Difference b/w non taxable service and exempted service.

[Guest]

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

[Guest]

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 ]

[Guest]

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

Clarifying Non-Taxable vs. Exempted Services Impact on CENVAT Credit Eligibility under CENVAT Credit Rules. The discussion addresses the distinction between non-taxable and exempted services in the context of service tax. Non-taxable services are those where service tax is not applicable, such as export services or certain rental services. Exempted services are those granted general exemptions under service tax rules, like services to Special Economic Zones (SEZ) or those below a certain turnover threshold. According to the CENVAT Credit Rules, both non-taxable and exempted services fall under the definition of 'exempted services,' impacting the eligibility for CENVAT credit on common inputs or services.