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EXEMPTIONS
Q. What are the exemptions available for small service providers? A.
Service Tax is fully exempted in respect of the taxable services of aggregate value not exceeding Ten lakh rupees in any financial year. w.e.f 1-4-2008
The above mentioned exemption based on the turnover is not available to the persons who are liable to pay Service Tax but are not the service providers. For example:
- The recipient of services from an overseas service provider who has no registered office in India
- A company incurring the Transportation charges for availing the services from Goods Transport Agencies, for transportation of goods by Road.
This exemption was introduced with effect from 01.04.2005. (Notification No. 6/2005-ST, dated 01.03.2005). Q. What are the conditions for availment of the exemption from Service Tax by the small scale service providers? A.
Some of the important conditions for availment of the exemption are as follows:
- If the aggregate value of taxable services rendered by the service provider from one or more premises exceeds rupees eight lakhs in the preceding financial year, the service provider is not eligible for the exemption for the current year.
- The exemption shall apply to the aggregate value of all taxable services and from all premises and not separately for each premise or each service.
- The benefit of the exemption shall not apply to taxable services rendered by a person under a brand name or trade name whether registered or not, of another person.
- The exemption shall not apply to persons who are other than the service providers, but liable to pay Service Tax under section 68 (2) of the Act.
- The provider of the taxable service shall avail the CENVAT credit only on such inputs or input services received, on or after the date on which the service provider starts paying Service Tax, and used for the provision of taxable services for which Service Tax is payable.
- CENVAT Credit of Service Tax paid on any input services, under Rule (3) or Rule (13) of the CENVAT Credit Rules 2004, used for providing the services under the above exemption, is not admissible for persons availing the above exemption.
- CENVAT Credit under Rule (3) of the said Rules, is not admissible on the capital goods which are received in the premises of the service provider during the exemption period.
- An amount equivalent to the CENVAT Credit taken, if any, in respect of the inputs lying in stock or in process as on the date on which the provider of taxable service starts availing the exemption should be paid; the balance credit amount, if any, shall lapse.
Q. Are there any other General exemptions? A.
The following general exemptions from payment of whole of the amount of Service Tax are available for the Service Providers:
- Services provided to the United Nations or International Organisations (Notification No. 16/2002-ST, dated 02.08.2002).
- Services provided to a developer of Special Economic Zone or a unit of Special Economic Zone (Notification No.04/2004-ST, dated 31.03.2004).
- The value of the goods and materials sold by the service provider to the recipient of the service is exempted from payment of the Service Tax, if there is a documentary proof specifically indicating the value of the goods and materials and,—
- no credit of duty paid on such goods and material sold, has been taken under the provisions of CENVAT Credit rules, OR
- where such credit has been taken by the service provider on such goods and materials, but such service provider has paid the amount equal to such credit availed before the sale of such good and materials. (Notifn.12/2003-ST dated 20.06.2003).
- Exemptions to Diplomatic Missions for official use of taxable services and also to the officers and their families of a Diplomatic Mission for personal use of taxable services-Refer Notification Nos. 33/2007-ST and 34/2007-ST, both dated 23.5.2007-See Question No. 1.13, 1.14 and 1.15, ante.
- Specified taxable services, namely, port service, other port service, goods transport service and containerised transport service, received by an exporter and used for export of goods (Notification No. 40/2007-ST dated 17.9.2007).
Under this notifcation, the service tax paid by an exporter on these services is refunded to the exporter on complinace of conditions mentioned in the notification. Q. Is there any exemption from payment of Service Tax if the receiver/provider of the service is the Central/State Government organization and Public Sector Undertakings? A.
- No. There is no such exemption. All service providers, including the Central/State Government Organisations and the Public sector undertakings rendering the specified taxable service, are liable to pay Service Tax.
- If a Government Department (sovereign)/public authorities performs any mandatory or statutory function under the provisions of any law and collect any fees, such activity shall be treated as activity purely in public interest and will not be taxable.
- If such authority performs a service, which is not in the nature of statutory activity, for a consideration, the same shall be taxable.
- However, the taxable services provided by a Banking company or a financial institution including a non banking financial company, or any other body corporate or any other person, to the Government of India or the Government of a State, in relation to collection of any duties or taxes levied by the Government of India or the Government of a State, are exempted from the payment of Service Tax. (Notification No. 13/2004-ST, dated 10.09.2004).
No Service Tax on Not for profit organizations: CESTAT
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