Business Daily from THE HINDU group of publications
Monday, Jul 16, 2007
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Business Daily from THE HINDU group of publications Monday, Jul 16, 2007 ePaper |
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Mentor
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Taxation Columns - At Your Service Management of assets
It is understood that management of assets is now a taxable service. What does asset management services imply? Who should provide this service? Aakash While banking and financial services are covered under Section 65(12) and provided by any person (being changed to commercial concern) by the Finance Bill, 2007, the taxable services in relation to carved out service of asset management includes asset management, portfolio management, and all forms of funds management. Thus, it will also include cash management, fund syndication, procurement, fund deployment and so on. Unlike banking services, such services should be provided by individuals only as banking company, financial institution, NBFC, body corporate or commercial concern have been specifically excluded. DO GOODS ALSO INCLUDE SOFTWARE? Finance Act, 2007 has amended the definition of `goods' in Finance Act, 1994 [Section 65(50)] to include software. Will it mean that earlier software was not legally considered as `goods', so as to levy service tax on maintenance or repairs of goods (software)? Ramesh G. The Finance Act, 2006 amended the definition of information technology to exclude repairs and maintenance of software from the definition implying that software was to be considered as goods for the purpose of levy of service tax for services in relation to maintenance or repairs based on Supreme Court's decision in Tata Consultancy Services. But the definition of goods as contained in Section 65(50) of Finance Act, 1994 was not amended as it was borrowed from the Sales of Goods Act, 1930. Now Finance Act, 2007 has once again provoked the service providers to gain from benefit of doubt as it has inserted an explanation in Section 64(64) which defines management, maintenance or repair services which reads thus: "For removal of doubts, it is hereby declared that for the purposes of this clause, `goods' include computer software." This will be effective from June 1, 2007, and, as such, it would imply that prior to this amendment, this was not the case and service providers could be benefited by this confusion or doubt as this doubt will be removed for prospective period and shall not apply retrospectively. However, it may be noted that this amendment is only clarificatory in nature and will not affect taxability of maintenance and repair from May 1, 2006. SANJIV AGARWAL Send in your queries to MentorAtYourService@gmail.com
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