CA Sandeep Kanoi

CA Sandeep KanoiAbatement in Service Tax was First Introduced Vide Principal Notification No. 26/2012-Service Tax, dated 20th June 2012 and subsequently been amended vide Notification No. 2/2013 – Service Tax, dated the 1st March, 2013, Notification No. 9/2013 – Service Tax, Dated: May 8, 2013, Notification No. 08/2014 – Service Tax Dated-11th July, 2014 and Notification No. 8/2015-ST, Dated: March 01, 2015.

By Union Budget 2015 and Notification No. 8/2015-ST, Dated: March 01, 2015 following amendment been made to Abatement Provisions wef 01.04.2015-

Changes made in Service Tax Abatement Provisions with effect from 01/04/2015

1. Transport of goods/ passengers by rail – Hitherto, service tax was payable on 30% of the value of services of rail transport of goods and passengers (with or without accompanied belongings) without any condition. Now, the abatement shall be available subject to the condition that Cenvat credit on inputs, capital goods and input services, used for providing the taxable services has not been taken under CCR, 2004.

2. Goods Transport Agency- Abatement on “Transportation of goods by Goods Transport Agency” was 75% which has now been reduced to 70%.

3. Services provided in relation to chit- Abatement on “Services provided in relation to chit” has been withdrawn.

4. Transport of goods in a vessel– Abatement on “Transportation of goods in a vessel” was 60% which has now been increased to 70%.

5.  Transport of passengers by Air–  Hitherto, an abatement of 60% was provided on taxable services of transport of passengers by air (with or without accompanied belongings). The said abatement continues for economy class travel and in case of other than economy class the abatement has been reduced to 40%.

Service Tax Rate Abatement Chart as Applicable from 01.04.2015 updated with Changes Made Vide Budget 2015 and Notification No. 8/2015-ST, Dated: March 01, 2015.

Table

Sr.No. Description of taxable service Percentage Conditions
Taxable Value Abatement
(1) (2) (3) (4) (5)
1 Services in relation to financial leasing including hire purchase (Refer Note-1) 10 90 Nil.
2 Transport of goods by rail 30 70 CENVAT credit on inputs, capital goods and input services, used for providing the taxable service, has not been taken under the provisions of the CENVAT Credit Rules, 2004
3 Transport of passengers, with or without accompanied belongings by rail 30 70 Same as above
4 Bundled service by way of supply of food or any other article of human consumption or any drink, in a premises ( including hotel, convention center, club, pandal, shamiana or any other place, specially arranged for organizing a function) together with renting of such premises (Refer Note-2) 70 30 (i) CENVAT credit on any goods classifiable under Chapters 1 to 22 of the Central Excise Tariff Act, 1985 (5 of 1986) used for providing the taxable service, has not been taken under the provisions of the CENVAT Credit Rules, 2004.
5 Transport of passengers by air, with or without accompanied belongings in CENVAT credit on inputs and capital goods, used for providing the taxable service, has not been taken under the provisions of the CENVAT Credit Rules, 2004.
(i) economy class 40 60
(ii) other than economy class 60 40
6 Renting of hotels, inns, guest houses, clubs, campsites or other commercial places meant for residential or lodging purposes. 60 40 Same as above.
7 Services of goods transport agency in relation to transportation of goods. 30 70 CENVAT credit on inputs, capital goods and input services, used for providing the taxable service, has not been taken by the service provider under the provisions of the CENVAT Credit Rules, 2004.
8 Services provided in relation to chit Omitted Vide Notification No. 8/2015-ST, Dated: March 01, 2015
9 Renting of motorcab 40 60

(i) CENVAT credit on inputs and capital goods, used for providing the taxable service, has not been taken under the provisions of the CENVAT Credit Rules, 2004;

(ii) CENVAT credit on input service of renting of motorcab has been taken under the provisions of the CENVAT Credit Rules, 2004, in the following manner:

(a) Full CENVAT credit of such input service received from a person who is paying service tax on forty percent of the value; or

(b) Up to forty percent CENVAT credit of such input service received from a person who is paying service tax on full value;

(iii) CENVAT credit on input services other than those specified in (ii) above, has not been taken under the provisions of the CENVAT Credit Rules, 2004.

