Business Daily from THE HINDU group of publications
Monday, Jul 03, 2006
Business Daily from THE HINDU group of publications Monday, Jul 03, 2006 |
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Mentor
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Taxation Columns - At Your Service Converting voice into words
A US-based firm wants to take service of `conversion of voice messages into word documents' from India. The voice recorded will come to India and will be sent back to the US after typing on computer, I want to know whether conversion of voice messages into word documents will come under service tax? Sham Sunder Gupta Service tax on a new service termed "business support services" is being levied in terms of the amendments made through Finance Act, 2006 from May 1, 2006. "Support service of business or commerce" means, "services provided in relation to business or commerce and includes evaluation of prospective customers, telemarketing, processing of purchase orders and fulfilment services, information and tracking of delivery schedules, managing distribution and logistics, customer relationship management services, accounting and processing of transactions, operational assistance for marketing, formulation of customer service and pricing policies, infrastructural support services and other transaction processing. "`Infrastructural support services' include providing office along with office utilities, lounge, reception with competent personnel to handle messages, secretarial services, internet and telecom facilities, pantry and security." Therefore, the conversion of voice message into word documents for a US-based firm, will amount to a "support service of business" and, hence, such service will attract service tax. However, since the word document is sent back to US, it will be an export of service out of the country. As per Rule 4 of Export of Services Rules, 2005, such service which is exported will be exempt from of any tax subject to two conditions: a) such service is delivered outside India and used outside India; and b) payment of such service provided is received by the service provider in convertible foreign exchange.
The Rs 4-lakh threshold Does the basic exemption of Rs 4 lakh exist for persons providing taxable services for the financial year 2006-07? Sham Sunder Gupta Service tax Notification 6/2005 provides basic exemption of Rs 4 lakh. This notification refers to Rs 4 lakh value of taxable services in any financial year. Thus, the basic exemption continues to be available for the current financial year too.
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S. Murugappan
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