"scientific or technical consultancy"means any advice, consultancy, or scientific or technical assistan

Indian Service Tax

Scientific and technical

Consultancy Service

Effective Date: 16.07.2001.

Authority: Notification No. 4/2001-ST, dt. 9/7/2001 (for full text of Notification

see under Broadcasting).

Rate of Service Tax: 8% from 14/5/2003 (5% upto 13/5/2003). 10% from 10/9/2004 - Cess 2% of 10% = 0.2. Total ST = 10.2%.

Definition: "scientific or technical consultancy"means any advice, consultancy, or scientific or technical assistance, rendered in any manner, either directly or indirectly, by a scientist or a technocrat, or any science or technology institution or organisation, to a client, in one or more disciplines of science or technology; [Section 65(92)].

Taxable service: Scientific or technical consultancy provided by a scientist or a technocrat, or by any science or technology institution or organisation to a client.

Value of taxable service: Gross amount charged from the client. Exemptions:

(i) Services by doctors, medical colleges, nursing homes, hospitals, diagnostic pathological labs, technocrats

(ii) Mere testing

(iii) Grants & Aids

Person liable to pay: Scientists, Technocrat, Institution and Organisation.

Head of Account :

SI. CodeSCCD

Minor-head 004400131 Scientific & Technical 00440124

Consultancy Service

Sub-head 00440013101 Tax Collection 00440125 116

Sub-head 00440013102 Other Receipts 00440126 113

Sub-head 00440013103 Deduct Refunds 00440127 118

Main text of Departmental Circular/TN:

[Ministry's ENo. B.II/I/2000-TRU dated 9/7/2001 - Annexure I]

1. Section 65(60)* defines "scientific and technical consultancy" as any advice, consultancy, or scientific or technical assistance, rendered in any manner,

* Section 65(92), w.e.f. 10/9/2004.

by a scientist or a technocrat, or any science or technology institution or organisation, to a client, in one or more discipline of science or technology. The taxable service has been defined in clause 72 (za) of Section 65 as "any service provided, to a client, by a scientist or a technocrat, or any science and technology institution or, organisation, in relation to scientific or technical consultancy".

2. The taxable service should be understood in the context of its commonly understood meaning and scope. For instance, it would cover consultation, advice or technical assistance provided by a scientist or a technocrat or a science or technology institution on any issue relating to any branch of science and technology. Such consultation may be in the nature of an expert opinion/advice in regard to scientific or technical feasibility or any other scientific or technical aspect of a project, process or design, recommending an apt technology, suggestion for improvement in existing technology or process, providing consultation on any technical problem or about new technology, etc. Some of the specific issues raised and clarifications thereon are given below.

3. Points for clarification:

Point raised for clarification Clarification

Whether services rendered by In common parlance, these categories

doctors, medical colleges, of service providers are not known

nursing homes, hospitals, as scientists or technocrats or

diagnostic and pathological science or technology institutions

labs, etc., would come under the or organisations. They will not be

purview of the proposed levy. covered under service tax.

Whether public funded research Yes. Service tax is liable to be paid

institutions like CSIR, ICAR, when any scientific or technical

DRDO, IITs and IISc., Regional consultancy service is rendered

Engineering Colleges etc., which whether by public funded

are exempt from payment of institutions or by private agencies.

income tax 'are covered under

the service tax.

Whether testing services will be Mere testing will not attract service

covered under the proposed levy? tax. However, in case testing is an

integral part of the consultancy, then

such activity is part and parcel of the

taxable service and no abatement

of any kind admissible.

Many public funded research In the facts of this case, no service is

institutions receive grants or rendered to anyone. Hence the question

aids from the Government for of payment of service tax does not

conducting research /project arise. However, if they render service

work. Whether such activities to anyone on payment basis, service

would be covered under the levy? tax will be payable on such services.

Whether the service tax will be If scientific or technical consultancy

leviable on consultancy provided is provided to a government

to government departments, department for which consultation

public sector undertakings?Fees are received, then service tax would be applicable.