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14 More Services to Exempt From Tax from July 1

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The Government recently announced that 14 more services would be exempted from payment of service tax. These services shall be included in the negative list and would come into effect from July 1.

With the inclusion of these 14 services in the negative list of services, the total number of services that are exempted from tax would go up to 38. All the other services which are not included in the negative list would be taxed at the rate of 12%.

While releasing the guidance paper titled ‘Taxation of service: an education guide’, The Finance Minister has announced new exemption list of services to mark the new approach to service tax. According to the guidance paper, the 14 services that have been added to the negative list are:

  • Services by public libraries – Lending of books, publications or any other knowledge enhancing content or material by public libraries
  • Services provided to the government authority for repair and maintenance of an aircraft
  • Services provided by advocates to other advocates and business entities up to a turnover of Rs.10 lakh
  • Auxiliary educational services
  • Renting of immovable property by educational institutions in respect of education
  • Services relating to works contract to schemes under JNNURM or Rajiv Awas Yojana
  • Building of monorail or metro projects
  • Services relating to transportation of passengers by rope way, cable car or air-tram way
  • Services by Employees State Insurance Corporation (ESIC) to those governed under the Employees Insurance Act
  • Services provided by way of public convenience such as provision of facilities of bathroom, washroom, urinals or toilets
  • Services by subcontractors by the way of works contract to another main contractor providing work contract services

The government has collected Rs.97,000 crore from service tax last year. For the current year, the government has hiked the service tax rate by 2% to 12% in the budget 2012-13. With the expansion of the service tax base, the Finance Minister said that it would be possible for the Central Board of Excise and Customs (CBEC) to exceed the collection target of Rs.1.24 lakh crore in the current year.