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Exemptions/ Abatements under Service Tax

Services exempted from Service Tax:
Some general exemptions are provided in respect of:

  • Services provided to the United Nations;
  • Services to units in and developers of Special Economic Zones;
  • Services rendered free of cost; and
  • Services prior to the effective date of the service being included as a taxable service, even if payments are realized later.

Exemptions available for small service providers:
Service Tax is fully exempted in respect of the taxable services of aggregate value not exceeding eight lakhs rupees in any financial year.
The above-mentioned exemption based on the turnover is not available to the persons who are liable to pay Service Tax but are not the service providers. For example:

  1. The recipient of services from an overseas service provider who has no registered office in India
  2. A company incurring the Transportation charges for availing the services from Goods Transport Agencies, for transportation of goods by Road.
  3. Whether the service charges were received for the services provided or to be provided.

In case the service provided by a person falls within the scope of the taxable services and if such service is not fully exempted, the service tax is payable on the value of the taxable service received subject to the eligible abatements, if any.

Abatements:
Abatement refers to the portion of value of taxable service, which is exempt in terms of a notification.

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