Dr. Sanjiv Agarwal

(a) Withdrawal of certain exemptions under Notification No. 25/2012-ST dated 20.06.2012

(i) Construction services provided to Government etc (Entry No. 12)

Clauses (a), (c) and (f) shall stand omitted

Construction, repair etc of the following services provided to the Government, a local authority, or a governmental authority are now taxable:

  • a civil structure or any other original works meant predominantly for other than commercial purposes;
  • of a structure for use as an educational, a clinical, or an art or cultural establishment;
  • Residential complex for self-use or the use of the employees.

Thus, exemption presently available on specified services of construction, repair, maintenance, renovation or alteration service provided to the Government, a local authority, or a governmental authority (vide S. No. 12 of the Notification No. 25/12-ST) shall be limited only to,-

(a)        a historical monument, archaeological site or remains of national importance, archeological excavation or antiquity;

(b)        canal, dam or other irrigation work; and

(c)        pipeline, conduit or plant for (i) water supply (ii) water treatment, or (iii) sewerage treatment or disposal.

(ii) Construction etc of airport or port.

In entry 14(a), the services relating to airport or port will no longer be exempt. Thus original work of construction, erection, commissioning or installation pertaining to an airport or port shall now be taxable. The other exemptions in the entry would continue.

(iii) Distribution / selling services under Entry No. 29

Exemption under clauses (c), (d) and (e) of Entry No. 29 have been omitted. These pertain to –

(a)     services provided by a mutual fund agent to a mutual fund or assets management company,

(b)   distributor to a mutual fund or AMC,

(c)   selling or marketing agent of lottery ticket to a distributor.

In all aforementioned exemptions, Service Tax shall be payable under 100 percent reverse charge basis by the recipient of service.

(iv) Telecommunication services (Entry No. 32)

Exemptions have been withdrawn on the following services –

(a)     Departmentally run public telephone;

(b)   Guaranteed public telephone operating only local calls;

(c)   Service by way of making telephone calls from free telephone at airport and hospital where no bill is issued.

(b) Rationalization of exemptions

(i) Exemption to artists (Entry No. 16)

Exemption to services provided by a performing artist in folk or classical art form of (i) music, or (ii) dance, or (iii) theater, will be limited only to such cases where amount charged is upto Rs 1,00,000 for a performance.

Only if the amount charged by such artist is more than rupees one lakh, the tax liability would arise. It may be noted that such exemption limit of rupees one lakh is based on per performance. It an artist performs at three places and only at one places he or she charges more than rupees one lakh, only such performance shall be liable to Service Tax. This exemption to artists shall not apply to services provided by artists as a brand ambassador.

(ii) Exemption to transportation of goods (Entry No. 20 and 21)

Exemption to transportation of certain essential goods and commodities by rail, road and vessel are exempt. This exemption shall be restricted only to items-milk, salt and food grains including flours, pulses and rice.

Exemption to transportation of food stuff by rail, or vessels or road is now limited to the transportation of food grains, rice and pulses, flour, milk and salt. Therefore, transportation by rail or vessels or road of items such as tea, coffee, jaggery, sugar, milk products, edible oil will now taxable.

Transportation of agricultural produce is separately exempt and shall continue to be exempt. With this change, exemption in relation to transportation of goods has been curtailed and limited to aforementioned items only.

(iii)  Rescission of exemption Notification No. 42/2012-ST dated 29.06.2012

Existing exemption, vide Notification No. 42/2012-ST dated 29.06.2012, to the service provided by a commission agent located outside India to an exporter located in India shall stand rescinded with effect from March 1, 2015. This exemption had become redundant in view of the amendments made in law in the previous budget, in the definition of “intermediary” in the Place of Provision of Services Rules, making the place of provision of a service provided by such agents as outside the taxable territory. (Vide Notification No. 3/2012-ST dated 1.3.2015).

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Category : Service Tax (3367)
Type : Articles (16948)
Tags : Budget (1956) Budget 2015-16 (272) Dr Sanjiv Agarwal (244)

8 responses to “Service Tax Exemptions Withdrawn From 1st April, 2015”

  1. S KISHORE KUMAR says:

    ii) Construction etc of airport or port.

