Section 90(A) - Amendment of section 65 of Finance Act, 1994 - Finance Act, 2008

CHAPTER V SERVICE TAX Amendment of Act 32 of 1994. 90. In the Finance Act, 1994,— (A) in section 65, with effect from such date as the Central Government may, by notification in the Official Gazette, appoint,— (1) after clause (7a), the following clause shall be inserted, namely:— '(7b) "associated enterprise" has the meaning assigned to it in section 92A of the Income-tax Act, 1961;'; (2) in clause (12),— (a) in sub-clause (a), for item (iv), the following item shall be substituted, namely:— ''(iv) securities and foreign exchange (forex) broking, and purchase or sale of foreign currency, including money changing;"; (b) for sub-clause (b), the following sub-clause shall be substituted, namely:— ''(b) foreign exchange broking and purchase or sale of foreign currency, including money changing provided by a foreign exchange broker or an authorised dealer in foreign exchange or an authorised money changer, other than those covered under sub-clause (a);"; (c) after sub-clause (b) as so amended, the following Explanation shall be inserted at the end, namely:— ' Explanation .— For the purposes of this clause, it is hereby declared that "purchase or sale of foreign currency, including money changing" includes purchase or sale of foreign currency, whether or not the consideration for such purchase or sale, as the case may be, is specified separately;'; (3) in clause (19),— (a) in sub-clause (ii), the following Explanation shall be inserted at the end, namely:— ' Explanation .— For the removal of doubts, it is hereby declared that for the purposes of this sub-clause, "service in relation to promotion or marketing of service provided by the client" includes any service provided in relation to promotion or marketing of games of chance, organised, conducted or promoted by the client, in whatever form or by whatever name called, whether or not conducted online, including lottery, lotto, bingo;'; (b) the words "any information technology service and" shall be omitted; (c) in the Explanation, clause (b) shall be omitted; (4) for clause (23), the following clause shall be substituted, namely:— '(23) "cargo handling service" means loading, unloading, packing or unpacking of cargo and includes,— (a) cargo handling services provided for freight in special containers or for non-containerised freight, services provided by a container freight terminal or any other freight terminal, for all modes of transport, and cargo handling service incidental to freight; and (b) service of packing together with transportation of cargo or goods, with or without one or more of other services like loading, unloading, unpacking, but does not include, handling of export cargo or passenger baggage or mere transportation of goods;'; (5) in clause (31), for the words "to a client", the words "to any person" shall be substituted; (6) after clause (53), the following clause shall be inserted, namely:— '(53a) "information technology software" means any representation of instructions, data, sound or image, including source code and object code, recorded in a machine readable form, and capable of being manipulated or providing interactivity to a user, by means of a computer or an automatic data processing machine or any other device or equipment;'; (7) for clause (57a), the following clause shall be substituted, namely:— '(57a) "internet telecommunication service" includes,— (i) internet backbone services, including carrier services of 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 customer's web page, (iii) provision of telecommunication services, including fax, telephony, audio conferencing and video conferencing, over the internet;'; (8) in clause (64), for the Explanation, the following Explanation shall be substituted, namely:— 'Explanation.— For the removal of doubts, it is hereby declared that for the purposes of this clause,— (a) "goods" includes computer software; (b) "properties" includes information technology software;'; (9) in clause (68), for the words "to a client", the words "to any other person" shall be substituted; (10) in clause (75), for the words "to a customer", the words "to any person" shall be substituted; (11) after clause (86c), the following clause shall be inserted, namely:— '(86d) "processing and clearinghouse" means any person including the clearing corporation authorised or assigned by a recognised stock exchange, recognised association or a registered association to perform the duties and functions of a clearinghouse in relation to,— (i) the periodical settlement of contracts for, or relating to, the sale or purchase of securities, goods or forward contracts and differences thereunder; (ii) the delivery of, and payment for, securities, goods or forward contracts; (iii) any other matter incidental to, or connected with, securities, goods and forward contracts;'; (12) in clause (90a), the Explanation occurring at the end shall be numbered as Explanation 1 thereof, and after the Explanation 1 as so numbered, the following Explanation shall be inserted, namely:— ' Explanation 2.— For the removal of doubts, it is hereby declared that for the purposes of this clause "renting of immovable property" includes allowing or permitting the use of space in an immovable property, irrespective of the transfer of possession or control of the said immovable property;'; (13) in clause (92), for the words "to a client", the words "to any person" shall be substituted; (14) in clause (105),— (a) in sub-clauses (e), (h), (j), (k), (p), (q), (r), (s), (t), (u), (v), (w), (x), (y), (z), (za), (zc), (zi), (zj), (zu), (zzt) and (zzw), for the words "to a client", occurring at the beginning, the words "to any person" shall be substituted; (b) in sub-clauses (f), (l), (zb), (zh), (zm), (zo), (zq), (zt), (zz), (zzd), (zzg), (zzp), (zzv) and (zzx), for the words "to a customer", occurring at the beginning, the words "to any person" shall be substituted; (c) for sub-clause (g), the following sub-clause shall be substituted, namely:— "(g) to any person, by a consulting engineer in relation to advice, consultancy or technical assistance in any manner in one or more disciplines of engineering including the discipline of computer hardware engineering. Explanation.