Health Club & Fitness Centre Services

September 19, 2016   admin  Service Wise Implications
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  • Understanding of the service

  • One can see gyms and health fitness clubs including spas are mushrooming everywhere in India. The service envisaged under this head are sauna and steam bath, Turkish bath, solarium, spa, reducing / slimming saloons, gymnasium, yoga, meditation, massages and any other like services.
  • Health and fitness services are provided by clubs, fitness centres, health saloons, hotels, gymnasium and massage centres. The services which fall under this category might be for weight reduction and slimming, physical fitness exercise, gyms, aerobics, yoga, meditation, reiki, sauna and steam bath, turkish bath, sun bath and massage for general well being. However therapeutic massage does not come in the ambit of taxable service. Therapeutic massage basically means a massage provided by qualified professionals under medical supervision for curing diseases suchas arthritis, chronic low back pain and sciatica etc. Ayurvedic massages, acupressure therapy, etc. given by qualified professionals under medical supervision for curing diseases/disorders will come under the category of therapeutic massages. If the massage is performed without any medical supervision or advice but for the general physical well being of a person, such massages do not come under the purview of therapeutic massages and they would be liable to service tax. [para 3, Instruction No B/11/1/2002-ST, dated 01.08.2002]

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  • Accounting Codes

Such codes are no longer statutory but used for statistical purpose for the purpose of registration and for payment of tax as specified vide Circular No.165/16/2012 –ST dated 20.11.2012:

Tax Collection of Service Interest and penalties on such service
00440205 00440206

  • Taxability as settled by precedents / Circulars / Trade notices

Activity Whether falls within the scope of present service Reference
Therapeutic massage No Instruction No B/11/1/2002-ST, dated 01.08.2002
Massages performed without any medical supervision or advise but for the general physical well being Yes Instruction No B/11/1/2002-ST, dated 01.08.2002
Institutes imparting diploma in yoga No Instruction No B/11/1/2002-ST, dated 01.08.2002

  • Value of Taxable Service

Section 67 read along with Service Tax (Determination of Value) Rules, 2006 provides the manner of determining the value of taxable services on which services tax should be levied.

In respect of Health Club and Fitness Centre Services, no specific provision for determination of taxable value has been provided.  However it has been clarified that the value of taxable services is the total amount of consideration consisting of all components of the taxable service and it is immaterial that the details of individual components of the total consideration are indicated separately in the invoice. Thus, the value of taxable Health Club and Fitness Centre Services is to be determined in terms of provision of Section 67 read with the prescribed Rules.

Vide Instruction No B/11/1/2002-ST, dated 01.08.2002 it has been clarified that monthly amount as membership is included in the value of taxable services.

  • Abatement

No abatement has been granted to any person liable to pay service tax under the Section

  • Exemptions available

  1. General Exemption
  • Small Service Provider

Vide Notification No 33/2012-ST, dated 20.06.2012 – Exemption to Small service providers having taxable turnover of less than 10 Lakhs and providing services other than by way of under a brand name.

  • Import of Technology

Vide Notification No. 14/ 2012-ST, dated March 17, 2012 – Exemption in respect of Taxable service involving import of technology, from so much of service tax, as is equivalent to the extent of amount of R&D Cess payable on the said transfer of technology under the provisions of section 3 of the Research and Development Cess Act, 1986. 

  • To Foreign Diplomatic missions and their personnel

Vide Notification No 27/2012-ST, dated 20.06.2012 – Exemption for all the taxable services provided by any person, for the official use of a foreign diplomatic mission or consular post in India, or for personal use or for the use of the family members of diplomatic agents or career consular officers posted therein.

  • Services by TBI or STEP

Vide Notification No 32/2012-ST, dated 20.06.2012 – All taxable services provided by TBI or STEP have been exempted

  • Services provided to SEZ

Vide Notification No 40/2012-ST, dated 20.06.2012, all taxable services received by a Unit located in a Special Economic Zone (SEZ) or Developer of SEZ for the authorized operations, has been exempted from the levy of whole of the service tax.

