Transcript Folie 1 - Indian Merchants' Chamber

Negative List of Services and
Exempted Services
- Udayan D. Choksi
Charging Section
Old charging provision
New charging provision
(Section 66)
(Section 66B)
“There shall be levied a tax (hereinafter
referred to as the service tax) at the rate of
twelve per cent. of the value of taxable
services referred to in sub-clauses [ ] of
clause (105) of section 65 and collected in
such manner as may be prescribed.”
“There shall be levied a tax (hereinafter
referred to as the service tax) at the rate of
twelve per cent. on the value of all
services, other than those services
specified in the negative list, provided or
agreed to be provided in the taxable
territory by one person to another and
collected in such manner as may be
prescribed.”
Applicable up to: 30th June, 2012.
Notification No. 22/2012-ST, dated
05.06.2012
Applicable from: 1st July, 2012.
Notification No. 19/2012-ST, dated
05.06.2012
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Taxability under Negative List
Is the activity a “service”?
‘Service’ Means
- Any activity
- Carried out by a
person for
another
- For
consideration
Includes
But shall not include
- Includes a declared
service
- Any activity that constitutes merely a
transfer in title of goods or immovable
property by way of sale, gift or in any
other manner;
- Such transfer, delivery or supply of any
goods which is deemed to be a sale
within the meaning of clause (29A) of
Article 366 of the Constitution;
- A transaction in money or actionable
claim;
- Any service provided by an employee to
an employer in the course of or in relation
to his employment;
- Fees taken in any Court or a tribunal
established under any law for the time
being in force
- 9 Declared
categories / species
of services
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Taxability under Negative List
Is the activity a “service”?
NO
No service tax
YES
Is the service included in the “negative list”?
YES
No service tax
NO
No service tax
YES
No service tax
NO
Is the service provided in the “taxable territory”?
YES
Is the service included in the list of exemptions?
NO
Service tax
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Negative List of Services vs. Exempted Services
Aspect
Negative List of Service
Mega Exemption and Other exemptions
Chargeability
Outside the scope of
charging section of Service
Tax
Fundamentally taxable
Whether exemption
can be
surrendered?
Mandatory exclusion –
Service Tax cannot be
levied at all
Voluntary exemption – Service provider
may not claim the exemption and charge
Service Tax
Whether an
exempted service?
Yes
May not be an exempted service
CENVAT Credit
Taxes and duties paid on
inputs, input services and
capital goods cannot be
availed
Taxes and duties paid on inputs, input
services and capital goods can be
availed if the exemption is foregone.
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Negative List of Services ...
Clause under
Section 66D
Description of services which are not liable to Service Tax
(a)
Services by Government or a local authority excluding the following services to the
extent they are not covered elsewhere –
i.
services by the Department of Posts by way of speed post, express parcel post, life
insurance and agency services provided to a person other than Government;
ii.
services in relation to an aircraft or a vessel, inside or outside the precincts of a port
or an airport;
iii. transport of goods or passengers; or
iv. support services, other than services covered under clauses (i) to (iii) above,
provided to business entities;
(b)
Services by the Reserve Bank of India
(c)
Services by a foreign diplomatic mission located in India
(d)
Services relating to agriculture or agricultural produce by way of –
i.
agricultural operations directly related to production of any agricultural produce
including cultivation, harvesting, threshing, plant protection or seed testing;
ii.
supply of farm labour;
iii. processes carried out at an agricultural farm including tending, pruning, cutting,
harvesting, drying, cleaning, trimming, sun drying, fumigating, curing, sorting,
grading, cooling or bulk packaging and such like operations which do not alter the
essential characteristics of agricultural produce but make it only marketable for the
primary market;
iv. renting or leasing of agro machinery or vacant land with or without a structure
incidental to its use;
v. loading, unloading, packing, storage or warehousing of agricultural produce;
… Negative List of Services
Description of services which are not liable to Service Tax
Clause under
Section 66D
vi.
vii.
agricultural extension services;
services by any Agricultural Produce Marketing Committee or Board or services
provided by a commission agent for sale or purchase of agricultural produce;
(e)
Trading of goods
(f)
Any process amounting to manufacture or production of goods
(g)
Selling of space or time slots for advertisements other than advertisements broadcast by
radio or television
(h)
Service by way of access to a road or a bridge on payment of toll charges
(i)
Betting, gambling or lottery
(j)
Admission to entertainment events or access to amusement facilities
(k)
Transmission or distribution of electricity by an electricity transmission or distribution
utility
(l)
Services by way ofi.
pre-school education and education up to higher secondary school or equivalent;
ii.
education as a part of a curriculum for obtaining a qualification recognised by any
law for the time being in force;
iii. education as a part of an approved vocational education course;
(m)
Services by way of renting of residential dwelling for use as residence
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… Negative List of Services
Clause under
Section 66D
Description of services which are not liable to Service Tax
(n)
Services by way of –
i.
