The charging section of the Finance Act, 1994, Section 66B provides that service tax should be levied on all services except the services which are specified in Section 66D of the said Act. As per Section 66D of the Financial Act, 1994, Negative list of Service Tax for 2013-14 is given here which is revised as per latest budget. There are currently 17 heads of Services which are given in the “negative list”. This Negative list of service tax is very important because every activity not covered under this list is chargeable to Service Tax. This list is also very useful in CA IPCC Paper 4 Taxation also.
Negative List of Service Tax
Some updates in the negative list of service tax keeps coming and we keep adding it here. For whole negative list scroll down.
LATEST UPDATES: August 2014:
Changes in Negative List from 01.10.2014
* Notification No. 18/2014 & 19/2014-Service Tax dated 25th August’ 2014
* Effective date of amendment—1st Oct’14
Services Provided by Radio Taxis:
- Earlier, radio taxis were excluded from the purview of service tax by virtue of section 66D(o)(vi) of Finance Act,1994;
- However, in the Finance (No.2) Act, 2014, enacted on 6th August, 2014, the said section was amended & the “radio taxis” got deleted, resulting in levy of service tax thereupon. However, effective date wasn’t notified. Now, the same has been notified as 1stOctober,2014;
- At the same time, abatement of 40% shall be allowed in such cases, as provided in entry no. 9/9A of N/N 26/2012-ST, amended by N/N 08/2014- ST, subject to the condition that no CENVAT is claimed.
- Hence, effective rate of service tax shall be 4.944%.
SERVICES BY WAY OF ADVERTISEMENT:
- As per the erstwhile provisions contained in section 66D(g) of Finance Act, 1994, sale of space for advertisement, other than radio & television, used to remain excluded from the levy of service tax.
- In the Finance (no. 2) Act, 2014, all advertisements, other than in print media, were made subject to service tax, though effective date of applicability of amended provisions, was not defined.
- Now, the same has been notified as 1st October, 2014.
DETERMINATION OF RATE OF EXCHANGE:
- From 28-May-2012, section 67A was inserted to determine the rate of exchange to be opted for the purpose of determination of value of the taxable service & such rate was construed to be the rates notified by CBEC from time to time, in accordance with section 14 of Customs Act,1962.
- This had led to various practical difficulties in the industry, since they had to separately maintain a track record as per CBEC rates for the purpose of valuing import or export of service, while in financial statements the rates were taken on a different basis(e.g. RBI rates, [email protected] TT buying/selling rate, etc.)
- Now, w.e.f. 1st October, 2014, rule 10 has been inserted in Service Tax Rules, 1994 to consider the rate of exchange as per GAAP on the date when Point of taxation arises in terms of the Point of Taxation Rules, 2011.
- Post this amendment, an ambiguity may arise as to whether the same rates may also be used for valuing export of services, or department may take the other view?
Updated on 16/06/2013.
Negative List of Service Tax 2013-14
Negative list of Service Tax is comprised of following 17 heads. I have given all the 17 heads of negative list of Service Tax below.
- Services by Government or a local authority excluding the following services to the extent they are not covered elsewhere:
- services by the Department of Posts by way of speed post, express parcel post, life insurance, and agency services provided to a person other than Government;
- services in relation to an aircraft or a vessel, inside or outside the precincts of a port or an airport;
- transport of goods or passengers; or
- Support services, other than services covered under clauses (i) to (iii) above, provided to business entities.
- Services by the Reserve [email protected] of India;
- Services by a foreign diplomatic mission located in India.
- Services relating to agriculture or agricultural produce by way of –
- agricultural operations directly related to production of any agricultural produce including cultivation, harvesting, threshing, plant protection or seed testing;
- supply of farm labour;
- processes carried out at an agricultural farm including tending, pruning, cutting, harvesting, drying, cleaning, trimming, sun drying, fumigating, curing, sorting, grading, cooling or bulk packaging and such like operations which do not alter essential characteristics of agricultural produce but make it only marketable for the primary market;
- renting or leasing of agro machinery or vacant land with or without a structure incidental to its use;
- loading, unloading, packing, storage or warehousing of agricultural produce;
- agricultural extension services;
- Services by any Agricultural Produce Marketing Committee or Board or services provided by a commission agent for sale or purchase of agricultural produce.
- Trading of goods.
- Any process amounting to manufacture or production of goods.
- Selling of space or time slots for advertisements other than advertisements broadcast by radio or television.
- Service by way of access to a road or a bridge on payment of toll charges.
- Betting, gambling or lottery.
- Admission to entertainment events or access to amusement facilities.
- Transmission or distribution of electricity by an electricity transmission or distribution utility.
- Services by way of –
- Pre-school education and education up to higher secondary school or equivalent;
- Education as a part of a curriculum for obtaining a qualification recognized by law;
- Education as a part of an approved vocational education course.
- Services by way of renting of residential dwelling for use as residence;
- Services by way of –
- extending deposits, loans or advances in so far as the consideration is represented by way of interest or discount;
- Service of transportation of passengers, with or without accompanied belongings, by –
- a stage carriage;
- railways in a class other than – (A) first class; or
(B) an air conditioned coach;
- metro, monorail or tramway;
- inland waterways;
- public transport, other than predominantly for tourism purpose, in a vessel between
- places located in India; and
- metered cabs, radio taxis or auto rickshaws;
- Services by way of transportation of goods –
by road except the services of –
- a goods transportation agency; or
- a courier agency;
- by an aircraft or a vessel from a place outside India up to the customs station of clearance in India; or
- by inland waterways;
17. Funeral, burial, crematorium or mortuary services including transportation of the deceased.
2 extra services included in Negative list
Two more services have been included in the negative list for service tax. These are:
Vocational courses offered by institutes affiliated to the State Council of Vocational Training; and, testing activities in relation to agriculture and agricultural produce.
The Finance Minister has also accepted the request of the Film Industry that full exemption of service tax granted on copy right on cinematography be limited to the films exhibited in cinema halls only.
All air conditioned restaurants will be brought under the service tax net. At present service tax does not apply to those air conditioned restaurants which do not serve liquor. But considering this distinction to be artificial, P. Chidambaram has proposed the uniformity of service tax for the two.
The rate of abatement for such homes and Flats which have a carpet area of 2000 sq. ft. or more; or have a value of Rs. 1 crore or more, has been reduced from 75% to 70%. However, low cost housing and single residential units will continue to enjoy existing exemptions from service tax.
That’s all in the list of Negative Services for 2013-14.
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