9A Transport of passengers, with or without accompanied belongings, by-a. a contract carriage other than motorcab.b. a radio taxi. 40 60 CENVAT credit on inputs, capital goods and input services, used for providing the taxable service, has not been taken under the provisions of the CENVAT Credit Rules, 2004.
10 Transport of goods in a vessel  30 70 Same as above.
11 Services by a tour operator in relation to,-(i) a package tour (Refer Note-4) 25 75

(i) CENVAT credit on inputs, capital goods and input services other than the input service of a tour operator, used for providing the taxable service, has not been taken under the provisions of the CENVAT Credit Rules, 2004.

(ii) The bill issued for this purpose indicates that it is inclusive of charges for such a tour.

(ii) a tour, if the tour operator is providing services solely of arranging or booking accommodation for any person in relation to a tour (Refer Note-5) 10 90

(i) CENVAT credit on inputs, capital goods and input services other than the input service of a tour operator, used for providing the taxable service, has not been taken under the provisions of the CENVAT Credit Rules, 2004.

(ii) The invoice, bill or challan issued indicates that it is towards the charges for such accommodation.

(iii) This exemption shall not apply in such cases where the invoice, bill or challan issued by the tour operator, in relation to a tour, only includes the service charges for arranging or booking accommodation for any person and does not include the cost of such accommodation.

(iii) any services other than specified at (i) and (ii) above. 40 60

(i) CENVAT credit on inputs, capital goods and input services other than the input service of a tour operator, used for providing the taxable service, has not been taken under the provisions of the CENVAT Credit Rules, 2004.

(ii)The bill issued indicates that the amount charged in the bill is the gross amount charged for such a tour.

12. (Refer Note-3) Construction of a complex, building, civil structure or a part thereof, intended for a sale to a buyer, wholly or partly, except where entire consideration is received after issuance of completion certificate by the competent authority,- (i) CENVAT credit on inputs used for providing the taxable service has not been taken under the provisions of the CENVAT Credit Rules, 2004;

(a) for a residential unit satisfying both the following conditions, namely:–

(i) the carpet area of the unit is less than 2000 square feet; and

(ii) the amount charged for the unit is less than rupees one crore;

25 75 (ii) The value of land is included in the amount charged from the service receiver.
(b) for other than the (a) above. 30 70

Note-1 For the purposes of exemption at Serial number 1 –

(i) The amount charged shall be an amount, forming or representing as interest, i.e. the difference between the installments paid towards repayment of the lease amount and the principal amount contained in such installments;

(ii) the exemption shall not apply to an amount, other than an amount forming or representing as interest, charged by the service provider such as lease management fee, processing fee, documentation charges and administrative fee, which shall be added to the amount calculated in terms of (i) above.

Note-2. For the purposes of exemption at Serial number 4 –

The amount charged shall be the sum total of the gross amount charged and the fair market value of all goods and services supplied in or in relation to the supply of food or any other article of human consumption or any drink (whether or not intoxicating) and whether or not supplied under the same contract or any other contract, after deducting-

(i) the amount charged for such goods or services supplied to the service provider, if any; and

(ii) the value added tax or sales tax, if any, levied thereon:

Provided that the fair market value of goods and services so supplied may be determined in accordance with the generally accepted accounting principles.

Note-3. For the purposes of exemption at Serial number 12 –

The amount charged shall be the sum total of the amount charged for the service including the fair market value of all goods and services supplied by the recipient(s) in or in relation to the service, whether or not supplied under the same contract or any other contract, after deducting-

(i) the amount charged for such goods or services supplied to the service provider, if any; and

(ii) the value added tax or sales tax, if any, levied thereon:

Provided that the fair market value of goods and services so supplied may be determined in accordance with the generally accepted accounting principles.

Note-4 “package tour” means a tour wherein transportation, accommodation for stay, food, tourist guide, entry to monuments and other similar services in relation to tour are provided by the tour operator as part of the package tour to the person undertaking the tour,

Note-5 “tour operator” means any person engaged in the business of planning, scheduling, organizing, arranging tours (which may include arrangements for accommodation, sightseeing or other similar services) by any mode of transport, and includes any person engaged in the business of operating tours,

Also Read-

Reverse and Partial Reverse Mechanism Chart from 01.04.2015

Updated Negative List of Services under Service Tax

Author Bio

More Under Service Tax

92 Comments

  1. SAGAR S. PATKAR says:

    We have started import freight forwarding.