extending deposits, loans or advances in so far as the consideration is represented by
way of interest or discount
ii. inter se sale or purchase of foreign currency amongst banks or authorised dealers of
foreign exchange or amongst banks and such dealers
(o)
Service of transportation of passengers, with or without accompanied belongings by –
i.
a stage carriage;
ii.
railways in a class other than(A) first class; or
(B) an airconditioned coach;
iii. metro, monorail or tramway;
iv. inland waterways;
v. public transport, other than predominantly for tourism purpose, in a vessel between
places located in India; and
vi. metered cabs, radio taxis or auto rickshaws;
(p)
Services by way of transportation of goods –
i.
by road except the services of(A) a goods transportation agency; or
(B) a courier agency;
ii.
by an aircraft or a vessel from a place outside India up to the customs station of
clearance in India; or
iii. by inland waterways;
(q)
Funeral, burial, crematorium or mortuary services including transportation of the deceased
Negative List of Services– Section 66D
Clause
Relevant definition
Comments
(a) Services by Government or a
local authority excluding the
following services to the extent
they are not covered elsewhere
i.
services by the Department
of Posts by way of speed
post, express parcel post,
life insurance and agency
services provided to a
person other than
Government;
ii.
services in relation to an
aircraft or a vessel, inside
or outside the precincts of
a port or an airport;
iii. transport of goods or
passengers; or
iv. support services, other
than services covered
under clauses (i) to (iii)
above, provided to
business entities;
‘government’ – General
Clauses Act, 1897 read with
constitution
•
Government does not include
statutory bodies, corporations.
•
Support Services provided by
government liable under reverse
charge. E.g. police and security
services
•
TRU Circular clarifies that services
provided by government in terms
of their sovereign right (e.g. grant
of mining or licensing rights) to
business entities, and which are
not substitutable in any manner by
any private entity, are not support
services.
‘local authority’ – Panchayat,
Municipality, District Boards,
Cantonment Boards, regional
councils and district councils.
‘support services’ infrastructural, operational,
administrative, logistic
marketing or any other support
of any kind comprising
functions that entities carry
out in ordinary course of
operations themselves but
may outsource – specifically
includes advertisement and
promotion, construction or
works contract, renting of
movable or immovable property,
security, testing and analysis.
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Negative List of Services– Section 66D
Clause Negative list of services
(b)
Services by the RBI
(c)
Comments
All services provided by the RBI are part of the negative list.
RBI now liable to service tax under reverse charge.
Services by a foreign
• This entry does not cover services if any provided by any
diplomatic mission located
office or establishment of an international organisation.
in India
• Services provided to foreign diplomatic mission for official use
covered under separate exemption notification.
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Negative List of Services– Section 66D
Clause Negative list of services
(d)
Services relating to
agriculture or agricultural
produce by way of –
• Agricultural operations
• Supply of farm labour
• Processes carried out
at an agricultural farm
• Renting of agro
machinery or vacant
land
• Loading, unloading,
packing, storage and
warehousing of
agricultural produce
• Agricultural extension
services
• Services provided by
any agricultural
produce market
committee or board or
services provided by
commission agent for
sale or purchase of
agricultural produce
Comments
• Agriculture defined - cultivation of plants and rearing or
breeding of animals and other species of life forms for food,
fibre, fuel raw materials or other similar products but does not
include the rearing of horses
• Activities like pisciculture, sericulture, floriculture and
horticulture are included in the definition of agriculture.
Plantation crops like rubber, tea or coffee are also
covered under agriculture.
• Agricultural produce defined - any produce of agriculture on
which either no further processing is done or such processing
is done as is usually done by a cultivator or producer which
does not alter its essential characteristics but makes it
marketable for primary market;
• Leasing of vacant land with a greenhouse or a storage shed
meant for agricultural produce covered.
• Agricultural extension defined - application of scientific
research and knowledge to agricultural practices through
former education or training.
• More complex value added services are liable to service tax.
• Taxing income from agriculture falls to the states (Entry 46 of
List II). While Parliament is competent under Entry 97 of List I
to charge service tax. These services appear to have been
kept in the negative list in view of the special status of
agriculture in India.
• Services relating to transportation and storage in relation to
agriculture operations and produce are currently exempt.
Negative List of Services– Section 66D
Clause Negative list of services
(e)
Trading of goods
Comments
• Activities of a commission agent or a clearing and forwarding
agent who sell goods on behalf of another for a commission
will not be included in trading of goods.
• Futures contracts would be covered under trading of goods as
these contracts involve transfer of title and goods on a future
date at a predetermined price.
• Trading of commodity futures will also be covered under
trading of goods.
• Services provided by commodity exchanges clearing houses
or agents would not be covered in the negative list entry.
