Service tax on Works contract executed for Water supply and Drainage Board -reg

[N Balachandran]

Dear sir,

In view of the finance bill 2012  and the Ministry of financecircular no. 334 /1/ 2012 -TRU dt 16.03.2012 with the  ‘Negative List’ approach for taxation of services is being introduced in the current fiscal. Under the new approach, all services except those in the ‘Negative List’ or otherwise exempted, would come into the tax net  with effect from 1st July, 2012.   What will be the position of works contract to be executed for Water Supply and Sewerage Board like  Sewage treatment plant, drinking water supply projects, laying of sewage line etc.

Tamil Nadu Water Supply and Drainage Board, Gujarat water supply and sewage board etc.,

whether the Sewage board are covered in the Local authority as clarified by Joint commissioner vide above mentioned circular.

We shall be thankful if you could forward your opinion in respect of the service tax implications on these projects. 

Regards

N.Balachandran

[Vijay Chitte]

As per Mega exemption notificaiton 12/2012-ST, Point No. 12(e) water & severage treatment are exemption from service tax.

YES, Tamil Nadu Water Supply and Drainage Board, Gujarat water supply and sewage board etc  this are covered in local authority.

AI Summary

Service tax exemption for water and sewerage treatment services applies where projects are for local authorities. Water and sewerage treatment services are exempt from service tax under the cited mega exemption provision (point 12(e)); entities such as state water supply and drainage boards are regarded as local authorities for this purpose, so works contracts for sewage treatment, drinking water supply and related sewerage projects executed for those boards fall within the exemption.