The Tax PublishersSection C

FAQs on Maintenance of Medical Records of Employees

Any service provided to any business entity, by any other person, in relation to storing, keeping or maintaining of medical records of employees of the business entity, is chargeable to service tax under this category. The present write-up tries to discuss the nature and scope of this taxable service via some Frequently Asked Questions (FAQs).

1. Who generally maintains medical records of employees?

World over, business organizations maintain medical histories of their employees which are used not only for medical purposes but also for finding the suitability of a person for a particular job or for promotion, etc. This activity is usually outsourced for a consideration. The relevant records are maintained either by certain designated hospitals or even by independent record keepers for a charge.

2. What is the effective date of levy of service tax on taxable service of maintenance of medical records of employees?

Service tax on the activity of maintenance of medical records of employees of a business entity is chargeable with effect from 1-7-2010.

3. What is the taxable service in relation to taxable service of maintenance of medical records of employers?

In respect of the activity of maintenance of medical records of employees of a business entity, the taxable service has been defined to mean any 'service provided or to be provided', to any business entity, by any other person, in relation to storing, keeping or maintaining of medical records of employees of the business entity.

The key ingredients of the definition are as under :

(i) Any service is provided in relation to storing, keeping or maintaining of medical records of employees of a business entity.

(ii) Such service is provided to any business entity.

(iii) Such service is provided by any other person.

4. What is the meaning of business entity in the context of the service in point?

As per section (19b) of section 65 of the Act, 'business entity' includes an association of persons, body of individuals, company or firm, but does not include an individual.

5. What would be the value of taxable service where provision of service is for a consideration in money?

In a case where the provision of service is for a consideration in money, the value of taxable service shall be the gross amount charged by the service provider for such service provided or to be provided by him.

6. What would be the value of taxable service where the provision of service is for a consideration not wholly or partly consisting of money?

In a case where the provision of service is for a consideration not wholly or partly consisting of money, the value of taxable service shall be the gross amount charged by the service provider to provide similar service to any other person in the ordinary course of trade and the gross amount charged is the sole consideration.

7. What would be the value of taxable service where the value cannot be determined in accordance with para (12) above?

In a case where the value cannot be determined in accordance with para (12) above, the service provider shall determine the equivalent money value of such consideration which shall in no case be less than the cost of the provision for such taxable service.

8. How is value of taxable service determined if the service provider does not charge service tax separately or if the service receiver pays only the taxable value?

In terms of rule 4A of the Service Tax Rules, 1994, service tax is required to be indicated separately in the bill or invoice. However, in a case where the service provider does not charge service tax separately or if the service receiver pays only the taxable value, it has been provided in sub-section (2) of section 67 that where the gross amount charged by a service provider, for the service provided or to be provided is inclusive of service tax payable, the value of such taxable service shall be such amount as, with the addition of tax payable, is equal to the gross amount charged.

9. Is the amount received in advance towards provision of a taxable service chargeable to service tax?

According to sub-section (3) of section 67, the gross amount charged for the taxable service shall include any amount received towards the taxable service before, during or after provision of such service. Hence, the amount received in advance towards the provision of a taxable service would be chargeable to service tax.

10. Who is liable to pay service tax in respect of the taxable service of maintenance of medical records of employees?

In relation to the taxable service of maintenance of medical records of the employees, the service provider is liable to pay service tax.

11. Is any taxable service provided or to be provided from outside India to a recipient in India chargeable to service tax?

Yes. Any taxable service provided or to be provided from outside India to a recipient in India is chargeable to service tax.

12. When is any taxable service provided or to be provided from outside India to a recipient in India not chargeable to service tax?

Any taxable service provided or to be provided from outside India to a recipient in India is not chargeable to service tax, when the recipient of the service is an individual and such service received by him is otherwise than for the purpose of use in any business or commerce.

13. When is the taxable service of maintenance of medical records of employees deemed to have been imported into India?

The taxable service of maintenance of medical records of employees is deemed to have been imported into India when such service is received by a recipient located in India for use in relation to business or commerce.

14. Who is liable to pay service tax in respect of import of service?

In terms of rule 2(1)(d)(iv) of the Service Tax Rules, 1994, in case of any taxable service provided or to be provided by any person from a country other than India and received by any person in India under section 66A of the Finance Act, 1994, the recipient of such service shall be liable to pay service tax.

15. Is taxable service provided outside India chargeable to service tax?

No. Service tax is not leviable on export of any taxable service, subject to the following conditions, namely :

(i) such service is provided from India and used outside India (this condition is not applicable with effect from 27-2-2010); and

(ii) payment for such service is received by the service provider in convertible foreign exchange.

16. What is export of service in relation to taxable service of maintenance of medical records of employees?

In relation to taxable service of maintenance of medical records of employees, export of service occurs when such service is provided in relation to business or commerce, provision is made for such services to a recipient located outside India and when such services are provided otherwise, be provision of such services to a recipient located outside India at the time of provision of such service.

17. What are the accounting codes in relation to taxable service of maintenance of medical records of employees?

The accounting codes for payment of service tax in relation to the taxable service of maintenance of medical records of employees are as under :

Service tax

:

00440601

Education cess

:

00440298

Secondary and Higher Education cess

:

00440426

Interest and Penalty

:

0044062

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