Valuation of Service for Service Tax

Export of Services Rules, 2005 have been amended vide Notification No. 13/2006-ST dated 19-4-2006.

The amended rules along with the classification of new taxable services are reproduced below in a tabulated format.

1. Export of Services Rules, 2005

Export of taxable service.—  The export of taxable service shall mean,—

1. In relation to taxable services specified hereunder such taxable services as are provided in relation to an immovable property which is situated outside India;

Section 65	Services	Section 65	Services
p	Architect (Arch)	zzq	Construction Service
q	Interior Decorator	v	Real Estate Agent
d	General Insurance Business in relation to immovable property	zzza	Site formation and clearance…services
zzzb	Dredging services	zzzc	Survey and map making services in relation to immovable property
zzzh	Construction of complex	zzzr	Auction of property (immovable)

Provided that for the purposes of this sub-rule, any taxable services provided shall be treated as export of services only if-

1. Such service is delivered outside India and used outside India; and

2. Payment for such service provided is received by the service provider in convertible foreign exchange.

2. In relation to taxable services specified hereunder such services as are performed outside India:

Provided that if such a taxable service is partly performed outside India, it shall be considered to have been performed outside India;

Provided that for the purposes of this sub-rule, any taxable services provided shall be treated as export of services only if-

1. Such service is delivered outside India and used outside India; and

2. payment for such service provided is received by the service provider in convertible foreign exchange.

Section 65	Services	Section 65	Services
a	Stock Broker	zt	Dry Cleaner
f	Courier Agency	zu	Event Manager
h	Custom House Agent (CHA)	zv	Fashion Designer
i	Steamer Agent (SA)	zw	Health Club & Fitness Centre
j	Clearing & Forwarding (C&F)	zza	Storage & Warehouse Keeper
l	Air Travel Agent (ATA)	zzc	Commercial training & Coaching Centre
m	Mandap Keeper	zzd	Commissioning & Installation Service
n	Tour Operator (TO)	zzf	Internet Café
o	Rent-a-cab (R-a-C)	zzg	Maintenance & Repair
s	Chartered Accountant (CA)	zzh	Technical Testing & Analysis Agency
t	Cost Accountant	zzi	Technical Inspection & Certification
u	Company Secretary (CS)	zzj	Authorised Service Station (LMV)
w	Security Agency	zzl	Other Port Services
x	Credit Rating	zzm	Airport & Civil Enclave
y	Market Research Agency(MRA)	zzn	Aircraft Operator
z	Underwriter	zzo	Business Exhibition
zb	Photography Studio	zzp	Goods Transport Agency
zc	Convention	zzs	Opinion Poll Agency
zi	Video Production Agency	zzt	Outdoor Caterer
zj	Sound Recording Studio/Agency	zzv	Survey & Exploration Mineral
zn	Port services	zzw	Mandap & Shamiana Contractor
zo	Motor Car Repair Service	zzx	Travel Agent
zq	Beauty Parlour	zzy	Recg Association —Forward contract
zr	Cargo Handling Service	zzzd	Cleaning Activity Services
zzze	Club or Association Services	zzzf	Packaging Activity Services
		zzzp	Transport of goods in containers

3. In relation to taxable services specified hereunder:

1. Such taxable services which are provided and used in or in relation to commerce or industry and the recipient of such services is located outside India: 

Provided that if such recipient has any commercial or industrial establishment or any office relating thereto, in India, such taxable services provided shall be treated as export of services only if—

1. order for provision of such service is made by the recipient of such service from any of his commercial or industrial establishment or any office located outside India;

2.  service so ordered is delivered outside India and used outside India; and

3.  payment for such service provided is received by the service provider in convertible foreign exchange;

2. such taxable services which are provided and used, other than in or in relation to commerce or industry, if the recipient of the taxable service is located outside India at the time when such services are received.

Section 65	Services	Section 65	Services
b	Telegraph Authority in relation to Telephone	zm	To a customer, by a banking company or a financial
c	Telegraph Authority in relation to Pager		institutions including a non-banking financial company,
e	Advertising Services		in relation to banking and
g	Consulting Engineer’s Services		other financial services.
k	Manpower Recruitment Agency	zp	To a customer, by a body corporate other than the body
r	Management Consulting Services		corporate referred to in sub-clause (zm), in relation to
za	Scientific or technical consultancy		banking and other financial services
zd	Telegraph authority in relation to leased circuit	zs	Cable Operator Services
ze	The telegraph authority in relation to a communication through telegraph	zx	Life insurance
zf	The telegraph authority in relation to a communication through telex	zy	In relation to insurance auxiliary services concerning life insurance
zg	The telegraph authority in relation to a communication through fax	zz	BusinessRail Travel Agent
zh	Computer Network Services	zzb	Business Auxiliary
zk	broadcasting Services	zze	Franchise Services
zl	insurance auxiliary services concerning general insurance business	zzk	Foreign exchange broking services
d	General insurance business (other than immovable property)	zzr	Intellectual Property Services
zzzg	Mailing and mailing list compilation	zzu	Programme producer in relation to programme
zzzi	Registrar to issue	zzzc	Survey and map making  services (other than immovable property)
zzzj	Share transfer agent
zzzk	ATM operators, maintenance & management	zzz	Transport of goods (other than water) by pipeline or other conduit
zzzi	Recovery agent	zzzr	Auction of movable property
zzzm	Sale of space for advertisement	zzzn	Sponsorship
		zzzq	Business support service
		zzzs	Public relation services
		zzzt	Ship management services
		Zzzu	Internet telephony

Explanation.— For the purposes of this rule "India" includes the designated areas in the Continental Shelf and Exclusive Economic Zone of India as declared by the notifications of the Government of India in the Ministry of External Affairs
Nos. S.O.429 (E), dated the 18th July, 1986 and S.O. 643 (E), dated the 19th September 1996

2. Clarification regarding some taxable services

• Photography services

• Maintenance and repair Services

Notification No. 20/2003-ST, dated 21st August, 2003 exempting taxable service in relation to maintenance or repair of computer peripherals, was withdrawn vide Notification No. 7/2004-ST., dated 9th July, 2004. Subsequently, vide Circular F. No. 81/2/2005-ST., dated 7-10-2005 it was clarified that maintenance or repair or servicing of software is leviable to service tax. This circular was issued in suppression of all earlier clarification / circular issued on the subject.

Doubts have been raised regarding the date of applicability of service tax on maintenance or repair of computer software. The above doubt has been put to rest vide Circular M.F (D.R) letter F.No.256/1/2006-CX.-4, Dated 7-3-2006. As per this circular service tax is leviable on the service of maintenance and repair of software w.e.f 9-7-2004, i.e., the day Notification No. 20/2003-ST. was rescinded.