Mumbai: The government has issued notifications bringing seven more services under the category of taxable services, giving effect to some of the provisions of the Finance Act, 2007 relating to service tax. The seven services shall become taxable from June 1.

Now, service providers will have to pay service tax on services like renting of commercial property, fax, telecom connection, pager, leased circuit and communication through telegraph and facsimile communication, with the merged "telecommunication service". With the new tax proposal, these services will become costlier from June 1.

Works contracts shall also be leviable to service tax with effect from June 1, 2007. However, an optional composition scheme for payment of service tax on works contract service has been notified. Under this scheme, provider of works contract service is given the option to pay service tax at a flat rate of 2 per cent of the total value of the contract instead of paying service tax at the standard rate. Certain conditions are prescribed to avail the optional composition scheme.

This will take the total number of taxable services to about 100. Service providers will have to pay 12 per cent service tax and an additional 3 per cent education cess.

Tax on these services will be effective from June 1, according to a notification issued by the Central Board of Excise and Customs.

However, property owners have been given a marginal relief, as property tax would be deductible for the purpose of service tax on commercial rentals though any penalty paid under the property tax cannot be deducted.

The notification also broadened the existing services tax net to include maxi-cab capable of carrying more than 12 persons for educational bodies or vehicles for driving schools, and rent-a-cab services, tent services, event management and manpower recruitment.

Renting of immovable properties for use in commerce or business shall be leviable to service tax with effect from 1st June 2007. However, property tax paid on immovable property is specifically excluded from the levy of service tax by way of an exemption notification.