service tax presentation
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CHANGES BY FINANCE ACT 2012
Service Tax
Service TaxChanges By Finance Act 2012
Before 01.07.2012 119 Services were Taxable Service Provider was Liable To Pay Tax in Full Under Special Condition Service Receiver was Liable
To Pay 1. Import of Services2. Transport of Goods By Road Services3. Sponsorship Service etc.
Service TaxChanges By Finance Act 2012
W.E.F 01.07.2012All Services Are Taxable except under
Negative List. (Important Negative List items Click Here)
Mega Exemption from Service Tax. (Important exemption list Click Here )
Removal of Services Classification prescribed vide Section 65(105).
Pure Services and Declared Services.
Declared Services
Renting of Immovable PropertyWork ContractConstruction of Complex, Building, Civil
StructureTemporary Transfer of Intellectual property
right Transfer of goods by way of hiring, licensing,
hire purchaseService portion in execution of work contract
Services
Banking, NBFC,Electricity Distribution ServicesSupport ServicesConsignment Handling ServicesCourier Agency Restaurant, Food Stand, First food CenterCaterer, Convention Centre etc.
Before 01.07.2012 From 01.07.2012
Erection, Commissioning or Installation Services
Construction Services in respect of Industrial Building or Civil Structure.
Construction of Residential Complex Services
Repair and Maintenance Services
Interior Designer ServicesRenovation, Alternation,
etc.
Now All this services are covered under 1. Work Contract
Service 2. Construction of
Complex.
Service Classification
Classification of Services
Rule 1. Reference to a Main Service shall not include reference to a service which is used for providing main service.
Means Service used for Main Service may or may not classified under same services.
Rule 2 . Most specific description shall be preferred over a more general description.
Rule 3 Taxability of a bundled service (a) if various elements of such service are naturally bundled in the ordinary course of
business, it shall be treated as provision of the single service which gives such bundle its essential character;
(b) if various elements of such service are not naturally bundled in the ordinary course of business, it shall be treated as provision of the single service which results in highest liability of service tax.
Explanation.— For the purposes of sub-section (3), the expression "bundled service" means a bundle of provision of various services wherein an element of provision of one service is combined with an element or elements of provision of any other service or services.
Negative list of Services
Services by Government or a Local AuthorityServices by the Reserve Bank of IndiaServices by a foreign diplomatic mission located in
IndiaServices relating to agricultureTrading of goods, Activity amounted to ManufacturingTransmission or Distribution of electricity by an
electricity transmission or distribution utilityFuneral, burial, crematorium or mortuary services
including transportation of the deceased
Mega Exempted Services - 1
1. Services provided to the Government or local authority by way of erection, construction, maintenance, repair, alteration, renovation or restoration of :
canal, dam or other irrigation works pipeline, conduit or plant for (i) drinking water supply (ii)
water treatment (iii)sewerage treatment or disposal a historical monument, archaeological site or remains of
national importance, a residential complex predominantly meant for self-use or
the use of their employees
Mega Exempted Services - 2
Services provided by way of erection, construction, maintenance, repair, alteration, renovation or restoration of:
a) Road, bridge, tunnel, or terminal for road Transportation for use by general public
b) building owned by charitable trust and meant predominantly for religious use by general public
c) pollution control or effluent treatment plant, except located as a part of a factory
d) electric crematorium
Mega Exempted Services -3
Services by way of erection or construction of original works pertaining to:-
a) airport, port or railways;b) single residential unit otherwise as a part of a
residential complex;c) low- cost houses up to a carpet area of 60 square
metersd) Post- harvest storage infrastructure for agricultural
produce including a cold storages for such purposes; e) Mechanized food grain handling system, machinery
or equipment for units processing agricultural produce as food stuff excluding alcoholic beverages;
Specific Exempted Services:
1. Services to United Nation or Specified International Organization.
2. Service by way of vehicle parking to general public excluding leasing of space.
3. Service by the following persons in respective capacity:
a) Selling or distribution of SIM cards or recharge coupon voucher;
b) Sub-contractor providing services by way of works contract to another contractor providing work contract services which re exempt;
Work Contract
One Contract - one order (Composite Order)
One Contract – Many order (Divisible Order) Supply order Erection order Civil order F & I Repairs & Maintenance
Valuation Method for Service Value of Work Contract
Cost Plus Method / Service Value / Direct Method
Composition Method or Preventive Method
Cost Plus Method / Service Value Method
Gross Amount Charged for Work Contract Less: Value of Supply including Tax thereon
Note: 1. CENVAT credit available for Input, Input Services used in or in relation to execution of Work contract.
2. Service Value determined above must have value for items listed in list – 1.
List - 1
(i) labour charges for execution of the works; (ii) amount paid to a sub-contractor for labour and services; (iii) charges for planning, designing and architect’s fees; (iv) charges for obtaining on hire or otherwise, machinery and
tools used for the execution of the works contract; (v) cost of consumables such as water, electricity, fuel, used in the
execution of the works contract; (vi) cost of establishment of the contractor relatable to supply of
labour and services; (vii) other similar expenses relatable to supply of labour and
services; and (viii) profit earned by the service provider relatable to supply of
labour and services;
Composition Method or Preventive Method
Gross Value Charged for Execution of Work Contract Add: FMV of Supplies (supplied in same or other
contract for execution of work contract) (i.e. Supplied free of cost or at discounted value) Less Value Charged for that Supplies
Note: 1. Preventive rate 40/60/70 % apply of calculating Service Value
2. CENVAT credit for Input is not available.3. CENVAT credit for Input Services and
capital Goods will be available.
