Exemptions abatements

Exemptions and Abatements
Presented by:
CA Gaurav Gupta
B.Com(Hons.), FCA, LLB, DISA
Partner
MGS & Co.
Author – Service Tax – Law & Practice
Certificate Course on Service Tax
Institute of Chartered Accountant of India
June 5th, 2016

• New charging provision (Section 66B)
“There shall be levied a tax (hereinafter referred to as the service tax) at the rate of
fourteen per cent. on the value of all services, other than those services specified in
the negative list, provided or agreed to be provided in the taxable territory by one person
to another and collected in such manner as may be prescribed.”
Section 93.
“(1) If the Central Government is satisfied that it is necessary in the public interest so to
do, it may, by notification in the Official Gazette, exempt generally or subject to such
conditions as may be specified in the notification, taxable service of any specified
description from the whole or any part of the service tax leviable thereon.”
Scheme of Act
Exemptions & Abatements CA Gaurav Gupta 3

Examine the definition of "Service" to determine if
the activity falls within its ambit. Special review of
"declared Service" required.
If the answer is affirmative, look out for its
exclusion in negative list
If not found in Negative list, look out for the
Service as being exempt under Notification No.
25/2012-ST dated June 20, 2012
If not found there also, check for abatement /
partial exemption under Notification No.
26/2012-ST dated June 20, 2012
Lastly, check Notification No. 30/2012 to
determine as to whether the liability to deposit
service tax is not on the recipient of Service
Negative List CA Gaurav Gupta 4
Scheme of Act

 Mega Exemption Notification:- Earlier specific exemption were granted in
respect of services taxable under Section 65(105). However post enactment
of Finance Act, 2012, Master Notification No 25/2012-ST dated 20-06-2012
has been notified by the Department for providing exemption to specific
services superseding Mega Notification No 12/2012-ST dated 17-03-2012
issued by the Department.
 Other Notifications:- There are certain exemptions which have not been
provided in Master Notification but provided by way of other Exemption
Notification.
 Abatements:- Similarly all notification issued prior to enactment of Finance
Act, 2012 has now become inoperative. Mega Abatement Notification No
26/2012 – ST dated 20-06-2012 has been notified by the Department
providing abatement in respect of specific services.
Scheme of Act

 Notification No. 25/2012 dated 20.06.2012
“In exercise of the powers conferred by sub-section (1) of section 93 of the
Finance Act, 1994 ….
….being satisfied that it is necessary in the public interest so to do, hereby
exempts the following taxable services from the whole of the service tax
leviable thereon under section 66B of the said Act”
Mega Exemption
Notification

Specified International Organizations have been defined in Mega Exemption
Notification as an International Organization declared by the Central
Government in pursuance of Sec 3 of the United Nations Act, 1947. The list of
Such Organization is as follows:-
1. Services provided to the UN or a specified international organization.
Mega Exemptions
• International Civil Aviation
Organization
• World Health Organization
• International Labour Organization
• International Monetary fund.
• Food and Agriculture Organization
of United Nation
• Universal Postal Union.
• International telecommunication
Union.
• World Meteorological Organization
• Permanent Central Opium board.
• Asian Development Bank.
• International hydrographic Bureau.
Etc.

Health care service has been defined under Mega Exemption as:
“any service by way of diagnosis or treatment or care for illness, injury,
deformity, abnormality or pregnancy in any recognised system of medicine
and includes:
• services by way of supply of meals for the patient or
• transportation of the patient to and from a clinical establishment,
but does not include hair transplant or cosmetic or plastic surgery, except
when undertaken to restore or to reconstruct anatomy or functions of body
affected due to congenital defects, developmental abnormalities, injury or
trauma.
2. Health care services by a clinical establishment, an authorized
medical practitioner or Para-medics.
Mega Exemptions

Recognised system of medicine:
Reference to be made to Clause (h) of section 2 of the Clinical Establishments Act, 2010
• Allopathy
• Yoga
• Naturopathy
• Ayurveda
• Homeopathy
• Siddha
• Unani
• Any other system of medicine that may be recognized by central government
Mega Exemptions

Health care should be provided by:
• A clinical establishment
Clinical establishment has been defined in the notification to mean “a hospital, nursing home,
clinic, sanatorium or any other institution by, whatever name called, that offers services or
facilities requiring diagnosis or treatment or care for illness, injury, deformity, abnormality or
pregnancy in any recognized system of medicine in India, or a place established as an
independent entity or a part of an establishment to carry out diagnostic or investigative services
of diseases.”
• An authorised medical practitioner
Authorized medical practitioner has been defined by the Notification to mean any medical
practitioner registered with any of the Councils of the recognized system of medicine established
or recognized by law in India and includes medical professional having the requisite qualification
to practice in any recognized system of medicine in India as per any law for the time being in
force.
Mega Exemptions

Health care should be provided by:
• Para-Medics
Para 7.2.2. of Taxation of Services – An
Education Guide dated 20.06.2012 describes
Paramedics as trained health care professionals,
for example nursing staff, physiotherapists,
technicians, lab assistants etc.
Mega Exemptions

Health care does not include services of hair transplant or cosmetic or plastic
surgery, except when undertaken to restore or to reconstruct anatomy or
functions of body affected due to congenital defects, developmental
abnormalities, injury or trauma.
Refer D.O.F. No. 334/13/2009-TRU, dated 6-7-2009 wherein it has been
specified that cosmetic surgery and plastic surgery are undertaken to preserve
or enhance physical appearance or beauty.
Eg. forehead lift, cosmetic dental surgery, orthodontics, aesthetic dentistry,
laser skin surfacing etc.
Mega Exemptions

Treatment Exempt?
Facial implants
No, for beauty enhancement
Laser Hair removal treatment
No, CCE v New Look Cosmetic Laser
Center [2009 (14) S.T.R. 27 (Tri. - Ahmd.)]
Preventive medication
Yes, CopyGene A/S v. Ministry of Taxation,
Denmark [[2012] 22 taxmann.com189
(ECJ)]
Facelift of a person whose face is
damaged in road accident
Yes
2 (i). Health care services by a clinical establishment, an authorized
Mega Exemptions
Answers for medical problem from a
call centre
No

Services provided by way of transportation of a patient in an ambulance, other
than those specified in (i) above
2 (ii). Transportation of Patient.
Mega Exemptions

2A. Services provided by cord blood banks by way of preservation of
stem cells or any other service in relation to such preservation.
Mega Exemptions

2B. Services provided by operators of the Common Bio-medical Waste
Treatment Facility
Mega Exemptions
Services provided by operators of the Common Bio-medical Waste
Treatment Facility to a clinical establishment by way of treatment or
disposal of bio-medical waste or the processes incidental thereto
BIO-MEDICAL WASTE Biomedical waste, consists of solids, liquids,
sharps, and laboratory waste that are potentially infectious or dangerous
and are considered bio waste .
It must be properly managed to protect the general public, specifically
healthcare and sanitation workers who are regularly exposed to
biomedical waste as an occupational hazard.

