GENERAL HIGHLIGHTS

•    All individual and sole proprietor tax payers with a turn over upto Rs.60 lakh freed from the formalities of audit.

•    To encourage voluntary compliance the penal provision for Service Tax are being rationalised.

•    Proposals relating to Service Tax estimated to result in net revenue gain of Rs.4,000 crore.

•    Indirect Taxes estimated to result in net revenue gain of Rs.11,300 crore.

•    Rate of Service Tax retained at 10 per cent.

NEW SERVICES:

1)    Hotel accommodation in excess of Rs.1,000 per day and service provided by air conditioned restaurants that have license to serve liquor added as new services for levying Service Tax.

2)    Tax on all services provided by hospitals with 25 or more beds with facility of Central air conditioning.

EXPANSION IN SCOPE OF EXISTING SERVICES:

1)    Authorized Service Stations Services [section 65 (105) (zo)]: The existing service is being replaced with a new definition to cover all persons and all motor vehicles other than those meant for goods carriage or three wheeler auto rickshaw.

2)    Life Insurance Service [section 65 (105) (zx)]: The scope of this service is proposed to be expanded to cover all services, including in relation to management of investments.

3)    Commercial Training or Coaching Service [section 65 (105) (zzc)]: The scope of the service is proposed to be expanded to include all coaching and training that is not recognized by law irrespective of whether the institute is providing any other course(s) recognized by law.

4)    Club or Association Service [section 65 (105) (zzze)]: The scope of the service is proposed to be expanded to include service provided to non-members as well.

5)    Business Support Service [section 65 (105) (zzzq)]: The scope of the service is being expanded to include operational or administrative assistance of any kind.

6)    Services by legal professionals [section 65 (105) (zzzzm)]: The scope of the existing service is being expanded to include:

I.    Services of advice, consultancy or assistance provided by a business entity to individuals as well;

II.    Representational services provided by any person to a business entity; and

III.    Services provided by arbitrators to business entities. Services provided by individuals to other individual will remain outside the levy.

7)    Services provided by clinical establishments [section 65 (105) (zzzzo)]: The existing levy on health services is proposed to be replaced as follows:

(i)    Any service provided by a clinical establishment having the facility of central air-conditioning in any part of the establishment and more than 25 beds for in-patient treatment at any time of the year;

(ii)    Diagnostic services provided by a clinical establishment with the aid of laboratory or medical equipment; and

(iii)    Health-related services provided by doctors, not being employees, providing health-related services from the premises of a clinical establishment.

8)    Service Tax on air travel both domestic and international raised.