New Approach: The approach of Service Tax has been proposed to be completely reversed from taxing only the services that were specifically stated as taxable services to a blanket provision which taxes all services other than those exempted. Furthermore, it also declares certain hybrid activities as services, which could not be ascertained to be services earlier and had resulted in years of inconclusive litigation. Therefore, all services will be chargeable to Service Tax unless specifically exempted by inclusion in the negative list‟ containing 17 heads of services. Sec. 66B, Finance Act, 1994: Section 66B states that there shall be levied a tax at the rate of twelve percent on the value of all services, other than those services specified in the negative list. The service tax will be levied at an increased rate of 12% instead of 10%. This might be beneficial, as a gradual increase in tax, keeping in mind that if GST comes into force in August, 2012 the proposed rate of service tax is 16%. Sec. 143(C)(44): As per this section "service" has been defined to mean any activity carried out by a person for another for consideration, and includes a declared service. "Declared services" have been inserted into the act to remove any ambiguity as to an element of service being involved in such activities. The Declared Services are as follows: (a) renting of immovable property; (b) construction of a complex, building, civil structure or a part thereof, (c) temporary transfer or permitting the use or enjoyment of any intellectual property right; (d) development, design, programming, customisation, adaptation, upgradation, enhancement, implementation of information technology software; (e) agreeing to the obligation to refrain from an act, or to tolerate an act or a situation, or to do an act; (f) transfer of goods by way of hiring, leasing, licensing or in any such manner without transfer of right to use such goods; (g) activities in relation to delivery of goods on hire purchase or any system of payment by installments; (h) service portion in the execution of a works contract; (i) service portion in an activity wherein goods, being food or any other article of human consumption or any drink (whether or not intoxicating) is supplied in any manner as a part of the activity. Negative List Sec. 66D: This new section provides a list of negative list‟ containing 17 heads of services. Therefore, all services...
Budget 2012: Highlights - Service Tax
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