Service tax retained at 10%; eight new under net

The government on Friday brought eight new services, including brand promotion, under the tax net even as Finance Minister Pranab Mukherjee retained the service tax rate at 10 per cent.

By adding eight new services and expansion of some of the existing services, the government has pegged total receipts from the service tax at Rs 68,000 crore during 2010-11, up from Rs 58,000 crore as per the revised estimates for the year 2009-10.

Services promoting brand of goods, services, events and business entity have been brought under the tax net, according to Budget memorandum presented by Mukherjee.

Similarly, permitting commercial use or exploitation of any event organised by a person or organisation is taxable.

Services provided for maintenance of medical records of employees of a business entity and electricity exchanges would also be taxed.

The Budget has also clarified that renting of immovable property is a taxable service. It would be applied retrospectively from June 1, 2007.

Besides, promotion, marketing or organising of games of chance, including lottery, is being introduced as a separate service.

Moreover, health services provided under insurance schemes offered by insurers and health check up undertaken by hospitals or medical establishments for the employees of business entities are brought under the tax net.

The scope of air passenger transport service is being expanded to include domestic journeys and international journeys in any class.

Similarly, copyrights on cinematographic films and sound recording have been brought under the ambit of service tax. However, copyright on original literacy, dramatic, musical and artistic work would continue to remain outside the scope of service tax.

Besides, certain additional services provided by a builder to the prospective buyers such as providing preferential location or external or internal development of complexes on extra charge are under the tax net.

However, service of providing vehicle-parking space would not be subjected to tax.