SERVICE TAX ON GRANT RECD FROM GOVT

[udit gupta]

We wish to know the service tax applicability as service provider against the grant received from Ministry of Govt of India for incurring the expenses related to the project on their behalf. Please clarify whether the service tax would be applicable on the said grant received or not as service provider. Please support your comments with the relevent section & law defining the same.

[Brijesh Verma]

You need to first elaborate the exact nature of activities which Government wants you/your client to execute. Overall, any non-commercial activity by a Government is tax free, but any firm opinion can be framed only if few more details are available.

[udit gupta]

To continue, it's a project where we need to train & recurit some numbers of unemployed rural youth under the rurual development programme of ministry & we need to show them atleast 90% utilization of the grant recd from the ministry for the expenses to be incurred for their training, recuitment & other outsourcing services in relation to the same.

AI Summary

Service Tax Query on Government Grant for Rural Youth Training; Non-Commercial Activities May Be Tax-Free, Details Needed A query was raised regarding the applicability of service tax on a grant received from the Indian government for a project. The project involves training and recruiting unemployed rural youth under a rural development program. One response indicated that non-commercial activities by the government are generally tax-free, but more details are needed for a definitive opinion. The project requires demonstrating at least 90% utilization of the grant for training, recruitment, and outsourcing services related to the program.