Service Tax Notifications (Notification No. 24/2010-Service Tax to Notification No. 35/2010-Service Tax dated June 22, 2010.)

The Central Government has issued various notifications regarding levy of Service Tax and exemptions therefrom, to be effective from July 1, 2010 (except as specified herein below). The details of the same are as under:

1. Date of effect for new taxable services and amendments in existing categories of taxable services

The Central Government has appointed July 1, 2010 as the date on which the new taxable services and amendments in certain existing categories of taxable services as proposed by Finance Act, 2010, would come into force.

2. Service Tax exemption for transport of passengers through air Exemption is granted from service tax on air transport of passengers in respect of following class of passengers:

  • A person arriving from place outside India and in transit in India subject to condition that he does not pass through immigration or leave the customs area;
  • A person employed or engaged by the aircraft operator; and
  • Passengers undertaking journey to or from airport located in Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Tripura, Sikkim or Baghdogra in West Bengal.

3. Abatement for transport of passengers through air

Service Tax on the services of transport of passengers through air is exempted in excess of the following limits subject to the condition of non availment of credit of duty on inputs used for providing such taxable services :

  • For passengers travelling within India in any class – 10% of the gross value of ticket or rupees one hundred per journey, whichever is less
  • For passengers embarking for international journey in economy class – 10% of the gross value of ticket or rupees five hundred per journey, whichever is less

4. Service Tax exemption to Construction of Complex Services

The Central Government has exempted Construction of Complex Services provided to Jawaharlal Nehru National Urban Renewal Mission and Rajiv Awaas Yojana from the levy of Service Tax.

5. Abatement of service tax on Commercial or Industrial Construction Services and Construction of Complex Services

The abatement of 75% from the gross amount charged in respect of Commercial or Industrial Construction Services and Construction of Complex Services except in cases where the cost of land has been separately recovered by the builder or his representative has been provided in Notification No. 1/2006- ST dated March 1, 2006. This abatement would not be applicable in respect of completion and finishing services provided in relation to building or civil structure or residential complex.

6. Exemption to certain Sports Sponsorship Services

The Finance Act, 2010 has removed the exclusion for sports sponsorship services and therefore has brought such services within the ambit of service tax. Simultaneously, the Government has notified exemption from service tax in respect of tournaments or championships organized by specific sports associations.

7. Exemption to certain services provided within a port or an airport

The Central Government has notified exemption to certain services when provided within a port or an airport from the whole of service tax which are as under–

  • Repair of ships or boats or vessels belonging to the Government of India including Navy or Coast Guard or Customs;
  • Repair of ships or boats or vessels where such process of repair amounts to manufacture? and has the meaning assigned to it in clause (f) of Section 2 of the Central Excise Act, 1944;
  • Supply of water;
  • Supply of electricity;
  • Treatment of persons by a dispensary, hospital, nursing home or multi-specialty clinic (except cosmetic or plastic surgery service);
  • Services provided by a school or centre to provide formal education other than those services provided by commercial coaching or training centre;
  • Services provided by fire service agencies.
  • Pollution control services

8. Exemption to services provided in relation to distribution of electricity

Exemption has been granted from levy of service tax on services provided by a distribution licencee, a distribution franchisee, or any other person by whatever name called, authorised to distribute power under the Electricity Act, 2003 for distribution of electricity. This exemption will come into force from June 22, 2010.

9. Exemption to transport of goods by rail services

The Government has extended the exemption from service tax in respect of services provided under the category of “Transport of goods by rail” till December 31, 2010. Consequential notifications have also been issued to extend the exemption related to certain essential supplies and prescribed abatement with effect from January 1, 2011.

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