Service tax in India

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Question: I am doing a job in account dep.(Sales Tax)

i have some confusion regarding service tax credit & Income tax . please solve my problem ?

Service tax :

1- may i take credit of service tax on all expenses such as service tax on mobile exp.telephone exp.insurance,repair,repair of plant & machinery,computer repair,vechiles repair,car repair,motor repair,bike repair,building repair,courier charges,freight inward,freight outword,import exp.export exp.bank charges etc. 2- what is the portion of service tax credit on capital goods as service tax on plant,machinery,building,computer,furniture etc, 3- if service tax bill is not proper as service tax no.not mention on bill,st amt.overwritten without co.stamp & authorised sign, credit of service tax on these bill would be taken or not. jiwan_pokhariya@yahoo.com)(via mail) (query sentto CA/SSK-X)

ANSWER 1) NO

2)@ 50% IN TWO ACCOUNTING YEAR

3) WHO ARE YOU TO VERIFY THE SAME JUST TAKE HIS SERVICE TAX NUMBER AND PAY THE BILL RECEIVED BY YOU ACCORDINGLY. FOR YOUR SAFE SIDE YOU CAN PREPARE A LETTER ADDRESSED TO THE ASSESSING OFFICER OF THE SERVICE PROVIDER, GIVING DETAILS OF SERVICE TAX PAID BY YOU THE CONCERNED FIRM OR PERSON AND YOU ARE SAFE AND YOUR DUTY IS OVER. ssunderagarwal@sify.com 9870243410

Service tax

is a tax levied on service providers in India, except the State of Jammu and Kashmir. The tax is levied on service providers who have an annual revenue of more than 8 lakhs, which encourages smaller service providers. The responsibility of collecting the tax lies with the Central Board of Excise and Customs(CBEC).

FAQs and Answered Queries

Question:REG SERVICE TAX

WE ARE THE AGRI PRODUCGTS EXPORTERS TO MALAYSIA,SINGAPORE,COLOMBO AND INDONESIA. ALL THE EXPORTS EFFECTED BY CONTAINERS. FOR WHICH THEY CHARGES CONTAINER TERMINCAL HANDLING CHARGES BOMBAY RS7000-00 @12.5%@937-00 PER CONTAINERS.MADRAS THC CHARGES @RS3000-00 12.5% RS.375. BOMBAY TOTAL CONTAINERS2006-2007 AND CHENNAI ALL TOGETHER WE PAID SERVICE TAX ALONE RS 100 LACS. IN THIS REGARD WHETHER THIS SERVICE TAX IS EXEMPTED FOR EXPORT THOUGH SERVICE OCCURED IN INDIA, ALSO CONFIRM ANY REFUND NOTIFICATION ANNOUNCED BY GOVERNMENT. KAYAROHANAM (via mail)

ANSWER YOU CAN FILE YOUR CLAIM FOR REFUND TO SERVICE TAX DEPARTMENT. (reply sent-070727)

Q: service tax on behalf of transporter

We are builders , we pay service tax on behalf of transporter for goods transport , however I would like to know whether we can take service tax credit on the expenses incurred like telephone expenses, professional fees ,etc Bharti(via mail)

ANSWER ALREADY REPLIED YOUR QUESTION AND IT IS A BIG 'N O ssunderagarwal@sify.com (reply sent-070719)

Payment of service tax on output service?

Q. To what extent the input credit of service tax can be utilise for payment of service tax on output service? Whether 20% or 35% of the Service Tax payable in output services as I refered from some webiste on service tax. I remain very much oblige to get the proper answer with related rule or section. Sandeep (via mail)

ANSWER IF YOU ARE PAYING SERVICE TAX FOR INPUT SERVICES THE SAME IS AVAILABLE FOR ADJUSTMENT IN OUT PUT SERVICE TAX. KINDLY REMEMBER THAT THERE SHOULD BE ACTUAL INPUT AND ACTUAL OUT PUT SERVICE TAX AND NOT FOR SERVICE TAX PAYABLE ON EXPENSES OR OTHERS WHICH ARE NOT AT ALL CONNECTED FOR INPUT CREDIT RESULTING IN OUT PUT PAYABLE SERVICE TAX. ssunderagarwal@sify.com (reply sent)

Question: Service Tax

We are a company engaged in the construction of residential & commercial complexes (exceeding 12 dwelling units). We are liable to service tax. The questions to be clarified are:

What are all the items of receipts (received from buyers of flats) chargeable to service tax?

When ST become liable to be remitted to government. at the time of getting advance from prospective buyer (or) at the time of construction agreement is entered into (or) at the time of registration of undivided share of land in favour of the buyer (or) at the time of completion and hand over of flats to the owners. G. Sankaranarayanan (via mail)

ANSWER

COLLECT AND PAY SERVICE TAX AT THE TIME OF HANDOVER OF FLAT TO THE BUYER.ssunderagarwal@sify.com (reply sent)

Question: Can we claim service tax credit?

