Abated & non- abated value of st

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Sathiya Moorthy

Sathiya Moorthy (Querist)
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02 March 2016 Can any explain me what is abated value and non- abated value of Service tax?

Suresh Ramaswamy

Suresh Ramaswamy (Expert)
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04 March 2016 Abatement is the term used in both Central Excise and Service Tax to refer to products / services which are taxed at lower rates. The rates are not enacted either in the Act / Tariff, but is covered by notifications. Abatement Notifications usually read :

" In exercise of the powers conferred by sub-section (1) of section 93 of the Finance Act, 1994 (32 of 1994) (hereinafter referred to as the said Act), and in supersession of notification number 13/2012- Service Tax, dated the 17th March, 2012, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i) vide number G.S.R. 211 (E), dated the 17th March, 2012, the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts the taxable service of the description specified in column (2) of the Table below, from so much of the service tax leviable thereon under section 66B of the said Act, as is in excess of the service tax calculated on a value which is equivalent to a percentage specified in the corresponding entry in column (3) of the said Table, of the amount charged by such service provider for providing the said taxable service, unless specified otherwise, subject to the relevant conditions specified in the corresponding entry in column (4) of the said Table",

The table then goes on to state what percentage of the service or value of product would be taxable. e,g, In Notification No: 26/2012 - S.T., entry no: 9 pertains to "Renting of any motor vehicle designed to carry passengers" - the service of Rent-a-Cab - Percentage 40% (subsequently raised to 50% by Notification No: 10/2014 - S.T.) - conditions to be followed "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".

This effectively means if the service provider does not avail of CENVAT credit as input on capital goods and services, he has the option of paying service tax on an value of 50% of the services rendered. There is no reduction in the rate of duty, but effectively the service provider pays tax @ 7.25% (at today's rates) as against 14.5% normally payable.

The taxable service of the provider of Rent-a-Cab Services is the ABATED VALUE OF SERVICES PROVIDED i.e.after deducting the abatement value which has to be disclosed in the ST - 3 Return.

As per provisions of Entry No 7(b) of Notification No 26/2012 - S.T., if the provider of Rent-a-Cab Service decides to pay duty @14.5% on the full value of services rendered i.e. he does not want to take the concession (for reasons whatsoever) , his services would be NON - ABATED VALUE OF SERVICES PROVIDED. Similarly the value of services provided by an operator availing the abatement, before charging the deduction is also Non Abated Value of Services Provided.

I hope, I have ben able to clarify your query and doubts.

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