"fashion designing"includes any activity relating to conceptualising, outlining, creating the designs

Indian Service Tax

Fashion Designer Service

Effective Date: 16/08/2002.

Authority: Notification No. 8/2002-ST, dt. 1/8/2002 (for full text of Notification see under'Beauty Parlour').

Rate of Service Tax: 8% from 14/5/2003 (5% upto 13/5/2003). 10% from 10/9/2004 - Cess 2% of 10% = 0.2. Total ST = 10.2%.

Definitions

"fashion designing"includes any activity relating to conceptualising, outlining, creating the designs and preparing patterns for costumes, apparels, garments, clothing accessories, jewellery or any other articles intended to be worn by human beings and any other service incidental thereto, [Section 65 (43)]

"Fashion Designer" means any person engaged in providing service in relation to fashion designing; [Section 65 (44)]

Taxable service: Fashion designing service provided to customer by a fashion designer in relation to designing etc., of clothes, jewellery or any other article intended to be worn by human beings.

Value of taxable service: Gross amount received from customers for service relating to fashion designing.

Exemptions

• Ailor, jeweller, goldsmith, boutiques

• Making of garments

• Stitching charges

Person liable to pay: Fashion Designer

Head of Account

S1. Code SCCD Minor-head 004400153 Fashion Designing Services 00440212 Sub-head 00440015301 Tax Collection 00440213 116 Sub-head 00440015302 Other Receipts 00440214 113 Sub-head 0044001530311 Deduct Refunds 00440215 118

Main text of Departmental Circular/TN

F. No. Bll/1/2002- TRU, Date: 01/08/2002

1. The secti6n referred to hereinafter are the sections or clauses of the Finance Act, 1994 as amended by the Finance Act, 2002. Reference to sub­clause or clause means clause or sub-clause of Section 65 of the Finance Act, 1994 as amended by the Finance Act, 2002.

2. As per clause (37)"fashion designing"includes any activity relating to conceptualising, outlining, creating the designs and preparing patterns for costumes, apparels, garments, clothing accessories, jewellery or any other articles intended to be worn by human beings and any other service incidental thereto and as per clause (38) "fashion designer" means any person engaged in providing service in relation to fashion designing. As per sub-clause (zv) of clause (90), taxable service is any service provided to any person, by a fashion designer in relation to fashion designing.

3. Fashion designer conceptualises and creates designs/patterns applying his sense of aesthetic, keen sense of colour, visual imagination, knowledge of market trend and as per requirement of the client. Accordingly fashion designer may be involved in designing of any goods which are intended to be worn by human being and where aesthetic/looks/fashion is a criterion for wearing it. Fashion designers work include selection of material (for example type of cloth, its colour, design, quantity etc.), preparing design as per the trend or as per his visual imagination, preparation of pattern incorporating the requirement of the client. Fashion designer also keeps in mind the occasion, season and time etc. when his designed article is intended to be worn.

4. A point has been raised as to whether tailors and jewellers will be covered under the service tax. Taxable service in this case is designing of goods intended to be worn by human being. A tailor is involved only in stitching of clothes. As such no designing activity is involved. Hence tailor will not be covered under the tax net. Similarly jeweller essentially makes jewellery and sells it. Therefore, no designing is involved. However a jeweller may avail services of a designer to design jewellery. Service provided by designer to jeweller would be covered under the tax net in the category of fashion designing.

5. Some times the fashion designer not only provide designing service but also make the garments or the intended articles as per the requirement. A point has been raised as to what shall be the value of taxable service in such cases as the service provider charges in composite manner for designing as well as making of garments. It is clarified that service tax levy covers only the fashion designing service and as such making of garments is outside the purview of the levy. Therefore service tax would be leviable only on the designing charges provided fashion designer show the designing and making charges separately in the bill. However it is also clarified that if a fashion designers designs article for himself and makes these articles say garments and sells them, in such a case designing service is provided to oneself by the designer and therefore not liable to service tax.

6. At times fashion designer provides stitching service along with designing of cloth as per the requirement of client. In such case the fashion designer is liable to pay service tax only on designing service rendered by him provided designing charges are shown separately in the bill. However if designing charges and stitching charges are shown in consolidated manner, service tax will be leviable on entire amount.