Declared Services for the purpose of Levy of Service Tax

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Service Tax is levied in India on almost all types of Services (except the Negative List of Services). However, there are certain activities which are difficult to determine that whether such activities would be classified as a Service or not.

Therefore, the Govt. while introducing the Negative List of Services has specifically mentioned that Service Tax would be levied on all Declared Services as well. Declared Services are those activities which were earlier difficult to determine as Services but would now be deemed as Services and therefore Service Tax would be levied on these Services.

Activities classified as Declared Service

Section 66E lays down the Activities which have been specifically classified as Declared Services and therefore Service Tax would be levied on them.

The following 9 Activities have been classified as a Declared Service under Section 66E:-

  1. Renting of Immovable Property

Renting of Immovable Property has been specifically classified as a Declared Service and therefore Service Tax would now be levied on the Renting of Immovable Property.

However, the following types of Renting of Immovable Property have been specifically exempted from the levy of Service Tax. All types of Renting of immovable property except the following would be chargeable to Service Tax.

Types of Activities of Renting of Immovable Property which are exempted:-

  1. Renting of Vacant Land with or without a Structure incidental to its use, relating to Agriculture
  2. Renting of Residential Dwelling for use as Residence.
  3. Renting out of Property by the Reserve Bank of India
  4. Renting out of Property by a Govt or Local Authority to a non-business entity.

There are certain exemptions as well which are available in respect of renting of immovable properties which are as follows:-

  1. Renting of precincts of Religious Place meant for General Place.
  2. Renting of Hotel, Inn, Guest House, Club, Campsite or other Commercial Places meant for Residence or Lodging purposes, having declared tariff of a room below Rs. 1000 per day or equivalent.
  3. Renting to an exempt Educational Institution

Renting of all other types of Immovable Property would be chargeable to Service Tax.

  1. Service Tax on Under-Construction Building

Under Construction Building sold before the issuance of Certificate of Completion would be liable to Service Tax.

However, Service Tax would not be levied on the whole amount received as a Abatement is allowed and therefore the effective rate of Service Tax decreases.

  1. Temporary Transfer of any Intellectual Property Right

The term – “Intellectual Property Right” has not been defined anywhere in the Act. The phrase Intellectual Property Right is to be understood as in the Normal Trade Parlance as per which the Intellectual Property Right includes the following:-

  • Copyright
  • Patents
  • Trademarks
  • Designs
  • Any other similar right to an intangible property
  1. Development, Design, Programming, Customisation, Adaptation, Up gradation, Enhancement, Implementation of Information Technology Software.
  2. Activities in relation to delivery of goods on Hire Purchase or any other system of Payment by Instalments.
  3. Transfer of Goods by way of Hiring, Leasing, Licensing or any such manner without transfer of right to use such goods.
  4. Agreeing to the obligation to refrain from an act, or to tolerate an act or a situation, or to do an act.
  5. Service Portion in execution of a Works Contract
  6. Service Portion in an Activity wherein Goods, being food or any other article of human consumption or any drink (whether or not intoxicating) is supplied in any manner as part of the Activity.

A Personal Finance enthusiast, Karan is the founder of charteredclub.com and loves to discuss about Money related matters.