laundry servives, Service Tax

[Ketan Kotecha]

laundry carrying out ironing, washing, darning, dyeing . Is it covered in service tax from budget 2012 or not

Posts / Replies

[vijay kumar]

Dear Sir, dry cleaning and cleaning activity for commercial buildings and factories etc. are covered under service tax. Only dry cleaning activity is covered under service tax whereas your activity appears to be different. No new such service as Laundry service has been brought into tax net in the 2012 budget.

[deepak gulati]

As per Finance Act 2012 , all services which are not comes under the defination of negative list are liable for service tax . Hence this service is liable for servioce tax as per Finance Act 2012.

Manpreet  Kapoor

[vijay kumar]

Finance Act, 2012 has not come into force. The negaltive list based definition of service is to come into force from a date to be notified after the assent of the Finance Bill, 2012 by the President and such date would be most likely 1.8.2012. Yes, under the new definition of "service", the above activity becomes a taxable service, but there is threshold exemption of Rs.10 lakh upto which there is no levy.

[Dilip Darji]

Dear Sir.

Dry Cleaning Service provided by any person, including commercial concern, are taxable on or after 01/05/2006.

DRY CLEANING means cleaning of fabrics with substantial non-aqueous organic solvents. The non-aqueous solent generally used in petrol etc.

DRY CLEANING means cleaning of cloths etc. using petroleum-based solvents rather than water.

WET CLEARING is althogether different than DRY CLEANING.

If the activity done by you are covered in the above definition, you would be liable to Service Tax.

However, you shall be elligible to threshold limit of Rs.10/- Lakhs.

DILIP DARJI. 

   

[Naveed S]

The points raised herein is clarified vide Board's letter issued vide F.No. B11/1/2002-TRU dated 01.08.2002 under the heading - Service Tax on 10 new services effective from 16-8-2002— Clarifications.

Annexure - X of the said circular is reproduced below :

Annexure X Dry cleaning service 1. The section referred to hereinafter are the sections or clauses of the Finance Act, 1994 as amended by the Finance Act, 2002. Reference to sub-clause or clause means clause or sub-clause of section 65 of the Finance Act, 1994 as amended by the Finance Act, 2002.  2. As per clause (31), "dry cleaning" includes dry cleaning of apparels, garments or other textile, fur or leather articles. As per clause (32) "dry cleaner" means any commercial concern providing service in relation to dry cleaning. The taxable service, as per clause (90)(zt) is any service provided to a customer, by a dry cleaner in relation to dry cleaning.  3. Dry cleaner normally performs following process as on cloths during the process of dry cleaning :  (i)  Tagging and inspection : Dry cleaner inspects the cloths and tags them with an identification label.  (ii) Pre-treatment : a stain remover is applied to remove the stains. Use of stain remover depends on the nature of stains such as stains of grease, oil, ink, colours etc. Fabric/cloth is then rinsed and dried.  (iii) Dry cleaning : a dry cleaning machine is a motor driven washer/extractor/dryer and it holds clothes in a rotating, perforated stainless-steel basket. Cloths are washed with a solvent. There may be various types of solvents used for dry cleaning such as perchloroethylene (perc), carbon tetrachloride, trichloroethylene and petrol etc. As the clothes rotate in the perforated basket, there is a constant flow of clean solvent from the pump and filter system. After cleaning, the clothes are drained to expel the solvent and then goes into a dry cycle by circulating warm air.  (iv)  Post spotting : If there is any spot/stain left after the dry cleaning, it is removed using water or any other appropriate chemical. 4. A point has been raised as to whether service tax is leviable on wet cleaning also. Wet cleaning is a process of cleaning garments in water and water soluble detergent. It is clarified that service tax is leviable only on dry cleaning. Accordingly service tax is not leviable on wet cleaning/washing provided the dry cleaner clearly mentions it in the bill. If details are not mentioned in the bill, it would normally be understood that clothes have been dry cleaned and in such situation service tax is liable to be paid.  5. A point has been raised whether service tax is payable on the job of dyeing, darning etc. It is clarified that since these activities are not dry cleaning, these service are not taxable provided it is clearly indicated in the bill.

Thus as per point 5 above, the services pertaining to ironing, washing, dyeing , darning etc. shall not attract service tax. Koi shak !!

[PUNITA BHATIA]

Since the laundry service is not in the negative list effective from 01/07/2012.....please someone clarify whether service tax is to be charged on laundry services as well.....

[Dilip Darji]

Yes. Laundry Service would be taxable after 01/07/2012, as it is not covered in Negative list.

[PUNITA BHATIA]

laundry means wet cleaning......it is different from dry cleaning.......does it come under service tax

[Naveed S]

In the post Finance Act, 2012 scenario, classification of taxable services into categories will no longer be required as it is either a service or not a service. If it is a service, it would be a taxable service, if it does not fall under a negative list or an exempted list. This is so because there is no need to classify the services into any specified categories of taxable services.

What will be more important will be to classify an economic activity as a ‘service’ or ‘not a service’. For this purpose, dominant test could be that laid down by Apex Court in BSNL v. Union of India [2006 (3) TMI 1 (SC)].

In view of above, first it is necessary to ascertain whether laundry and wet cleaning activity is actually a "service" or "not a service", based thereon, it isl be decided if it attracts service tax or otherwise.

In my personal view, if only wet cleaning activities is undertaken, then it shall not attract any service tax, as it is not a service but only a labour oriented activity carried out by a Laundry (Dhobi).

[JAMES PG]

Service has been defined in clause (44) of Section 65B  of the Finance Act as any activity for a consideration carried out by a person for another and includes declared service but does not include any activity that constitutes only a transfer in title of goods or immovable property by sale, gift or in any other manner and those included in neagtive list.

Effective from 1st July, 2012 all services, except that of negative list and covered by mega exemption notification will be taxable if the taxable turnover of the preceding financial year exceeded Rs 10 lacs. Since dry cleaning or wet cleaning is not covered in negative list or not exempted, it is a taxable service