Budget 2012-2013 - Amendments in Service Tax (Determination of Value) Rules, 2006

Sr. No.

Particulars

Old Provisions

New Provisions

1.

Composition scheme in Works Contract

Works Contract (Composition Scheme for Payment of Service Tax) Rules, 2007

Merged into Rule 2A of Valuation Rules

Rate of Composition Tax on all works contract

4% upto 31-3-2012

4.8% w.e.f. 1-4-2012

Original work

Rate of tax 12% of 40%

Effective rate = 4.8%

Works contract where value of land is included –

Rate of Tax = 12% of 25%

Effective rate = 3.0%

Other works contracts including completion and finishing services –

Rate of Tax = 12% of 60%

Effective rate = 7.2%

2

Valuation method in works Contract

Rule 2A – Gross value minus of value of goods sold

No change

3

Supply of food and drinks in a restaurant or as outdoor catering

Determination of value of taxable - new Rule 2C

Not existing

However, exemption was granted through Exemption Notification no. 1/2006 ST dated 1.3.2006

Effective Rate w.e.f. 1.4.2012

New Valuation rule to determine the value of services involved.

Value of Service involved in the supply of food or any other article of human consumption or any drink:

Restaurant

12% of 30% = 3.6%

Restaurant

12% of 40% = 4.8%

Outdoor catering

12% of 50% = 6%

Outdoor catering

12% of 60% = 7.2%

4.

Manner of determination of Value – Rule 3- where value is not ascertainable

“where the consideration received is not wholly or partly consisting of money”- substituted

“where such value is not ascertainable” .

5.

Inclusion in or exclusion from value of certain expenditure or costs Rule 5- explanation to sub rule(1)

“services specified in sub-clause (zzzx) of clause (105) of section 65 of the Finance Act, 1994”,- substituted

“telecommunication service”

6.

Inclusion in Value - .Rule 6(1)

Not existing

new clause(x) inserted in Sub rule(1)

amount realised as demurrage or by any other name whatever called for the provision of a service beyond the period originally contracted or in any other manner relatable to the provision of service- included

7

Exclusion from value – Rule 6(2)

“interest on loans” -

interest on,-

(a) deposits; and

(b) delayed payment of any consideration for the provision of services or sale of goods;

Not exisitng

Accidental damages due to unforeseen actions not relatable to the provision of service.

8

Actual consideration to be the value of taxable service provided from outside India -Rule 7 omitted

Omitted