  1. can we claim of service tax credit on all capital exp.& revenue exp.
  2. can we claim of service tax credit 50% on capital exp. as insurance & repair & maint. on on car,plant,machinery
  3. which are those exp.on which we can claim of service tax credit

Jiwan Pokhariya (via email)

ANSWER:

FOR TRADING ITEMS YOU CAN ADJUST 100% AND FOR MANUFACTURED ITEMS 50% PER YEAR. ssunderagarwal@sify.com,
edesk note
It is suggested that one signs up free for www.edeskonline.com(reply sent -070705)



Question: Even if our service revenue is exempted? Even If our service revenue is below the exempted level, do we need to get registered with excise deptt.? -- JP Paranjape(Via Mail)

ANSWER:IF YOU ARE COVERED UNDER CENTRAL EXCISE AND IS DEALING IN EXCISABLE GOODS THEN YOU ARE BOUND TO REGISTER BUT I BELIVE YOU ARE TALKING OF SERVICE TAX. UNDER SERVICE TAX YOU NEED REGISTER IF YOUR TURN OVER IS BELOW 8 LACS BUT IF IT IS IN BETWEEN 7 AND 8 YOU SHOULD REGISTER. ssunderagarwal@sify.com(reply sent 070611)
eDesk note: It is suggested that one signs up free for www.edeskonline.com

Educational Institutes are exempted from payment of service tax on rent of commercial properties. Can you please tell me which kind of educational institutes are exempted? Is a childrens nursery school which does not require any registration from any government authority exempted? Thanks, -- Ashok Patel (via email)

ANSWER: If your turnover is below 8 lacs you are exempted.

Can we claim Service Tax on Mobile phones
Mukesh Kumar(Via Mail)

Answer: please explain your query in detail. Service Tax is appliceble on service providers only. please let me know what type of service do you provide. CA Bhavik Parikh

How do you define import of services under service tax and when is service tax actually payable to them. Let me have the criteria specific to services rendered in India by person outside India. -- Archana Yadav(via email)

ANSWER: IMPORT OF SERVICES MEANS WHEN A FOREIGNER RENDERS SERVICES IN INDIA IT IS LIABLE FOR SERVICE TAX. ANY SERVICE RENDERED OUTSIDE INDIA IS NOT COVERED UNDER SERVICE TAX ACT. ssunderagarwal@sify.com

My building is let out to commercial companies who are carrying business activities in it. The total rental is above Rs. 8,00,000/-. I do not provide any service to the tenant and rent is only for the building structure. Shall I have to collect and pay Service Tax ?
Shaktinandan Singh
(Via mail)

ANSWER: AS PER THE FINANCE ACT, 2007 COMMERCIAL RENT IS COVERED UNDER PROVIDING OF SERVICES AND HENCE YOU ARE LIABLE IF IT IS ABOVE 8 LACS PER YEAR. THE SERVICE TAX IS APPLICABLE FROM 1ST JUNE, 2007 AND YOU ARE TO COLLECT THE SAME FROM YOUR TENANT AND PAY IT ACCORDINGLY BUT YOU HAVE TO REGISTER YOURSELF WITH THE DEPARTMENT CONCERED. ssunderagarwal@sify.com(reply sent - 070611)

Please let us know the effective date of Service Tax to 12.36% from 12.24%. Also, is the service tax rate going to climb at 15.45% w.e.f. June 1st, 2007.
Thanks and regards,
Rajitha
(Via Mail)

Answer: The President of India has given his assent to the Finance Bill 2007 by putting his seal and signature on and it has now been enacted as the Finance Act 2007. Service Tax Rate has been hiked to 12.36 per cent as Secondary and Higher Education Cess of 1 per cent on service tax has come into force. Consequently, w.e.f. 11th May 2007 the rate of service tax shall be revised as follows: Service Tax on taxable value 12.00% Education Cess @ 2% of Service Tax 0.24% Secondary and Higher Secondary Cess 1% of taxable value 0.12% Hence effective service tax works out to 12.36% Kindly note that all three heads of taxes shall have to be separately displayed on the Invoice. As per my knowledge there is no such news yet of service tax going up to 15.45% w.e.f June 1st , 2007. -- CA Bhavik Parikh

Service Tax on Rent of Commercial / Residential Building. --From Ashok Prasad (via email)

Answer: Gross Rent in a year exceeding 8 lacs from commercial properties shall be charged to Service Tax. There is no service tax on Residential properties.

Situation One: We have given certain properties on rent in Calcutta for Commercial purposes but the building is partly commercial and partly residential and accordingly Muncipal taxes are assessed. Now the portion we have given on rent to some companies which uses the property partly as residence and partly for their business purposes, in this case how the Service Tax should be charged? only on the commercial portion or on total portion of the let out property?

Answer: What your agreement states if you have allowed for residential use then on the area you divide the rent but the agreement is only for office use then on entire amount the S.T is payable. You can contact our CA on ssunderagarwal@sify.com

Stuatation Two: We have given our one residential property to a company which the compny is uses as his guest house although there is no commercial use of the property and the company claims since the property is not used for commercial purposes so the service tax is not applicable to this property. our question is whether the claim of the company is correct or not?

Answer: Refer to your agreement for nature of uses it will be clear whether ST is applicable or not.If you have given for commercial uses then ST have to be paid by the company. In next bill you add ST and send the same to the company. If company fails to pay send a letter to excise (Service Tax) department for clarification with a copy to the company.You can contect our CA on ssunderagarwal@sify.com.

I will be thankful to you if you answer my following questions:

  • Is notification issued for charging Service Tax on rent on commercial properties ? If yes then please let me know from which date it is leviable.
Answer: This will be applicable from the date of President's assent. Presedent has already given his consent but if the rent for commercial property is less than 8 lacs per year it is not applicable. If the property is in joint name then make two separate agreements and charge rent accordingly if it is near about 15 to 16 lacs per year. You can contact our CA on ssunderagarwal@sify.com

See also

References



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