Composite Contract
Total Value of Composite Contract 100
Value of Supply (Value to be Justified with VAT / Sales Tax return) (Here we may show the Supply Invoice)
80
Value of Service including incidental material for Services
20
Determine the Tax payable (Full Rate i.e. 12.36%) 2.472
Less CENVAT Credit
For Material / Input used in Services (Non-billable items)
1.000
For Input Services used for providing Services
0.400
For Capital Goods (we can take credit 50% & 50% in 1st & 2nd Year but we have to reverse credit when the same is transfer to other site as such on value purchased less deprecation)
0.00
Net Tax payable 1.072
Single Contract – Divisible order
Gross Amount for Supply Order 800
Gross Amount for Erection order 80
Gross Amount for Civil order 100
Gross Value for F & I (except F & I value being integral part of Supply)
20
Total Contract Value 1000
Add: FMV of Free Supply after reducing amount charged 0.00
Value of Work Contract 1000
Taxable Value (40/60/70 %) 400
Tax Livable 49.44
Less CENVAT Credit
For Input Services used for providing Services 0.400
For Capital Goods (we can take credit 50% & 50% in 1st & 2nd Year but we have to reverse credit when the same is transfer to other site as such on value purchased less deprecation)
0.00
Net Tax payable 1.072
Separate Contract for each work without Interdependency clause
Supply Contract Exempted
Erection Contract Tax payable to determined as per clause applicable to Cost Plus Contract / Direct calculation
Civil Contract Tax payable to determined as per clause applicable to Presumptive Taxation / Composition method
Repair & Maintenance Contract
Presumptive Taxation / Composition method
This is not possible to be applied in our case as service provider because we are providing bundle of Services which are normally bundled in business practice.
Most Vital Changes
Service Provided in or from India is Taxable (except provided in Jammu & Kashmir)
Services received in Taxable Territory from any non-Taxable Territory.
In case of change in effective rate of tax date of payment have vital Important.
Enlargement of Reverse Charge Coverage
Reverse Charge Mechanism
Services Covered are (subject to specified condition): Transportation of Goods by Road Support Service by Government or Local Authority Renting or Hiring any Motor Vehicle for carrying passenger. Supply of manpower for any purpose Service by way of works contract Import of ServicesNote: 1. CENVAT credit can be availed on the basis of tax paid
challan for Any Tax paid under Reverse Charge Mechanism. 2. Govt. has clarified in educational guide that Service Receiver
is not liable for Services whose point of taxation has been determined and whole liability affixed before 01.07.2012.
Transportation of Goods by Road
Service Receiver (Who is paying Freight)
Tax @12.36% on 25% Freight Value
CENVAT Credit Can Avail for Service Tax payable against Service Billed.
CENVAT Document Tax paid Challan
Must Note Freight paid does not have element of Loading & Unloading Charges
Support service by Government or Local Authority
Service Provided by Government or local authority
Taxable Value for Service Receiver Tax @12.36% on 100% Service Charges Paid
Services Mainly Covered 1. Testing , 2. Security 3. Construction / Erection 4. R & D or any other Support Services
Following Govt. Support Services are exempted
1. Renting of Immovable property, 2. Postal Services, 3. Services in relation to Aircraft
or Vessel and 4. Transportation of Goods or
Passenger.
Renting or Hiring of Vehicle for Passenger Carrying.
Service Provider 1. Any individual, 2. Hindu Undivided Family3. Proprietary firm 4. Partnership firm,
Service Receiver Liability Tax 12.36% on 40% Value Paid
Mainly Cover 1. CAR 2. Jeep3. Bus etc .
Supply of Manpower for any purpose
Service Provider 1. Any individual, 2. Hindu Undivided Family3. Proprietary firm 4. Partnership firm,
Service Receiver Liability Tax 12.36% on 75% Value Paid
Mainly Cover 1. Labour provided by Agency2. Man power for Loading &
Unloading.3. Security Personal 4. Man power for Material Sifting
Works Contract
Service Provider 1. Any individual, 2. Hindu Undivided Family3. Proprietary firm 4. Partnership firm,
Service Receiver Liability On 50% Value Paid (Method of Calculation of Taxable value is disused above)
Mainly Cover 1. Civil Work order (With or Without Material)
2. Erection work order(With or Without Material)
3. Repair & Maintenance order(With or Without Material)
Import of Services
When Service is called Imported
When a Service is received in Taxable Territory from non-taxable Territory.
Service Receiver liability Tax @12.36% on full value paid subject to available Abetment / Exemption
Abetment & Exemption Taxable Value should be determined considering service is provided from Taxable area by Service Receiver.
Services Covered All Taxable Services
Most Important Action to be taken
All work order to be revised considering Tax implication under reverse charge method,
All Service Provider to be registered with Service Tax department,
All Input Service Bill must complied with provision of CENVTABLE invoice.
First Service Invoice to be supported by Service Tax Registration and subsequent Invoices to be supported by Tax paid challan for Tax paid against earlier bill.(Bill format and check list enclosed)
All Service And Excise Bill to be address to Site address otherwise CENVAT Credit will not available and also billed Site become liable for tax under reverse charge.
Contains of Invoice if Partial Reverse Charge Applicable
Invoice to be issued in compliance of Rule 4A of Service Tax Rule,1994 Name, Address and Registration Number of Service
Provider and Receiver Value of Taxable Service Provided or agreed to be
provided Service Tax payable thereon (Only Service Provider
liability)
Thanks for your Feedback
Prepared By P K Jaiswal & Co56/1/1, King’s Road,Howrah – 711 101Email: pkjaiswal.co@live.inContact: 09062000111 033 32515699
Prepared For Techno Electric and Engg. Co. Ltd.
END
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