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Name of Service

Service Provider

Service Receiver who deposits service tax

Insurance Agent Service

Insurance Agent

(Insurance Company)

Any person carrying on Insurance business

 

Recovery Agent Service

Recovery

Agent

Banking

co./Financial

inst./NBFC

Mutual Fund Agent Service

(AMENDMENT

From 1.4.15)

Mutual Fund Agent/Distributor Service

Mutual fund/ Asset management company

 

Lottery ticket Selling service

(AMENDMENT

From 1.4.15)

 

Lottery agent

Lottery Distributor

Or

Selling AGENT

Director Service

Director

Body corporate

Service provided from non taxable territory

(Import and Services from J&k to outside J&k)

Foreign Party

Or

Service Provider in J&K

Any person in taxable territory

(Any person within INDIA)

Legal Service

Individual Advocate

Or

Firm of Advocate

Or

Arbitrary tribunal

Any business entity

Having turnover

>10 lacs in last financial year

Goods transport agency’s services:

Transport Company

Factory

(registered under or governed by the Factories Act, 1948.)

Society

 

Cooperative Society

 

Dealer Registered under Excise(First Stage dealer/Second Stage Dealer)

 

Body Corporate

 

Partnership firm (whether registered or not)

 

(There is 70% abatement also)

Manpower Service

(Security guard/labor/placement agency)

Individual

HUF

Partnership firm

AOP

Body Corporate

Aggregator Service

Effective from 01.03.2015)

Cab operator

Aggregator Company

(Like Uber)

Renting of Motor Vehicle

Individual

HUF

Partnership firm

AOP

Body Corporate

(There is 60% Abatement also)

Sponsorship Service

Any person

Body Corporate

Or

Partnership firm

Support of Services

Except

Certain services covered in negative list like

·         services by the Department of Posts by way of speed post, express parcel post, life insurance and agency services

 

·         services in relation to an aircraft or a vessel, inside or outside the precincts of a port or an airport

 

·         transport of goods or passengers

(AMENDMENT

Date to be Notified)

Government

Or

Local Authority

Any business entity

Lottery Ticket

Lottery Agent

Lottery distributor

 

Exam Questions

Question 5
Vakil & Vakil, a firm of lawyers rendered legal advice to Mr. B, an architect, and MNO Ltd., an
advertising agency during October, 20XX. Both Mr. B and MNO Ltd. are not entitled for small
service providers’ exemption in the said financial year. Who is liable to pay service tax in this
case? Will your answer be different if Mr. B and MNO Ltd. sought legal advice from Mr. A, a
lawyer?

-a-

In case of taxable services provided or agreed to be provided to any business entity located in
the taxable territory by an individual advocate or a firm of advocates by way of legal services,
person liable to pay service tax is the person receiving such service.
Further, services provided by an individual advocate or a partnership firm of advocates by way
of legal services to inter alia a business entity with a turnover up to ` 10 lakh in the preceding
financial year are exempt from service tax.
In the given case, turnover of services of both Mr. B and MNO Ltd. would have been more
than ` 10 lakh in the preceding financial year as they are not entitled to small service
providers’ exemption in the said financial year and hence, legal services provided by Vakil and
Vakil (firm of advocates) or Mr. A (individual lawyer) during October, 20XX will not be exempt
from service tax.
Therefore, service tax will be payable by service receivers, Mr. B and MNO Ltd. irrespective of
whether the legal advice is sought from Vakil and Vakil, a firm of lawyers or from Mr. A, an
individual lawyer.
-ea-

Question 6
Answer the following questions:

(ii) PQR Ltd., a manufacturing company, hires a cab from Mr. M, who is engaged in the
business of renting of motor cabs. Value of services provided by Mr. M is ` 2,500 and
service tax payable thereon is ` 140. Who is liable to pay service tax in this case?
Note: PQR Ltd and Mr. M are located in New Delhi and wherever applicable, service tax
is charged separately.

-a-

(ii) In case of renting of motor cabs, abatement of 60% is available from gross amount
charged on fulfillment of certain conditions. In other words, effective rate of service tax in
case of renting of motor cabs provided on abated value is 5.6% [14% of 40%]. Since in
the given case service tax payable is 5.6% of the value of taxable service
[(Rs. 140 / Rs. 2500) x 100 = 5.6%], service tax is payable on abated value.
In case of taxable services provided by way of renting of a motor vehicle designed to
carry passengers on abated value to any person who is not engaged in the similar line of
business by any individual/HUF/partnership firm (whether registered or not) including
association of persons, located in the taxable territory to a business entity registered as
body corporate, located in the taxable territory; entire service tax is liable to be paid by
service receiver.
Since in the given case, renting of motor cab service is provided to a company
(PQR Ltd.), reverse charge provisions will apply and entire service tax will be payable by
service receiver (PQR Ltd.). Thus, service tax of Rs. 140 (5.6% of Rs. 2,500) is liable to be
paid by PQR Ltd.

-ea-

  1. Indirect Tax
  2. Amendments Indirect Tax for November 2016 Exams
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CA Maninder Singh
CA Maninder Singh is a Chartered Accountant for the past 6 years. He provides courses for Practical Accounts, Taxation and Efiling at teachoo.com .
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