India Tax & Regulatory

Indirect Tax Alert

IDTX/8/2011 26 April 2011 In this issue:

New Taxable Services Expansion/Amendments in existing services Others Contacts

The following amendments will be effective from 1 May 2011

New Taxable Services

Services by air-conditioned restaurants having license to serve liquor

The services will be brought within the purview of Service Tax w.e.f. 1 May, 2011. An abatement of 70% has been granted for the purpose of valuation of taxable service, subject to fulfilment of specified conditions. The services will qualify as export when provided in relation to immovable property located outside India. The services will qualify as provided from outside India and received in India when provided in relation to immovable property located in India.

Short-term accommodation in hotels, inns, clubs, guest houses, etc.

The services will be brought within the purview of Service Tax w.e.f. 1 May, 2011. An abatement of 50% has been granted for the purpose of valuation of taxable service, subject to fulfilment of specified conditions. An exemption from levy of whole of Service Tax has been provided when the declared tariff for providing of such accommodation including charges for all amenities provided in the unit of accommodation is less than

` 1000 per day. The services will qualify as export when provided in relation to immovable property located outside India. The services will qualify as provided from outside India and received in India when provided in relation to immovable property located in India.

Expansion/Amendments in Existing Services

The changes proposed in the Union Budget 2011 to the following categories of taxable services expanding/amending their scope will be effective from 1 May, 2011.

Services of Authorised Service Stations Life Insurance Services Commercial Training or Coaching Services. The following services provided by a Commercial Coaching or Training Centre will be exempted from levy of Service Tax Any preschool coaching and training; Any coaching or training leading to grant of a certificate or diploma or degree or any educational qualification which is recognized by any law for the time being in force;

Club or Association Services Support Services of Business or Commerce Legal Consultancy Services

Others
Exemption for Health Check-Up and Treatment Services The whole of Service Tax leviable on services in relation to heath check-up or preventive care or treatment, provided by a hospital, nursing home or multi-speciality clinic will be exempted from 1 May, 2011. Withdrawal of exemption for representational services. The exemption to the taxable services provided or to be provided by a practicing chartered accountant, a practicing cost accountant and a practicing company secretary, in his professional capacity, to a client, relating to representing the client before any statutory authority in the course of proceedings initiated under any law for the time being in force has been withdrawn w.e.f. 1 May, 2011 Amendment in relation to the computation of taxable value of Life Insurance Services Sub-Rule 7A of Rule 6 of Service Tax Rules, 1994 in relation to the computation of taxable value of Life Insurance Services has been substituted whereby the insurer shall have the option to pay tax on either: The gross premium charged from a policy holder reduced by the amount allocated for investment, or savings on behalf of policy holder, if such amount is intimated to the policy holder at the time of providing of service or; 1.5 per cent of the gross amount of premium charged from a policy holder in all other cases

Such option shall not be available in cases where the entire premium paid by the policy holder is only towards risk cover in life insurance. Source
1. Notification No. 29 to 37 of 2011-ST dated 25 April, 2011

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