BUDGET 2011 : SERVICE TAX

SERVICE TAX

Ø  Rate of Service Tax retained at 10% to create foundation for GST.

Ø  Service Tax Refund / Exemption to SEZ Units rationalized & clarified.

Ø  2 New services introduced

»        Services by air-conditioned restaurants having license to serve liquor; and

»        Short-term accommodation in hotels / inns / clubs / guest houses etc

Ø  Scope of following existing services expanded:

»        Authorized Service Station service: To cover all persons and all motor vehicles other than those meant for goods carriage or three wheeler auto rickshaw

»        Life Insurance Services: Services provided by Life Insurance Companies in the area of investment also brought within the ambit of Service Tax.

»        Commercial Training or Coaching Services: Scope expanded to include all coaching and training that is not recognized by law.

»        Club or Association Services: Services provided to non-members covered

»        Business Support Services: Scope expanded to include operational and administrative assistance of any kind.

»        Legal Consultancy Services: Services provided to individuals covered and representation services provided by any person to business entities covered under Service Tax net.

»        Health Services: Scope of health services expanded in respect of clinical establishment having central air-conditioning facility in any part of the establishment and more than 25 beds for in-patient treatment.

Ø  Point of Service Tax Rules, 2011 introduced to determine the point of time when the services shall be deemed to be provided to determine rate of Service Tax.

Ø  Individual and sole proprietors provided relief from Service Tax audit by Department subject to having turnover less than INR 60 lakhs.

Ø  Penal provisions rationalized to encourage voluntary compliance.