BUSINESS SUPPORT SERVICE
Date of Introduction: 01.05.2006 vide Notification No.15/2006 dated 25.04.2006
Definitions:
“support services 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. Explanation.—For the purposes of this clause, the expression “infrastructural support services” includes providing office along with office utilities, lounge, reception with competent personnel to handle messages, secretarial services, internet and telecom facilities, pantry and security; (section 65(104c) of the Finance Act, 1994)
“taxable service” means any service provided or to be provided to any person, by any other person, in relation to support services of business or commerce, in any manner; (section 65(105)(zzzq) of the Finance Act, 1994) Value of Taxable Service: The value of taxable service shall be the gross amount charged by the service provider for providing such service and the money value of any other consideration ( if any) received for providing such service. The value of taxable service shall be determined as per the provisions made under section 67 of the Finance Act, read with Service Tax (Determination of Value ) Rules, 2006
Who is responsible to pay Service Tax:
The service
provider is responsible to pay service tax. However, in cases, where the
provider of taxable service is located
outside
India and the recipient of service is located
in
India, the recipient of service is responsible for payment of service tax. The
responsibility to pay service tax under such situations is determined by the
provisions made under section 66A of the Finance Act, 1994, read with Taxation
of Services (Provided from outside India and received in India) Rules, 2006
Scope of Service:
Business entities outsource a
number of services for use in business or commerce. These services include
transaction processing, routine administration or accountancy, customer
relationship management and tele-marketing. There are also business entities
which provide infrastructural support such as providing instant offices along
with secretarial assistance known as “Business Centre Services”. It is proposed
to tax all such outsourced services. If these services are provided on behalf of
a person, they are already taxed under Business Auxiliary Service. Definition of
support services of business or commerce gives indicative list of outsourced
services
(Ref:
Joint Secretary (TRU)’s letter D.O.F.No. 334/4/2006-TRU dated 28.02.2006)
General Exemptions:
|
Sr.No. |
Notification No. |
Nature of exemption |
|
1 |
16/2002 |
Services provided to United nations or any International Organisation |
|
2 |
12/2003 |
Exemption to value of goods and material sold during the course of providing taxable service, subject to conditions laid down in the notification. |
|
3 |
4/2004 |
Service provided to a developer of Special Economic Zone or Unit located in SEZ |
|
4 |
6/2005 |
Exemption from service tax for taxable services upto gross value of Rs. 4 lakhs, in case of service providers whose gross turnover for the preceding financial year was less than Rs. 4 lakhs ( w.e.f 01.04.2005) |
Economic Zone or Unit located in SEZ
Exemption from service tax for taxable services 6/2005 upto gross value of Rs. 4
lakhs, in case of service providers whose gross turnover for the preceding
financial year was less than Rs. 4 lakhs ( w.e.f 01.04.2005)
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