A veterinary clinic means a clinic where animals and birds are treated. Further
the meaning and scope of health care service will remain same as defined for
earlier service.
3. Services by a veterinary clinic in relation to health care of animals or
birds.
Mega Exemptions

• Charitable activities
• Provided by an entity registered under Sec 12AA of Income Tax Act, 1961.
Charitable Activities is defined under Mega Exemption as “activities relating to-
(i) public health by way of -
(a) care or counseling of (i) terminally ill persons or persons with severe physical or
mental disability, (ii) persons afflicted with HIV or AIDS, or (iii) persons addicted
to a dependence-forming substance such as narcotics drugs or alcohol; or
(b) public awareness of preventive health, family planning or prevention of HIV
infection;
(ii) advancement of religion or spirituality or Yoga;
4. Services by an entity registered under section 12AA of the Income
Tax Act, 1961
Mega Exemptions

• Charitable activities
• Provided by an entity registered under Sec 12AA of Income Tax Act, 1961.
Charitable Activities is defined under Mega Exemption as “activities relating to-
(iii) advancement of educational programmes or skill development relating to,-
(a) abandoned, orphaned or homeless children;
(b) physically or mentally abused and traumatized persons;
(c) prisoners; or
(d) persons over the age of 65 years residing in a rural area;
(iv) preservation of environment including watershed, forests and wildlife; or
(v) advancement of any other object of general public utility up to a value of twenty five
lakh rupees in a financial year subject to the condition that total value of such
activities had not exceeded twenty five lakh rupees during the preceding financial
year.
Tax Act, 1961
Mega Exemptions

Tax Act, 1961
Mega Exemptions
Activities Exempt?
Donations for Ramlila / Christmas
No, not a service
Religious activity of feeding animals
Yes, CIT v. Barkate Saifiyah Society [1995]
213 ITR 492 (Guj.)
Educational programes for persons
over age of 65 year in Delhi
No, Delhi is not a Rural area
Development of rain harvesting in
Delhi
Yes

The exemption covers services by a person by way of –
• Renting of precincts of a religious place meant for general
public or
• Conduct of any religious ceremony.
Religious place has been defined in Mega Exemption Notification as “a place
which is primarily meant for conduct of prayers or worship pertaining to a religion,
meditation, or spirituality” .
Para 7.5.2. - Religious ceremonies are life-cycle rituals including special religious
poojas conducted in terms of religious texts by a person so authorized by such
religious texts. Occasions like birth, marriage, and death involve elaborate eligious
ceremonies.
Event managers for religious ceremonies not covered.
5. Specified services provided in relation to religious activities.
Mega Exemptions

Services by a specified organisation in respect of a religious pilgrimage
facilitated by the Ministry of External Affairs of the Government of India, under
bilateral arrangement
“specified organisation” shall mean,- (a) Kumaon Mandal Vikas Nigam Limited, a
Government of Uttarakhand Undertaking; or (b) ‘Committee’ or ‘State Committee’ as
defined in section 2 of the Haj Committee Act, 2002 (35 of 2002)”
5A. Specified pilgrimages
Mega Exemptions

Services provided by-
(a) an arbitral tribunal to -
(i) any person other than a business entity; or
(ii) a business entity with a turnover up to rupees ten lakh in the preceding financial
year;
(b) a partnership firm of advocates or an individual as an advocate other than a senior
advocate by way of legal services to,-
(i) an advocate or partnership firm of advocates providing legal services ;
(ii) any person other than a business entity; or
(iii) a business entity with a turnover up to rupees ten lakh in the preceding financial
year; or
(c) A senior advocate by way of legal services to person other than a person ordinarily
carrying out any activity relating to industry, commerce or any other business or
profession;
[Effective w.e.f. 01-04-2016]
6. Services of an individual advocate/arbitral tribunal.
Mega Exemptions

6. Services of an individual advocate/arbitral tribunal.
Mega Exemptions
Legal Service provided by Individual or a
partnership firm of
advocates
Any other entity
To an individual advocate or a partnership firm of
advocates providing legal services
Exempt Taxable
To a Business entity with turnover more than 10 Lakhs Taxable Taxable
To a Business entity with turnover less than 10 Lakhs Exempt Taxable
To any other person Exempt Taxable
“legal service” means any service provided in relation to advice, consultancy or assistance in any
branch of law, in any manner and includes representational services before any court, tribunal or
authority;

The exemption is provided to services of technical testing or analysis of newly
developed drugs, including vaccines and herbal remedies, on human participants
by a clinical research organization approved to conduct clinical trials by the Drugs
Controller General of India.
[This service has been deleted with effect from July 11, 2014]
7. Services by way of technical testing or analysis of specified drugs.
Mega Exemptions

Para 7.7.1.- There is exemption from service tax to training or coaching in recreational
activities relating to arts, culture or sports. The benefit is available to coaching or training
relating to all forms of dance, music, painting, sculpture making, theatre and sports etc.
Q. Is coaching to IPL players exempt?
Q. Is training of dance by Shaimak Dawar Exempt?
Q. Is activity of Farah Khan (choreographer) exempt?
8. Services by way of training or coaching in recreational activities
relating to arts, culture or sports.
Mega Exemptions

9. Services provided,-
(a) by an educational institution to its students, faculty and staff;
(b) to an educational institution, by way of,-
(i) transportation of students, faculty and staff;
(ii) catering, including any mid-day meals scheme sponsored by the
Government;
(iii) security or cleaning or house-keeping services performed in such
educational institution;
(iv) Services relating to admission to, or conduct of examination by, such
institution
[Effective from July 11, 2014]
9. Specified service relating to educational institution.
Mega Exemptions

“educational institution" means an institution providing services by way of:
(i) pre-school education and education up to higher secondary school or equivalent;
(ii) education as a part of a curriculum for obtaining a qualification recognised by any law for the time being in force;
(iii) education as a part of an approved vocational education course
“approved vocational education course" means,—
(i) a course run by an industrial training institute or an industrial training centre affiliated to the National Council for
Vocational Training or State Council for Vocational Training offering courses in designated trades notified under the
Apprentices Act, 1961 (52 of 1961); or
(ii) a Modular Employable Skill Course, approved by the National Council of Vocational Training, run by a person
registered with the Directorate General of Training, Ministry of Skill Development and Entrepreneurship
9. Specified service relating to educational institution.
Mega Exemptions

Any services provided by, _
(i) the National Skill Development Corporation set up by the Government of India;
(ii) a Sector Skill Council approved by the National Skill Development Corporation;
(iii) an assessment agency approved by the Sector Skill Council or the National Skill Development Corporation;
(iv) a training partner approved by the National Skill Development Corporation or the Sector Skill Council
in relation to (a) the National Skill Development Programme implemented by the National Skill Development
Corporation; or (b) a vocational skill development course under the National Skill Certification and Monetary
Reward Scheme; or (c) any other Scheme implemented by the National Skill Development Corporation
9A. Specified service relating to skill training
Mega Exemptions
Services provided by the IIM, to their students, by way of the following educational programmes, except
Executive Development Programme,—
(a) two year full time residential Post Graduate Programmes in Management for the Post Graduate
Diploma in Management, to which admissions are made on the basis of Common Admission Test (CAT),
conducted by Indian Institute of Management;
(b) fellow programme in Management;
(c) five year integrated programme in Management
9B. Specified service of IIM

