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Support Services Under Service Tax
January, 21st 2015

Support services for the purpose of Service Tax have been defined in section 65B(49).

Meaning of Support Services (Clause 49)

“support services” means infrastructural, operational, administrative, logistic, marketing or any other support of any kind comprising functions that entities carry out in ordinary course of operations themselves but may obtain as services by outsourcing from others for any reason whatsoever and shall include advertisement and promotion, construction or works contract, renting of immovable property, security, testing and analysis.

Support services have been defined in section 65B of the Act as ‘infrastructural, operational, administrative, logistic marketing or any other support of any kind comprising functions that entities carry out in ordinary course of operations themselves but may obtain as services by outsourcing from others for any reason whatsoever and shall include advertisement and promotion, construction or works contract, renting of movable or immovable property, security, testing and analysis’. Thus services which are provided by government in terms of their sovereign right to business entities are not support services e.g. grant of mining or licensing rights.

‘Support services’ means -

  • infrastructural,
  • operational,
  • administrative,
  • logistic,
  • marketing or
  • any other support of any kind comprising functions that entities carry out in ordinary course of operations themselves but may obtain as services by outsourcing from others for any reason whatsoever
  • shall include advertisement and promotion, construction or works contract, renting of immovable property, security, testing and analysis;
  • Services provided by Government Security agencies are covered under support service - under reverse charge, Service Receiver is liable to tax.

‘Support services for business or commerce’ was prior to Finance Act, 2012, defined in section 65(104c) as follows –

“Support services of business or commerce means services provided in relation to business or commerce and includes evaluation of prospective customers, telemarketing, processing of purchase orders and fulfilment services, information and tracking of delivery schedules, managing distribution and logistics, customer relationship management services, accounting and processing of transactions, operational or administrative assistance in any manner, formulation of customer service and pricing policies, infrastructural support services and other transaction processing”.

The new definition is a wider definition and generally includes the following –

  • advertising
  • sales promotion/other promotion
  • construction
  • works contract
  • renting of immovable property
  • security
  • testing and analysis

In case of services provided by Government or a Local Authority, support services provided to business entities have been excluded from the scope of negative list under clause (a) of section 66D of Finance Act, 1994.

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