No Service Tax On Architects Income , Rules Cdbt

The Central Board of Direct Taxes (CBDT) has clarified that services provided by architects do not fall under the ambit of service tax leviable on engineering consultants.

However, in case a consultancy firm providing both consultancy and architectural services against which a lumpsum payment has been received, then service tax will be leviable on the entire amount.

In case a break-up is given for charges against engineering consultancy and architectural services, then the service tax will be leviable only on the former.

The clarification has been issued after several queries were addressed by industry to the CBDT.

The CBDT has taken this position based on several issues. The service rendered should be in a discipline of engineering and it should be rendered by a professionally qualified engineer or an engineering firm for its remuneration to fall under the ambit of the service tax.

 

As per sub-clause 9(G) of clause (41) of Section 65 of the Finance Act, 1994, the taxable service has been defined as any service provided to a client, by a consulting engineer in relation to advice consultancy or technical assistance in any manner in one or more disciplines of engineering.

Further, Clause (11) of the same section defines a consulting engineer as any professionally qualified engineer or engineering firm, who, either directly or indirectly renders any advice, consultancy or technical assistance in any manner to a client in one or more disciplines of engineering.

The CBDT has also taken into consideration the fact that architects are governed by a separate legislation namely The Architects Act, 1972, which provides for the registration of architects.

The architects are required to be registered with the Council of Architecture. Such a registration is granted only when the person concerned has a degree or diploma in architecture.

The CBDT has pointed out in its clarification that the law itself thus recognises architecture as a separate profession.

The All India Council for Technical Education consulted by the CBDT has also clarified that architecture and engineering are two separate disciplines of technical education and these are two separate professions.

Consulting Engineers Association of India have stated that though there are areas of overlap between the two professions, they are independent disciplines and separate educational facilities exist for both.

The CBDT has taken the view that all these points indicate that they are independent disciplines and hence architects would not be bound by the provisions of service tax payable by engineering consultants for consultancy services.