Financial Daily from THE HINDU group of publications
Thursday, Mar 16, 2006
Financial Daily from THE HINDU group of publications Thursday, Mar 16, 2006 |
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Industry & Economy
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Taxation Govt advances last date for service imports tax feedback K.R. Srivats
New Delhi , March 15 Service recipients will have to act fast if their views are to be factored in by the Revenue Department in the formulation of the proposed new rules on levy of tax on service imports. With Parliament expected to pass the Finance Bill 2006 by March 22 itself, the Finance Ministry has decided to hasten the process of finalising the new rules for levy of service tax on taxable services provided from outside India to recipients in the country.
New PROVISION
The Revenue Department now wants all feedback on the draft rules issued for this purpose and also on valuation of services to be submitted to it by March 17, against the earlier specified last date of March 31. Services imports into the country already attract service tax. To provide more clarity and certainty to the provisions governing levy of service tax on services imports, Budget 2006-07 has proposed introduction of a new provision that seeks to levy service tax under "reverse charge" method on taxable services provided from outside India to recipients in India.
Reverse charge
Under the reverse charge method, service tax is collected from the recipient of a service rather than the provider of service. The new rules are to be notified at the same time when the Finance Bill 2006 becomes law. A senior Finance Ministry official said that one of the important benefits of levy of service tax on services imports is the "level playing field" it would give for domestic service providers. The official also said that there is no readily available data on the actual value of taxable services imported into the country.
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