Services of assessing bodies empanelled centrally by Directorate General of Training, Ministry of Skill
Development and Entrepreneurship by way of assessments under Skill Development Initiative (SDI)
Scheme
9C. Specified service relating to vocational training
Mega Exemptions
Services provided by training providers (Project implementation agencies) under Deen Dayal Upadhyaya
Grameen Kaushalya Yojana under the Ministry of Rural Development by way of offering skill or
vocational training courses certified by National Council For Vocational Training
9D. Specified service of training providers

Recognized sports body means –
(i) the Indian Olympic Association,
(ii) Sports Authority of India,
(iii) a national sports federation recognised by the Ministry of Sports and Youth Affairs of
the Central Government, and its affiliate federations,
(iv) national sports promotion organisations recognised by the Ministry of Sports and Youth
Affairs of the Central Government,
(v) the International Olympic Association or a federation recognised by the International
Olympic Association or
(vi) a federation or a body which regulates a sport at international level and its affiliated
federations or bodies regulating a sport in India;
10. Services provided to a recognized sports body by specified person.
Mega Exemptions

Specific person are :-
- Player - Referee - Umpire
- Coach - Team Manager
When provided for participation in a sporting event organized by a recognized
sports body
10. Services provided to a recognized sports body by specified person.
Mega Exemptions
Sachin playing for India in
World cup
Shane Warne playing for
Rajasthan Royals
Taxable
Ravi Shastri acting as
commentator for Star Sports
Taxable
Exempt

Services by way of sponsorship of sporting events organised,-
(a) by a national sports federation, or its affiliated federations, where the
participating teams or individuals represent any district, state, zone or country;
(b) by Association of Indian Universities, Inter-University Sports Board, School
Games Federation of India, All India Sports Council for the Deaf, Paralympic
Committee of India or Special Olympics Bharat;
(c) by Central Civil Services Cultural and Sports Board;
(d) as part of national games, by Indian Olympic Association; or
(e) under Panchayat Yuva Kreeda Aur Khel Abhiyaan (PYKKA) Scheme;
11. Services by way of sponsorship of tournaments or championship
organized by specified persons.
Mega Exemptions

Mega Exemptions
Exemption to Construction
and related activities of
Specified structures
Provided to
Government
Provided to any
person
Provided to any
person
-original works

Service of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance,
renovation, or alteration of following specified building of Government, a local authority or a governmental
authority were exempt vide Entry 12 of Notification No. 25/2012-Service Tax dated 20.06.2012.
a. a historical monument, archaeological site or remains of national importance, archaeological
excavation, or antiquity specified under the Ancient Monuments and Archaeological Sites and
Remains Act, 1958 (24 of 1958);
b. canal, dam or other irrigation works;
c. pipeline, conduit or plant for (i) water supply (ii) water treatment, or (iii) sewerage treatment or
disposal;
12. Construction related services when provided to Government
Mega Exemptions

Service of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance,
renovation, or alteration of following specified building of Government, a local authority or a governmental
authority were exempt vide Entry 12 of Notification No. 25/2012-Service Tax dated 20.06.2012.
a. a civil structure or any other original works meant predominantly for use other than for commerce,
industry, or any other business or profession;
b. a structure meant predominantly for use as (i) an educational, (ii) a clinical, or (iii) an art or cultural
establishment;
c. a residential complex predominantly meant for self-use or the use of their employees or other persons
specified in the Explanation 1 to clause 44 of section 65 B of the said Act
under a contract which had been entered into prior to the 1st March, 2015 and on which appropriate
stamp duty, where applicable, had been paid prior to such date:
Provided that nothing contained in this entry shall apply on or after the 1st April, 2020;
Note – Please also see Section 102
12A. Construction related services when provided to Government
Mega Exemptions

Specified structures means:-
(a) a road, bridge, tunnel, or terminal for road transportation for use by general public;
(b) a civil structure or any other original works pertaining to a scheme under Jawaharlal Nehru National
Urban Renewal Mission or Rajiv Awaas Yojana;
(ba) a civil structure or any other original works pertaining to the 'In-situ rehabilitation of existing slum
dwellers using land as a resource through private participation' under the Housing for All (Urban)
Mission/Pradhan Mantri Awas Yojana, only for existing slum dwellers.
(bb) a civil structure or any other original works pertaining to the Beneficiary-led individual house
construction/enhancement under the Housing for All (Urban) Mission/Pradhan Mantri Awas Yojana;
(c) a building owned by an entity registered under section 12 AA of the Income tax Act, 1961(43 of
1961) and meant predominantly for religious use by general public;
(d) a pollution control or effluent treatment plant, except located as a part of a factory; or
(e) a structure meant for funeral, burial or cremation of deceased;
[Amended w.e.f. 01-03-2016]
13. Services provided by way of erection, construction, maintenance,
repair, alteration, renovation or restoration of specified structures
Mega Exemptions

Specified structures are:-
(a) railways, excluding monorail or metro;
Explanation.—The services by way of construction, erection, commissioning or installation of original
works pertaining to monorail or metro, where contracts were entered into before 1st March, 2016, on
which appropriate stamp duty, was paid, shall remain exempt;
(b) a single residential unit otherwise than as a part of a residential complex;
(c) low- cost houses up to a carpet area of 60 square metres per house in a housing project approved by
competent authority empowered under the ‘Scheme of Affordable Housing in Partnership’ framed by
the Ministry of Housing and Urban Poverty Alleviation, Government of India;
(ca)low cost houses up to a carpet area of 60 square metres per house in a housing project approved by
the competent authority under:
(i) the "Affordable Housing in Partnership" component of the Housing for All (Urban)
Mission/Pradhan Mantri Awas Yojana;
(ii) any housing scheme of a State Government.
[Amended w.e.f. 01-03-2016]
14. Services by way of construction, erection, commissioning, or
installation of original works pertaining to specified structures.
Mega Exemptions

Specified structures are:-
(d) post- harvest storage infrastructure for agricultural produce including a cold storages for such
purposes; or
(e) mechanised food grain handling system, machinery or equipment for units processing agricultural
produce as food stuff excluding alcoholic beverages;
Original works has been defined under Rule 2A of Determination of Value rules, 2006
Earlier specified structures also include ports and airports . However, Finance Act, 2015 removed the
same and made taxable w.e.f April 1, 2015
14. Services by way of construction, erection, commissioning, or
installation of original works pertaining to specified structures.
Mega Exemptions

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:
Provided further that nothing contained in this entry shall apply on or after the 1st April, 2020;
14A. Exemption in respect of construction contracts for port / airport
Mega Exemptions