• Treatment of investments.
• Valuation formula for reversal of credit in respect of trading
retained
• Trading of goods included in negative list.
• Transfer of title of goods is excluded from the definition of
‘service’.
• “The Negative List shall comprise of the following services
…”
• Exempted service definition covers “service, on which no
service tax is leviable under section 66B of the Finance
Act”.
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Negative List of Services– Section 66D
Clause Negative list of services Comments
(f)
Any process amounting to • Defined as a process on which duties of excise are leviable
manufacture or production
under section 3 of the Central Excise Act or any process
of goods
amounting to manufacture of alcoholic liquors for human
consumption on which duties of excise are leviable under any
State Act.
• Service tax would be leviable on processes which do not
amount to manufacture or production of goods. However,
some services relating to processes not amounting to
manufacture have been exempted under the exemption list
e.g. job work in relation to cut and polished diamonds and
gemstones, processes of electroplating, zinc plating,
anodising etc.
• Service tax not be leviable even if there is a central excise
duty exemption for such process.
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Negative List of Services– Section 66D
Clause Negative list of services Comments
(g)
Sale of space or time slots • Under Entry 55 of List II, the State Legislatures have the
for advertisements other
exclusive taxing power in relation to taxes on advertisements
than advertisements
other than advertisements published in the newspapers and
broadcast by radio or TV
advertisements broadcast by radio or television.
• Services provided by advertisement agencies relating to
preparation of advertisements would not be covered in this
negative list entry.
• If a person provides a composite service of providing space
for advertisement and that is covered in the negative list entry
coupled with a taxable service relating to design and
preparation of advertisement, the taxability of such a bundled
service will be determined in terms of the principles laid down
in section 66F of the Act.
• The term “any other means” under the definition of
advertisement has to be read ejusdem generis, which means
advertisement has to be through some medium.
• Whether advertisement by display of product itself constitutes
medium. (e.g. car displayed at a mall)
(h)
Providing access to a road • Under Entry 59 of List II of the Seventh Schedule to the
or a bridge on payment of
Constitution of India, the State Legislatures have been
toll charges
bestowed with the exclusive taxing power in relation to tolls.
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Negative List of Services– Section 66D
Clause Negative list of services
(i)
Betting, gambling or
lottery
(j)
Admission to
entertainment events or
amusement facilities
Comments
• Under Entry 62 of List II of the Seventh Schedule to the
Constitution of India, the State Legislatures have been
bestowed with the exclusive taxing power in relation to ‘taxes
on luxuries, including taxes on entertainments, amusements,
betting and gambling.’
• Auxiliary services used for organising or promoting betting or
gambling events will not be covered under this entry.
• Under Entry 62 of List II of the Seventh Schedule to the
Constitution of India, the State Legislatures have been
bestowed with the exclusive taxing power in relation to ‘taxes
on luxuries, including taxes on entertainments, amusements,
betting and gambling.’
• The programme, drama or ballet need not necessarily be held
in a theatre to receive the benefit of this entry as the words
used in the definition are theatrical performances and not
performances in theatres.
• Entry to video parlours exhibiting movies played on a DVD
player and displayed through a TV screen will also be
covered in the definition as an exhibition of cinematographic
film. However, a membership of a club does not qualify to
avail the benefit under this entry.
• Auxiliary service like an event manager for organising
entertainment events will also not be covered under this entry
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Negative List of Services– Section 66D
Clause Negative list of services Comments
(k)
Transmission or
• Transmission and distribution services were exempted earlier.
distribution of electricity by • Electricity transmission or distribution utility has been defined
an electricity transmission
under the Act to include Central Electricity Authority, State
or distribution utility
Electricity Board, Central Transmission Utility, State
Transmission Utility, Distribution or transmission licensee, Any
other entity entrusted with such function by State or Central
Government
• Charges collected by a developer or a housing society for
distribution of electricity within the residential complex is not
covered under this entry.
• Similarly, services provided by way of installation of gensets
or similar equipment by private contractors for distribution of
electricity are also not covered under this entry.
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Negative List of Services– Section 66D
Clause Negative list of services
(l)
• Preschool education
and education up to
higher secondary
school or equivalent
• Education as a part of
a prescribed
curriculum for
obtaining a
qualification
recognised by law for
the time being in force
• Education as part of
an approved
vocational education
course (defined –
includes industrial
training centres
affiliated to the
National Council for
Vocational Training)
Comments
• Course recognised by an Indian law are covered.
• It has been clarified in the TRU that services provided by
international schools giving international certifications are also
covered under this entry.
• Boarding schools provide service of education coupled with
other services like providing dwelling units for residence and
food. This may be a case of bundled services if the charges
for education and lodging and boarding are inseparable.
• Auxiliary educational services and renting of immovable
property services provided to or by an educational institution
in respect of education exempted from service tax.