 

  1. Specific Exemptions:

No Specific Exemption had been granted by the government in case of Health Club and Fitness Centre Services.

  • Provisions relating to Cenvat Credit

Since services are taxable, Cenvat shall be available to service provider.  However, if providing both taxable as well as non taxable services, Cenvat Credit as per Rule 6 of Cenvat Credit Rules, 2004 shall be available.

  • Provisions relating to point of taxation

The point of taxation will be governed by Rule 3 of Point of Taxation Rules, 2011. As per the said rules, the Point of Taxation will be the date of issue of invoice or the date of receipt of payment, whichever is earlier. In case the invoice is not issued within 30 days of booking (provision of service), the date of booking will be the point of taxation.

  • Provisions relating to Place of Provision of Service Rules, 2012

The Place of Provision of Service Rules, 2012 contains Rule 4, which provides for place of provision of services which are provided to an individual, represented either as the recipient of service or a person acting on behalf of the recipient, which require the physical presence of the receiver or the person acting on behalf of the receiver, with the provider for the provision of the service.

Para 5.4.3. of Taxation of Services – An Education Guide dated 20.06.2012 clarifies such cases as follows:

Certain services like cosmetic or plastic surgery, beauty treatment services, personal security service, health and fitness services, photography service (to individuals), internet café service, classroom teaching, are examples of services that require the presence of the individual receiver for their provision. As would be evident from these examples, the nature of services covered here is such as are rendered in person and in the receiver’s physical presence. Though these are generally rendered at the service provider’s premises (at a cosmetic or plastic surgery clinic, or beauty parlor, or health and fitness center, or internet café), they could also be provided at the customer’s premises, or occasionally while the receiver is on the move (say, a personal security service; or a beauty treatment on board an aircraft).

In the above case, place of performance of service shall be the place where such services are actually performed.

  • Related Circulars and Notification

  • Circular F.No. B.11/1/2002-TRU, dated 1-8-2002[annexure vi]
  1. The section referred to hereinafter are the sections or clauses of the Finance Act, 1994 as amended by the Finance Act, 2002. Reference to sub-clause or clause means clause or sub-clause of section 65 of the Finance Act, 1994 as amended by the Finance Act, 2002.
  1. As per clause (42), “health and fitness service” means physical well being service such as, sauna and steam bath, turkish bath, solarium, spas, reducing or slimming saloons, gymnasium, yoga, meditation, massage (excluding therapeutic massage) or any other like service. As per clause (90)(zw), the taxable service is any service provided to any person, by a health club and fitness centre in relation to health and fitness service. “Health club and fitness centre” means any establishment including a hotel or a resort providing health and fitness service.
  1. Health and fitness services are provided by clubs, fitness centres, health saloons, hotels, gymnasium and massage centres. The services which fall under this category might be for weight reduction and slimming, physical fitness exercise, gyms, aerobics, yoga, meditation, reiki, sauna and steam bath, turkish bath, sun bath and massage for general well being. However therapeutic massage does not come in the ambit of taxable service. Therapeutic massage basically means a massage provided by qualified professionals under medical supervision for curing diseases suchas arthritis, chronic low back pain and sciatica etc. Ayurvedic massages, acupressure therapy, etc. given by qualified professionals under medical supervision for curing diseases/disorders will come under the category of therapeutic massages. If the massage is performed without any medical supervision or advice but for the general physical well being of a person, such massages do not come under the purview of therapeutic massages and they would be liable to service tax.
  1. A point has been raised as to what would be the value of taxable service in case where clubs and fitness centres charge a monthly/periodic amount as membership fee and only members are allowed to avail their services. It is clarified that membership fee charged by the club is in lieu of service provided and therefore in such cases service tax would be leviable on periodic/monthly membership fee.
  1. Another point relates to service tax on membership fee already collected. It is clarified that no service tax will be payable on membership fee already collected prior to the date on which the new service tax has come into force.
  1. Certain recognised institutes impart diploma courses in yoga. A point has been raised as to whether service tax is leviable on such institutes. It is clarified that such institutes and research centre do not fall in the category of health club and fitness centre and accordingly would not be liable to service tax.

 

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