    In entry 14(a), the services relating to airport or port will no longer be exempt. Thus original work of construction, erection, commissioning or installation pertaining to an airport or port shall now be taxable. The other exemptions in the entry would continue.
    “14A. Services by way of construction, erection, commissioning, or installation of original works pertaining to an airport or port provided under a contract which had been entered into prior to 1st March, 2015 and on which appropriate stamp duty, where applicable, had been paid prior to such date:

    provided that Ministry of Civil Aviation or the Ministry of Shipping in the Government of India, as the case may be, certifies that the contract had been entered into before the 1st March, 2015:
    Dear Sir,
    The exemption of Service Tax for construction services for an airport/airfield under ministry of defense is not clarified till now. Please update on the matter.

  2. S KISHORE KUMAR says:

    a) Withdrawal of certain exemptions under Notification No. 25/2012-ST dated 20.06.2012
    (ii) Construction etc of airport or port.

    In entry 14(a), the services relating to airport or port will no longer be exempt. Thus original work of construction, erection, commissioning or installation pertaining to an airport or port shall now be taxable. The other exemptions in the entry would continue.
    “14A. Services by way of construction, erection, commissioning, or installation of original works pertaining to an airport or port provided under a contract which had been entered into prior to 1st March, 2015 and on which appropriate stamp duty, where applicable, had been paid prior to such date:

    provided that Ministry of Civil Aviation or the Ministry of Shipping in the Government of India, as the case may be, certifies that the contract had been entered into before the 1st March, 2015:
    Notification No. 9/2016-Service Tax, Dated 01/03/2016

    Seeks to amend notification No. 25/2012-Service Tax, dated 20th June 2012, so as to amend certain existing entries granting exemption on specified services and inserting new entries for granting exemption from service tax on specified services-

    G.S.R.….(E).-In exercise of the powers conferred by sub-section (1) of section 93 of the Finance Act, 1994 (32 of 1994), the Central Government being satisfied that it is necessary in the public interest so to do, hereby makes the following further amendments in the notification of the Government of India in the Ministry of Finance (Department of Revenue) No.25/2012-Service Tax, dated the 20thJune, 2012, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i) vide number G.S.R. 467 (E), dated the 20thJune, 2012, namely:-

    provided further that nothing contained in this entry shall apply on or after the 1st April, 2020;”;
    The exemption further allowed as per notification 9/16 dated 01/03/2016 only specifies for an airport under ministry of civil aviation whereas the notification no.25/12 lifts the exemption on construction of any airport. Please clarify the applicability of exemption on construction of airport or airfield under ministry of defence.

  3. R.Abraham says:

    Is any service tax exemption for road construction for Defence under govt of india.
    If there, any notification.

  4. Basavaraj says:

    I want to know how to calculate service tax on restaurant from 30.04.2015

  5. Chinni says:

    sir,

    i want to know that the service tax rates of residential and commercial complex services from 01.04.2015 if any amendments in future please tell me the rates.

    thanks

  6. JM Baskar says:

    Dear Sir/Madam

    Query: Can you please clarify about education courses accredited by NABET( National Accreditation Board for Education & Training),QCI.

    Does NABET accredited course fall under ” a course recognised by any law” ?

    As per circular 164/15/2012 from TRU”- The words ” recognized by any law” will include such courses as are approved or recognized by any entity established under a central or state law including delegated legislation, for the purpose of granting recognition to any education course or VEC.

    Note : NABET is the constituent Board of Quality Council Of India, the accreditation authority in India. NABET formally recognizes the Vocational training providers and also the courses.

    It would be of great help if this query is answered.

    Kind Regards

  7. U.M.B.Menon says:

    Not Exempted. Construction, Maintenance, Repairs of any service whether it is commercial in nature or NOT, is taxable under Service Tax!

  8. KISHORE GANDHI says:

    SIR,
    I want to know whether A sub contractual work of pipe line of PNG gas connection are exempt from service tax of not.

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