The following major modifications have been proposed in the Finance Bill in respect of Service Tax

I. SERVICE TAX IS BEING IMPOSED ON THE FOLLOWING SPECIFIED SERVICES:
1) Service provided in relation to transport of goods by rail
2) Service provided in relation to transport of (i) coastal goods; and (ii) goods through Inland Water including National Waterways
3) Legal consultancy service
4) Cosmetic and plastic surgery service

The above changes will come into effect from a date to be notified, after the enactment of Finance (No. 2) Bill, 2009.

II. SCOPE OF CERTAIN EXISTING SERVICES IS BEING EXTENDED OR ALTERED AS FOLLOWS:
1) The definition of Business Auxiliary Service (BAS) is being amended so as to provide that only those processes, which result in the manufacture of ‘excisable goods’ (as defined in the Central Excise Act) are excluded from the purview of BAS.
2) The definition of ‘Information Technology Software Service’ is being amended to replace the word ‘acquiring’ with the word ‘providing’ [appearing in Sl. No. (iv) and (v) of the definition]. The amendment is being given retrospective effect from 16.05.2008.
3) The definition of stock-broker (in stock-broker service) is being amended to exclude sub-broker from its ambit. As a consequence, sub-brokers will be outside the purview of service tax.

The above changes will come into effect from a date to be notified, after the enactment of Finance (No. 2) Bill, 2009.

III. EXEMPTIONS
1) Exemption from service tax is being provided to inter-state or intra-state transportation of passengers in a vehicle bearing ‘Contract Carriage Permit’ with specified conditions.
2) Exemption from service tax (leviable under Club or Association Service) is being provided to the Federation of Indian Export Organizations (FIEO) and specified Export Promotions Councils. The exemption is valid till 31.03.2010.
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3) Exemption from service tax (leviable under banking and other financial services or under foreign exchange broking service) is being provided to inter-bank purchase and sale of foreign currency between scheduled banks.

The above changes will come into effect immediately.