Our Bureau

New Delhi, April 25

The Government has specified May 1 as the date from which service tax would be applicable on the 15 new services that were brought under this tax net in Budget 2006-07.

The Budget 2006-07 had stated that service tax would be applicable on the 15 new services from a date to be notified by the Centre, after the enactment of the Finance Bill 2006. The President, Mr A.P.J. Abdul Kalam, has given his assent to the Finance Act 2006 on April 18.

The new services made taxable include services provided by share transfer agents and registrar to issues, recovery agents, maintenance and management of Automatic Teller Machines, sale of advertising space or time (except for print media), sponsorship of events by companies (except for sports), public relations management services, ship management services, international air travel (excluding economy class), rail container handling services (excluding haulage charges), cruise ship travel, Internet telephony services, business support services and credit card, debit card and other payment card-related services.

Rate for air travel agents

Meanwhile, the Finance Ministry has also increased the rate at which air travel agents opt to pay service tax. This has been done in the wake of increase in the general rate of service tax from 10 per cent to 12 per cent. Consequent to this increase, air travel agents now have the option to pay service tax at the rate of 0.6 per cent (earlier 0.5 per cent) in the case of domestic bookings and 1.2 per cent (earlier 1 per cent) in the case of international bookings with effect from May 1.

In the case of goods transported in containers by rail, the Finance Ministry has prescribed 70 per cent abatement on the gross amount charged for transport of goods.

The abatement is being given to ensure that service tax is not levied on the freight amount paid to railways for transport of goods in containers. Consequently, service tax would be chargeable only on 30 per cent of the gross amount charged for transport of goods in containers by rail.

Services provided in relation to transport of goods in containers by rail attract tax with effect from May 1.

(This article was published in the Business Line print edition dated April 26, 2006)
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