• Auxiliary educational services defined – includes services
relating to imparting any skill, knowledge or education, or
development of course content, or any other knowledge enhancement activity, whether for the students or the faculty,
or any other services which educational institutions ordinarily
carry out themselves but may obtain as outsourced services
from any other person.
• Private tutors are not covered under this entry. However
private tutors can avail the benefit of the threshold exemption.
• In case a course in a college leads to a dual qualification only
one of which is recognised by law, then it would again be a
case of bundled service if the service is inseparable.
• Placement services provided to educational institutions for job
placements will not be covered under this entry.
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Negative List of Services– Section 66D
Clause Negative list of services
(m)
Renting of residential
dwelling for use as
residence
Comments
• Renting has been defined in the Act
• Residential dwelling has not been defined and is to be
interpreted to mean any residential accommodation not
including a hotel, motel, inn, guesthouse, camp-site, lodge,
housing board or like places meant for temporary stay.
• In case the renting of the residential dwelling is used partly as
a residence and partly for non-residential purposes, it would
be a case of bundled service and would be taxed
appropriately.
• If furnished flats are given on the rent for temporary stay, they
are in the nature of lodges guest-houses and will not be
treated as a residential dwelling.
• However, if government department allots houses to its
employees and charges a license fee, such service would be
covered in the negative list entry relating to services provided
by government and would not be taxable
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Negative List of Services– Section 66D
Clause Negative list of services
(n)
Extending deposits, loans
or advances in so far as
the consideration is
represented by way of
interest or discount and
inter se sale or purchase
of foreign currency
amongst banks
Comments
• Transaction must qualify as a service – Transaction in money
or actionable claim excluded.
• ‘money’ means legal tender, cheque, promissory note, bill
of exchange, letter of credit, draft, pay order, traveller
cheque, money order, postal or electronic remittance or
any such similar instrument but shall not include any
currency that is held for its numismatic value.
• Fixed deposits or saving deposits or any other such deposit
for which return is received by way of interest
• Providing a loan or overdraft facility on payment of interest
• Mortgages or loans with a collateral security the consideration
for which is represented by way of interest
• Corporate deposits the consideration for which is represented
by way of interest
• Any charges or amounts collected over and above the interest
or discount would represent taxable consideration
• Transactions in repos/ reverse repos excluded from the
definition of service itself – in any case it would have been
excluded under this negative list entry.
• Subscription to or trading in Commercial Papers(CPs) or
Certificate of Deposits(CDs) is excluded from the definition of
service – CPs and CDs are promissory notes and a
transaction in money.
• Interest on loans is excluded from the ambit of Rule 6(3) of
the CENVAT Credit Rules
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Negative List of Services– Section 66D
Clause Negative list of services
(o)
Service of transportation of passengers,
with or without accompanied belongings by
–
i.
a stage carriage;
ii.
railways in a class other than(A) first class; or
(B) an airconditioned coach;
iii. metro, monorail or tramway;
iv. inland waterways;
v. public transport, other than
predominantly for tourism purpose, in
a vessel between places located in
India; and
vi. metered cabs, radio taxis or auto
rickshaws;
Comments
Transportation of passengers by following modes
shall hence be exigible to Service Tax:
• Aircrafts, helicopters, etc.
• Railways in first class
• Railways in an air-conditioned coach
• In a vessel, predominantly for tourism
purpose, between places located in India.
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Negative List of Services– Section 66D
Clause Negative list of services
(p)
Services by way of
transportation of goods –
i.
by road except the
services of(A) a goods
transportation
agency; or
(B) a courier agency;
ii.
by an aircraft or a
vessel from a place
outside India up to
the customs station
of clearance in India;
or
iii. by inland waterways;
(q)
Funeral, burial,
crematorium or mortuary
services including
transportation of the
deceased
Comments
• TRU clarifies transportation of goods by vessel in the coastal
waters is not covered under the negative list.
• Separate exemption available to GTA services by way of
transportation of fruits, vegetables, eggs, milks, food grain or
pulses in a goods carriage; goods where gross amount
charged on a consignment transported in a single goods
carriage does exceed Rs. 1500 and goods where gross
amount charged for transportation of all such goods for a
single consignee in the goods carriage does exceed Rs. 750
• The words “up to the customs station of clearance in India”
were substituted for the words “to the first customs station of
landing in India” at the time of assent of the Finance Bill, 2012.
• ‘goods transport agency’ means any person who provides
service in relation to transport of goods by road and issues
consignment note, by whatever name called.
• A seller sells goods to customer on FOR (Free on Road basis)
and arranges for transportation and recovers the same from
the customer. The seller is providing transportation services to
the customer, but is not a GTA
• Does it mean there is no liability to Service tax on amounts
recovered by seller from the customer.
