General Exemptions from Service Tax.

GENERAL EXEMPTIONS:

            General exemptions granted by the Central Government in service tax may be of the following types:

  • Exemptions available to all assessees in respect of all services;
  • Exemptions available in respect of specified assessees in respect of all services;
  • Threshold exemptions.

EXEMPTION AVAILABLE TO ALL ASSESSEES:

            The following are the exemptions available to all service providers in respect of all the services:

  • Services provided to United Nations or an International Organization;
  • Services provided to a developer of Special Economic Zone or a Unit located therein;
  • Value of goods and materials sold by the service provider;
  • Services provided to the foreign diplomatic mission/consular posts in India;
  • Services provided to the family members of diplomatic agents/career consular offices;
  • Services exported from India.

EXEMPTIONS AVAILABLE TO SPECIFIED ASSESSEES:

            The following service providers are exempt from service tax in respect of all taxable services:

  • Reserve Bank of India;
  • Technology Business Incubation and Science & Technology Entrepreneurship Park;
  • Technology Business Incubatees.

THRESHOLD EXEMPTION:

            A threshold exemption scheme has been introduced vide Notification No.6/2005-ST, dated 01.03.2005 exempting service tax on aggregate value of taxable service not exceeding four lakhs received by the service provider during a financial year.  This limit has been further extended to Rs. 8 lakhs vide Notification No. 4/2007-ST, dated 01.03.2007 and Rs.10 lakhs vide Notification No. 8/2007-ST, dated 01.03.2007 with effect from 01.04.2008.

For the purpose of calculating the aggregate value not exceeding Rs.10 lakhs the total of first consecutive payments received during a financial year shall be considered. The said threshold limit can be availed subject to the following conditions:

  • the service provider is not to avail CENVAT credit of service tax paid on any input services used for providing the said taxable service;
  • the service provider is not to avail CENVAT credit on capital goods received in his premises during the period in which the service provider avails exemption benefit;

The following persons are excluded from the benefit threshold exemptions:

      • persons using brand name/trade name of another person;
      • service receivers who are liable to pay service tax.

Even when a service provider is eligible to avail threshold exemption he has an option to avail the threshold exemption and continue to pay service tax on the taxable services provided by him. However once an option is exercised in a financial year, it shall not be withdrawn during the remaining part of such financial year.

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