New Service Tax Law w.e.f 01.07.2012

New Service Tax Law w.e.f. 01-07-2012

The Key Features of New System of Taxation are:

1. At the outset ‘service’ has been defined in clause (44) of section 65B of the Finance Act 2012.
2. Section 66B specifies the charge of service tax which is essentially that service tax shall be levied on all services provided or agreed to be provided in a taxable territory, other than services specified in the negative list.
3. The negative list of services is contained in section 66D of the Act.
4. Since provision of service in the taxable territory is an important ingredient of taxability, section 66C empowers the Central Government to make rules for determination of place of provision of service. Under these provisions the Place of Provision of Services Rules, 2012 have been made.
5. To remove some ambiguities certain activities have been specifically defined by description as services and are referred as Declared Services (listed in section 66E)
6. In addition to the services specified in the negative list, certain exemptions have been given. Most of the exemption has been consolidated in a single mega exemption for ease of reference.
7. Principles have been laid down in section 66F of the Act for interpretations wherever services have to be treated differently for any reason and also for determining the taxability of bundled services.
8. The System of valuation of services for levy of service tax and of availment and utilization of Cenvat Credits essentially remains the same with only incidental changes required for the new system of taxation.

WHAT IS SERVICE?

‘Service’ has been defined in clause (44) of the new section 65B and means –

Ø  Any activity

Ø  For consideration

Ø  Carried out by a person for another

Ø  And includes a declared service.

‘Service’ does not include-

Ø  Any activity that constitutes only a transfer in title of (i) goods or (ii) immovable properly by way of sale, gift or in any other manner (iii) a transfer, delivery or supply of goods which is deemed to be a sale of goods within the meaning of clause (29A) of Article 366 of the Constitution.

Ø  A transaction only in (i) money or (ii) actionable claim

Ø  A service provided by an employee to an employer in the course of the employment.

Ø  A service provided by an employee to an employer in the course of the employment.

Ø  Fees payable to a court or a tribunal set up under a law for the time being in force.

Check List to determine whether you are providing a “Service”

S. No.	Question	Answer
1.	Am I doing an activity (including, but not limited to, an activity specified in section 65E of the Act) for another person?	YES
2.	Am I doing such activity for a consideration?	YES
3.	Does this activity consist only of transfer of title in goods or immovable property by way of sale, gift or in any other manner?	NO
4.	Does this activity constitute only transfer, delivery or supply of goods which is deemed to be a sale of goods within the meaning of clause (29A) of Article 366 of the Constitution?	NO
5.	Does this activity consist only of a transaction in money or actionable claim?	NO
6.	Is the consideration for the activity in the nature of a service provided by an employee of such person in the course of employment?	NO
7.	Is such an activity in the nature of a service provided by an employee of such person in the course of employment?	NO
8.	Is the activity covered in any of the categories specified in Explanation 1 or Explanation 2 to clause (44) of section 65B of the Act.	NO

NOTE: If the answer to above questions is as per the answers indicated in ‘Answer’ column of the table above then YOU ARE PROVIDING A SERVICE.

Check List to determine whether service provided by you is “Taxable Service”:

S. No.	Question	Answer
1.	Have I provided or have I agreed to provide the service?	YES
2.	Have I provided or agreed to provide the service in the taxable territory?	YES
3.	Is this activity entirely covered in any of the services described in the negative list of services specified in section 66D of the Act?	NO

NOTE: If the answer to above questions is as per the answers indicated in ‘Answer’ column of the table above then YOU ARE PROVIDING A TAXABLE SERVICE.

source : Taxman's Service Tax  Book

Employees' Deposit Linked Insurance Scheme

EMPLOYEES’ BENEFIT SCHEMES - PART-3/3

Among various employees’ benefit schemes, Employees Provident Fund, Pension Fund and Deposit Linked Insurance Schemes are recognized as effective tools for making adequate financial provision to the employees in two contingencies Premature Death, while in service and Compulsory Retirement. The Employees’ Provident Fund and Miscellaneous Provisions Act, 1952 (hereinafter called the Act), which is umbrella legislation and ensures social security measures for the betterment of employees of the organized sector.

EMPLOYEES’ DEPOSIT LINKED INSURANCE SCHEME

Employees’ Deposit Insurance Scheme, 1976 (in short EDLI Scheme) is in the nature of an insurance scheme and is applicable to all establishments to whom Provident Fund and Miscellaneous Provisions Act, 1952 is applicable. The amount of insurance benefit is equal to the average balance in account of the deceased member in the Provident Fund during the last 12 months before his death, or during the period of membership, whichever is less. The benefit will be in accordance with age of the member and the contribution made by the employer on behalf of the deceased member, subject to ceiling of Rs. 1, 30,000. The amount is payable to the nominee of the member in the form of deposit in his/her saving bank account. 

ADMINISTRATION

The Central Board of Trustee constituted under the Provident Fund Scheme, 1952 is responsible for the administration of the EDLI Scheme. Since the Government has a financial stake in the Scheme and contributes towards the administration cost of the Scheme, it takes keen interest and monitors the administration of Scheme to see that the same is administered in an efficacious manner. The Regional PF Commissioners are responsible for speedy settlement of claims received by them.

MEMBERSHIP

The Scheme applies to all employees who-

i)             Are covered by the EPF Scheme, 1952 and

ii)            Would have been covered by the said scheme but for paragraph 27 of the Employees’ Provident Fund Scheme or the exemption granted to the establishment in which he is employed under Section 17 the Act.

CONTRIBUTIONS

a)   Contribution by Employer:

                      i.        At the rate of 0.50% of wage bill towards insurance premium.

                     ii.        One-fourth of the insurance premium towards administration of the Scheme.

b)   Contribution by the Central Government:

          The Central Government shall contribute towards the expenses, a sum equivalent to one-half of the contribution made by the employer.

The contribution of employer and the Central Government shall be credited by the respective Regional Provident Fund Commissioners to an account called the ‘Deposit Linked Insurance Account’ and all expenses to the cost of any benefit provided by the Scheme be met out of this account. The monies belonging to this account shall be invested in a manner prescribed in the rules relating to the Scheme.

EXEMPTION

Under Section 17 (2A) of the Act, an employer may seek exemption from making contribution to EDLI Scheme, if he/she provides the better insurance benefits to his/her employees than those provided by the Scheme. For this purpose, he/she may submit application to the Central Government seeking exemption from contributing to EDLI. The Central Government, after being satisfied that the Scheme of insurance offered by the employer is better than EDLI Scheme, may grant exemption. After obtaining exemption, the employer may resort to the alternative scheme in lieu of EDLI Scheme. Almost all insurance companies offer better group insurance schemes in lieu of EDLI Scheme.

Source: Student Company Secretary