-
Exempted Services ...
Sr. No.
Description of Exempted Services - Notification No. 25/2012-ST dated June 20, 2012 effective July
1, 2012
1.
Services provided to the United Nations or a specified international organization
2.
Health care services by a clinical establishment, an authorised medical practitioner
3.
Services by a veterinary clinic in relation to health care of animals or birds
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Exempted Services ...
Sr. No.
Description of Exempted Services - Notification No. 25/2012-ST dated June 20, 2012 effective July
1, 2012
4.
Services by an entity registered under Section 12AA of the Income Tax Act, 1961 by way of
charitable activities.
“charitable activities” means activities relating to (i) public health by way of (a) care or counseling of (i) terminally ill persons or persons with severe physical or mental
disability, (ii) persons afflicted with HIV or AIDS, or (iii) persons addicted to a dependenceforming substance such as narcotics drugs or alcohol; or
(b) public awareness of preventive health, family planning or prevention of HIV infection;
(ii) advancement of religion or spirituality;
(iii) advancement of educational programmes or skill development relating to,(a) abandoned, orphaned or homeless children;
(b) physically or mentally abused and traumatized persons;
(c) prisoners; or
(d) persons over the age of 65 years residing in a rural area;
(iv) preservation of environment including watershed, forests and wildlife; or
(v) advancement of any other object of general public utility up to a value of,(a) eighteen lakh and seventy five thousand rupees for the year 2012-13 subject to the
condition that total value of such activities had not exceeded twenty five lakhs rupees during
2011-12;
(b) twenty five lakh rupees in any other financial year subject to the condition that total value
of such activities had not exceeded twenty five lakhs rupees during the preceding financial
year;
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Exempted Services ...
Sr. No.
5.
Description of Exempted Services - Notification No. 25/2012-ST dated June 20, 2012 effective July
1, 2012
Services of(a) renting of precincts of a religious place meant for general public; or
(b) conduct of any religious ceremony.
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Exempted Services ...
Sr. No.
6.
Description of Exempted Services - Notification No. 25/2012-ST dated June 20, 2012 effective July
1, 2012
Services provided by:
(a) an arbitral tribunal to (i) any person other than a business entity; or
(ii) any business entity with a turnover up to Rs. 10 lakhs in the preceding FY
(b) an individual as an advocate or a partnership firm of advocates by way of legal services to,(i) an advocate or partnership firm of advocates providing legal services ;
(ii) any person other than a business entity; or
(iii) a business entity with a turnover up to Rs. 10 lakhs in the preceding FY; or
(c) a person represented on an arbitral tribunal to an arbitral tribunal;
Comments:
- ‘business entity’ means any person ordinarily carrying out any activity relating to industry,
commerce or any other business or profession
- ‘legal service’ means any service provided in relation to advice, consultancy or
assistance in any branch of law, in any manner and includes representational services before any
court, tribunal or authority;
• Legal services covered under the reverse charge mechanism.
• Service tax credit not available in view of definition of output service.
• Earlier exemption for representational services now applicable only to advocates and not to
practicing CA / CS / CWA.
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Exempted Services ...
Sr. No.
Description of Exempted Services - Notification No. 25/2012-ST dated June 20, 2012 effective July
1, 2012
7.
Services of technical testing or analysis of newly developed drugs, including vaccines and herbal
remedies, on human participants by a clinical research organization approved to conduct clinical
trials by the Drug Controller General of India
8.
Services by way of training or coaching in recreational activities relating to arts, culture or sports.
Comments:
• Term ‘recreational activities’ not defined. Lack of definition may create dispute.
• TRU has clarified benefit is available to coaching or training relating to all forms of dance,
music, painting, sculpture making, theatre and sports etc.
9.
Services provided to or by an educational institution in respect of education exempted from service
tax, by way of:
(a) Auxiliary educational services; or
(b) Renting of immovable property
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Exempted Services ...
Sr. No.
Description of Exempted Services - Notification No. 25/2012-ST dated June 20, 2012 effective July
1, 2012
10.
Services provided to a recognized sports body by(a) an individual as a player, referee, umpire, coach or manager for participation in a tournament or
championship organized by a recognized sports body;
(b) another recognised sports body;
Comments:
• New exemption granted
• ‘recognized sports body’ means specified institutions and inter alia includes ‘(vi) a federation or
a body which regulates a sport at international level and its affiliated federations or bodies
regulating a sport in India’.
For e.g. ICC & BCCI
11.
Services by way of sponsorship of sporting events organised(a) by a national sports federation, or its affiliated federations, where the participating teams or
individuals represent any district, state or zone;
(b) by Association of Indian Universities, Inter-University Sports Board, School Games
Federation of India, All India Sports Council for the Deaf, Paralympic Committee of India,
Special Olympics Bharat;
(c) by Central Civil Services Cultural and Sports Board;
(d) as part of National Games, by Indian Olympic Association;
(e) under Panchayat Yuva Kreeda Aur Khel Abhiyaan (PYKKA) Scheme;
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Exempted Services ...