Services provided by way of temporary transfer or permitting the use or
enjoyment of a copyright,-
(a) covered under clause (a) of sub-section (1) of section 13 of the Copyright Act,
1957 (14 of 1957), relating to original literary, dramatic, musical or artistic works;
or
(b) of cinematograph films for exhibition in a cinema hall or
cinema theatre;”
15. Temporary transfer or permitting the use or enjoyment of a
copyright
Mega Exemptions

Temporary transfer
Permanent transfer of copyright would amount to sale of goods. The position has also been
confirmed in the case of Radaan Media Works (I) Ltd v CST, Chennai [2010 (19) S.T.R. 740
(Tri. - Chennai)]
Copyrights in specified items only
Original literary, dramatic, musical, artistic works or cinematograph films for exhibition in
cinema hall or theatre
copyright
Mega Exemptions

copyright
Mega Exemptions
Song composer allowing
recording
Music Company distributing
its music
Taxable, sound recording falls under clause (c)
of sub-section (1) of section 13 of the Indian
Copyright Act, 1957
Author allowing publication of
his book
Exempt
Exempt

This service exempts service performed by artist in relation to :-
• music, or
• dance, or
• theatre,
excluding services provided by such artist as a brand ambassador
Further, Finance Act, 2015 imposed a monetary limit on the above exemptions
The exemption has now been restricted and shall now be available when:
a) the consideration charged for such performance is not more than one lakh and fifty
thousand rupees; and
b) such service are not provided by such artist as a brand ambassador
16. Services by a performing artist in folk or classical art forms
Mega Exemptions

16. Services by a performing artist in folk or classical art forms
Mega Exemptions
Performance by Zakir Husaain
for Taj Mahal
Performance of Pt Jasraj and
Received Rs 51,000 for same
Exempt
Drawing by M F Husain Taxable, artists in still art forms
Taxable
Performance by Shiamak Dawar
in Western Dance form
Taxable, not classical
Performance by Pt. Birju
Maharaj and charged Rs
2,00,000/- for same
Taxable

The present category exempts services by way of collecting or providing news to or by:
• an independent journalist,
• press trust of India or
• United news of India.
Thus if any news is supplied by any other person and news agencies like reuters to persons
other than specified persons, such news shall be taxable.
17. Services in relation to news
Mega Exemptions

• Services by a hotel, inn, guest house, club or campsite, by whatever name called, for
residential or lodging purposes, having declared tariff of a unit of accommodation below
one thousand rupees per day or equivalent
• “Declared Tariff” means charges for all amenities provided in the unit of accommodation
(given on rent for stay) like furniture, air-conditioner, refrigerators or any other
amenities, but without excluding any discount offered on the published charges for such
unit.
• Letter DOF No 334/3/2011-TRU dated 25-04-2011 - Cost of extra bed will not form a
part of declare tariff.
• Further if the declared tariff is revised as per the tourist season, the liability to pay tax
shall be on the declared tariff for the accommodation where the published/printed tariff
is above Rs 1000.
18. Services by way of renting of a hotel, inn etc having declared tariff
of a room below Rs 1000 per day or equivalent
Mega Exemptions

Mega Exemptions
Is the tax required to be paid on declared tariff or
actual amount charged?
The actual tax will be liable to be paid on the
amount charged i.e. declared tariff minus any
discount offered. Thus if the declared tariff is Rs.
1100/-, but actual room rent charged is Rs. 800/-,
tax will be required to be paid @ 5% on Rs. 800/-
.
Is it possible to levy separate tariff for the same
accommodation in respect of corporate/privileged
customers and other normal customers?
It is possible to levy separate tariff for the same
accommodation in respect of a class of
customers which can be recognized as a distinct
class on an intelligible criterion. However, it is not
applicable for a single or few corporate entities.
Clarifications vide Circular No. 139/8/2011-TRU, dated 10-5-2011

Mega Exemptions
Is the declared tariff
supposed to include cost of
meals or beverages?
Where the declared tariff includes the cost of food or beverages.
Service Tax will be charged on the total value of declared tariff. But
where the bill is separately raised for food or beverages, and the
amount is charged in the bill, such amount is not considered as part of
declared tariff.
What is the position relating
to off-season prices? Will
they be considered as
declared tariff?
When the declared tariff is revised as per the tourist season, the
liability to pay Service Tax shall be only on the declared tariff for the
accommodation where the published/printed tariff is above Rupees
1000/-. However, the revision in tariff should be made uniformly
applicable to all customers and declared when such change takes
place.
Clarifications vide Circular No. 139/8/2011-TRU, dated 10-5-2011

[effective from July 11, 2014]
The term commercial has been deleted from the exemption phrase and thus, Services by any
place of stay be it Hotel, camsite, dharamshala etc, providing services of residential or lodging
and having declared tariff of a unit of accommodation below one thousand rupees per day or
equivalent shall now be exempted from Service Tax.
Implications
• No Major Impact, more of a clarificatory amendment
Mega Exemptions – Issues and Changes CA Gaurav Gupta 51
Exemption to accommodation places expanded
Mega Exemptions

• This entry exempts services provided in relation to serving of food or beverages by a
restaurant, eating joint or mess, other than those having the facility of air conditioning or
central air heating in any part of the establishment at any time during the year.
• Vide a newspaper advertisement, CBEC has clarified that service charges will also form
part of consideration while valuing service of restaurant.
• Services provided in relation to serving of food or beverages by a canteen maintained
in a factory covered under the Factories Act, 1948 (63 of 1948), having the facility of air-
conditioning or central air-heating at any time during the year
• Is Take away taxable?
19. Services provided in relation to serving of food or beverages by
specified restaurant
Mega Exemptions

• This entry exempts Services provided in relation to serving of food or beverages by a
canteen maintained in a factory covered under the Factories Act, 1948 (63 of 1948),
having the facility of air-conditioning or central air-heating at any time during the year
19A. Services provided in factory canteen
Mega Exemptions

• agricultural produce;
• milk, salt and food grain including flours, pulses and rice;
• chemical fertilizer, organic manure and oilcakes;
• newspaper or magazines registered with the Registrar of Newspapers;
• relief materials meant for victims of natural or man-made disasters, calamities,
accidents or mishap; or
• defence or military equipments
• Railway Equipments or materials (only in case of railways)
• cotton, ginned or baled
In case of GTA, following additional exemption is available:
• goods, where gross amount charged for the transportation of goods on a consignment
transported in a single carriage does not exceed one thousand five hundred rupees;
• goods, where gross amount charged for transportation of all such goods for a single
consignee does not exceed rupees seven hundred fifty;
20. Services by way of transportation by rail or a vessel from one port
in India to another or GTA of the specified goods.
Mega Exemptions

