Tuesday, April 1, 2014

Steps to determine taxable services


The drill to identify whether you are providing taxable service is very simple. Pose the questions listed in Step 1 and Step 2 below-

Step 1

To determine whether you are providing a ‘Service’

Pose the following questions to yourself:

Sr.No
Question
Answer
1
2
1
Am I doing an activity (including, but not limited to, an activity specified in section 66E of the Act) for another person*?
Yes
2
Am I doing such activity for a consideration?
Yes
3
Does this activity consist only of transfer of title in goods or immovable property by way of sale, gift or in any other manner?
No
4
Does this activity constitute only a transfer, delivery or supply of goods which is deemed to be a sale of goods within the meaning of clause (29A) of article 366 of the Constitution
No
5
Does this activity consist only of a transaction in money or actionable claim?
No
6
Is the consideration for the activity in the nature of court fees for a court or a tribunal?
No
7
Is such an activity in the nature of a service provided by an employee of such person in the course of employment?
No
8
Is the activity covered in any of the categories specified in Explanation 1 or Explanation 2 to clause (44) of section 65B of the Act
No

[*if you are a person doing business through an establishment located in the taxable territory and another establishment located in non taxable territory OR an association or body of persons or a member thereof then please see Explanation 3 to clause (44) of section 65B of the Act  before answering this question]

If the answer to the above questions is as per the answers indicated in column 3 of the table above THEN you are providing a service.

Step 2

To determine whether service provided by you is taxable

If you are providing a ‘service’ (Step 1) and then pose the following questions to yourself-

Sr.No
Question
Answer
1
2
1
Have I provided or agreed to provide the service?
Yes
2
Have I provided or agreed to provide the service in the taxable territory?
Yes
3
Is this activity entirely covered in any of the services described in the negative list of services specified in section 66D of the Act?
No

If the answer to the above questions is also as per the answers given in column 3 of the table above THEN you are providing a ‘taxable service’.

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