The Hindu Business Line : 7 new services under tax net from May 16

New Delhi, May 10 Come May 16, service tax will be applicable on information technology (IT), software services, investment management services under unit linked insurance plan (ULIP), internet telecommunication services and services provided by stock exchanges, commodity exchanges and clearing houses.

With the Finance Bill 2008 receiving Presidential assent here on Saturday, the Finance Ministry notified May 16 as the date from which service tax would be applicable on the seven new taxable services announced in Budget 2008-09.

Refund for exporters

The revenue department has also extended the scheme of refund of service tax paid by exporters to three additional services, taking the total number of services for which service tax refund is available to exporters to 19.

Exporters can now get service tax refund on purchase or sale of foreign currency by authorised dealers or foreign exchange brokers.

However, exporters have to produce evidence to show that the services utilised by them for purchase or sale of foreign currency is related to export of goods.

They can also get service tax refund on services provided in relation to supply of tangible goods, without transferring right of possession and effective control of the tangible goods.

optional scheme

The Finance Ministry has also now provided an optional scheme for payment of service tax on purchase or sale of foreign currency (including money changing), which will attract service tax from May 16.

“Where the consideration (commission) for the services provided in relation to purchase or sale of foreign currency is not explicitly indicated, the person liable to pay service tax has been given the option to pay service tax calculated at the rate of 0.25 per cent of the gross amount of currency exchanged,” the Finance Ministry said in a release here.

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