In the present day scenario Service Sector Income is also a major contributor to the Gross Domestic Product (GDP) as compared to the Manufacturing Industry. Hence all the provisions contained in the Statutes governing Goods shall be suitably amended in the Statutes governing Services. Trade Discount is one such issue being discussed here. Trade Discount in any merchandise is a common phenomenon especially between Channels of distribution. The Valuation of Services under Service Tax Rules governed by Sec 67 of the Finance Act does not contain any specific provisions dealing with Trade Discount, whereas a specific provision is available in the Central Excise Act.More...
INTRODUCTION OF SPECIFIC PROVISION FOR TREATEMENT OF TRADE DISCOUNT IN VALUATION OF SERVICES UNDER SERVICE TAX RULES
ReplyDeleteIn the present day scenario Service Sector Income is also a major contributor to the Gross Domestic Product (GDP) as compared to the Manufacturing Industry. Hence all the provisions contained in the Statutes governing Goods shall be suitably amended in the Statutes governing Services. Trade Discount is one such issue being discussed here. Trade Discount in any merchandise is a common phenomenon especially between Channels of distribution. The Valuation of Services under Service Tax Rules governed by Sec 67 of the Finance Act does not contain any specific provisions dealing with Trade Discount, whereas a specific provision is available in the Central Excise Act.
Sec 4(4)(d)(ii) of the Central Excise Act, 1944, provides that Value for the purpose of calculation Excise Duty in relation to any excisable goods – “does not include the amount of the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of the wholesale trade at the time of removal in respect of such goods sold or contracted for sale “
Being, the Service Tax is also an Indirect Tax just like Central Excise Act, 1944 and most of the Provisions in Service Tax are extracted from the Central Excise Act, 1944. Hence, valuation rule under Sec 67 of the Finance Act may suitably be amended in the same line to provide specific ruling in respect of treatment of Trade Discount while valuing the services to put an end to various legal wrangles pending before the Judiciary in respect of this issue.
- J. BALASUBRAMANIAN, B.Com.,ACA.,ICWA.,MBA.,CS