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Service Tax (Rate of Digital Services Tax) (Amendment) Order 2024



The Service Tax (Rate of Digital Services Tax) (Amendment) Order 2024 [P.U (A) 67/2024] amends the service tax rate for digital services provided by foreign service providers from 6% to 8%, effective 1 March 2024.


This is an increase from the previous 6% rate established in the Service Tax (Rate of Digital Services Tax) Order 2019 [P.U. (A) 271/2019], also included here.


The change aligns the tax rate for imported digital services with the standard rate for domestic service tax.


Key points about the savings provision:

  • For digital services provided before 1 March 2024 but with provision spanning after that date:

    • Service tax charged at the new 8% rate only on the portion attributable to the period after 1 March 2024

  • For digital services provided on or after 1 March 2024:

    • Any payments received before 1 March 2024 remain subject to the previous 6% service tax rate.


This savings clause:

  • Avoids imposing the higher 8% rate retrospectively on services already contracted or paid for before the Order comes into force.

  • Ensures incremental effects of the rate increase rather than unfairly changing mid-stream tax costs for services already being supplied

  • Provides certainty and transitional relief for taxpayers regarding services straddling the implementation date of 1 March 2024

  • Overall, the savings provision eases the transition to the higher 8% rate and avoids disruption, uncertainty or unfairness in business arrangements spanning the effective date.

References:

Service Tax (Rate of Digital Services Tax) (Amendment) Order 2024

326.1 [P.U (A) 67_2024] Service Tax (Rate of Digital Services Tax) (Amendment) Order 2024
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 Service Tax (Rate of Digital Services Tax) Order 2019

326.2 [P.U (A) 271_2019] Service Tax (Rate of Digital Services Tax) Order 2019
.pdf
Download PDF • 480KB

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