Sr. No.
Description of Exempted Services - Notification No. 25/2012-ST dated June 20, 2012 effective July
1, 2012
12.
Services provided to the Government or local authority by way of construction, erection,
commissioning, installation, completion, fitting out, repair, maintenance, renovation, restoration or
alteration of (a) a civil structure meant predominantly for a non-industrial or non-commercial use;
(b) a historical monument, archaeological site or remains of national importance
(c) a structure meant predominantly for use as (i) an educational, (ii) a clinical, or (iii) an art or
cultural establishment;
(d) canal, dam or other irrigation works;
(e) pipeline, conduit or plant for (i) drinking water supply (ii) water treatment (iii)sewerage treatment
or disposal; or
(f) a residential complex predominantly meant for self-use or the use of their employees or other
persons specified in the Explanation 1 to clause 44 of section 65 B of the said Finance Act;
13.
Services provided by way of construction, erection, commissioning, installation, completion, fitting
out, repair, maintenance, renovation, restoration or alteration of –
(a) road, bridge, tunnel, or terminal for road transportation for use by general public;
(b) a civil structure or any other original works pertaining to a scheme under Jawaharlal Nehru
National Urban Renewal Mission or Rajiv Awaas Yojana;
(c) building owned by an entity registered under section 12AA of the Income tax Act, 1961(43 of
1961) and meant predominantly for religious use by general public;
(d) pollution control or effluent treatment plant, except located as a part of a factory; or a structure
meant for funeral, burial or cremation of deceased
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Exempted Services ...
Sr. No.
Description of Exempted Services - Notification No. 25/2012-ST dated June 20, 2012 effective July
1, 2012
14.
Services by way of construction, erection, commissioning or installation of original works pertaining
to,(a) airport, port or railways;
(b) single residential unit otherwise as a part of a residential complex;
(c) low- cost houses up to a carpet area of 60 square metres per house in a housing project
approved by competent authority empowered under the ‘Scheme of Affordable Housing in
Partnership’ framed by the Ministry of Housing and Urban Poverty Alleviation, Government of
India;
(d) post- harvest storage infrastructure for agricultural produce including a cold storages for such
purposes; or
(e) mechanised food grain handling system, machinery or equipment for units processing
agricultural produce as food stuff excluding alcoholic beverages;
Comments for 12, 13, 14:
• Constructing hospitals and educational institutes for the government, a local authority or a
governmental authority is not liable to Service tax. But constructing the same for others is liable
to service tax.
• Construction of a building owned by an entity registered under section 12 AA of the Income tax
Act, 1961 and meant predominantly for religious use by general public is exempt from Service
tax.
• Repair, maintenance of airports, ports and railways are liable to Service tax and the same will
be available as input tax credit to railways, port or airport authority, if other conditions are met.
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Exempted Services ...
Sr. No.
Description of Exempted Services - Notification No. 25/2012-ST dated June 20, 2012 effective July
1, 2012
15.
Temporary transfer or permitting the use or enjoyment of a copyright covered under clause (a) or (b)
of sub-section (1) of section 13 of the Indian Copyright Act, 1957 (14 of 1957), relating to original
literary, dramatic, musical, artistic works or cinematograph films;
Comments:
• Temporary transfer or permitting use or enjoyment of copyright in cinematographic film and
sound recording were earlier liable to service tax.
• Now, Temporary transfer or permitting use or enjoyment of copyright
in recording
cinematographic film is exempted.
• ‘software’ is defined as ‘literary work’.
16.
Services by a performing artist in folk or classical art forms of (i) music, or (ii) dance, or (iii) theatre,
excluding services provided by such artist as a brand ambassador
Comment:
Activities by an artist in other art forms e.g. western music or dance, modern theatres, performance
of actors in films or television serials would be taxable. Similarly activities of artists in still art forms
e.g. painting, sculpture making etc. are taxable.
17.
Services by way of collecting or providing news by an independent journalist, Press Trust of India or
United News of India
18.
Services by way of renting of a hotel, inn, guest house, club, campsite or other commercial places
meant for residential or lodging purposes, having declared tariff of a room below rupees one
thousand per day or equivalent;
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Exempted Services ...
Sr. No.
Description of Exempted Services - Notification No. 25/2012-ST dated June 20, 2012 effective July
1, 2012
19.
Services provided in relation to serving of food or beverages by a restaurant, eating joint or a mess,
other than those having the facility of air-conditioning or central air-heating in any part of the
establishment, at any time during the year and which has a license to serve alcoholic beverages;
20.