• Exemption has been provided to services which are by way of giving on hire to a state
transport undertaking, a motor vehicle meant to carry more than twelve passengers.
• Exemption given when to a goods transport agency, a means of transportation of
goods.
• State transport undertaking as defined under Mega Exemption as “meaning assigned to
it in clause (42) of sec 2 of Motor Vehicles Act, 1988(59 of 1988).”
• Para 7.11.5 - Giving on hire a bus to a state transport undertaking is exempt from
service tax. If the bus is given on hire to a person other than a state transport
undertaking, it will be taxed
22. Services by way of giving on hire specified means of transportation.
Mega Exemptions

Specified modes:-
• air, embarking from or terminating in an airport located in the state of Arunachal
Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, or Tripura or at
Bagdogra located in West Bengal;
• non-airconditioned contract carriage other than radio taxi, for transportation of
passengers, excluding tourism, conducted tour, charter or hire .
• stage carriage other than air-conditioned stage carriage;
[Earlier ropeway, cable car or aerial tramway were also exempt. However, this entry is
deleted w.e.f. 01-04-2016;]
23. Transport of passengers, with or without accompanied belongings,
by specified modes.
Mega Exemptions

[effective from July 11, 2014]
Exemption in respect of air-conditioned contract carriages withdrawn. Abatement of 60%
available.
Implications
• Increased costs in terms of employee benefits - commutation
Mega Exemptions – Issues and Changes CA Gaurav Gupta 57
24. Exemption in respect of air-conditioned contract carriages
withdrawn
Mega Exemptions

Specified services:-
o water supply,
o public health,
o sanitation conservancy,
o solid waste management or
o slum improvement and upgradation; or
• repair or maintenance of a vessel
Implications:
• Exemption in respect of services provided to Government or local authority or
governmental authority, has been made more specific.
• Exemption shall not be available to ancillary services for such functions such as
consultancy, designing, etc.
25. Specifies service provided to the Government or a local authority or
a governmental authority.
Mega Exemptions

“governmental authority” means an authority or a board or any
other body;
(i) set up by an Act of Parliament or a State Legislature; or
(ii) established by Government,
with 90% or more participation by way of equity or control,
to carry out any function entrusted to a municipality under
article 243W of the Constitution
25. Specifies service provided to the Government or a local authority or
a governmental authority.
Mega Exemptions

A. General Insurance specified schemes -
• Hut Insurance Scheme;
• Cattle Insurance under Swarnajaynti Gram Swarozgar Yojna;
• Scheme for Insurance of Tribals;
• Janata Personal Accident Policy and Gramin Accident Policy;
• Group Personal Accident Policy for Self-Employed Women;
• Agricultural Pumpset and Failed Well Insurance;
• Varishtha Pension Bima Yojna
• 'Niramaya' Health Insurance Scheme implemented by Trust constituted under the
provisions of the National Trust for the Welfare of Persons with Autism, Cerebral Palsy,
Mental Retardation and Multiple Disabilities Act, 1999 (44 of 1999) (w.e.f. 01-04-2016)
• Etc.
B. Life Insurance specified schemes -
(a) Janashree Bima Yojana (JBY); or
(b) Aam Aadmi Bima Yojana (AABY);
(c) Services by way of collection of contribution under Atal Pension Yojana (APY).]
26. Services of insurance provided under specified schemes.
Mega Exemptions

26B. Services by way of collection of contribution under Atal Pension
Yojana (APY)
Mega Exemptions
26C. Services of life insurance business provided by way of annuity
under the National Pension System regulated by Pension Fund
Regulatory and Development Authority of India (PFRDA) under the
Pension Fund Regulatory and Development Authority Act, 2013 (23 of
2013)

Services provided by an incubatee up to a total turnover of fifty lakh rupees in a financial
year subject to the following conditions, namely:-
(a) the total turnover had not exceeded fifty lakh rupees during the preceding financial year;
and
(b) a period of three years has not been elapsed from the date of entering into an
agreement as an incubatee;
‘incubatee’ as an entrepreneur located within the premises of a Technology Business
Incubator (TBI) or Science and Technology Entrepreneurship Park (STEP) recognised by
the National Science and Technology Entrepreneurship Development Board (NSTEDB) of
the Department of Science and Technology, Government of India and who has entered into
an agreement with the TBI or the STEP to enable himself to develop and produce hi-tech
and innovative products;
27. Services provided by an incubate subject to certain conditions.
Mega Exemptions

Service by an unincorporated body or an entity registered as society to own members by
way of reimbursement of charges or share of contribution:-
(a) as a trade union;
(b) for the provision of carrying out any activity which is exempt from the levy of service tax;
or
(c) up to an amount of five thousand rupees per month per member for sourcing of goods or
services from a third person for the common use of its members in a housing society or
a residential complex;
28. Specified service by an unincorporated body or an entity registered
as a society.
Mega Exemptions

The present entry provides exemption to services by the following person in respective
capacities:
(a) sub-broker or an authorised person to a stock broker;
(b) authorised person to a member of a commodity exchange;
(f) selling agent or a distributer of SIM cards or recharge coupon vouchers;
(g) business facilitator or a business correspondentto a banking company with respect to
Basic Savings Bank Deposit Account covered by Pradhan Mantri Jan Dhan Yojana in
the banking company's rural area branch, by way of account opening, cash deposits,
cash withdrawals, obtaining e-life certificate, Aadhar seeding;
(ga) any person as an intermediary to a business facilitator or a business correspondent
with respect to services mentioned in clause (g);
(gb) business facilitator or a business correspondent to an insurance company in a rural
area; or
(h) sub-contractor providing services by way of works contract to another contractor
providing works contract services which are exempt;
29. Services by specified intermediaries.
Mega Exemptions

Carrying out an intermediate production process as job work in relation to -
(a) agriculture, printing or textile processing;
(b) cut and polished diamonds and gemstones; or plain and studded jewellery of gold and
other precious metals, falling under Chapter 71 of the Central Excise Tariff Act ,1985 (5
of 1986);
(c) any goods on which appropriate duty is payable by the principal manufacturer; or
(appropriate duty does not include NIL duty or duty when wholly exempt)
(d) processes of electroplating, zinc plating, anodizing, heat treatment, powder coating,
painting including spray painting or auto black, during the course of manufacture of
parts of cycles or sewing machines upto an aggregate value of taxable service of the
specified processes of one hundred and fifty lakh rupees in a financial year subject to
the condition that such aggregate value had not exceeded one hundred and fifty lakh
rupees during the preceding financial year;
30. Specified services of carrying out an intermediate production
process as job work.
Mega Exemptions

Service of job workers in relation to processing of alcoholic liquors for human
consumption was exempt earlier The exemption has now been withdrawn and
their services have now been made taxable
30. Specified services of carrying out an intermediate production
process as job work.
Mega Exemptions

Footwear Association of India is organizing a business exhibition in Germany for footwear
manufacturers of India. Is Footwear association of India required to pay service tax on
services to footwear manufacturers?
No. The activity is exempt from service tax.
31. Services by an organizer to any person in respect of a business
exhibition held outside India
Mega Exemptions

