| Q.1 |
Who is a "Consulting
Engineer" ? |
Ans.
|
Consulting Engineer
is any professionally qualified engineer or engineering firm
who, either directly or indirectly, renders any advice, consultancy
or technical assistance in any manner to a client in one or
more disciplines of engineering.
Consulting engineers include self-employed, professionally qualified
engineers, who may or may not have employed others to assist
them or it could be an engineering firm- whether organised as
a sole proprietorship, partnership, a private or a public Ltd.
Company. |
| Q.2 |
What is the taxable
service in case of consulting engineer ? |
Ans.
|
The taxable service
rendered by a consulting engineer means any service provided
to a client, by a consulting engineer in relation to advice,
consultancy or technical assistance in any manner in one or
more disciplines of engineering.
The services which attract the levy include all the services
which are rendered in the capacity of a professional person
and specifically include the services pertaining to structural
engineering works, civil/mechanical/electrical engineering works
or relating to construction management. All services rendered
within the scope of the term engineering attract Service Tax
provided they are rendered in the capacity of a consulting engineer.
The scope of the services of a consultant may include any one
or more of the following categories :-
- Feasibility study;
- Pre-design services/project report;
- Basic design engineering;
- Detailed design engineering;
- Procurement;
- Construction supervision and project management;
- Supervision of commissioning and initial operation;
- Manpower planning and training;
- Post-operation and management;
- Trouble shooting and technical services, including establishing
systems and procedures for an existing plant.
The list is only illustrative. |
| Q.3 |
What is the value
of taxable service in case of consulting engineer? |
Ans.
|
The value of taxable
service in relation to the services provided by a consulting
engineer to a client is the gross amount charged by such engineer
from the client for advice, consultancy or technical assistance
in any manner in one or more disciplines of engineering. |
| Q.4 |
Is Service Tax chargeable
on Sub Consultant appointed by main consulting engineer? |
Ans.
|
No. The services should
be rendered to a client directly, and not in the capacity of
a sub-consultant/associate consultant to another consulting
engineer, who is the prime consultant. In case, services are
rendered by the sub- consultant, the levy of Service Tax does
not fall on the sub-consultant but only on the prime or main
consulting engineer who raises a bill on his client (which would
include the charges for services by the sub-consultant ). |
| Q.5 |
What is the procedure
to be followed when service charges for consulting engineers
are received at different stages of work instead of as one time
payment? |
Ans.
|
Normally the consulting
engineer receives remuneration from the client for the services
rendered by him as per the stipulations in the contract/agreement
between them. The payment from the client is received as a single
payment or in different stages based on the completion of work
at each stage. The consulting engineers shall be required to
pay Service Tax on the payments received at each stage from
the client by the 25th of the succeeding month. Subsequent
modification, if any, in the bills raised to the client at the
time of final payment may be allowed after verification. |
| Q.6 |
Is any exemption
from Service Tax available to consulting engineers ? |
Ans.
|
Yes. The value of taxable
service rendered by a consulting engineer to a client in respect
of any project based in a foreign country is fully exempt from
the levy of Service Tax. However this exemption is subject to
the condition that the charges for such services are received
in convertible foreign exchange. - {Authority: Notification
No.25/97-ST dt. 2.7.97} |
| Q.7 |
Are valuers liable
for payment of service tax under the category of consulting
engineer? |
| Ans. |
Yes, the services provided
by Engineer Valuers regarding valuation of immovable property
and plant & machinery fall within the purview of Consulting
Engineers and is liable for payment of service Tax. |
| Q.8 |
Would the trust /
societies providing service in the field on engineering consultancy,
be liable to pay service tax ? |
| Ans. |
Yes, the Societies/
Trust working in the field of Engineering Consultancy would
be liable to pay service tax under the category of consulting
engineer. |
| Q.9 |
Are the services
rendered by ‘Consulting Engineer’ to Central Govt./State Govt.
organisations or Public Sector undertakings exempted from payment
of Service Tax? |
| Ans. |
No. There is no exemption
to this effect. Such services would be as liable for payment
of Service Tax as the services provided to private parties.
|
| Q.10 |
Are the Organisations
functioning on behalf of the Govt. of India liable to pay Service
Tax if they are engaged in rendering consultancy services on
no profit, no loss basis ? |
| Ans. |
Yes. If Govt. organisations
are providing consultancy services and getting paid for the
same, they would be correctly covered under category of ‘Consulting
Engineer’. |
| Q.11 |
Whether a foreign
company, which is not having registered office in India, but
is providing services in India to Indian client , is liable
to pay Service Tax ? |
Ans.
|
Yes, since the place
of rendering the service is the criterion for deciding the liability
to pay Service Tax, the foreign companies, which are providing
engineering consultancy services in India, are liable to pay
service tax after due registration. However, if they do not
have any office in India, they can get registered at the head
office of their client as their registered address for discharging
their Service Tax liability. |
| Q.12 |
If the foreign company
is rendering services at different places all over India, is
it necessary that different registrations be obtained for each
place of operation or one registration is enough? |
| Ans. |
No, even if they are
rendering services at different places in the Country, they
need to take registration only at the place where the Central
billing office operates from. |
| Q.13 |
If payment to the
foreign company is in foreign currency, what would be rate of
exchange to determine the Service Tax liability ? |
| Ans. |
The rate of exchange
prevailing on the date on which Indian client makes payment,
would be the rate of conversion of foreign currency into Indian
rupees. |
| Q.14 |
Is Service Tax applicable
to those firms, who undertake turn-key projects? |
Ans.
|
If the firms are manufacturing
tailor made items and are also engaged in drawing, designing,
erection & commissioning of the machinery at site, all the
essential ingredients of ‘Consulting Engineers’ i.e. advice,
consultancy & technical assistance are present. Therefore,
they would be liable for payment of Service Tax. |
Q.15
|
Whether fees charged
by a consulting engineer for secondment /deputation of qualified
engineers would attract levy of Service Tax? |
| Ans.
|
Yes. Service Tax would
be payable in the event consulting engineers are sent on deputation/secondment
to other firms. |
Q.16
|
Are the services
provided by a qualified engineer in the field of insurance survey
liable to Service Tax under the category of consulting engineer
? |
| Ans.
|
Yes. The services provided
by a qualified engineer in the field of insurance survey would
fall under service tax net under the category of service provided
by consulting engineer. |
| Q.17 |
In case of LPG road
tanker, agencies authorised by the Director of Explosives, Nagpur
conduct inspection and certify the tanker as road worthy. Such
Inspections are not optional but compulsory (a statutory requirement).
Whether the services rendered by such agencies will be covered
under the scope of consulting Engineers ? |
| Ans. |
Services rendered by
Agencies authorised by Director of Explosive, Nagpur to conduct
inspection and certify road worthiness of LPG tanker attract
service tax as Consulting Engineer since these services are
in the nature of technical assistance provided by an engineering
firm to a client. |
| Q.18 |
Is any exemption
from service tax available to consulting engineers working in
the field of computer software ? |
| Ans. |
Yes. The value of taxable
services provided to any person by a consulting engineer in
relation to computer software is exempted from the whole of
the service tax leviable thereon. (Authority :- Notfn. No.4/99-ST
dt. 28.2.99) |
