Accounts Notes: Service Tax on Management Consultant

Saturday 2 July 2011

Service Tax on Management Consultant

Indian Service Tax
Management Consultant

Effective Date: 16/10/1998.

Authority: Notification No. 53/98-ST, dt. 7/10/1998 (for full text of Notification see under'Architect').

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: "management consultant"means any person who is engaged in providing any service, either directly or indirectly, in connection with the management of any organisation in any manner and includes any person who renders any advice, consultancy or technical assistance, relating to conceptualising, devising, development, modification, rectification or up gradation of any working system of any organisation; [Section 65(65)]

Taxable service: Management consultant providing service to a client in connection with the management of any organisation in any manner.

Value of taxable service: The gross amount charged by such consultant from the client for services rendered in connection with the management of any organisa~ion in any manner.

Person liable to pay: Management Consultant.
Head of Account

SI. Code

SCCD

Minor-head

004400130

Management Consultant Services

004400115

Sub-head

00440013001

Tax Collection

004400116

110

Sub-head

00440013002

Other Receipts

00440117

111

Sub-head

00440013003

Deduct Refunds

00440118

118
Questions & Answers

Q. 1l Who is Management Consultant?

Ans. "Management Consultant" is a person who is engaged in providing any service, either directly or indirectly, in connection with the management of any organization in any manner and includes any person who renders any advice, consultancy or technical assistance, relating to conceptualizing, devising, development, modification, rectification or up gradation of any working system of any organization.

Q. 2 What is the taxable service in case of a Management Consultant?

Ans. Taxable service means any service provided to a client, by a management consultant in connection with the management of any organization in any manner.

Q. 3 What is the value of the taxable service in case of Management Consultant?

Ans. Value of the taxable service in relation to the service provided by a management consultant to a client, is the gross amount charged by such consultant from the client for services rendered in connection with the management of any organization in any manner.

Q. 4 The Management Consultants render lectures/briefs/advice to the management association members for promoting sound management principles and practices. Whether such services are liable for service tax?

Ans. Yes. The activities of rendering lectures / briefs / advice to the management association members relate to up gradation of human resources of an organization. Therefore, these services would correctly attract service tax as Management Consultant.
Changes from 10/9/2004

F.No.B2/812004-TRU, Date: 10/9/2004

23. Service tax on IT industry:

Taxable services provided in respect of Enterprise Resource Planning (ERP) software systems by a management consultant for management of any organization has been exempted. (Refer Notification No.16/2004-S.T.,dated 10/9/2004).
Main text of Departmental Circular/TN

[TN No. 116/98-ST, Dated 15/10/1998 of Hyderabad Commissionerate]

7.1 As per Section 65(21)* of the Finance Act, 1994, "management consultant" means any person who is engaged in providing any service, either directly or indirectly, in connection with the management of any organisation in any manner and includes any person who renders any advice, consultancy or technical assistance, relating to conceptualising, devising, development, modification, rectification or up gradation of any working system of any organisation. The "taxable service" means the service provided to a client by a management consultant in connection with the management of any organisation in any manner.