DIRECT AND INDIRECT TAXATION PROJECT

TELECOMMUNICATION AND BROADCASTING SERVICES IN INDIA

SUBMITTED BY:NAME: EKLAVYA RATHI ROLL NO: 99 CLASS: - SYBMS-B

INDEX TOPIC
TELECOMMUNICATION SERVICES:MEANING CHARGEABILITY 1-2 3-4

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BROADCASTING SERVICES:MEANING CHARGEABILITY 5-6 7

TELECOMMUNICATION AND BROADCASTING SERVICES:EXEMPTION VALUE OF TAXABLE SERVICES SERVICE TAX RETURNS REGISTRATION RETURNS 8-11 12 13 14-16 17

TELECOMMUNICATION SERVICES MEANING Any service provided by a telecommunication provider. A specified set of user-information transfer capabilities provided to a group of users by a telecommunications system. Telecommunications, also called telecommunication, is the exchange of information over significant distances by electronic means. A complete, single telecommunications circuit consists of two stations, each equipped with a transmitter and a receiver. The transmitter and receiver at any station may be combined into a single device called a transceiver. The medium of signal transmission can be electrical wire or cable (also known as "copper"),optical fibre or electromagnetic fields. The free-space transmission and reception of data by means of electromagnetic fields is called wireless. The simplest form of telecommunications takes place between two stations. However, it is common for multiple transmitting and receiving stations to exchange data among them. Such an arrangement is called a telecommunications network. The Internet is the largest example. On a smaller scale, examples include: y Corporate and academic wide-area networks (WANs) y Telephone networks y Police and fire communications systems y Taxicab dispatch networks y Group of amateur radio operators Data is conveyed in a telecommunications circuit by means of an electrical signal called the carrier or carrier wave. In order for a carrier to convey information, some form of modulations required. The mode of modulation can be broadly categorized as either analog or digital. In analog modulation, some aspect of the carrier is varied in a continuous fashion. The oldest form of analog modulation is amplitude modulation (AM), still used in radio broadcasting at some frequencies. Digital modulation actually predates analog modulation; the earliest form was Morse code. During the 1900s, dozens of new forms of modulation were developed and deployed, particularly during the so-called "digital revolution" when the use of computers among ordinary citizens became widespread. In some contexts, a broadcast network, consisting of a

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single transmitting station and multiple receive-only stations, is considered a form of telecommunications. Radio and television broadcasting are the most common examples. Telecommunications and broadcasting worldwide are overseen by the International Telecommunication Union (ITU), an agency of the United Nations (UN) with headquarters in Geneva, Switzerland. Most countries have their own agencies that enforce telecommunications regulations formulated by their government. According to the government of India:Taxable Service means any service provided or to be provided to any person, by the telegraph authority in relation to telecommunication service. Telecommunication service means service of any description provided by means of any transmission, emission or reception of signs, signals, writing, images and sounds or intelligence or information of any nature, by wire, radio, optical, visual or other electromagnetic means or systems, including the related transfer or assignment of the right to use capacity for such transmission, emission or reception by a person who has been granted a licence under the first proviso to sub-section (1) of section 4 of the Indian Telegraph Act, 1885 (13 of 1885 )

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CHARGEABILITY THE FOLLOWING SERVICES ARE TELECOMMUNICATION SERVICES:CHARGEABLE UNDER

(i) Voice mail, data services, audio tex services, video tex services, radio paging; (ii) fixed telephone services including provision of access to and use of the public switched telephone network for the transmission and switching of voice, data and video, inbound and outbound telephone service to and from national and international destinations; (iii) cellular mobile telephone services including provision of access to and use of switched or non-switched networks for the transmission of voice, data and video, inbound and outbound roaming service to and from national and international destinations. (iv) carrier services including provision of wired or wireless facilities to originate, terminate or transit calls, charging for interconnection, settlement or termination of domestic or international calls, charging for jointly used facilities including pole attachments, charging for the exclusive use of circuits, a leased circuit or a dedicated link including a speech circuit, data circuit or a telegraph circuit; (v) provision of call management services for a fee including call waiting, call forwarding, caller identification, three-way calling, call display, call return, call screen, call blocking, automatic call-back, call answer, voice mail, voice menus and video conferencing; (vi) private network services including provision of wired or wireless telecommunication link between specified points for the exclusive use of the client; (vii) data transmission services including provision of access to wired or wireless facilities and services specifically designed for efficient transmission of data; and (viii) communication through facsimile, pager, telegraph and telex, but does not include service provided by- (a) any person in relation to online information and database access or retrieval or both