— For the purposes of this sub-clause, it is hereby declared that services provided by a consulting engineer in relation to advice, consultancy or technical assistance in the disciplines of both computer hardware engineering and computer software engineering shall also be classifiable under this sub-clause;"; (d) in sub-clause (m), for the words "a client" and "the client", wherever they occur, the words "any person" and "such person" shall respectively be substituted; (e) for sub-clause (zzk), the following sub-clause shall be substituted, namely:— "(zzk) to any person, by a foreign exchange broker, including an authorised dealer in foreign exchange or an authorised money changer, other than a banking company or a financial institution including a non-banking financial company or any other body corporate or commercial concern referred to in sub-clause (zm);"; (f) in sub-clause (zzzu), for the words "internet telephony", the words "internet telecommunication service" shall be substituted; (g) after sub-clause (zzzzd), the following sub-clauses shall be inserted, namely:— "(zzzze) to any person, by any other person in relation to information technology software for use in the course, or furtherance, of business or commerce, including,— (i) development of information technology software, (ii) study, analysis, design and programming of information technology software, (iii) adaptation, upgradation, enhancement, implementation and other similar services related to information technology software, (iv) providing advice, consultancy and assistance on matters related to information technology software, including conducting feasibility studies on implementation of a system, specifications for a database design, guidance and assistance during the start-up phase of a new system, specifications to secure a database, advice on proprietary information technology software, (v) acquiring the right to use information technology software for commercial exploitation including right to reproduce , distribute and sell information technology software and right to use software components for the creation of and inclusion in other information technology software products, (vi) acquiring the right to use information technology software supplied electronically; (zzzzf) to a policy holder, by an insurer carrying on life insurance business, in relation to management of investment, under unit linked insurance business, commonly known as Unit Linked Insurance Plan (ULIP) scheme. Explanation .— For the purposes of this sub-clause,— (i) management of segregated fund of unit linked insurance business by the insurer shall be deemed to be the service provided by the insurer to the policy holder in relation to management of investment under unit linked insurance business; (ii) the gross amount charged by the insurer from the policy holder for the said services provided or to be provided shall be equivalent to the difference between,— (a) premium paid by the policy holder for the Unit Linked Insurance Plan policy; and (b) the sum of premium paid for or attributable to risk cover, whether for life, health or other specified purposes, and the amount segregated for actual investment. Illustration Total premium paid for the Unit Linked Insurance Plan policy = Rs.100 Risk premium = Rs. 10 Amount actually invested = Rs. 85 Gross amount charged for the service provided = Rs. 5 [100-(10+85)]; (iii) in addition to the amount referred to in clause (ii), the gross amount charged shall include any amount charged subsequently, whether or not periodically, by the insurer from the policy holder in relation to management of investment under unit linked insurance business; (zzzzg) to any person, by a recognised stock exchange in relation to assisting, regulating or controlling the business of buying, selling or dealing in securities and includes services provided in relation to trading, processing, clearing and settlement of transactions in securities; (zzzzh) to any person, by a recognised association or a registered association in relation to assisting, regulating or controlling the business of the sale or purchase of any goods or forward contracts and includes services provided in relation to trading, processing, clearing and settlement of transactions in goods or forward contracts; (zzzzi) to any person, by a processing and clearinghouse in relation to processing , clearing and settlement of transactions in securities, goods or forward contracts including any other matter incidental to, or connected with, such securities, goods and forward contracts; (zzzzj) to any person, by any other person in relation to supply of tangible goods including machinery, equipment and appliances for use, without transferring right of possession and effective control of such machinery, equipment and appliances;"; (15) in clause (106), after the words ''goods or material or '', the words "information technology software or" shall be inserted; (16) in clause (108), for the words ''process or material'', at both the places where they occur, the words ''process or material or information technology software'' shall be substituted; (17) in clause (109a), in sub-clause (c), for the words "internet telephony", the words "internet telecommunication service" shall be substituted; (18) for clause (115), the following clause shall be substituted, namely:— '(115) "tour operator" means any person engaged in the business of planning, scheduling, organising or arranging tours (which may include arrangements for accommodation, sightseeing or other similar services) by any mode of transport, and includes any person engaged in the business of operating tours in a tourist vehicle or a contract carriage by whatever name called, covered by a permit, other than a stage carriage permit, granted under the Motor Vehicles Act, 1988 or the rules made thereunder. Explanation .— For the purposes of this clause, the expression "tour" does not include a journey organised or arranged for use by an educational body, other than a commercial training or coaching centre, imparting skill or knowledge or lessons on any subject or field;';