncement on the issue and has also been cited by the Hon’ble High Court.

4) The contents of this instruction may be brought to the notice of all adjudicating authorities under your jurisdiction with direction to follow the same scrupulously.

Yours faithfully,

(Pankaj Jain)

Under Secretary (CX)

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No TDS to be deducted if commission paid to foreign agents.

No TDS to be deducted if commission paid to foreign agents for rendering services abroad

Article authored by Mr. Alok Patnia, founder of Taxmantra.com

ITAT Chennai Bench recently held that assessee is not liable to deduct tax at source for making payment to its foreign agents for rendering services abroad, if the foreign agent does not have a permanent establishment in India and the service rendered is not in the nature of technical service.

Facts of the case:

The assessee, a private limited company, manufactures and exports leather garments and incurred expenditure towards commission paid to non-residents for the purpose of procuring orders abroad. The A.O disallowed the same, by observing that section 9 of the Act applied in this case as the commission amount had accrued to a non-resident/ payee principally on account of a business activity in India which required TDS deduction. The Assessing Officer further held that the certificate under section 195(2) of the Act had also not been produced. Accordingly, he disallowed/added the commission amount in assessee’s income.

The Appellate Tribunal held that:
The Revenue’s only grievance is that the aforesaid foreign agency commission paid by the assessee to the non residents/payee attracts disallowance under section 40 (a)(i) for non deduction of TDS. It is made clear that in support of this plea, no cogent evidence has been produced. It transpires from the case file the assessee has paid foreign exchange commission to its non-resident agent who do not have any permanent establishment in India. There is no material to prove that these payment have arisen out of an agreement executed in India. Nor there is any evidence to conclude that the non-resident/payee has rendered any technical service to the assessee. The Revenue also fails to prove the payments to have been accrued, arisen or paid in India so as to make it taxable under provision of the Act.

Taking into consideration all these circumstances, CIT(A) held that the assessee was not liable to deduct TDS on above stated commission paid to its non-resident payees.

Source: www.blog.tdsman.com

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Clarification Regarding TDS of Rent Service under Chapter XVII-B on Service Tax Component.

SECTION 194-I OF THE INCOME-TAX ACT, 1961 - DEDUCTION OF TAX AT SOURCE - RENT – CLARIFICATION REGARDING TDS UNDER CHAPTER XVII-B ON SERVICE TAX COMPONENT COMPRISED OF PAYMENTS MADE TO RESIDENTS

CIRCULAR NO. 1/2014 [F.NO.275/59/2012-IT(B)], DATED 13-1-2014

The Board had issued a Circular No.4/2008 dated 28-04-2008 wherein it was clarified that tax is to be deducted at source under section 194-I of the Income-tax Act, 1961 (hereafter referred to as 'the Act'), on the amount of rent paid/payable without including the service tax component. Representations/letters has been received seeking clarification whether such principle can be extended to other provisions of the Act also.

2. Attention of CBDT has also been drawn to the judgement of the Hon'ble Rajasthan High Court dated 1-7-2013, in the case of CIT (TDS) Jaipur v. Rajasthan Urban Infrastructure (Income-tax Appeal No.235, 222, 238 and 239/2011), holding that if as per the terms of the agreement between the payer and the payee, the amount of service tax is to be paid separately and was not included in the fees for professional services or technical services, no TDS is required to be made on the service tax component u/s 194J of the Act.

3. The matter has been examined afresh. In exercise of the powers conferred under section 119 of the Act, the Board has decided that wherever in terms of the agreement/contract between the payer and the payee, the service tax component comprised in the amount payable to a resident is indicated separately, tax shall be deducted at source under Chapter XVII-B of the Act on the amount paid/payable without including such service tax component.

4. This circular may be brought to the notice of all officer for compliance.

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No TDS on Professional & Technical Fees u/s. 194J of Income Tax Act by Service Tax.

The CBDT hass issued a Circular No. 01/2014 dated 13.01.2014 regarding Deduction of TDS under Section 194J (chapter XVII-B of the Income Tax Act, 1961) on professional and technical services.  This circular clarifies that on Professional and technical services fees paid by the payee to payer is not undercome TDS Deduction.  This circular has issued by CBDT after the judgement of the Hon'ble Rajastlian High Court dated 01.07.2013, in the case of CIT(TDS) Jaipur vs Rajasthan Urban Infrastructure (Income-tax Appeal No.235, 222, 238 and 239/2011), holding that if as per the terms of the agreement between the payer and the payee, the amount of service tax is to be paid separately and was not included in the fees for professional services or technical services.  Therefore on Professional and Techical service fees no TDS is required  u/s 194J of the Income Tax Act. The clarified circular of CBDT is as under:

F. No_ 275/59/20124T(B)

Government of India

Ministry of Finance

Department of Revenue

Central Board of Direct Taxes

Circular No.01/2014

New Delhi, the 13th January-'2014

Subject: TDS under Chapter XVII-,13 of the Income-tax Act, 1961 on service tax component comprised in the payments made to residents - clarification regarding

1. The Board had issued a Circular No.4/2008 dated 28-04-2008 wherein it was clarified that tax is to be deducted at source under Section 194-1 of the Income-tax Act, 1961 (hereafter referred to as 'the Act'), on the amount of rent paid/payable without including the service tax component. Representations/letters has been received seeking clarification whether such principle can be extended to other provisions of the Act also.

2. Attention of CBDT has also been drawn to the judgement of the Hon'ble Rajastlian High Court dated 01.07.2013, in the case of CIT(TDS) Jaipur vs Rajasthan Urban Infrastructure (Income-tax Appeal No.235, 222, 238 and 239/2011), holding that if as per the terms of the agreement between the payer and the payee, the amount of service tax is to be paid separately and was not included in the fees for professional services or technical services, no TDS is required to be made on the service tax component u/s 194J of the Act.

3. The matter has been examined afresh. In exercise of the powers conferred under section 119 of the Act, the Board has decided that wherever in terms of the agreement/contract between the payer and the payee, the service tax component comprised in the amount payable to a resident is indicated separately, tax shall be deducted at source under Chapter XVII-B of the Act on the amount paid/payable without including such service tax component.

4. This circular may be brought to the notice of all officers for compliance.

5. Hindi version shall follow.

Under Secretary to Government of India

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