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referred to in sub-clause of clause (105); (b) a broadcasting agency or organisation in relation to broadcasting referred (c) any person in relation to [internet telecommunication service] referred to in sub-clause "Telegraph authority" has the meaning assigned to it in clause (6) of section 3 of the Indian Telegraph Act, 1885 (13 of 1885) and includes a person who has been granted a licence under the first proviso to subsection (1) of section 4 of that Act; "Facsimile (FAX)" means a form of telecommunication by which fixed graphic images, such as printed texts and pictures are scanned and the information converted into electrical signals for transmission over the telecommunication system; On-line information and database access or retrieval" means providing data or information, retrievable or otherwise, to a customer, in electronic form through a computer network; Internet telecommunication service includes,(I) Internet backbone services, including carrier services of internet traffic by one Internet traffic by one Internet Service Provider to another Internet Service provider, (II) Internet access services, including provision of a direct connection to the internet and space for the customers web page, (III)Provision of telecommunication services, including fax, telephony, audio conferencing and video conferencing, over the internet. "Pager" means an instrument, apparatus or appliance which is a nonspeech, one way personal calling system which alert and has the capability of receiving, storing and displaying numeric or alpha-numeric message. "Telegraph" has the meaning assigned to it in clause (1) of section 3 of the Indian Telegraph Act, 1885 (13 of 1885). "Telex" means a typed communication by using teleprinters through telex exchanges;

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BROADCASTING SERVICES MEANING Taxable Service means any service provided or to be provided to a client, by a broadcasting agency or organization in relation to broadcasting, in any manner and, in the case of broadcasting agency or organisation, having its head office situated in any place outside India, includes service provided by its branch office or subsidiary or representative in India or any agent appointed in India or by any person who acts on its behalf in any manner, engaged in the activity of selling of time slots for broadcasting of any programme or obtaining sponsorships for programmes or collecting the broadcasting charges or permitting the rights to receive any form of communication like sign, signal, writing, picture, image and sounds of all kinds by transmission of electromagnetic waves through space or through cables, direct to home signals or by any other means to cable operator, including multisystem operator or any other person on behalf of the said agency or organisation. "Broadcasting" has the meaning assigned to it in clause (c ) of section 2 of the Prasar Bharati (Broadcasting Corporation of India) Act, 1990 (25 of 1990) and also includes programme selection, scheduling or presentation of sound or visual matter on a radio or a television channel that is intended for public listening or viewing, as the case may be; and in the case of a broadcasting agency or organisation, having its head office situated in any place outside India, includes the activity of selling of time slots or obtaining sponsorships for broadcasting of any programme or collecting the broadcasting charges or permitting the rights to receive any form of communication like sign, signal, writing, picture, image and sounds of all kinds by transmission of electro-magnetic waves through space or through cables, direct to home signals or by any other means to cable operator including multisystem operator or any other person on behalf of the said agency or organisation, by its branch office or subsidiary or representative in India or any agent appointed in India or by any person who acts on its behalf in any manner; "Broadcasting Agency or Organization" means any agency or organization engaged in providing service in relating to broadcasting in any manner and, in the case of a broadcasting agency or organization, having its head office situated in any place outside India, includes its branch office or subsidiary or representative in India or any agent

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appointed in India or any person who acts on its behalf in any manner, engaged in the activity of selling of time slots for broadcasting of any programme or obtaining sponsorships for programme or collecting the broadcasting charges or permitting the rights to receive any form of communication like sign, signal, writing, picture, image and sounds of all kinds by transmission of electro-magnetic waves through space or through cables, direct to home signals or by any other means to cable operator including multisystem operator or any other person on behalf of the said agency or organisation; Programme means any audio or visual matter, live or recorded, which is intended to be disseminated by transmission of electro-magnetic waves through space or through cables intended to be received by the general public either directly or indirectly through the medium of relay stations;

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CHARGEABILITY Chargeability of Taxable Services: (1) The chargeability of taxable services shall be determined according to the terms of the sub-clauses (105) of section 65; (2) When for any reason , a taxable service is prima facie, classifiable under two or more sub-clauses of clause (105) of section 65, classification shall be effected as follows :(a) the sub-clause which provides the most specific description shall be preferred to sub-clauses providing a more general description; (b) composite services consisting of a combination of different services which cannot be classified in the manner specified in clause (a), shall be classified as if they consisted of a service which gives them their essential character, in so far as this criterion is applicable; (c) when a service cannot be classified in the manner specified in clause(a) or clause (b), it shall be classified under the sub-clause which occurs first among the sub-clauses which equally merits consideration.

