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CHANGES IN NEGATIVE LIST OF SERVICE TAX WEF 01.04.2013

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I. Exemption by way of auxiliary educational services and renting of immovable property by specified educational institutes will no longer be available.
This will have the effect of restricting the scope of exemption to “Auxiliary educational services” and “Renting of immovable property services” only when :

a. Provided by any person to Educational Institutes;

b. Provided by one Educational Institute to another Educational Institute.

II. The benefit of exemption in relation to copyrights for cinematograph films will now be available only to films exhibited in a cinema hall or theatre. TV Channels like Sony will now be liable to pay service tax on their exhibiting of films on Sony Channel.

III. Service tax on all AC Restaurants : Earlier, to claim the exemption for services provided in relation to serving of food or beverages, Restaurant, eating joint or a mess were required to satisfy dual requirement:

a. Not to have the facility of air-conditioning or central air-heating in any part     of the establishment, at any time during the year, and

b. Not to have a license to serve alcoholic beverages

However, the exemption is being rationalized so that exemption will be now available to all non air-conditioned (non-centrally air-heated) restaurants, eating joint or a mess irrespective of they have a license to serve alcohol or not. Other impact of this amendment will be to impose service tax on restaurants having air-condition facility irrespective of they have a license to serve alcohol or not, example of the same would be KFC, McD.

IV. The exemptions available to transportation of goods by railway and vessel under S. No 20 and services provided by a goods transportation agency (GTA) under S. No.21 are being harmonized. Thus exemption to transportation of petroleum and petroleum products, postal mails or mail bags and household effects by railways and vessels will not be available while the benefit of transportation of agricultural produce, foodstuffs, relief materials for specified purposes, chemical fertilizers and oilcakes, registered newspapers or magazines, relief materials meant for victims of natural of man-made disasters, calamities, accidents or mishap and defense equipments will be available to GTAs;

V. Exemption for vehicle parking to general public is now being withdrawn so that all type of parking facility granting whether by way of reserved (i.e. leasing of space to an entity for providing such parking facility) or unreserved (i.e. General Parking) parking will be liable to service tax

VI. Exemption for services provided to Government, a local authority or a governmental authority, by way of repair or maintenance of aircraft is being withdrawn.

VII. Definition of Charitable Activities as given in Clause (k) of Definition Part of Mega Notification No. 25/2012-ST dt. 20.6.2012 is being amended so that there will be no separate threshold limit for granting the exemption to activities relating to advancement of any other object of general public utility and will be governed by provisions as applicable to SSI to claim exemption from payment of service tax.

REVIEW OF EXEMPTIONS (to take effect from 1st day of April, 2013):

(A) The following exemptions are being rationalized:

  • Rationalization of exemption limit prescribed for charitable organizations, providing service towards any other object of general public utility. So far, the limit was 25 Lakh Rupees per annum. Now, they will be covered by the threshold exemption.
  • Exemption provided to restaurants other than those having (i) air-conditioning and (ii) license to serve liquor, is being rationalized; condition regarding 'license to serve liquor' is being omitted. Therefore, with effect from 1st April, 2013, service tax will be leviable on taxable service provided in restaurants with air-conditioning or central air heating in any part of the establishment at any time during the year.
  • Rationalization of exemption to transport of goods by road and rail/vessel.


(B) The following exemptions are being withdrawn:

  • Services provided by an educational institution by way of renting of immovable property.
  • Temporary transfer or permitting the use or enjoyment of a copyright relating to cinematographic films was fully exempt so far; now, this exemption will be restricted to exhibition of cinematography films in a cinema hall or a cinema theater.
  • Services by way of vehicle parking to general public.
  • Services provided to Government, a local authority or a governmental authority, by way of repair or maintenance of aircraft.
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