Difference b/w non taxable service and exempted service.

[Asked by Guest]

What is the difference between non taxable service and exempted service. (Reference Rule 6 of Cenvat Credit Rules'04)

In my opinion Non Taxable services are the services where ST not applicable Example: Export of service, Renting services to certain catagories etc.,[which is classified as nontaxable in service catagory itself ] Exempted services are services where the General exemption given in ST rules Example:- Service to SEZ,Services to United states, Turnover exemption upto Rs. 8.00lakhs, Services to IT Incubators,etc., In Cenvat credit rule 6 refers, if common Inputs or common services received & utilized for out put services we are eligible on 20% of the cenvat credit [refer 16 services for such credit ]

For the purpose of CENVAT Credit Rules, there is no difference between non-taxable or exempted service as both the above category of services are under covered within the definition of 'exempted services' - Rule 2(e) of CENVAT credit Rules.

AI Summary

Exempted services classification affects CENVAT Credit; common inputs credit limited by rule to a prescribed proportion.
For the purpose of the CENVAT Credit Rules both non taxable services and exempted services are treated as 'exempted services' and regarded alike for credit denial; when common inputs or services are used partly for taxable and partly for exempt/non taxable outputs, a prescribed limited proportion of CENVAT credit is permitted for those common inputs.