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TELECOMMUNICATION AND BROADCASTING SERVICES

Exemption 1. Exemption to Small Scale Service Providers: In exercise of the powers conferred by sub-section (1) of section 93 of the Finance Act, 1994 (32 of 1994) (hereinafter referred to as the said Finance Act), the Central Government, on being satisfied that it is necessary in the public interest so to do, hereby exempts taxable services of aggregate value not exceeding Ten lakh* rupees in any financial year from the whole of the service tax leviable thereon under section 66 of the said Finance Act: Provided that nothing contained in this notification shall apply to,(i) taxable services provided by a person under a brand name or trade name, whether registered or not, of another person; or (ii) such value of taxable services in respect of which service tax shall be paid by such person and in such manner as specified under sub-section (2) of section 68 of the said Finance Act read with Service Tax Rules,1994. 2. The exemption contained in this notification shall apply subject to the following conditions, namely:(i) the provider of taxable service has the option not to avail the exemption contained in this notification and pay service tax on the taxable services provided by him and such option, once exercised in a financial year, shall not be withdrawn during the remaining part of such financial year; (ii) the provider of taxable service shall not avail the CENVAT credit of service tax paid on any input services, under rule 3 or rule 13 of the CENVAT Credit Rules, 2004 (herein after referred to as the said rules), used for providing the said taxable service, for which exemption from payment of service tax under this notification is availed of; (iii) the provider of taxable service shall not avail the CENVAT credit under rule 3 of the said rules, on capital goods received in the premises

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of provider of such taxable service during the period in which the service provider avails exemption from payment of service tax under this notification; (iv) the provider of taxable service shall avail the CENVAT credit only on such inputs or input services received, on or after the date on which the service provider starts paying service tax, and used for the provision of taxable services for which service tax is payable; (v) the provider of taxable service who starts availing exemption under this notification shall be required to pay an amount equivalent to the CENVAT credit taken by him, if any, in respect of such inputs lying in stock or in process on the date on which the provider of taxable service starts availing exemption under this notification; (vi) the balance of CENVAT credit lying unutilised in the account of the taxable service provider after deducting the amount referred to in subparagraph (v), if any, shall not be utilised in terms of provision under sub-rule (4) of rule 3 of the said rules and shall lapse on the day such service provider starts availing the exemption under this notification; (vii) where a taxable service provider provides one or more taxable services from one or more premises, the exemption under this notification shall apply to the aggregate value of all such taxable services and from all such premises and not separately for each premises or each services; (viii) the aggregate value of taxable services rendered by a provider of taxable service from one or more premises, does not exceed rupees *ten lakhs in the preceding financial year. 3. For the purposes of determining aggregate value not exceeding ten*lakh rupees, to avail exemption under this notification, in relation to taxable service provided by a goods transport agency, the payment received towards the gross amount charged by such goods transport agency under section 67 for which the person liable for paying service tax is as specified under subsection (2) of section 68 of the said Finance Act read with Service Tax Rules, 1994, shall not be taken into account. 2.Services to UN Agencies

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Services provided to United Nations or an International Organizations are exempt. 3. Export of service: Any service which is taxable under clause 105 of Section 65 may be exported without payment of service tax. 4. Exemption to services provided to a developer of SEZ or a unit of SEZ: Exempts the taxable services specified in clause (105) of section 65 of the said Finance Act, which are provided in relation to the authorized operations in a Special Economic Zone, and received by a developer or units of a Special Economic Zone, whether or not the said taxable services are provided inside the Special Economic Zone, from the whole of the service tax leviable thereon under section 66 of the said Finance Act subject to certain conditions 5. Exemption to value of goods & material sold by service provider: In exercise of the powers conferred by section 93 of the Finance Act, 1994 (32 of 1994), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts so much of the value of all the taxable services, as is equal to the value of goods and materials sold by the service provider to the recipient of service, from the service tax leviable thereon under section (66) of the said Act, subject to condition that there is documentary proof specifically indicating the value of the said goods and materials. All 6. Exemption to taxable services provided by TBI and STEP: taxable services, provided by a Technology Business Incubator (TBI) or a Science and Technology Entrepreneurship Park (STEP) recognized by the National Science and technology Entrepreneurship Development Board (NSTEDB) of the Department of Science and Technology, Govt. of India from the whole of the service tax leviable thereon subject to certain conditions and procedures. 7. Exemption to taxable services provided by entrepreneurs located within the premises of TBI or STEP: All taxable services, provided by an entrepreneur located within the premises of a Technology Business Incubator (TBI) or a Science and Technology Entrepreneurship Park (STEP) recognized by the National Science and technology Entrepreneurship Development Board (NSTEDB) of the Department of