Services by way of making telephone calls from -
(a) departmentally run public telephone;
(b) guaranteed public telephone operating only for local calls; or
(c) free telephone at airport and hospital where no bills are being issued
This exemption has been withdrawn w.e.f April 1, 2015
32. Services by way of making telephone calls from specified facilities
Mega Exemptions
It includes slaughtering of all animals
33. Services by way of slaughtering of animals

Mega Exemptions
Specified Persons:
(a) Government, a local authority, a governmental authority or an individual in relation to
any purpose other than commerce, industry or any other business or profession;
(b) an entity registered under section 12AA of the Income tax Act, 1961 (43 of 1961) for the
purposes of providing charitable activities; or
(c) a person located in a non-taxable territory.
Para 7.11.17 - I am resident in Jammu and Kashmir and planning to construct a property in
Delhi. I have got the architectural drawings made from an architect who is also resident in
Jammu and Kashmir. Am I liable to pay service tax on architect services?
No. Even though the property is located in Delhi- in a taxable territory- your architect is
exempt from service tax as both the service provider and the service receiver is in a non-
taxable territory.
34. Services received from a service provider located in a non-taxable
territory by specified persons

Mega Exemptions
Services of public libraries by way of
a) Lending of books,
b) Publications or any other knowledge- enhancing content or material
35. Service of public libraries
Employees State Insurance Scheme provides full medical care in the form of medical
attendance, treatment, drugs and injections, specialist consultation and hospitalization to
insured persons and also to members of their families where the facility for Specialist
consultation, hospitalization has been extended to families.
36. Services by Employees State Insurance Corporation.

Mega Exemptions
• High Court of Rajasthan in case of Mecson Marbles Pvt Td v Commercial Tax officer
[200793)WLN 401] observed that transfer of a business implies transfer of a running
business together with all its rights, liabilities, stock in trade and goodwill.
• Para 7.11.15 - What does the term ‘transfer of a going concern’ mean?
Transfer of a going concern means transfer of a running business which is capable of
being carried on by the purchaser as an independent business, but shall not cover mere
or predominant transfer of an activity comprising a service. Such sale of business as a
whole will comprise comprehensive sale of immovable property, goods and transfer of
unexecuted orders, employees, goodwill etc. Since the transfer in title is not merely a
transfer in title of either the immovable property or goods or even both it may amount to
service and has thus been exempted.
37. Services by way of transfer of a going concern as whole or
independent part thereof

Mega Exemptions
• Services by way of public conveniences such as provision of facilities of bathroom,
washrooms, lavatories, urinal or toilets;
38. Services by way of public conveniences.

Mega Exemptions
Functions are as follows:-
• the Municipalities with such powers and authority as may be necessary to enable them
to function as institutions of self government and such law may contain provisions for
the devolution of powers and responsibilities upon Municipalities, subject to such
conditions as may be specified therein, with respect to
(i) the preparation of plans for economic development and social justice;
(ii) the performance of functions and the implementation of schemes as may be
entrusted to them including those in relation to the matters listed in the Twelfth
Schedule;
• the Committees with such powers and authority as may be necessary to enable them to
carry out the responsibilities conferred upon them including those in relation to the
matters listed in the Twelth Schedule
39. Services by a Government, a local authority or a government
authority in relation to any function entrusted to a municipality under
article 243 W of the Constitution.

Mega Exemptions
It was further clarified vide F. No.334/03/2014-TRU dated February 17, 2014, that Loading,
unloading, packing, storage and warehousing of rice:
It was further clarified vide F. No.334/03/2014-TRU dated February 17, 2014, that following
exemptions are already available in respect of rice:
• Transportation of rice:
o by a rail or a vessel: Services by way of transportation of food stuff by rail or a vessel
from one place in India to another is exempt
o by a goods transport agency: Transportation of food stuff by a goods transport agency
is exempt.
• Milling of paddy into rice: When paddy is milled into rice, on job work basis, service
tax is exempt under sl.no.30 (a) of exemption notification 25/2012-ST dated 20th June,
2012, since such milling of paddy is an intermediate production process in relation to
agriculture.
40. Services by way of loading, unloading, packing, storage or
warehousing of rice, cotton, ginned or baled. (cotton added from
11.7.14)”.

Mega Exemptions
41. Services received by the Reserve Bank of India, from outside India
in relation to management of foreign exchange reserves;
42. Services provided by a tour operator to a foreign tourist in relation
to a tour conducted wholly outside India
Tour Wholly In India Wholly
Outside
India
Partially in
India
Indian Tourist Taxable Taxable Taxable
Foreign Tourist Taxable Non Taxable Taxable

Mega Exemptions
Services by operator of Common Effluent Treatment Plant by way of
treatment of effluent has been exempted w.e.f April 1, 2015. In order to
minimize environmental pollution due to the small and medium-scale
industries, cleaner production technologies and formation of waste
minimization circles are being encouraged in India. Thus, exemption to
operator of Common Effluent Treatment Plant by way of treatment of effluent
is step in this direction
43. Services by way operator of Common Effluent treatment plant

Mega Exemptions
Services by way of pre-conditioning, pre-cooling, ripening, waxing, retail packing,
labelling of fruits and vegetables has been exempted by Finance Act, 2015 w.e.f April 1,
2015 As a condition it has been provided that such activities when provided on fruits or
vegetables should not change or alter the essential characteristics of the said fruits or
vegetables. Such activities were taken as part of making such fruits or vegetables
marketable, however, was not covered by the activities forming part of Clause (d) of
Section 66D of Finance Act, 1994 (Negative List) which included processes carried out
at an agricultural farm including tending, pruning, cutting, harvesting, drying, cleaning,
trimming, sun drying, fumigating, curing, sorting, grading, cooling or bulk packaging and
such like operations which do not alter the essential characteristics of agricultural
produce but make it only marketable for the primary market.
44. Services by way of pre market activities in relation to fruits and
vegetables

Mega Exemptions
Services by way of admission to a museum, national park, wildlife sanctuary,
tiger reserve or zoo has been exempted w.e.f April,2015.
46. Services by way of exhibition of movie to distributors / association of exhibitor
Service provided by way of exhibition of movie by an exhibitor to the
distributor or an association of persons consisting of the exhibitor as one of its
members has been exempted w.e.f April 1, 2015
45. Services by way of admission to certain places

Mega Exemptions
Services by way of right to admission to,-
i. (exhibition of cinematographic film, circus, dance, or theatrical performance including
drama or ballet;
ii. recognised sporting event;
iii. award function, concert, pageant, musical performance or any sporting event other than
a recognised sporting event, where the consideration for admission is not more than Rs
500 per person.
While the first two do not have any limit for price of ticket, the third part of exemption has
restricted the exemption to those tickets of the event where tickets are priced for not more
than Rs 500.
The exemption was required as the Finance Act removed the services by way of admission
to entertainment events or access to amusement facilities from Nagative List (Section 66D of
Finance Act, 1994).
47. Services by way of right to admission to certain events

Mega Exemptions
Services provided by Government or a local authority to a business entity with a turnover up
to rupees ten lakh in the preceding financial year-
Explanation.—For the purposes of this entry, it is hereby clarified that the provisions of this
entry shall not be applicable to the following services, namely:—
(a) services specified in sub-clauses (i), (ii) and (iii) of clause (a) of section 66D of the
Finance Act, 1994;
(b) services by way of renting of immovable property.
48. Services provided by Government or a local authority to a business
entity with a turnover up to rupees ten lakh in the preceding financial
year.

