SERVICE TAX

By according ascent to the Finance bill 2003 the President of India has sanctioned the increase in the rate of Service Tax leviable in respect of existing services from 5% to 8% w.e.f. 14th May 2003. Following are some of the highlights of the Bill that we publish here for the information of our readers.

AIR TRAVEL :

The rate of service tax payable by air travel agents on optional basis has been revised to 0.4 % of the basic fare in the case of domestic bookings and 0.8% of the basic fare in the case of International bookings. This is worth noting for the crew & units planning shootings which require a lot of travel.

Levy of service tax on certain new services :

Following services has been brought into the Service Tax net by the Finance Bill 2003 :
1. Authorised Service Stations
2. Post services
3. Banking and Financial Services (Foreign Exchange Broker Services)
4. Business Auxiliary Services
5. Maintenance or Repair Services
6. Franchise Services
7. Internet Café
8. Commissioning & Installation Services
9. Commercial Vocational Institutes, Coaching Centres & Private Tutorials.
10. Technical Testing & Analysis
11. Technical Inspection & Certification

PROCEDURAL CHANGES :
Significant changes have been brought about in the service tax Credit Rules 2002 as regards admissibility as well as procedure for availing of credit of service tax paid on “Input Services” for discharging service tax liability on the “Output Services” as compared to the existing provisions regarding admissibility of credit of service tax in respect of input services following in the same category of taxable services as that of output services.

The Output service shall be allowed to take any credit only after he makes payment against the bill and the input service provider. The output service provider shall maintain separate accounts in respect of the input service availed by him and utilized in rendering of taxable as well as exempted / non-taxable service.
RETROSPECTIVE AMENDMENT:
In case of users of services of Clearing and Forwarding Agents certain provisions have been inserted relating to services provided during the period from 16/11/97 to 2/6/98. The distributors and exhibitors might like to look into these provisions.

PAN Number:
Service Tax assesses who have not applied for PAN based STC Code number for the reason that they have not yet been issued PAN Number by the Income Tax Department are required to approach the Service Tax office along with the prescribed form (Annex II as they call it) for the issue of temporary 15 digit code number. It will also enable the Service Tax Officials to take up the matter separately with the IT Dept. for expeditious issue of the PAN number.

E-FILLING OF SERVICE TAX RETURNS :
The Central Board of Excise and Customs claims to be ready to facilitate electronic filing of S T -3 returns of Service Tax. Initially the facility has been extended only with respect to the following services :
1. Telegraph Services
2. Telephones
3. Life Insurance Services
4. Insurance Auxiliary Services
5. General Insurance business
6. Stock Brokers
7. Advertising Agencies
8. Courier Services
9. Banking & Financial Industry
10. Custom House Agents

Although there are certain conditions to E-filling of the service tax return but initial phase of Electronic Filing is optional. Based on the experience & response the guidelines will be revised by the board to bring more assessees under the scheme.

For any further clarifications the readers are advised to contact :

The Office of the Commissioner of Central Excise :
Mumbai – I
New Central Excise building,
115 Maharshi Karve Rd,
Opp. Churchgate Rly. Station,
Mumbai 400 020.