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Science and Technology, Govt. of India from the whole of the service tax leviable thereon subject to certain conditions and procedures. 8. Exemption to services provided to Foreign Diplomatic Missions or Consular Post in India: All services provided by any person, for the official use of a Foreign Diplomatic Mission or Consular Post in India are exempted from service tax subject to certain conditions and procedures. 9. Exemption to services provided for personal use of a family member of Diplomatic Agent or Career Consular Officers posted in Foreign Diplomatic Mission/Consular Post in India: All services provided by any person, for personal use of family member of Diplomatic Agents or Career Consular officers posted in a Foreign Diplomatic Mission or Consular Post in India are exempted from service tax subject to certain conditions and procedures.

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VALUE OF TAXABLE SERVICES (1) Service tax chargeable on any taxable service with reference to its value shall, (i) in a case where the provision of service is for a consideration in money, be the gross amount charged by the service provider for such service provided or to be provided by him; (ii) in a case where the provision of service is for a consideration not wholly or partly consisting of money, be such amount in money, with the addition of service tax charged, is equivalent to the consideration; (iii) in a case where the provision of service is for a consideration which is not ascertainable, be the amount as may be determined in the prescribed manner. (2) Where the gross amount charged by a service provider, for the service provided or to be provided is inclusive of service tax payable, the value of such taxable service shall be such amount as, with the addition of tax payable, is equal to the gross amount charged. (3) The gross amount charged for the taxable service shall include any amount received towards the taxable service before, during or after provision of such service. (4) Subject to the provisions of sub-sections (1), (2) and (3), the value shall be determined in such manner as may be prescribed.

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SERVICE TAX RATES

ACCOUNTING CODE SERVICE TAX 10% of the value 00440398 of services EDUCATIONAL 2% of the service 00440298 CESS tax payable SECONDARY 1% of the service 00440426 AND HIGHER tax payable EDUCATION CESS Other As levied or 00440399 Penalty/interest applicable

RATE OF TAX

ACCOUNTING CODE 00440165 00440298 00440426

00440166

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REGISTRATION Service Tax is administered by the Central Excise & Service tax Commissionerates and the Service Tax Commissionerates working under the Central Board of Excise & Customs, Department of Revenue, Ministry of Finance, Government of India. LTUs are also collecting Service Tax in respect of the Large Tax Paying units registered with them. The unique feature of Service Tax is reliance on collection of tax, primarily through voluntary compliance.Government has from the very beginning adopted a flexible approach concerning Service Tax administration so that the assessees and the general public gain faith and trust in the tax measure so that voluntary tax compliance, one of the avowed objectives of the Citizens Charter, is achieved. Substantive and procedural liberalization measures, adopted over the years for this purpose, are clear manifestations of the above approach. Following are some of the measures adopted in that direction: (i) Under Section 67 of the Finance Act, 1994, Service Tax is levied on the gross or aggregate amount charged by the service provider on the receiver. Rule 6(1) of the Service Tax Rules, 1994 has provided that Service Tax shall be paid to the credit of the Government account in respect of the services deemed to be provided as per the rules framed in this regard. Point of Taxation Rules, 2011 has provided the point in time when a service shall be deemed to have been provided; Rule 3 of the said rule provides that for the purposes of these rules, unless otherwise provided, point of taxation shall be,(a) the time when the invoice for the service provided or to be provided is issued: Provided that where the invoice is not issued within 14 days of the provision of the service, the point of taxation shall be date of such completion. (b) In a case, where the person providing the service, receives a payment before the time specified in clause (a), the time, when he receives such payment to the extent of such payment. Explanation For the purpose of this rule, wherever any advance by whatever name known, is received by the service provider towards the provision of taxable service, the point of taxation shall be the date of receipt of each such advance. Rule 4. Determination of point of taxation in case of change in effective rate of tax. Notwithstanding anything contained in rule 3, the point of taxation in cases where there is a change in effective rate of tax in respect of a service, shall be determined in the following manner, namely:-

