New Budget 2013 Service Tax changes

New Budget 2013 Service Tax changes 

THE rate of Service Tax (i.e. 12.36%) has been retained. However, changes are proposed by way of introduction of 2 new services in Negative List, withdrawal of Service tax exemption in certain cases, change in taxable value for high end flats, one time Amnesty scheme etc. In the following paragraphs we have made an attempt to capture these proposed changes.

CHANGES IN ABATEMENTS: (effective from I March 2013) Attention Real estate developers / builders; Al present taxable portion for service lax purpose is prescribed as 25% uniformly for constructions where value of land Ls included in the amount charged from the service recipient.

Going forward, in the case of'construction of complex, building or civil structure, or a part thereof, intended for sale to a buyer, wholly or partly except where the entire consideration is received after issuance of completion certificate by the competent authority", where the carpet area of residential unit is upto 2000 square feel or die amount charged is less than One Crore Rupees, the taxable portion for service tax purpose will I remain as 25 %. however, in all other cases taxable portion for service lax purpose will be 30%. Thus, the effective Service Tax would be increased from 3.09% (i.e. 12.36% * 25%) to 3.708% (i.e. 12.36% * 30%).

CONCLUSION: Last Budget saw mammoth changes in Service tax legislation (introduction of Negative List regime and related rules whereas the Finance Bill. 2013 doesn't trouble the Service Tax provisions much. Although many concerns of the industry pertaining to the Negative list. Point of Taxation Rules. 2011 and the Place of Provisions of Services Rules. 2012 are yet to be answered, the Budget 2013 conies as less complicated and is welcome.