EXEMPTIONS FROM SERVICE TAX – RECENT NOTIFICATIONS

[Mr. M. GOVINDARAJAN]

                        Sec.93 (3) of the Finance Act, 1994 gives power to the Central Government exemption from service tax.  This section provides that 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 is leviable thereon.  It further provides that if the Central Government is satisfied that it is necessary in the public interest so to do, it may, by special order in each case, exempt any taxable service of any specified description from the payment of whole or any part of the service tax leviable thereon, under circumstances of exceptional nature to be stated in such order.

                        In this Budget also notifications are issued giving exemption from service tax to various services. 

1. Notification No.5/2011-Service Tax, dated 01.03.2011 – Sec. 65 (105) (zzo) defines taxable service as any service provided or to be provided to an exhibitor, by the organizer of a business exhibition, in relation to a business exhibition.   This notification exempts the taxable service when provided by an organizer of business exhibition for holding a business exhibition outside India, from the whole of the service tax thereon under Sec. 66 of the Finance Act.
2. Notification NO.6/2011-Service Tax, dated 01.03.2011 – Sec. 65 (105) (zzzza) defines ‘taxable service’ as any service provided or to be provided to any person, by any other person in relation to the execution of a works contract, excluding works contract in respect of roads, airports, railways, transport terminals, bridges, tunnels and dams.  This notification exempts the taxable service of execution of a works contract when provided for the purposes of carrying out-

• Construction of new residential complex or part thereof; or
• Completion and finishing services of new residential complex or part thereof

            Under Jawaharlal Nehru National Urban Renewal Mission and Rajiv Awaas Yojana from the whole of the service tax leviable thereon under Section 66 of the Finance Act.

3. Notification No.7/2011-Service Tax, dated 01.03.2011 – Sec. 65 (105) (d) defines ‘taxable service’ as any service provided or to be provided to a policy holder or any person, by an insurer including re-insurer carrying on general insurance business in relation to general insurance business.   This notification exempts the taxable service provided by an insurer carrying on General Insurance Business to any person for providing insurance under the Rashtriya Swasthya Bima Yojana from the whole of the service tax leviable thereon under Sec. 66 of the Finance Act.
4. Notification No.8/2011-Service Tax, dated 01.03.2011 – Sec. 65(105) (zzn) defiens ‘taxable service’ as any service provided or to be provided to any person, by an aircraft operator, in relation to transport of goods by aircraft; Sec. 65(105) (zzp) defines ‘taxable service’ as any service provided or to be provided to any person by a goods transport agency, in relation to transport of goods by road in a goods carriage.   Sec. 65 (105) (zzzp) defines ‘taxable service’ as any service provided or to be provided to any person by any other person in relation to transport of goods in any manner.   This Notification exempts the taxable services of the above said services, provided to any person located in India, when the goods are transported from a place located outside India to a final destination which is also outside India, from the whole of service tax leviable thereon under Sec. 66 of the Finance Act.   This Notification comes into effect from 01.04.2011.
5. Notification No. 9/2011-Service Tax, dated 01.03.2011 gives further exemption for the service under Sec. 65 (105) (zzn).  This notification exempts the taxable service to the extent so much of the value as is equal to the amount of the freight included in the value determined under Sec. 14 of the Customs Act, 1962 or the rules made there under for the purpose of charging customs duties.   This notification also comes into effect from 01.04.2011.
6. Notification No. 10/2011-Service Tax, dated 01.03.2011 gives further exemption for the service rendered under Sec. 65 (105) (zzzza) when provided wholly within an airport and classified under Sec. 65(105)(zzm)  from whole of service tax leviable thereon under Sec. 66 of the Finance Act.
7. Notification No.11/2011-Service Tax, dated 01.03.2011 gives further exemption for the service rendered under Sec. 65 (105) (zzzza) when provided wholly within the port or other port, for construction, repair, alteration and renovation of wharves, quays, docks, stages, jetties, piers and railways from the whole of service tax leviable thereon under Section 66 of the Finance Act.
8. Notification No. 17/2011-Service Tax, dated 01.03.2011 exempts the taxable services under Sec. 65 (105) chargeable to tax under Sec. 66 or Section 66A of the Finance Act, received by a Unit located in a Special Economic Zone or Developer of SEZ for the authorized operations, from the whole of service tax, education cess and secondary and higher education cess leviable thereon.