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

AI Summary

Service Tax Exemption Confirmed for Water and Sewage Projects under Mega Exemption Notification 12/2012-ST. A query was raised regarding the applicability of service tax on works contracts executed for Water Supply and Sewerage Boards in light of the 2012 finance bill and the Ministry of Finance's circular introducing a 'Negative List' approach. The question focused on whether projects like sewage treatment plants and water supply projects would be taxed. A response clarified that, according to the Mega Exemption Notification 12/2012-ST, water and sewage treatment are exempt from service tax, and entities like the Tamil Nadu Water Supply and Drainage Board are considered local authorities, thus qualifying for the exemption.