Mega Exemptions
49. Employees' Provident Fund Organisation (EPFO) to persons governed under the
Employees' Provident Funds and Miscellaneous Provisions Act, 1952 (19 of 1952);
50. Insurance Regulatory and Development Authority of India (IRDA) to insurers under the
Insurance Regulatory and Development Authority of India Act, 1999 (41 of 1999);
51. Securities and Exchange Board of India (SEBI) set up under the Securities and
Exchange Board of India Act, 1992 (15 of 1992) by way of protecting the interests of
investors in securities and to promote the development of, and to regulate, the securities
market;
52. National Centre for Cold Chain Development under Ministry of Agriculture, Cooperation
and Farmer's Welfare by way of cold chain knowledge dissemination;
53. Services by way of transportation of goods by an aircraft from a place outside India upto
the customs station of clearance in India (w.e.f. 01-06-2016).
Services of Certain Bodies exempted w.e.f. 01-04-2016

Mega Exemptions
54. Services provided by Government or a local authority to another Government or local
authority: Provided that nothing contained in this entry shall apply to services specified in
sub-clauses (i), (ii) and (iii) of clause (a) of section 66D of the Finance Act, 1994;
55. Services provided by Government or a local authority by way of issuance of passport,
visa, driving licence, birth certificate or death certificate;
56. Services provided by Government or a local authority where the gross amount charged
for such services does not exceed Rs. 5000 : Provided that nothing contained in this
entry shall apply to services specified in sub-clauses (i), (ii) and (iii) of clause (a) of
section 66D of the Finance Act, 1994: Provided further that in case where continuous
supply of service, as defined in clause (c) of rule 2 of the Point of Taxation Rules, 2011,
is provided by the Government or a local authority, the exemption shall apply only where
the gross amount charged for such service does not exceed Rs. 5000 in a financial year;
57. Services provided by Government or a local authority by way of tolerating non-
performance of a contract for which consideration in the form of fines or liquidated
damages is payable to the Government or the local authority under such contract;
Certain New exemptions provided to Government w.e.f. 13-04-2016

Mega Exemptions
58. Services provided by Government or a local authority by way of—
(a) registration required under any law for the time being in force;
(b) testing, calibration, safety check or certification relating to protection or safety of workers,
consumers or public at large, required under any law for the time being in force;
59. Services provided by Government or a local authority by way of assignment of right to
use natural resources to an individual farmer for the purposes of agriculture;
60. Services by Government, a local authority or a governmental authority by way of any
activity in relation to any function entrusted to a Panchayat under article 243G of the
Constitution;
61. Services provided by Government or a local authority by way of assignment of right to
use any natural resource where such right to use was assigned by the Government or the
local authority before the 1stApril, 2016: Provided that the exemption shall apply only to
service tax payable on one time charge payable, in full upfront or in instalments, for
assignment of right to use such natural resource;

Mega Exemptions
62. Services provided by Government or a local authority by way of allowing a business
entity to operate as a telecom service provider or use radio frequency spectrum during
the financial year 2015-16 on payment of licence fee or spectrum user charges, as the
case may be;
63. Services provided by Government by way of deputing officers after office hours or on
holidays for inspection or container stuffing or such other duties in relation to import
export cargo on payment of Merchant Overtime charges (MOT).

Other Exemptions
1. Exemption to small service provider
2. Exemption in case of Import of technology
3. Services to foreign diplomatic mission
4. Services by TBI or STEP
5. Services provided to SEZ
6. Exemption against scrips under export Schemes

Other Exemptions
1. Exemption to small service provider - Notification No 33/2012 dated
01.07.2012
Exemption has been provided to a service provider when aggregate value of taxable service
(aggregate of all services and all premises) as provided by assesse is not exceeding a
specified limit during a financial year i.e Rs 10 Lakh at present.
However above notification is not available to following persons:-
• Person providing taxable services under a brand name or trade name
• Person required to pay service tax under reverse charge.
Conditions for availing above exemption:-
• Exemption is optional, however once opted for a financial year shall not be withdrawn
during remaining part of such financial year.
• Service provider shall not avail CENVAT credit of service tax paid on any input or input
services, capital goods.
• Service provider shall avail CENVAT Credit only on such inputs or input services as are
received on or after date on which service provider statrts paying service tax.

Other Exemptions
2. Exemption in case of Import of technology - Notification dated
14/2012 dated 17-03-2012
Exemption in respect of taxable service involving import of technology, from so much of
service tax, as is equivalent to extent of amount of R&D Cess payable on said transfer of
technology.
Conditions:-
• Amount of R&D Cess is paid within 6 months from date of invoice or in case of
associated enterprises, the date of credit in books of account.
• R&D Cess is paid at the time or before payment for service.
• The records of R&D Cess are maintained for establishing linkage between invoice or
credit entry and R&D Cess payment challan.

Other Exemptions
3. Services to foreign diplomatic mission - Notification No 27/2012-ST
dated 20.06.2012
All taxable service provided by any person, for the official use of a foreign diplomatic
mission or consular post in India or for personal use or for use of family members of
Diplomatic agents or carreer consular officers posted therein.
Procedure:-
a) Certificate is issued to diplomatic agents or career consular officers
b) An identification card bearing unique identification number and containing a photograph
and name of such diplomatic mission etc in India where he is posted.
c) A copy of certificate duly authenticated by the head of such foreign diplomatic mission
alongwith an undertaking in in original stating that services received are for official
purpose or for personal use of family.
d) The head of such foreign diplomatic mission etc shall maintain account of such
undertaking
e) Invoice by service to contain serial number and date of undertaking furnished

Other Exemptions
4. Service by TBI or STEP - Notification No 32/2012-ST dated
20.06.2012
All taxable service provided by TBI or STEP duly recognized by NSTEDB has been
exempted from service tax, provided they furnish requisite information in Form I and Form II
received from each incubate with Assistant Commissioner of Central Excise before
exercising such option.

Other Exemptions
4. Service to SEZ - Notification No 40/2012-ST dated 20.06.2012
All taxable services received by a Unit located in a Special Economic Zone (SEZ) or
Developer of SEZ for the authorized operations, has been exempted from the levy of whole
of the service tax, education cess and secondary and higher education cess.
- in case the specified services received and used for authorised operations are wholly consumed
within the SEZ, the provider of such services or the receiver of such services on reverse charge
basis, as the case may be, has the option not to pay the service tax ab initio
- Where the specified services received by Unit or Developer, are not wholly consumed within SEZ,
refund shall be restricted to the extent of the ratio of export turnover to the total turnover for the given
period to which the claim relates and the same shall be claimed as per the following ratio:
Refund = (Export Turnover of goods + Services of SEZ Unit/Developer) x Service tax paid on
services other than wholly consumed services (both SEZ and DTA)
Total Turnover

Abatements
Notification No. 26/2012 dated 20.06.2012
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), …..
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 ……….
Please note that we have for the sake of better understanding represented rate of
exemption available in front of each service.