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(a) In case a taxable service has been provided before the change in effective rate of tax,(i) Where the invoice for the same has been issued and the payment received after the change in effective rate of tax, the point of taxation shall be date of payment or issuing of invoice, whichever is earlier; or (ii) Where the invoice has also been issued prior to change in effective rate of tax but the payment is received after the change in effective rate of tax, the point of taxation shall be the date of issuing of invoice; or (iii) Where the payment is also received before the change in effective rate of tax, but the invoice for the same has been issued after the change in effective rate of tax, the point of taxation shall be the date of payment; (b) In case a taxable service has been provided after the change in effective rate of tax, (i) Where the payment for the invoice is also made after the change in effective rate of tax but the invoice has been issued prior to the change in effective rate of tax, the point of taxation shall be the date of payment; or (ii)Where the invoice has been issued and the payment for the invoice received before the change in effective rate of tax, the point of taxation shall be the date of receipt of payment or date of issuance of invoice, whichever is earlier; or (iii)Where the invoice has also been raised after the change in effective rate of tax but the payment has been received before the change in effective rate of tax, the point of taxation shall be date of issuing of invoice. Explanation for the purposes of this rule, change in effective rate of tax shall include a change in the portion of value on which tax is payable in terms of a notification issued under the provisions of Finance Act, 1994 or rules made thereunder. (ii)Corporate assessees are given the liberty to pay tax on the value of taxable service, provided by them in a month, by the 6th of the following month if tax is deposited electronically and 5th of the following month if tax is deposited in any other manner. Further, in case the assessee is individual or proprietary firm or partnership firm, tax payment is required to be made only once in a quarter i.e by 6thof the following quarter if tax is deposited electronically and 5th of the following quarter if tax is deposited in any other manner. (iii)The process of registration of assessees has been considerably simplified. (iv) No separate accounts have been prescribed for the purposes of Service Tax. It has been provided that accounts being maintained by the

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assessees under any other law in force would be sufficient. This has placed the Department at considerable inconvenience to itself, so as to minimize difficulties for the assessees. (v) The Finance Act, 2001 has introduced self assessment for service tax returns; thereby sparing the assessees from the rigours of routine scrutiny and assessment. (vi)Frequency of filing the returns in the form of ST 3 or ST3A as the case may be is minimized. Filing of Statutory return has been made half yearly and by the 25th of the month following the half-year ending on 31st arch and 30th September. This is in replacement of the monthly/quarterly returns prescribed earlier. (vii)Penal provisions do exist in respect of Service Tax also. Failure to obtain registrations, failure to pay the tax, failure to furnish the prescribed returns, suppression of the correct value of the taxable services and failure to comply with notice do attract penal provisions as prescribed. But, it is specifically provided that no penalty is imposable on the assessee for any of the above failures, if the assessee proves that there was reasonable cause for the failure. This provision has been inserted to take care of the genuine difficulties of the new assessees. (viii) Service Tax Credit Rules, 2002, have been replaced by the CENVAT Credit Rules, 2004, introduced by the Finance Act, 2004, where under CENVAT credit has been extended across the sectors i.e. goods and services.

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RETURNS Service tax is levied on specified services and the responsibility of payment of the tax is generally cast on the service provider but for few exceptions. System of self-assessment of Service Tax Returns by service tax assessees has been introduced w.e.f. 01.04.2001. The jurisdictional Superintendent of Central Excise is authorized to cross verify the correctness of self assessed returns. These tax returns have to be filed half yearly. The Central Excise officers are authorized to conduct surveys to bring the prospective service tax assessees under the tax net. Directorate General of Service Tax at Mumbai oversees the activities at the field level for technical and policy level coordination.

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BIBLIOGRAPHY www.wikipedia.com www.google.com http://searchtelecom.techtarget.com http://www.servicetax.gov.in

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ACKNOWLEDGEMENT I would like to thank Professor Parag Thakkar for giving us the opportunity to explore taxation in a unique way through conducting deep research on taxation of services. The project enabled me to understand the taxation laws in India relating to telecommunication and broadcasting services. I am highly obliged for being given this opportunity to look at taxation in a whole different way.

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