    We are charging ser tax @ 4.2% plus swachh bharat cess 0.15% , plus krishi cess 0.15% . and paid ser tax accordingly to department till Sept 2016.
    Now while filing half yearly return in service tax below mentioned error is appearing. Please help to solve this issue.

    V2SRC10 Exemption Notification No.{ 09/2016-S.T. } and Serial No.{ 1(a)(xiii) } is not applicable to the Service { Business support
    service } and/or for the return period.

    ERROR APPEARED FOR IMPORT OCEAN FRT. PLEASE HELP.

    Please advise which notification and serial number to be used.
    Best regards
    SAGAR PATKAR

  2. Gaurav Khandelwal says:

    Sir, instead of taking abatement @70% we took 75% abatement. Are we liable to pay the interest on the unpaid service tax? If yes, can you please provide me the interest rate.

  3. raveendra kumar says:

    CA ravindra kumar

    please solve my problem

    if we have take services from transporter towards freight and transporter pay service tax 25% on service invoice and 75% liability of consignee so please ask me for the same.

  4. O.P.KANSAL says:

    SIR,

    WE ARE MANUFACTURER & GTA UNDER CENTRAL EXCISE AND AVAILING CENVAT CREDIT ON DUTY PAID INPUTS, `CG` & INPUT SERVICES. WE ARE MANUFACTURER OF THE ITEMS UNDER CETH 48.00 & CLEAR OUR `FG` UNDER CE NOTIFICATION NO. 18/2012 DATED 17.03.2012.

    REGARDING CENVAT CR. ON GTA; WE FIRST MADE e-PAYMENT THR. G.A.R.7 ON THE ABATED PART OF FREIGHT & THAN TAKE ITS CENVAT CREDIT.

    IS THIS O.K. OR SOMETHING ELSE? SIR, PLEASE GIVE REPLY ON MY e-mail I/D. opkansal72@gmail.com. ITS SHALL FEEL HIGHLY BE OBLIGED.

  5. Raj Outsourcing says:

    Dear Sir,

    We are the Work Contractors for Building Maintenance (Ex:Painting,Civil,Glass,Fabrication,Fire pro and Other) maintenance works Including Material. So we are confusing about abatement method at Invoicing and Service Tax Return submitting process(Like: How the amount should be consider for actual and service value). So Kindly Guide me and tell me the abatement notification Numbers for filling the returns.

    Thanking You,

  6. Manoj Singh says:

    Dear Sir,
    We are providing fork lift in a plant on rental basis. Please tell us about taxation. for both side (Service provider and service receiver).

  7. praveen agarwal says:

    sir,
    we are doing works contract like tile laying & painting celing for a residential site as a service provider IN PROPRITORSHIP CONCERN, we were geting payment from the client including service tax 4.944% previously and the same were paid by us to service tax. and we were filing st3 under works contract service as a service provider and showing tax rate 4.8% ed cess 2% SEC ED CESS1 % AND THE RETURN WAS ACCEPTED ONLINE. BUT FROM 1.06.2015 THE RATE WAS REVISED TO 5.6% , FROM HERE OUR PROBLEM IS WHEN WE ARE SHOWING THE RATE 4.8 +2+1 ONE COLUMN AND SHOWING ANOTHER RATE BY ADD COLUMN 5.6% N FILING IT MY RETURN IS GETING REJECTED PLAESE HELP ME ITS URGENT, WHAT IS THIS ABATEMENT SOME BODY TOLD ME ABOUT CLAIMING ABATEMENT, IT MEANS THE BEFORE RETURNS WHAT I FILED WAS INCORRECT? OR WHAT N WERE NO I FIND THE ABATEMENT NOFICATION NO N CODE PLEASE HELP I AM TOTALLY CONFUSED URGENT

  8. Mounagurusamy.S says:

    Service tax Abetement for GTA changed from 75% to 70% .This abilicable from 1st April-2015 & Tax Rate change from 12.36% to 14% .This is abilicable from 01/06/2015. We calculated abetement 75% for April& May-2015. Are we pay Interest for the balance Tax amount @ which % ? From which date we calculated Interest .Our Concern is a Firm.

