Exemptions and Abatements

Exemptions and Abatements
Institute of Chartered Accountant of India
May 25, 2014
Certificate Course on Indirect Taxes
Bilaspur
Presented by:
CA Gaurav Gupta
B.Com(Hons.), FCA, LLB, DISA
Partner
MGS & Co.
Author – Service Tax – Law & Practice

• New charging provision (Section 66B)
“There shall be levied a tax (hereinafter referred to as the service tax) at the rate of twelve
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
Mega Exemptions
Answers for medical problem from a
call centre
No

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

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;
(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
4. Services by an entity registered under section 12AA of the Income
Tax Act, 1961
Mega Exemptions

4. Services by an entity registered under section 12AA of the Income
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 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) an individual as an advocate or a partnership firm of advocates 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 person represented on an arbitral tribunal to an arbitral tribunal.
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.
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

Services provided to an educational institution in respect of education exempted
from service tax, by way of,-
(a) auxiliary educational services; or
(b) renting of immovable property;
“Auxiliary educational services” means any services,
• relating to imparting any skill, knowledge, education or development of course content or
• any other knowledge – enhancement activity, whether for the students or the faculty,
• or any other services which educational institutions ordinarily carry out themselves but may obtain as
outsourced services from any other person,
• including services relating to admission to such institution, conduct of examination, catering for the
students under any mid-day meals scheme sponsored by Government, or transportation of students,
faculty or staff of such institution.
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

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

Specified structures are :-
(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 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);
(c) a structure meant predominantly for use as (i) an educational, (ii) a clinical, or (iii) an art
or cultural establishment;
(d) canal, dam or other irrigation works;
(e) pipeline, conduit or plant for (i) water supply (ii) water treatment, or (iii) sewerage
treatment or disposal; or
(f) 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;
12. Service provided to the Government or local authority by way of
erection, construction, maintenance, repair, alteration, renovation or
restoration of specified structures.
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;
(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;
13. Services provided by way of erection, construction, maintenance,
repair, alteration, renovation or restoration of specified structures
Mega Exemptions

Specified structures are:-
(a) an airport, port or railways, including monorail or metro;
(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;
(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
14. Services by way of construction, erection, commissioning, or
installation of original works pertaining to specified structures.
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.
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 Exempt
Drawing by M F Husain Taxable, artists in still art forms
Taxable
Performance by Shiamak Dawar
in Western Dance form
Taxable, not classical

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

• “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

• 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;
• foodstuff including flours, tea, coffee, jaggery, sugar, milk products, salt and edible oil,
excluding alcoholic beverages;
• chemical fertilizer 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)
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
21. 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;
• a contract carriage for the transportation of passengers, excluding tourism, conducted
tour, charter or hire; or
• ropeway, cable car or aerial tramway;
22. Transport of passengers, with or without accompanied belongings,
by specified modes.
Mega Exemptions

Specified services:-
• carrying out any activity in relation to any function ordinarily entrusted to a municipality
in relation to
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
23. 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
23. Specifies service provided to the Government or a local authority or
a governmental authority.
Mega Exemptions

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;
• premia collected on export credit insurance;
• Weather Based Crop Insurance Scheme or the Modified National Agricultural
Insurance Scheme, approved by the Government of India and implemented by
the Ministry of Agriculture;
• Jan Arogya Bima Policy;
• National Agricultural Insurance Scheme;
• Pilot Scheme on Seed Crop Insurance;
• Central Sector Scheme on Cattle Insurance;
• Universal Health Insurance Scheme;
• Rashtriya Swasthya Bima Yojana; or
• Coconut Palm Insurance Scheme;
24. Services of general insurance business provided under specified
schemes.
Mega Exemptions

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;
25. 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;
26. 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;
(c) mutual fund agent to a mutual fund or asset management company;
(d) distributor to a mutual fund or asset management company;
(e) selling or marketing agent of lottery tickets to a distributer or a selling agent;
(f) selling agent or a distributer of SIM cards or recharge coupon vouchers;
(g) business facilitator or a business correspondent to a banking company or 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;
27. 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 sholly 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;
28. Specified services of carrying out an intermediate production
process as job work.
Mega Exemptions

Para 7.11.16 –
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.
29. 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
30. Services by way of making telephone calls from specified facilities
Mega Exemptions
It includes slaughtering of all animals
31. 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.
32. 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
33. 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.
34. 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.
35. 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;
36. Services by way of public conveniences.
Services of Life Insurance under following schemes:-
• Janashree Bima Yojana (JBY) or
• Aam Aadmi Bima Yojana (AABY)
37. Services of Life insurance in specified schemes

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
38. Services by 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.”.

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 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, namely;-

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
70
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 CENVAT credit on inputs and
capital goods, used for
providing the taxable service,
has not been taken
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.
75 Cenvat
Credit not
taken
8 Services provided
in relation to chit
70 Cenvat
Credit not
taken
Chit means a transaction whether called chit, chit fund,
chitty, kuri, or by whatever name by or under which a
person enters into an agreement with a specified
number of persons that every one of them shall
subscribe a certain sum of money (or a certain quantity
of grain instead) by way of periodical installments over
a definite period and that each subscriber shall, in his
turn, as determined by lot or by auction or by tender or
in such other manner as may be specified in the chit
agreement, be entitled to a prize amount,
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 any
motor vehicle
designed to carry
passengers
60 No
CENVAT
credit is
taken
Renting of any motor vehicle designed to
carry passengers
10 Transport of
goods in a vessel
50 No
CENVAT
credit is
taken
Abatements

Sl.
No.
Description of
taxable service
(1) (2) (3) (4)
11 Services by a tour
operator in
relation to,-
(i) a package tour
75 (i) No CENVAT credit has been
taken (ii) The bill issued for this
purpose indicates that it is inclusive
of charges for such a tour.
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) a tour, if the
tour operator is
providing services
solely of arranging
or booking
accommodation
for any person in
relation to a tour
90 (i) No Cenvat Credit taken
(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.
Abatements

Sl.
No.
Description of
taxable service
(1) (2) (3) (4)
(iii) any services
other than
specified at (i)
and (ii) above.
60 (i) No CENVAT credit
has been taken.
(ii) The bill issued
indicates that the amount
charged in the bill is the
gross amount charged for
such a tour.
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 for a residential unit satisfying both
the following conditions namely:-
(i) The carpet area of unit is less than 2000
square feet and
(ii) The amount charged for the unit is less
than rupees one crore.
75 (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.
(b) Construction other than above 70
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.
507 B, D-Mall, Netaji Subhash Palace, Delhi - 110034
+91 11 32962487
+91 11 2735 2487
+91 98110 13940
cagauravmgs@gmail.com
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 and Abatements

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