Under the present system there are 88 exemption notifications. The need for exemptions is not obviated with the introduction of negative list. While some existing exemptions have been built into the negative list, others, wherever necessary, have been retained as exemptions. In addition some new exemptions are also proposed to be introduced. For ease of reference and simplicity most of the exemptions are now a part of one single mega exemption notification 25/2012-ST dated 20/6/12
Partial Reverse Charge
With effect from 1.7.2012 a new scheme of taxation is being brought into effect whereby the liability of payment of service tax shall be both on the service provider and the service recipient. Usually such liability is affixed either on the service provider or the service recipient, but in specified services and in specified conditions, such liability shall be on both the service provider and the service recipient.
The enabling provision has been provided by insertion of Proviso to section 68 in the Finance Act, 2012 as per which Central Government may notify the service and the extent of service tax which shall be payable by such person and the provisions of Chapter V shall apply to such person to the extent so specified and the remaining part of the service tax shall be paid by the service provider. Under this clause the Central government has issued notification no. 30/ 2012 dated 20.6.2012 notifying the description of specified services when provided in the manner so specified where part of the service tax has to be paid by the service receiver. The extent to which tax liability has to be discharged by the service receiver has also been specified in the said notification.
The manner of operation of the reverse charge mechanism has been explained in this point. Export of Services
Export of services shall now be governed by new provisions in the Service Tax Rules 1994, namely Rule 6A. The essential requisites before a service can be designated as export service are:
- It must be a service as defined under sub-section 44 of section 65B
- By a service provider located in the taxable territory
- To a service receiver is located outside India
- The service is not a service specified in the negative list
- The place of provision of the service is outside India
- The payment for such service is received by the service provider in convertible foreign exchange
- The service provider and service receiver are not merely establishments of a distinct person by virtue of item (b) of Explanation 2 of clause 44 of section 65B of the Act