  9. Manish Jaggi says:

    We are executing contract for PSU for installation , testing and commissioning .
    1. Will this be covered under WORK CONTRACT.
    2. We have further sub contracted the work. The sub contractor is also registered under Service Tax. Thus we are both service provider and service receiver for the same work of a parent organisation. How do we get rebate on Service tax paid by Sub contractor .
    3. Where in the form ST 3 do we claim the credit for the tax paid by sub contractor.

  10. Mounagurusamy.S says:

    Service tax Abetement for GTA changed from 75% to 70% .This abilicable from 1st April-2015 & Tax Rate change from 12.36% to 14% .This is abilicable from 01/06/2015. We calculated abetement 75% for April& May-2015. Are we pay Interest for the balance Tax amount @ which % ? From which date we calculated Interest .Our Concern is a Firm.

  11. BACHAN SINGH BISHT says:

    we have provided security service security guards how can filed st-3 return after all tax paid by service receiver ol tell us it is nessary for st-3 return filied by service provider pl confirm wirh example how can fill up st-3

  12. E.RAMESH says:

    DEAR SIR,

    I NEED A CLARITY IN GTA INWARD & OUTWARD SERVICE TAX PAYMENT

    AND WHO IS LIABLE TO PAY FOR MANUFACTURER INDUSTRIES UTILIZIING TRANSPORT FOR RAW MATERIAL & AUTO FARE FOR TOOL MOVEMENT

    CASE:-1 TRANSPORT LIKE SAFEXPRESS, OM LOGISTICS, V-EXPRESS ETC.. WHERE SERVICE TAX CHARGED IN THE BILL 14% AND PAYMENT MADE TO THEM. WILL THE GTA SERVICE TAX 25% SHOULD BE PAID BY THE END USER AGAIN FOR THE ABOVE CASE.

    CASE:2 WHAT TYPE OF LOGISTICS PAYING 70% GTA & 25% PAYABLE UNDER WHAT CIRCUMSTANCE

    E.RAMESH
    9710650872

  13. YOGESH KUMAR GUPTA says:

    PLEASE SUGGEST ME ON THE FOLLOWING ISSUE:

    WHETHER SERVICE TAX SHALL BE APPLICABLE ON PROVIDING THE WORKS CONTRACT SERVICE FOR CONSTRUCTION OF DRAIN UNDER ASSAM URBAN INFRASTRUCTURE INVESTMENT PROGRAM AT STATE ASSAM ??

  14. Vishal says:

    Dear Sir,

    please tell me about service provider company take abatement or utilized cenvat credit in return.

    in this case compulsory for abatement is canceled.

    or

    cenvat credit is canceled.

  15. Nawin Kumar Jha says:

    My Question is

    a consignment form place A to B transported by Road and B to C Transported by rail and c to D transported by road. Please tell me which category of service tax applicable and also say rate of of service tax brief if cenvat credit also applicable or not.

    thanking you

    nawin kumar jha

  16. Hitesh soni says:

    i want to know the notification no & Serial no for Works Contract in case of works contract entered into for maintenance or repair or reconditioning or restoration or servicing of any goods, service tax shall be payable on seventy percent. of the total amount charged for the works contract;

  17. R.G.PATEL says:

    DEAR
    MY QUESTION IS REGARDING WORKS CONTRACT OF A CAPENTER FOR NEW FURNITURE IN AN OFFICE OF A BODY CORPORATE.
    LET ME KNOW NOTIFICATION NUMBER AND ITS SERIAL NUMBER FOR ABATEMENT OF 60% TO TAKEN.

