Relevant changes made in the Service Tax law by the Budget 2012

From 1^st July 2012 Service Tax Law has been amended and various new provision have been inculcated in the Law.

Below are the relevant amendments:

Reverse Charge:

Before 1^st July 2012 reverse charge concept was applicable only in case of Services received from outside India. Under reverse charge the liability of Service Tax shifts from the Service provider to the Service receiver.

After 1^st July 2012 it has been introduced under certain services provided by domestic service providers also.

The services covered under reverse charge are:

1.       Service provided or agreed to be provided by a good transport agency in respect of transportation of goods by road.

2.       Service provided or agreed to be provided by way of sponsorship to any body corporate or partnership form located in taxable territory.

3.       Service provided by –

-          An arbitral tribunal

-          An individual advocate or a firm of advocates by way of support services

-          Government or local authority by way of support services excluding renting of immovable property.

4.       Service by way of renting of a motor vehicle to carry passengers by any service provider who is either an individual/HUF/partnership firm/AOP.

5.       Service by way of supply of manpower for any purpose by any service provider who is either an individual/HUF/partnership firm/AOP.

6.       Work contract service provided by any service provider who is either an individual/HUF/partnership firm/AOP.

7.       Service provided by any service provider located in J&K.

8.       Service provided by an insurance agent to any person carrying on insurance business.

In all the above cases the Service tax needs to be paid on the basis of reverse charge. The government has also notified the percentage of the service tax liability that needs to be discharged by the service receiver in all the above cases

As per the new law certain services in relation to the agriculture or agriculture produce has been exempted from levy of Service Tax. The same are mentioned below:

-          Seed Testing

Apart from above another major change is that the payment of Service Tax shall not be made under different Accounting codes. Now there is just one code for all services and separate codes for Education Cess and SHEC. Please go through the attached circular for the Payment codes.

Please take note of the above amendments and take necessary actions to incorporate the same the accounts function.