Exemption for public services preserves tax relief for specified municipal functions while excluding unrelated consultancy or design services.

Exemption confines service-tax relief to services provided to Government, local authorities or governmental authorities that are directly connected to municipal functions: water supply, public health, sanitation conservancy, solid waste management and slum improvement and upgradation; repair or maintenance of vessels remained exempt while aircraft maintenance exemption was withdrawn. Amendments adjusted the definition of "governmental authority" to encompass bodies set up by statute or established by Government with ninety percent or more participation, and the "local authority" definition lists panchayats, municipalities, municipal committees, district boards, cantonment boards and certain regional or development councils.

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