  18. Pawan Rana says:

    Dear Sir
    I want to know the service tax applicability on GTA & Contractors like taxi hiring & labour .
    Thanks
    With Regards
    Pawan Rana

  19. Pawan Rana says:

    DEAR SIR, WE WANT TO KNOW THE PRESENT STAND ON SERVICES OF GOODS TRANSPORT AGENCY IN RELATION TO TRANSPORT OF GOODS. WHETHER THE RATE OF
    3.70 IMPLEMENTED OR KEPT ON HOLD Old rate 100×25%=25 25×12%=3 25×2%=.5 .0×1%=.25
    Further I want to know about applicability of service tax on hiring vehicle ( taxi ) , & labour contractor
    Thanks
    with Regards
    Pawan

  20. CHETAN says:

    SIR
    I WANT TO KNOW CURRENT AMENDMENT ON VEHICLE HIRE CHARGES SERVICE TAX TREATMENT.BEFORE ON BILL AMOUNT SERVICE PROVIDER CHARGES 60% BILL AMOUNT @ 7.41%

    THANKS

    CHETAN

  21. mohanrao says:

    The service tax rate applicable from 1st june 2015 is as below

    GTA
    for example nett amount 1000/-
    abatement 70% so amount of abt is 700/-
    =====
    total 300/-
    service tax 14%(payable on 300/-) 42/-
    that means service is 42/-
    notification no. is 08/2015 Dt. March 01 2015

    The service tax payable on MANPOWER IS 14% on total amount there is no abatement.

    if any updates pl share

    thnx and rgds

    rao

  22. harpinder singh says:

    Sir
    kindly advise me for srviec tax purpose freight includes ?????????? is any amount is exemtpted from ST mention in freight LR(consignment note).beside the amount mentioned in consignment note local transport also demand some charge i.e. demurrage charges,labour,delivery comssion other misc charges .Are the ST is payable on these charges ///thks

  23. Kannan says:

    sir,
    How to calculate service tax NEW RATE(14%) of Transportation
    OLD Example ( Total Freight – Rs.1000/-)
    1000 x 25% = 250/-
    250 x 12% = 30
    250 x 2% = 5
    250 x 15 = 2.50
    Please calculate new rate sir

    kannan

  24. Bhavin says:

    If One Transport Pvt ltd is providing transport service to Ltd companies .
    The Transport Co is in to hiring does not have own trucks, Does Reverse Mechanism Apply on Transport Co .

  25. RANJAN AGARWAL says:

    I am registered as goods transport operators 00440067 in 2 of my firms since 2009 & 2010 & regularly paying service tax under same category till now.one of my friends
    told me that I have to deposit it under GTA 00440262 as the above category 00440067 is omitted & clubbed with GTA.I checked in serv tax accounting chart online where 00440067 is still existing
    Pl guide on this serious issue on my id mentioned above.

    Thanks & Regards

    RANJAN AGARWAL

  26. Arvind jha says:

    sir what is new rate of service tax of transporters

    old is : 5000*3% = 150
    : 150*2% = 3
    : 5000*1% = 50

    Pls Give New Rate

    Regards
    Arvind Jha

  27. Vikesh Chetal says:

    The client is getting the advertisement from different parties and make advertisement and that advertisement is published in the T.V. Screen on the different sites. This advertisement is continuously running on the Screens. Agency is the owner of the screens. The bill of monthly advertisement is given to the different parties. My view is that Service tax is 14% on the bill and no abatement can be claimed. Pl confirm.

  28. Ankit Gosaliya says:

    Hi
    Old example 1000×25%=250
    250×12%=30
    250×2%=5
    250×1%=2.5
    Total 37.5 tax pay.
    What is new..??
    1000×30%=3000
    Next is what??????

  29. Ankit Gosaliya says:

    DEAR SIR, WE WANT TO KNOW THE PRESENT STAND ON SERVICES OF GOODS TRANSPORT AGENCY IN RELATION TO TRANSPORT OF GOODS.

    WHETHER THE RATE OF 3.70 IMPLEMENTED OR KEPT ON HOLD
    Old rate 100×25%=25
    25×12%=3
    25×2%=.5
    .0×1%=.25
    Plz give me new rate

  30. BHUPINDER BHATIA says:

    Dear Sir,

    we required the service tax rate as per nature of service type to be charged or not and service tax claimable or not claimable

  31. SANTOSH GAIKWAD says:

    Dear Sir,

    I am having a 4 truck which are engaged in transportation of Goods from which i gets monthly revenue of about 4.50 Lacs. Do i Liable to Registered under service Tax & Liable to Pay Service Tax?

