EXEMPTED SERVICES

[Mr. M. GOVINDARAJAN]

Section 93 of Chapter V of Finance Act, 1994 gives powers to the Central Government to grant exemption from service tax. The said 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 leviable thereon. 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.

The Department now and then issued notifications in regard to grant exemption from service tax.   After the introduction of negative list many notifications issued before that period had been rescinded. This article will give the details of exemption available from the Service tax as on today.

Notification 25/2012-Service Tax, dated 20^th June, 2012 gives the mega exemption list from service tax. The notification has been amended by the following notifications:

• Notification No. 44/2012-Service Tax, dated 07.08.2012;
• Notification No. 49/2012-Service tax, dated 24.12.2012;
• Notification No. 3/2013-Service tax, dated 01.03.2013;

After incorporating the amendments made in the above said three notifications in 25/2012-Service Tax, the following are exempted from the whole of service tax leviable under Section 66B of the Finance Act:

1. Services provided to the United Nations or a specified international organization;

2. Health care services by a clinical establishment, an authorized medical practitioner or para-medics;

3.  Services by a veterinary clinic in relation to health care of animals or birds;

4. Services by an entity registered under section 12AA of the Income tax Act, 1961 (43 of 1961)) by way of charitable activities;

5. Services by a person by way of-

    (a) renting of precincts of a religious place meant for general public; or

    (b) conduct of  any religious ceremony;

6, 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;

7. Services by way 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 Drug Controller General of India;

8. Services by way of training or coaching in recreational activities relating to arts, culture or sports;

9. Services ³[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;

10. Services provided to a recognized sports body by-

    (a)  an individual as a player, referee, umpire, coach or team manager for participation in a sporting event organized by a recognized sports body;

    (b)  another recognized sports body;

11. Services by way of sponsorship of sporting events organized,-

    (a) by a national sports federation, or its affiliated federations, where the participating teams or individuals represent any district, state or zone;

    (b) by Association of Indian Universities, Inter-University Sports Board, School Games Federation of India, All India Sports Council for the Deaf, Paralympics 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;

12. Services provided to the Government, a local authority or a governmental authority by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of -

    (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;

13. Services provided by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of,-

    (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 12AA 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;

14. Services by way of construction, erection, commissioning, or installation of original works pertaining to,-

    (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 meters 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)  mechanized food grain handling system, machinery or equipment for units  processing  agricultural produce as food stuff excluding alcoholic beverages;

15. 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;

16. Services by a performing artist in folk or classical art forms of (i) music, or (ii) dance, or (iii) theatre, excluding services provided by such artist as a brand ambassador;

17. Services by way of collecting or providing news by an independent journalist, Press Trust of India or United News of India;

18. Services by way of renting of a hotel, inn, guest house, club, campsite or other commercial places meant for residential or lodging purposes, having declared tariff of a unit of accommodation below rupees one thousand per day or equivalent;

19. Services provided in relation to serving of food or beverages by a restaurant, eating joint or a 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;

20. Services by way of transportation by rail or a vessel from one place in India to another of the following goods -

   (a)  omitted

   (b) relief materials meant for victims of natural or man-made disasters, calamities, accidents or mishap;

   (c)  defence  or military equipments;

   (d) omitted

   (e) omitted

   (f) newspaper or magazines registered with the Registrar of Newspapers;

   (g) railway equipments or materials;

   (h) agricultural produce;

   (i) foodstuff including flours, tea, coffee, jaggery, sugar, milk products, salt and edible oil, excluding alcoholic beverages; or

   (j) chemical fertilizer and oilcakes;

21. Services provided by a goods transport agency, by way of transport in a goods carriage of,-

     (a) agricultural produce;

     (b) 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;

     (c) goods, where gross amount charged for transportation of all such goods for a single consignee does not exceed rupees seven hundred fifty;

