We are a publishing house. We have entered into an agreement with a UK-based company for providing online access of our books to our specified customers. The said company converts the books into digital format and uploads it on a server located outside India. Please confirm if service tax would be applicable on the fee payable by us to the company for this arrangement.
The service provided by the UK company should be taxable under the category of development & supply of content service, which includes service provided in relation to development and supply of content for use in online information and database access or retrieval services. However, as the provider of services is located outside India, it would be relevant to examine the taxability of services under the rules prescribed for the taxability of import of services, under which the services provided by the UK company would be subject to service tax in India.
We are a consultancy firm. Our parent company based in the US has assigned certain personnel to our office for specific projects. We are depositing service tax under the category of ?manpower recruitment or supply services? on the payments made to the company for such personnel. Additionally, we are also reimbursing the rent paid by these assignees for their accommodation in India. Are we liable to pay service tax on these reimbursements?
Service tax authorities have clarified vide Circular F No B1/ 6/ 2005 – TRU dated July 27, 2005, that service tax is to be charged on the full amount of consideration for the supply of manpower, whether full- or part-time. The value of taxable service includes recovery of staff costs from the recipient (salary and other contributions). Even if the staff costs are paid directly to the individual or if they are paid on behalf of the seconding entity, such costs can be considered as a part of the consideration paid by the service recipient to the service provider, and hence, form part of the value of taxable service. Since, the rent is paid by your office and is a component of the salary consideration payable to the assignees, the same would be considered as a part of consideration for the supply of manpower by the head office. Thus, the liability to deposit service tax would be on your company as a recipient of services under the category of manpower recruitment or supply services.
We have entered into an agreement with one of our clients for provision of laboratory testing services. We understand that lab testing services provided in relation to humans are exempt from the applicability of service tax. Please confirm.
Laboratory testing services are taxable under the taxable service category of technical testing and analysis service (TTAS). The scope of TTAS excludes any testing or analysis service provided in relation to human beings or animals. The laboratory tests carried out on humans for purposes like diagnosing or identifying disease as well as for preventing diseases and disorders have been excluded from the definition of TTAS. However, tests carried out for the purpose of clinical testing of drugs and formulations would be included under TTAS. Accordingly, laboratory testing services provided by you to your client should be exempt from service tax provided that such services are not in relation to any clinical trials.
We run a skin clinic where we undertake cosmetic surgery. Recently these services have been brought under the ambit of service tax. Please confirm the same and also advice on the relevant time period within which we are required to take the service tax registration.
The Finance Bill 2009 has sought to levy service tax on cosmetic and plastic surgery service. Service tax is applicable on such services from September 1, 2009. The provider of any taxable service is required to apply for service tax registration within 30 days from the date of introduction of a new taxable service category (subject to a threshold limit of Rs 9 lakh). Thus, you need to apply for service tax registration by September 30, 2009, under the taxable service category of cosmetic and plastic surgery services.
Respondents are senior professionals at Ernst & Young. The replies do not constitute professional advice. Neither EY nor FE are liable for any action taken on the basis of these replies
