Budget 2010: Service tax Exemption provided and withdrawn

Exemptions:

1) Statutory taxes charged by the foreign governments are being excluded from taxable value for levy of service tax under the Air passenger transport service.

2)  Exemption from service tax is being provided to services relating to ‘Erection, Commissioning or Installation’ of,-

(a) Mechanized Food Grain Handling Systems etc.;

(b) Equipment for setting up or substantial expansion of cold storage; and

(c) Machinery/equipment for initial setting up or substantial expansion of units for processing of agricultural, apiary, horticultural, dairy, poultry, aquatic, marine or meat products.

3) Pre-packaged I.T. software, with the license for right to its use, is being exempted from service tax, subject to specified conditions.

4) At present exemption from service tax is available to transport of fruits, vegetables, eggs or milk by road by a goods transport agency. The scope of exemption is being expanded to include food grains and pulses in the list of exempted goods.

5) Exemption from service tax is being provided to Indian news agencies under ‘Online Information and Database Retrieval Service’ subject to specified conditions.

6) Exemption from service tax is being provided to the ‘Technical Testing and Analysis Service’ and ‘Technical Inspection and certification service’ provided by Central and State seed testing laboratories, and Central and State seed certification agencies.

7) Exemption from service tax is being provided to the transmission of electricity. The above changes will come into effect immediately.

Withdrawal or amendments of exemptions:

1) Exemption from service tax on ‘Service provided in relation to transport of goods by rail’ is being withdrawn. The levy will come into effect from 01.04.2010.

2)  Exemption from service tax, presently available to Group Personal Accident Insurance Scheme provided by Govt. of Rajasthan to its employees, under General Insurance Service is being withdrawn.

3) The exemption from service tax on ‘Commercial training or coaching service’ is being restricted to vocational training courses in the designated Trades notified under the Apprentices Act, 1961.

The above changes, except at S. No.1, will come into effect immediately.