No TDS on Service Tax Component

Clarification in the Latest Circular from CBDT

The latest circular from CBDT (Central Board of Direct Taxes) clarifies, based on a High Court decision, that service need not be deducted on the Service Tax component.

Thus, your cllients should now pay you higher to that extent. Correspondlngly, you need to deduct lower TDS to a similar extent.

An example:

  Earlier NOW
Head % Rs Rs
Amount Billed 10,000 10,000
Service Tax 12.36% 1,236 1,236
Gross Amount 11,236 11,236
T.D.S. 10.00% 1,124 1,000
Net Amount Receivable / Pauable 10,112 10,236

Ensure you follow this and also make sure your clients pay you accordingly. The link to the circular is here.

Note that, for now, this is applicable only if Service Tax is charged seprately for professional / techincal services.

Service Tax VCES Forms

Service Tax Voluntary Compliance Scheme – Forms Notified

The Service Tax authorities have notified the forms and details for the Service Tax Voluntary Compliance Encouragement Scheme.

The key details to be provided are, other than Name, Address, ST No., etc. are:

  • Amount of Service Tax unpaid as on 31st December 2012
  1. Higher Education Cess
  2. Education Cess
  3. Service Tax
  • The above calculation is to be done using the same method as used for the relevant period service tax returns.

Do have these details ready to ensure we can start filing at the earliest. The relevant forms in soft copy will be sent later.

ST Due Date for H2FY13 extended

ST Due Date for Oct-12 to Mar-13 extended

The due date for filing the service tax returns for the second half of Financial Year 2013 (October 2012 to March 2013) has been extended to 31st August 2013. The form required to be filed for this return will be available around 31st July 2013, as per the latest ST Notification.

The said notification is available here:

Do revert to me if you need any further clarifications.

ST Return Due Date Postponed

Service Tax Return Due Jul-12 to Sept-12 extended to 30th April 2013

Service Tax Return (ST 3) for the period 1st July – 30th September, 2012 is now available in a modified format for e-filing in ACES.CBEC has extended the last date of e-filing of the new Service Tax Return (ST-3) for the period July-September 2012, from 15th April to 30th April 2013.

Service Tax Notifications dated 19 April 2006

The effective service tax rate of 12.24% is applicable from 18th April 2006, since that is the day on which the Finance Bill 2006 was assented to by the Hon. President.

A gist of the slew of service tax notifications issued today (though these are dated 19th April 2006) is here. All these notifications are effective from 19th April, 2006.

  1. The rate of interest for delayed service tax payment is 13% p.a. [Notification No. 8/2006]
  2. Service tax to be payable, even if any taxable service is provided from any other country, but is received in India [Notification No. 9/2006]. The clause, prior to this amendment, did not specify the place of providing or receiving the taxable service. It refered to the person providing the service.
  3. Notification No. 10/2006 amends the definition of ‘Person Liable for Paying Service Tax’ in the Service Tax Rules. The receipient of a taxable service which is received in India from any person from any other country, irrespective of from where the service is provided. The earlier definition made the receipent liable to pay service tax only if the provider was a non-resident or from outside India and did not have any office in India. This notification also removes the valuation methods for computing the service tax payable by clearing and forwarding agents and insurance agents.
  4. A new set of Rules (yes, yet another set of rules) called the Taxation of Services (Provided from Outside India and Received in India) Rules, 2006 are notified vide Notification No. 11/2006. Under these rules, input, input service, output service are defined to have the same meaning as in the CENVAT Credit Rules, 2004. The list of taxable services provided from outside India and received in India is mentioned therein; and includes some services in relation to immovable property situated in India, and some other services. There are a few exceptions also specified. These rules require the receipent of the services to register and pay service tax. It is clarified that the taxable services provided from outside India and received in India shall not be treated as output services for availing credit of excise duty / service tax paid on any input / input service. Note that where a service is provided partly outside India and partly in India, will be treated as a service provided in india.
  5. And yet more more set of rules … this time they are to be known as Service Tax (Determination of Value) Rules, 2006. These rules specify the method to value taxable services where the consideration is not wholly / partly received in money, i.e. by valuing the service at an equivalent gross amount charged by the service provided for similar services in the ordinary course of business; failing which the service provider is to determine the equivalent money value of such consideration which cannot be less than the cost of provision of the service. These rules also specify that the authority and powers of the Central Excise Officer to reject the valuation, and the procedure for the same. These rules, along with illustrations and examples, clarifies the inclusion and exclusion of certain costs from the value of service provided. [Notification No. 12/2006].
  6. Notification No. 13/2006 amends the Export of Service Rules, 2005. This amendment specifies the what is export of taxable service and clarifies that any service that is partly performed outside India will be deemed to be performed outside India. The provision of any service shall be treated as export of service when the service is delivered outside India and used outside India; and the payment is received by the service provider in convertible foreign exchange.
  7. And finally, Notification No. 14/2006 rescinds two earlier notifications; namely, notification no 22/2005 [service provided to an individual by a service provider, where the services are received and consumed outside India, not in the course business] and notification no 25/2005 [specified services provided by a non-resident person outside India and consumed outside India, in the course of sailing of a ship].

Related Links: Service Tax Website, Notifications Issued in 2006, CENVAT Credit Rules 2004