itatonline.org » Blog Archive » A Comprehensive Guide To Changes In Service-tax Law In Finance Bill 2012:

The views expressed herein are personal to the writer and do not necessarily represent the views of the Bar Association.

The Negative List Taxation introduced by the Finance Bill 2012 substantially reinvents the law on Service Tax and will have a deep impact on service transactions. The authors, well known experts in the field of service-tax, have meticulously studied the entire law on the subject and have explained the implications of the proposed amendments in a succinct and clear manner. A pdf copy of the Guide is available for download

 

The Finance Minister has proposed paradigm shift in service tax law in Union Budget, 2012. From selective approach of levy of service tax on taxable services, this years budget has shifted to negative list of services. Until this year, the service tax was payable on 117 taxable services. Now it is proposed that barring 17 services in negative list, all services will become taxable from the date to be notified upon passage of the bill. A list of exempted services is also proposed. The levy specifically provides for “declared services” and definitions of these services are given. First time after introduction of service tax in 1994, definition of the term, “service” is provided in the law. The Negative List Taxation introduced by Service Tax substantially reinvents the law on Service Tax and will have a deep impact on service transactions. The introduction of the Negative List prior to the introduction of GST leads to significant gaps in relation to generation and use of tax credits. This anomaly will doubtless add to the real indirect tax cost of transactions in India.

 


The rate of service tax is increased from 10% to 12%, however, the Education Cess & Secondary and Higher Education Cess remains at the previous level of 2% and 1% of service tax.

 

Upon increase in tax rates and bringing all services under the tax net barring a few, the Government has targeted revenue collection of Rs. 1.24,000 Cr. from the last years budgeted revenue of Rs. 67,000 Cr. and revised budgeted revenue of Rs. 92,000 Cr.

 

Changes are proposed in Point of Taxation Rules, Valuation Rules and Cenvat Credit Rules. The taxation of export of services and import of service is being replaced by “place of provision of service” and the draft rules are placed for discussion. The ambit of reverse charge mechanism under which the recipient of service is liable to pay tax is widened. Certain favourable retrospective amendments are also made in the law.

 

By CA Rajkamal Shah & CA Ashit Shah

 


 

 

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19 Responses to “A Comprehensive Guide To Changes In Service-tax Law In Finance Bill 2012:”

  1. manoj sarangi Says:

    Dear Sir,

    There are several amendments in service tax law in Budget 2012. You are kindly requested to send a PDF copy of the same in abovementioned e-mail id. kINDLY SEND YOUR COMMENTS ALSO.

    Best Regards
    manoj

  2. veermani Says:

    PERSONS WHO ARE GETTING SALARIES ABOVE RS.10 LKHS WILL BE COVERED? IN THE NEGATIVE LIST SALARY IS NOT EXCLUDED.

  3. Mukesh Says:

    ss

  4. mitesh Says:

    pl send to me this guide

  5. Pramod Thakar Says:

    Good question. since it is not in negative list, we needs to concerntreat on this matter. God knows, after a year Govt. may start recovery from employer,

  6. Navaneeth Says:

    Good job

  7. Kusum Says:

    Good

  8. Kusum Says:

    nice

  9. Kusum Says:

    The rate of service tax is increased from 10% to 12%, however, the Education Cess & Secondary and Higher Education Cess remains at the previous level of 2% and 1% of service tax.

  10. BHUPENDER BHAKUNI Says:

    GOOOD ONE

  11. Nachiket B Upadhyaya Says:

    When there is a list of exempted items, what is significance of negative list? I request if difference between these two concepts can be explained to me.

    Thanks…

  12. CA Vatsal Mankad Says:

    A very good compilation of changes

  13. CA Ritesh Says:

    good one sir

  14. Naveen Says:

    thanks

  15. pritesh Says:

    Dear nachiket,
    There is a difference between negative list and exempted list, the services which are exempted are not covered in negative list b’coz they are Taxable services,these are exempt because of a notification..while the services which are covered in negative list are not at all taxable.

  16. CHANDRA KANT Says:

    yes

  17. CA Rajput Jain Says:

    Thanks for sharing nice information in this article…..

  18. Meri Pustak Says:

    This is very nice blog for the service taxes and the different type of the change for Service taxes laws, if you want to purchase online service taxes books than please visit us @ http://www.meripustak.com/Indirect-Tax/cid-10038

  19. Dilip Shah Says:

    As commission agent now comes under purview of service tax in case of receipt of foreign remittance from overseas supplier (principal), who will actually pay service tax ?

    1. Our foreign supplier of goods is refusing to pay such service tax since they are located outside India and Indian laws are not applicable to them.

    2. Accordingly since I cannot recover service tax from service receiver located outside India, how I can collect and deposit same with tax authorities ?

    3. Since I am service provider, the service provider is not binded by law to pay service tax. His job is merely to charge, collect and deposit service tax with tax authorities.

    Thank you.

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