NEWS SECTION

Rate of Service Tax + Cess 12.36% w.e.f 01-04-2012

The rate of service tax is being restored to the statutory rate of 12% - and Notification No. 8/2009-ST dated February 24, 2009 reducing the rate to 10% has been rescinded effective April 1, 2012.

1) The rate of service tax is being increased from ten per cent. to twelve per cent.
2) Consequent to change in the rate of service tax, changes are also being made in specific and
compounding rates of tax for the following:
a) Service in relation to purchase and sale of foreign currency including money changing;
b) Service of promotion, marketing, organizing or in any manner assisting in organizing lottery;
c) Works contract service;

Proposed Negative List

The Finance Bill has proposed a list for those services, which may be kept outside the service tax net implying that all other services will be taxed.

 A Negative List approach to taxation of services is being introduced vide new sections, namely, 65B, 66B, 66C, 66D, 66E and 66F proposed in Chapter V of the Finance Act, 1994 (please refer clause 143 of the Finance Bill, 2012). The services specified in the ‘Negative List’ (section 66D) shall remain outside the tax net. All other services, except those specifically exempted by the exercise of powers under section 93(1) of the Finance Act, 1994, would thus be chargeable to service tax. Negative list approach to taxation of services shall come into effect from a date to be notified, after the Finance Bill, 2012 receives the assent of the President. For operationalizing the Negative List approach, a number of changes have been proposed in Chapter V of the Finance Act, 1994. Detailed information regarding these changes is being made available as a Guidance Paper, which will be placed in the public domain. The consequential changes in Service Tax Rules, 1994, Service Tax (Determination of Value) Rules, 2006 and Cenvat Credit Rules, 2004 also form part of this Guidance Paper. Provisions relating to positive list approach, namely, sections 65, 65A, 66, and 66A currently appearing in Chapter V of the Finance Act, 1994, will cease to operate from a date to be notified later, as and when the negative list approach begins to operate.