Exemptions

The following changes are being made w.e.f April 1, 2013 in the exemption notification number 25/2012-ST dated June 20, 2012:

(i) Exemption by way of auxiliary educational services and renting of immovable property by (and not to) specified educational institutes under S. No 9 will not be available;

(ii) The benefit of exemption under S. No 15 of the notification in relation to copyrights for cinematograph films will now be available only to films exhibited in a cinema hall or theatre. This will allow service providers to pass on input tax credits to taxable end-users;

(iii) Exemption under S. No 19 will now be available only to non air-conditioned (non-centrally air-heated) restaurants; the dual requirement earlier that it should also have a license to serve alcohol is being done away with;

(iv) The exemptions available to transportation of goods by railway and vessel under S. No 20 and services provided by a goods transportation agency (GTA) under S. No.21 are being harmonized. Thus exemption to transportation of petroleum and petroleum products, postal mails or mail bags and household effects by railways and vessels will not be available while the benefit of transportation of agricultural produce, foodstuffs, relief materials for specified purposes, chemical fertilizers and oilcakes, registered newspapers or magazines and defence equipments will be available to GTAs;

(v) The exemptions under S. No 24 for vehicle parking to general public and S. No 25 for repair or maintenance of government aircrafts are being withdrawn; and

(vi) The definition of “charitable activities” is being changed by deleting the portion listed in sub-clause (v) of clause (k). Thus the benefit to charities providing services for advancement of “any other object of general public utility” up to Rs 25 Lakh will not be available. However the threshold exemption will continue to be available up to Rs 10 lakh.

Abatement

The abatement available under S. No 12 of notification 26/2012-ST dated June 20, 2012 for construction of a complex, building, civil structures etc. is being reduced from the existing 75% to 70% for construction other than residential properties having a carpet area up to 2000 sq ft or where the amount charged is less than Rs 1 crore. This will come into effect from March 1, 2013.

Service tax exemptions narrowed and abatement rate reduced, altering eligibility for educational, restaurant, transport and construction services. Amendments narrow multiple service tax exemptions and reduce the construction abatement. Key changes: educational auxiliary services and renting by specified educational institutes lose exemption; cinematograph film copyright exemption applies only to films exhibited in cinema halls or theatres; restaurant exemption limited to non air conditioned establishments; transportation exemptions for rail and vessel harmonized with GTA provisions, withdrawing exemption for petroleum, postal mails and household effects while preserving GTA exemptions for specified goods; parking and government aircraft maintenance exemptions withdrawn; charitable activities definition narrowed. Construction abatement is reduced effective March 1, 2013.