    Regards
    Santosh Gaikwad.

  32. MANOJ KUMAR says:

    Dear sir,
    please send this article to my mail id.

    taxi hire charges
    contractual wages
    freight out word & inword
    service tax amendment,revesre charges mecha.

  33. Balasaheb says:

    tell me abatement of service tax in work contract act” under erection, Commissioning,& Installation(under which section)? – which rate of service tax is applicabe is 40% is correct?

    1. Girisan says:

      Sir,
      We are a manufacturing unit making mining equipments. We need for errection and commission at out sites. so the question is whether service tax is applicable for such work. If have any abatement applicable for the amount. please tell.

  34. Shivagangafoodoil extractions says:

    Dear sir,
    We are the manufacaturers of Edible Crude rice bran oil, we are purchasing rice bran from local and out of state, and selling oil and DORB. we paying lorry freight we are paying ST for 25% for the year 2013-14. whether we have to pay service tax are eligible to service tax as per notfn.no.06/2015 dt.01.03.2015, pleaseadvice

  35. Narpat says:

    Respected Sir
    Previously we were charging 7.42% for room rent now what the new rate is.Please also tell if service tax is applicable on Non a/c restaurants
    Thanks

  36. A.S.RAO says:

    sir,
    i am subscribing a chit with registered chit fund company, i have received a mail from chit fund organisation, saying that i suppose to pay the service tax as per finance bill 2015. please clarify doubt regarding, as i need to pay the tax or the foremen has to pay the tax. and on what amount and what was the percentage of tax.

  37. PREM says:

    We are dealing in contract of Private companies to PICK up and DROP employees, &
    running of Tours & Travels
    presently we are charging at 4.944%
    Now Ist JUNE on wards 5.6% charging is it correct or Not
    please advise me

    Thanks

  38. Mani says:

    Dear Sir,

    Please send me the details of Service Tax to be calculated for Manpower supply & Security. For a Corporate as well as for a proprietory / partnership firm.

    Thanks,

    MANI

  39. Vinay Pal Singh says:

    We are a LLP firm. Can we liable to pay service tax under reverse charge on receive the manpower service from a proprietorship firm

  40. k k Sarawagi says:

    Provisions of renting of motor cab is clumsy and needs further clarification. If the service provider is not required to register himself under the service tax because of turnover less than Rs. 9 Lacs and not claiming any cenvat credit,please inform whether abatement of 60% is still available to a body corporate under reverse charge mechanism.

  41. DEVINDER says:

    pl. tell me abatement of service tax in pandal & shamina is 30 % , whether the abatement is applied of total receipt or on the tatal service tax received ?

    thanks

  42. C.DHANUNJAY says:

    DEAR SIR, WE WANT TO KNOW THE PRESENT STAND ON SERVICES OF GOODS TRANSPORT AGENCY IN RELATION TO TRANSPORT OF GOODS.

    WHETHER THE RATE OF 3.70 IMPLEMENTED OR KEPT ON HOLD

  43. Po mamma says:

    We are hiring manpower services through security agency. Can you please clarify the deduction. For example the total monthly bill including all charges like pf ESI management cost, salary and wages come to 2 lacs. Is the calculation based on Total monthly bill amount ?

  44. Rajiv says:

    sir,
    what is accounting entry for “work contract act” under erection, Commissioning,& Installation(under which section)?

    Is this accounting entry is correct ? For Example :

    Supply products cost Rs. 50000
    Add: Vat @ Actual for Example 5% 2500

    Add: Labour Charge for Installation, Rs. 10000
    Erection & commissioning

    Add Service Tax (@ 12.36@ on Rs 10000) Rs. 1236

    So the total Cost Of System RS 63736

    can i make accounting entry for this bases ?

    Thanking You

    Rajiv

    1. DEPUTY DIRECTOR says:

      Respected Sir,
      We are auditing the local body institutions.
      in local body, they renting lands, building etc and receiving service tax
      In this regard please clarify the abatement method with example and authority.

      by,
      Deputy Director of Local Fund Audit,
      Salem.

  45. Atul says:

    Sir, shall we start to charge service tax on abetment value in case of GTA as in notification it is showing that notifiation to be published.

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