Services by way of transportation by rail or a vessel from one place in India to another for specified
goods like petroleum and petroleum products, defence or military equipment, household effects,
railway equipments or materials, agricultural produce, foodstuffs, chemical fertilizers and oilcakes
21.
Services provided by a goods transport agency by way of transportation of
- fruits, vegetables, eggs, milk, food grains or pulses in a goods carriage, or
- goods where gross amount charged on a consignment transported in a single goods carriage
does not exceed Rs. 1,500; or
- goods, where gross amount charged for transportation of all such goods for a single consignee in
the goods carriage does not exceed Rs. 750
22.
Services by way of giving on hire (a) to a state transport undertaking, a motor vehicle meant to carry more than twelve passengers; or
(b) to a goods transport agency, a means of transportation of goods;
23.
Transport of passengers by- air embarking or terminating in an airport located in the state of
Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, or Tripura or at
Baghdogra located in West Bengal; or a contract carriage for the transportation of passengers,
excluding tourism, conducted tour, charter or hire or ropeway, cable car or aerial tramway
24.
Services by way of motor vehicle parking to general public excluding leasing of space to an entity
for providing such parking facility
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Exempted Services ...
Sr. No.
Description of Exempted Services - Notification No. 25/2012-ST dated June 20, 2012 effective July
1, 2012
25.
Services provided to the Government or a local authority by way of (a) Carrying out an activity in relation to any function ordinarily entrusted to a municipality in
relation to water supply, public health, sanitation conservancy, solid waste management or
slum improvement and upgradation; or
(b) repair or maintenance of a vessel or an aircraft
26.
Services of general insurance business provided under specified schemes
27.
Services provided by an incubatee up to total business turnover of Rs. 50 lakh in an FY, subject to
the following conditions:
(a) total business turnover had not exceeded Rs. 50 lakh in the preceding FY and
(b) A period of 3 years has not lapsed from the date of entering into agreement as an incubatee
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Exempted Services ...
Sr. No.
Description of Exempted Services - Notification No. 25/2012-ST dated June 20, 2012 effective July
1, 2012
28.
Service by an unincorporated body or an entity registered as a society to own members by way of
reimbursement of charges or share of contribution
(a) as a trade union;
(b) for the provision of carrying out any activity which is exempt from the levy of service tax; or
(c) up to an amount of Rs. 5000 per month per member for sourcing of goods or services from a
third person for common use of its members in a housing society or residential complex
Comments:
• Scope of exemption extended to include contributions from trade unions.
• Whether exemption up to Rs. 5,000/- available in respect of contributions received from
members is more than Rs. 5,000/-?
• Earlier Notification 8/2007-S.T. dated 01.03.2007 imposed a condition that the total
consideration received from an individual member by the said association for providing the
services does not exceed three thousand rupees per month
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Exempted Services ...
Sr. No.
Description of Exempted Services - Notification No. 25/2012-ST dated June 20, 2012 effective July
1, 2012
29.
Services by the following persons in respective capacities a) a sub-broker or an authorised person to a stock broker;
b) an authorised person to a member of a commodity exchange;
c) a mutual fund agent or distributor to mutual fund or asset management company for
distribution or marketing of mutual fund;
d) a selling or marketing agent of lottery tickets to a distributer or a selling agent;
e) a selling agent or a distributer of SIM cards or recharge coupon vouchers;
f)
a business facilitator or a business correspondent to a banking company or an insurance
company in a rural area;
g) business facilitator or a business correspondent to a banking company or an insurance
company, in a rural area;
h) sub-contractor providing services by way of works contract to another contractor providing
exempt works contract service
30.
Carrying out an intermediate production process as job work in relation to (a) agriculture, printing or textile processing;
(b) cut and polished diamonds and gemstones; or plain and studded jewellery of gold and other
precious metals, falling under Chapter 71 of the Central Excise Tariff Act ,1985 (5 of 1986);
(c) any goods on which appropriate duty is payable by the principal manufacturer; or
(d) processes of electroplating, zinc plating, anodizing, heat treatment, powder coating, painting
including spray painting or auto black, during the course of manufacture of parts of cycles or sewing
machines upto an aggregate value of taxable service of the specified processes of one hundred
and fifty lakh rupees in a financial year subject to the condition that such aggregate value had not
exceeded one hundred and fifty lakh rupees during the preceding financial year;
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Exempted Services ...
Sr. No.
Description of Exempted Services - Notification No. 25/2012-ST dated June 20, 2012 effective July
1, 2012
31.
Services by an organiser to any person in respect of a business exhibition held outside India
32.
Services by way of making telephone calls from:
(a) departmentally run public telephones;
(b) guaranteed public telephones operating only for local calls; or
(c) free telephone at airport and hospitals where no bills are being issued
33.
Services by way of slaughtering of animals
34.