     (d) foodstuff including flours, tea, coffee, jaggery, sugar, milk products, salt and edible oil, excluding alcoholic beverages;

     (e) chemical fertilizer and oilcakes;

     (f) newspaper or magazines registered with the Registrar of Newspapers;

     (g) relief materials meant for victims of natural or man-made disasters, calamities, accidents or mishap; or

     (h) defence or military equipments;

22. Services by way of giving on hire -

    (a) to a state transport undertaking, a motor vehicle meant to carry more than twelve passengers; or

    (b) to a goods transport agency, a means of transportation of goods;

23. Transport of passengers, with or without accompanied belongings, by -

    (a) 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;

    (b) a contract carriage for the transportation of passengers, excluding tourism, conducted tour, charter or hire; or

    (c) ropeway, cable car or aerial tramway;

24. Omitted 

25. Services provided to Government, a local authority or a governmental authority by way of -

    (a) carrying out any activity in relation to any function ordinarily entrusted to a municipality in relation to water supply, public health, sanitation conservancy, solid waste management or slum improvement and up gradation; or

    (b) repair or maintenance of a vessel;

26. Services of general insurance business provided under following schemes -

    (a) Hut Insurance Scheme;

    (b) Cattle Insurance under Swarnajaynti Gram Swarozgar Yojna (earlier known as Integrated Rural Development  Programme);

    (c) Scheme for Insurance of Tribals;

    (d) Janata Personal Accident Policy and Gramin Accident Policy;

    (e) Group Personal Accident Policy for Self-Employed Women;

    (f) Agricultural Pumpset and Failed Well Insurance;

    (g) premia collected on export credit insurance;

    (h) 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;

    (i) Jan Arogya Bima Policy;

    (j) National Agricultural Insurance Scheme (Rashtriya Krishi Bima Yojana);

    (k) Pilot Scheme on Seed Crop Insurance;

    (l) Central Sector Scheme on Cattle Insurance;

    (m) Universal Health Insurance Scheme;

    (n) Rashtriya Swasthya Bima Yojana; or

    (o) Coconut Palm Insurance Scheme;

26A. Services of life insurance business provided under following schemes -

    (a)  Janashree Bima Yojana (JBY); or

    (b) Aam Aadmi Bima Yojana (AABY);

27. 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;

28. Service by an unincorporated body or a non- profit entity registered under any law for the time being in force, to its 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;

29. Services by the following persons in respective capacities -

    (a)  sub-broker or an authorized person to a stock broker;

    (b)  authorized 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 distributor or a selling agent;

    (f)    selling agent or a distributor 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;

30. 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

    (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 up to 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;

31. Services by an organizer to any person in respect of a business exhibition held outside India;

32. 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;

33. Services by way of slaughtering of animals;

34. Services received from a  provider of service  located in a non- taxable territory by -

    (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;

35. Services of public libraries by way of lending of books, publications or any other knowledge- enhancing content or material;

36. Services by Employees’ State Insurance Corporation  to persons governed  under the Employees’ Insurance Act, 1948 (34 of 1948);

37. Services by way of transfer of a going concern, as a whole or an independent part thereof;

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

39. Services by a governmental authority by way of any activity in relation to any function entrusted to a municipality under article 243 W of the Constitution.

Notification No. 27/2012-Service tax, dated 20.06.2012 exempts taxable services provided by any person, for the official use of a foreign diplomatic mission or consular post in India, or for personal use or for the use of the family members of diplomatic agents or career consular officers posted therein from whole of the service tax leviable under section 66B of the said Act, subject to the conditions in the said notification.

Notification No. 29/2012-Service tax, dated 20.06.2012 exempts the taxable service of renting of an immovable property, from so much of the service tax leviable thereon under section 66B of the said Finance Act, as is in excess of the service tax calculated on a value which is equivalent to the gross amount charged for renting of such immovable property less taxes on such property, namely property tax levied and collected by local bodies.

