Page Contents
Finance Act, 2015 has proposed to cover all services provided by Government or local authority to business entities under service tax net however effective date of this amendment was awaited for a long.
Now, Central Government vides Notification No. 06/2016 ST dated 18th February 2016 appointed the 1st April 2016 as the date on which the aforesaid provisions will come into effect.
Simultaneously, the scope of mega exemption has been extended to cover services provided by the Government or a local authority to a business entity with a turnover up to rupees ten lakh in the preceding financial year (Notification No. 07/2016-ST).
Further, by virtue of notification no. 30/2012 ST dated 20.06.2012 read with Rule 2(1)(d) of Service Tax Rules, 1994, in case of service provided or agreed to be provided by Government or Local Authority to a business entity, the recipient of service is liable for payment of service tax under reverse charge mechanism however date of this amendment is still awaited.
More read: Taxation on Income from Equity and Debt Mutual Fund
Therefore, w.e.f. 1st April 2016, service tax will be applicable on following services provided by Government or Local Authority:
S. No. | Nature of Service | Taxability | Who is liable to pay |
1. | Services by Department of Post provided to Government | Non-taxable | NA |
2. | Services by Department of Post provided to a person other than Government | Taxable# | Service Provider i.e. department of post |
3. | services in relation to an aircraft or a vessel, inside or outside the precincts of a port or an airport | Taxable# | Service Provider |
4. | Transport of goods or passengers | Taxable# | Service Provider |
5. | Renting of immovable property service to a business entity | Taxable# | Service Provider |
6. | Renting of immovable property to a person other than Business Entity | Non-taxable | NA |
7. | Other services provided to the business entity | Taxable# | Service Receiver* |
8. | Other services provided to a person other than a business entity | Non-taxable |
Notification for the reverse charge is yet to come.
the exemption is available if services are provided to a business entity having turnover in preceding F.Y. is up to Rs. 10 lakh.
Here it is worthwhile to mention that any services provided by the government will remain exempt if the same is covered under any separate clause of negative list of services or mega exemption notification
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances; Hope the information will assist you in your Professional endeavors. For query or help, contact: singh@carajput.com or call at 011-233 433 33
New cheque clearing process in India starting from October 4, 2025 Existing System (Until Oct 3, 2025) : Clearing Method:… Read More
Overview on Tax Treatment on Gratuity in India What is Gratuity? Gratuity is a lump sum paid by an employer… Read More
Taxation Comparison: Gold Coin vs Gold Jewellery Tax Aspect Gold Coin Gold Jewellery ITR Reporting Treated as a capital asset.… Read More
Crypto Taxation & ITR Reporting Guide Tax on Profits from Crypto (Virtual Digital Assets)- Taxation U/s 115BBH Applicability on Virtual… Read More
Savings Account – Rules for Transactions to Avoid Income Tax Scrutiny The Income Tax Department monitors high-value transactions through banks’… Read More
Quick Guide on GST Marginal Scheme What is GST Marginal Scheme Meaning : The GST Margin Scheme is applicable primarily… Read More