Govt for 8% tax on 10 services from July

The government has also listed a large number of services which would be exempted from the tax net. The list of services which would not be taxed include services by call centres and medical transcription centres (which fall under business auxillary services). Vocational training, computer training and recreational training centres have also been exempted from the service tax. Mandap keeper’s services provided by religious centres would not be taxed. While these services have been exempted, coaching centres providing coaching for competitive, pre-engineering and pre-medical entrance tests would come under the tax net.

Coaching institutes providing training for typing and shorthand, TV or vehicle repair, tailoring, industrial training, foreign language, martial art, painting, dancing and others would also continue to enjoy the servicce tax exemption till February 29, 2004, the official release added.

Further, commercial training institutes, which offer coaching that leads to issuance of recognised certificates, diplomas and degrees would also be exempted. In the case of maintenance and repair services, the government has decided to exempt all contracts that were entered into before July 1, 2003. However, commission agents, which fall into the category of business auxillary services, would come under the service tax net.

The scope of service tax, which was limited to a few major ports, has been extended to cover all ports. Similarly, authorised automobile service for motorcars and two-wheelers were only taxed so far but the tax net would now also cover those services rendered to buses, trucks, cabs and others. Foreign exchange broking services of only corporates and non-bank finance companies were so far under the service tax. This has been extended to all forex brokers including money changers and forex dealers.

Provision were made in the Finance Act, 2003 to include seven new services under the tax net. The seven services which were included were commercial training & coaching centres, internet cafe, franchise services, technical testing & analysis, technical inspection and certification, maintenance and repair services, commissioning and installation and business auxillary services.

The date from which these sevices were to be taxed was notified on Friday by the finance ministry. Apart from these services, the finance ministry has expanded the scope of service tax under the three service heads of port service, authorised automobile service and foreign exchange broking service.