Notification No. 31/2012-Service tax, dated 20.06.2012 exempts the taxable service received by an exporter of goods and used for export of goods, as detailed below:

Service provided to an exporter for transport of the said goods by goods transport agency in a goods carriage  from any container freight station or inland container depot to the port or airport, as the case may be, from where the goods are exported; or

Service provided to an exporter in relation to transport of the said goods by goods transport agency in a goods carriage  directly from their place of removal, to an inland container depot, a container freight station, a port or airport, as the case may be, from where the goods are exported

from the whole of the service tax leviable thereon under  section 66B of the said Act, subject to the conditions specified in this Notification.

Notification No. 32/2012-Service tax, dated 20.06.2012 exempts taxable services, provided or to be provided, by a Technology Business Incubator (TBI) or a Science and Technology Entrepreneurship Park (STEP) recognized by the National Science and Technology Entrepreneurship Development Board (NSTEDB) of the Department of Science and Technology, Government of India, from the whole of the service tax leviable thereon under section 66B of the said Finance Act, subject to the conditions, specified in this Notification.

Notification No.33/2012-Service tax, dated 20.06.2012 exempts taxable services of aggregate value not exceeding ten lakh rupees in any financial year from the whole of the service tax leviable thereon under section 66B of the said Finance Act.      

Notification No. 42/2012-Service tax, dated 29.06.2012 exempts the taxable service received by an exporter of goods and used for export of goods of the description specified as specified below:

Service provided by a commission agent located outside India and engaged under a contract or agreement or any other document by the exporter in India, to act on behalf of the exporter, to cause sale of goods exported by him.

from so much of the service tax leviable thereon undersection 66B of the said Act, as is calculated on a value up to ten percent of the free on board value of export goods for which the said specified service has been used, subject to the conditions  specified in this Notification.

Notification No. 6/2013-Service tax, dated 18.04.2013 exempts the taxable services provided or agreed to be provided against scrip by a person located in the taxable territory from the whole of the service tax leviable thereon under section 66B of the Act. This notification shall be applicable to the Focus Market Scheme duty credit scrip issued to an exporter by the Regional Authority in accordance with paragraph 3.14 of the Foreign Trade Policy.   The exemption shall be subject to the conditions prescribed in this Notification. 

Notification No.7/2013-Service tax, dated 18.04.2013exempts the taxable services provided or agreed to be provided against a scrip by a person located in the taxable territory from the whole of the service tax leviable thereon undersection 66B of the Act. This notification shall be applicable to the Focus Product Scheme duty credit scrip issued to an exporter by the Regional Authority in accordance with paragraph 3.15 of the Foreign Trade Policy. The exemption shall be subject to the conditions mentioned in this Notification.

Notification No. 8/2013-Service tax, dated 18.04.2013exempts the taxable services provided or agreed to be provided against scrip by a person located in the taxable territory, from the whole of the service tax leviable thereon under section 66B of the Act. This notification shall be applicable to the Vishesh Krishi and Gram Udyog Yojana (Special Agriculture and Village Industry Scheme) duty credit scrip issued to an exporter by the Regional Authority in accordance with paragraph 3.13.2 of the Foreign Trade Policy.   The exemption shall be subject to the conditions specified in this Notification.

Notification No. 12/2012-Service tax, dated 01.07.2013exempts the services on which service tax is leviable under section 66 B of the Act, received by a unit located in a Special Economic Zone or Developer of SEZ and used for the authorized operation from the whole of the service tax, education cess, and secondary and higher education cess leviable thereon. The exemption shall be provided by way of refund of service tax paid on the specified services received by the SEZ Unit or the Developer and used for the authorized operations.   Where the specified services received by the SEZ Unit or the Developer are used exclusively for the authorized operations, the person liable to pay service tax has the option not to pay the service tax ab initio, subject to the conditions and procedure as stated below.   This exemption shall be given effect to in the manner prescribed in this Notification.