Bangalore: Credit card-, debit card-, charge card- or other payment card-related services provided by entities other than banks and financial institutions will also invite service tax at the rate of 12 per cent, as per the Union Budget for 2006-07 presented to Parliament on Tuesday.

Such services provide by banks and financial institutions were brought under the service tax net from 2001 onwards. "Since then individual cards such as those used for shopping in malls, buying petrol and diesel, and in health clubs and hospitals have been introduced, skirting the service tax," a Finance Ministry official said. Now, anybody who issues a card and provides card-related services will be covered under service tax, he explained.

The budget has also withdrawn the exemptions granted to several entities from payment of service tax that will have implications on trade.

Accounting

This includes accounting, auditing and statutory certification services provided by a practising chartered accountant, cost accountant and company secretary in his professional capacity.

"Earlier, only 25 per cent of their turnover was covered under service tax. With the lifting of exemption from March 1 onwards, the entire turnover will be covered under service tax in the case of these entities," the official said. The Centre has also decided to withdraw service tax exemption granted to services provided by a call centre or a medical transcription centre.

Big implications

This will have "big implications," the official said, adding that the service provided by a call centre facility of a company such as Airtel for the captive use of its customers will, henceforth, come under the service tax net.

"Those call centres that export services will continue to be exempted from the provisions of service tax," he said.

ERP software system

The exemption granted to service provided in relation to Enterprise Resource Planning (ERP) software system provided by a management consultant in connection with the management of any organisation has also been withdrawn. Besides, Catering services provided on a train by an outdoor caterer and those provided within the premises of an academic institution or medical establishment will also be subject to service tax after the Government decided to withdraw the exemption given to these services till February 28 this year.

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