Sl.
No.
Description of
taxable service
% Conditions Explanation
(1) (2) (3) (4)
1 Services in
relation to
financial
leasing
including hire
purchase
90 (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.
Abatements

Sl.
No.
Description of taxable
service
(1) (2) (3) (4)
2 Transport of goods by rail
(other than service
specified at Sl. No. 2A
below)
70
2A Transport of goods in
containers by rail by any
person other than Indian
Railways
60
3 Transport of passengers,
with or without
accompanied belongings
by rail
70
Abatements

Sl.
No.
Description of
taxable service
(1) (2) (3) (4)
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
30 CENVAT
credit on any
goods
classifiable
under
Chapters 1 to
22 of the
Central Excise
Tariff Act,
1985 has not
been taken
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.
Abatements

Sl.
No.
Description of
taxable service
(1) (2) (3) (4)
5 Transport of
passengers by
air, with or without
accompanied
belongings
60
/40
CENVAT credit on inputs and
capital goods, used for
providing the taxable service,
has not been taken
60 % if Travelling in
Economy Class and
40% if travelling in
higher class
6 Renting of hotels,
inns, guest
houses, clubs,
campsites or
other commercial
places meant for
residential or
lodging purposes.
40
Same as above
Abatements

Sl.
No.
Description of
taxable service
(1) (2) (3) (4)
7 Services of goods
transport agency in
relation to
transportation of goods
other than used
household goods.
70 Cenvat Credit
not taken
Condition not to be fulfilled by service recipient
Prior to April 1,2015 abatement is 75%
7A Services of goods
transport agency in
relation to
transportation of used
household goods.
60 Cenvat Credit
not taken
Condition not to be fulfilled by service recipient
Prior to April 1,2015 abatement is 75%
8 Services provided in
relation to chit
30 Cenvat Credit
not taken
Abatements

Chit fund
Notification No. 26/2012 dated 20.06.2012
• In the case of Delhi Chit Fund Association v Union Of India reported as 2013 (30) S.T.R.
347 (Del.), Hon’ble Delhi High Court has quashed the Centre's notification to levy
service tax on chit-fund business, saying the act of a foreman, who conducts auction of
chit amount among contributors, does not fall under the definition of "service" provided
in the Finance Act.
• Hon’ble Court held as under:
"We have come to the conclusion that no service tax is chargeable on the services rendered by
the foreman in a business chit fund on an interpretation of the statutory provisions. It is not
necessary for us to therefore express any opinion as to the correctness of the views expressed
in the aforesaid Education Guide issued by the Central Board of Excise and Customs.
16. In the result the writ petition succeeds and prayer (i) is granted. The notification of June
20, 2012 issued by the Government of India, Ministry of Finance (Department of Revenue) is
quashed.”

Sl.
No.
Description of taxable
service
(1) (2) (3) (4)
9 Renting of motorcab 60 No CENVAT credit is
taken except that of sub
contractor motocab
service provider.
Cenvat Credit of
other tour
operator
available from
October 1. 2014
9A Transport of passengers, with
or without accompanied
belongings, by a contract
carriage other than motorcab,
a radio taxi and contract
carriage
60 No Cenvat Credit availed This entry to
include radio
taxi after
enactment of
Finance Bill
2014
10 Transport of goods in a vessel 70 No CENVAT credit is
taken
Prior to April 1,
2015 the
abatement was
60%
Abatements

Sl.
No.
Description of
taxable service
(1) (2) (3) (4)
11 Services by a tour
operator in relation
to,-
(i) a tour, if the tour
operator is
providing services
solely of arranging
or booking
accommodation for
any person
90 (i) No CENVAT credit has been taken
other than the input service of a tour
operator
(ii) The invoice, bill or challan issued
indicates that it is towards the charges
for such accommodation.
(ii) This exemption shall not apply in such
cases where the invoice issued by the
tour operator, in relation to a tour, only
includes the service charges for
arranging accommodation and not the
cost of such accommodation.
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,
(ii) Tour other than
(i) above
70 (i) Same as (i) above
(ii) The bill issued for this purpose
indicates that it is inclusive of charges
for such a tour and the amount
charged in the bill is the gross amount
charged for such a tour.
Cenvat Credit of other tour
operator available from October 1.
2014
Abatements

Sl.
No.
Description of taxable service % Conditions Explanation
(1) (2) (3) (4)
12 (a)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
70 (i) CENVAT
credit on inputs
used for providing
the taxable service
has not been.
(ii) The value of
land is included in
the amount
charged from the
service receiver.
Abatements

Disclaimer
This presentation has been prepared for internal use of ICAI and its members. The contents of this document are
solely for informational purpose. It does not constitute professional advice or a formal recommendation. The
presentation is made with utmost professional caution but in no manner guarantees the content for use by any
person. It is suggested to go through original statute / notification / circular / pronouncements before relying on the
matter given. The presentation is meant for general guidance and no responsibility for loss arising to any person
acting or refraining from acting as a result of any material contained in this presentation will be accepted by us.
Professional advice recommended to be sought before any action or refrainment.
CA Gaurav Gupta
Partner
MGS & Co.
Chartered Accountants
Delhi l Gurgaon
O : LD – 65, Pitampura, Delhi - 110034.
: 119, DLF City Court, MG Road, Gurgaon, Haryana – 121002.
P : +91 11 4571 8819, +91 11 3296 2487
F : +91 11 2735 2487
M: +91 98110 13940
Thank you

1. International Civil Aviation Organisation
2. World Health Organisation
3. International Labor Organisation
4. Food and Agriculture Organisation of the United Nations
5. UN Educational, Scientific and Cultural Organisation (UNESCO)
6. International Monetary Fund (IMF)
7. International Bank for Reconstruction and Development
8. Universal Postal Union
9. International Telecommunication Union
10. World Meteorological Organisation
11. Permanent Central Opium Board
12. International Hydrographic Bureau
13. Commissioner for Indus Waters, Government of Pakistan and his
advisers and assistants
14. Asian African Legal Consultative Committee
15. Commonwealth Asia Pacific Youth Development Centre,
Chandigarh
16. Delegation of Commission of European Community
17. Customs Co-operation Council
18. Asia Pacific Telecommunity
19. International Centre of Public Enterprises in Developing
Countries, Ljubljana (Yugoslavia)
20. International Centre for Genetic Engineering and Biotechnology
21. Asian Development Bank
22. South Asian Association for Regional Co-operation
23. International Jute Organisation, Dhaka, Bangladesh
List of Specified Organizations

Exemptions abatements

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