13 June 2012

Highlights of Amendments in Service Tax (Determination of Value) Rules, 2006

Highlights of Amendments in Service Tax (Determination of Value) Rules, 2006

Vide notification no. 24/2012 ST dated 6-6-2012, CBEC has amended the provision relation to determination of value of Taxable Services in certain circumstances as follows:
Substitution of Rule 2A:- To prescribe
  • First option to pay service tax on Value of services after deducting value of goods from the gross value.
  • Second option to pay service tax at composite rate
    • Pay ST on 40% value of original work
    • Pay ST on 70% value of maintenance or repair or reconditioning or restoration or servicing of any goods
    • Pay ST on 60% value of all other works contract
Amendment to Rule 2B:- Reference to clause (zm) and (zzk) deleted, as not required after introduction of negative list.
Insertion of new Rule 2C:- To prescribe rate of composition in case of activity at a restaurant or as outdoor catering as:
  • Pay ST on 40% value in case of Restaurant.
  • Pay ST on 60% value in case of Outdoor Catering.
Amendment to Rule 3:- Relating to the provisions where value is not ascertainable.
Amendment to Rule 5:- Relating to Inclusion in or exclusion from value of certain expenditure or costs, reference to clause (zzzx) removed.
Amendment to Rule 6:- Cases in which the commission, costs, etc., will be included or excluded:
  • amount realised as demurrage related to taxable services shall be included.
  • interest on delayed payment shall be excluded.
  • taxes levied by any Government on any passenger travelling by air shall be excluded.
  • accidental damages due to unforeseen actions not relatable to the provision of service shall be excluded.
  • subsidies and grants disbursed by the Government, not directly affecting the value of service shall be excluded.
Deletion of Rule 7:- This rule was to prescribe Actual consideration to be the value of taxable service provided from outside India.

About the Author: -
Surender Gupta
313, Chanakya Complex b-10, subhash chowk Laxmi nagar - Vikas Marg Delhi - 110092 India

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