Services received from a service provider located in a non-taxable territory by:
(a) the Government, a local authority or an individual in relation to any purpose other than industry,
business or commerce; or
(b) an entity registered under section 12AA of the Income tax Act, 1961 (43 of 1961) for the
purposes of providing charitable activities.
(c ) a person located in a non-taxable territory
Comments:
• Services provided in taxable territory from a service provider located in a non- taxable territory
are covered under reverse charge.
• Exemption granted to Government or local authorities or individuals, if services are obtained for
non-commercial purposes.
• Exemption granted where both service provider and receiver are located in non-taxable territory
but place of provision might be in the taxable territory.
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Exempted Services ...
Sr. No.
Description of Exempted Services - Notification No. 25/2012-ST dated June 20, 2012 effective July
1, 2012
35.
Services of public libraries by way of lending of books, publications or any other knowledge
enhancing content or material
36.
Services by Employee’s State Insurance Corporation to persons governed under the Employees’
Insurance Act, 1948
37.
Services by way of transfer of a going concern, as a whole or an independent part thereof
Comments:
• Transactions of business restructuring, amalgamation, demergers etc.
• Reversal of CENVAT Credit under Rule 6 of CENVAT Credit Rules, 2004.
38.
Services by way of public conveniences such as bathroom, washrooms, lavatories, urinal or toilets
39.
Services by a governmental authority by way of an activity in relation to any function entrusted to a
municipality under Article 243W of the Constitution
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Other Exemptions
Notification Number
Notification No.
27/2012-ST dated
June 20, 2012
effective July 1,
2012
Notification No.
29/2012-S.T., dated
20.06.2012
Description of Exempted Service
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
Service of renting of an immovable property, from so much of
the Service Tax leviable thereon under section 66B of the said
Finance Act, as is in excess of the service tax calculated on a
value which is equivalent to the gross amount charged for
renting of such immovable property less taxes on such
property, namely property tax levied and collected by local
bodies, provided:
- Interest / penalty etc on account of delayed payment of
property tax or any other reasons shall not be treated as
property tax for the purposes of deduction
- wherever the period for which property tax paid is different
from the period for which service tax is paid/ payable, only
property tax proportionate to the relevant period can be
excluded
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Other Exemptions
Notification Number
Notification No.
31/2012-ST dated June
20, 2012 effective July
1, 2012
Description of Exempted Service
Service provided to an exporter for transport of goods by goods
transport agency in a goods carriage from :
- any container freight station or inland container depot to the
port or airport, as the case may be, from where the goods are
exported; or
- directly from their place of removal, to an inland container
depot, a container freight station, a port or airport, as the case
may be, from where the goods are exported
The exporter shall have to produce the consignment note, by
whatever name called, issued in his name and other procedural
compliances specified
Notification No.
32/2012-ST dated June
20, 2012 effective July
1, 2012
Service provided, by a Technology Business Incubator (TBI) or a
Science and Technology Entrepreneurship Park (STEP)
recognized by the National Science and Technology
Entrepreneurship Development Board (NSTEDB) of the
Department of Science and Technology, Government of India
- Procedural compliances specified
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Other Exemptions
Notification Number
Notification No. 41/2012S.T. dated June 29, 2012
effective July 1, 2012
Description of Exempted Service
Exemption granted to specified services:
“specified services” means- in the case of excisable goods, taxable services that have
been used beyond the place of removal, for the export of said
goods;
- in the case of goods other than (i) above, taxable services
used for the export of said goods;
- but shall not include any service specifically excluded from the
definition of ‘input services’.
Rebate can be claimed by means of two methods:
1. Specified % of FOB Value of goods exported (% prescribed
as per tariff headings)
2. If amount of rebate is more than 0.12% of FOB value of
exported goods, Form A-1 shall be submitted along with
relevant invoice, bill or challan, or any other document for
each specified service, in original, issued in the name of the
exporter, evidencing payment for the specified service used
for export of the said goods and the service tax paid thereon
and other conditions in notification to be fulfilled.
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Charging Section
Old charging provision
New charging provision
(Section 66)
(Section 66B)
“There shall be levied a tax (hereinafter
referred to as the service tax) at the rate of
twelve per cent. of the value of taxable
services referred to in sub-clauses [ ] of
clause (105) of section 65 and collected in
such manner as may be prescribed.”
“There shall be levied a tax (hereinafter
referred to as the service tax) at the rate of
twelve per cent. on the value of all
services, other than those services
specified in the negative list, provided or
agreed to be provided in the taxable
territory by one person to another and
collected in such manner as may be
prescribed.”
Applicable up to: 30th June, 2012.
Notification No. 22/2012-ST, dated
05.06.2012
Applicable from: 1st July, 2012.
Notification No. 19/2012-ST, dated
05.06.2012
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MUMBAI
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Ahmedabad 380 051
VADODARA
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