Specific requirements / conditions for Abatement
The grant of abatement for Service Tax purposes is subject to fulfillment of certain specific requirements or conditions as follows -
Financial leasing/hire purchase
The gross amount charged for financial leasing services, including equipment leasing and hire purchase services will be sum total of the following-
- 10% of the amount forming or representing interest; and
- Other charges such as lease management fees, processing fees, documentation charges and administrative fees.
Transport of goods by rail
- Abatement would be applicable for services rendered w.e.f. 1.10.2012 ie, the date from which such services have been made taxable.
Transport of passengers by rail
- Abatement would be applicable for services rendered w.e.f. 1.10.2012 ie, the date from which such services have been made taxable.
Bundled services for supply of food
- Cenvat Credit on specified inputs used for providing services should not be taken.
- The amount charged shall be the sum total of the gross amount charged and the fair market value of all goods and services supplied in or in relation to the supply of food or any other article of human consumption or any drink (whether or not intoxicating) and whether or not supplied under the same contract or any other contract, after deducting-
(i) the amount charged for such goods or services supplied to the service provider, if any; and
(ii) the value added tax or sales tax, if any, levied thereon:
It may be noted that the fair market value of goods and services so supplied may be determined in accordance with the generally accepted accounting principles.
- Not available for restaurant sales.
- Supply of food etc. should be a bundled service in a premises including hotel, convention centre, club, pandal, shamiana etc. used for functions.
Transport of passengers by air
- Cenvat credit on inputs and capital goods used for providing services should not be taken.
- Charges which are directly related to journey such as re-confirmation fee, date change fee, seat upgrade fee, preferred seat charges etc. will be covered by abatement.
- Charges which are not related to journey such as meal charges, escort charges etc. will not be covered by abatement.
- Excess baggage charge may be leviable to service tax without abatement.
- Pet charges may be leviable to service tax without abatement.
- For cancellation charges billed separately as administrative charge, abatement will not be applicable.
Renting of hotels, Inns etc.
- Cenvat credit on inputs and capital goods used for providing services should not be taken.
Goods transport agency
- Cenvat Credit of capital goods, inputs and input services used for providing services should not be taken.
Chit services
- For this abatement, ‘chit’ means a transaction whether called chit, chit fund, chitty, kuri, or by whatever name by or under which a person enters into an agreement with a specified number of persons that every one of them shall subscribe a certain sum of money (or a certain quantity of grain instead) by way of periodical installments over a definite period and that each subscriber shall, in his turn, as determined by lot or by auction or by tender or in such other manner as may be specified in the chit agreement, be entitled to a prize amount. taxmanagementindia.com
- Cenvat Credit of capital goods, inputs and input services used for providing services should not be taken.
Renting of motor vehicles
- Cenvat Credit of capital goods, inputs and input services used for providing services should not be taken.
- Motor vehicle can be any motor vehicle but meant only for carrying of passengers.
Transport of goods in a vessel
- Cenvat Credit of capital goods, inputs and input services used for providing services should not be taken.
Tour operators
- Package tour means a tour wherein transportation, accommodation for stay, food, tourist guide, entry to monuments and other similar services in relation to tour are provided by the tour operator as part of the package tour to the person undertaking the tour,
- Tour operator means any person engaged in the business of planning, scheduling, organizing, arranging tours (which may include arrangements for accommodation, sightseeing or other similar services) by any mode of transport, and includes any person engaged in the business of operating tours,
- Cenvat Credit of capital goods, inputs and input services used for providing services should not be taken.
- For package tour, bill should indicate that it is inclusive of charges for package tour.
- Where tour operator provides services only of accommodation booking for tour, the challan / bill should indicate that charges are towards accommodation and not merely the service charges for arranging booking without cost of accommodation.
- In case of any other arrangement, the bill should indicate that the amount is gross amount charged.
Construction of complex, building, civil structure etc.
- The amount charged shall be the sum total of the amount charged for the service including the fair market value of all goods and services supplied by the recipient(s) in or in relation to the service, whether or not supplied under the same contract or any other contract, after deducting-
(i) the amount charged for such goods or services supplied to the service provider, if any; and
(ii) the value added tax or sales tax, if any, levied thereon:
It may be noted that the fair market value of goods and services so supplied may be determined in accordance with the generally accepted accounting principles.
- Cenvat credit of inputs used for providing services should not be taken.
- Cenvat credit of input services and capital goods can be taken besides, abatement.
- Cost of land should form part of value of service.
- The complex / building should be meant for sale / intended for sale.
- The entire consideration should be received after issuance of completion certificate by the Competent Authority.
- A clarification has been issued by office of the Commissioner of Service Tax- Mumbai vide F.No. V/ST-I/Tech-II/463/11 dated 31st August, 2012 on applicability of Service Tax on floor rising charges. Many builders charge additional amount known as "floor rise charges" in addition to the normal sale price of a flat. The charges are risen as the floor rise because the construction cost increases as per the increase in the floor. It is clarified that since the floor rise charges are recovered on account of additional construction cost, it would be treated as part of the consideration for sale of flat in terms of provisions of section 66F (naturally bundled services). Consequently, the floor rise charges would be eligible for the abatement of 75% in terms of Notification No. 26/2012-ST dated 20.06.2012. However, this clarification is limited to floor rise charge only and not for other components like "Preferential Location Service" which may cover other services.
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