Highlights of Amendments in Service Tax (Determination of Value) Rules, 2006

Highlights of Amendments in Service Tax (Determination of Value) Rules, 2006

Vide notification no. 24/2012 ST dated 6-6-2012, CBEC has amended the provision relation to determination of value of Taxable Services in certain circumstances as follows:

Service Tax (Determination of Value) Rules, 2006 [As amended is available on http://www.taxmanagementindia.com]

Substitution of Rule 2A:- To prescribe

• First option to pay service tax on Value of services after deducting value of goods from the gross value.
• Second option to pay service tax at composite rate
  • Pay ST on 40% value of original work
  • Pay ST on 70% value of maintenance or repair or reconditioning or restoration or servicing of any goods
  • Pay ST on 60% value of all other works contract

Amendment to Rule 2B:- Reference to clause (zm) and (zzk) deleted, as not required after introduction of negative list.

Insertion of new Rule 2C:- To prescribe rate of composition in case of activity at a restaurant or as outdoor catering as:

• Pay ST on 40% value in case of Restaurant.
• Pay ST on 60% value in case of Outdoor Catering.

Amendment to Rule 3:- Relating to the provisions where value is not ascertainable.

Amendment to Rule 5:- Relating to Inclusion in or exclusion from value of certain expenditure or costs, reference to clause (zzzx) removed.

Amendment to Rule 6:- Cases in which the commission, costs, etc., will be included or excluded:

• amount realised as demurrage related to taxable services shall be included.
• interest on delayed payment shall be excluded.
• taxes levied by any Government on any passenger travelling by air shall be excluded.
• accidental damages due to unforeseen actions not relatable to the provision of service shall be excluded.
• subsidies and grants disbursed by the Government, not directly affecting the value of service shall be excluded.

Deletion of Rule 7:- This rule was to prescribe Actual consideration to be the value of taxable service provided from outside India.

Service Tax (Determination of Value) Rules, 2006 [As amended]

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Surender Gupta
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