India to Exempt Tax on Selected Services Starting July 1

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Jun. 25 – India will exempt tax on services that deal with low-cost housing construction, power distribution, services within ports and airports, selected tournaments and championships, foreign travelers in transit and those flying to and from the northeast starting July 1.

“Repair of ships or boats or vessels belonging to the Government of India, including the Navy or the Coast Guard or the Customs, but does not include government owned public sector undertakings,” the Central Board of Excise and Customs (CBEC) said as to the services exempted from tax.

The Jawaharlal Nehru National Urban Renewal Mission and the Rajiv Awas Yojana low-cost housing projects will be exempted from service tax as well as services found within ports and airports including water supply, electricity supply, medical treatment, education, fire service agencies and pollution control services.

Authorized power distributors will also be exempt of service tax. Foreign travelers entering the country in transit to another overseas destination will also be qualified for the service tax exemption provided that he does not pass through immigration and does not leave the customs area.

Anyone traveling to and from the northeastern states of Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura and Baghdogra in West Bengal will not be charged a service tax.

Authorities have also included eight new taxable services starting July 1:

  • Maintaining or storing medical records
  • Electricity exchange
  • Marketing games of chance
  • Health services provided by hospitals, nursing homes or multi-specialty clinics
  • Commercial use of any event
  • Services promoting a brand
  • Film and music copyrights
  • Services provided to the buyer by the builder of residential or commercial complex for providing preferential location or development of a complex

For more advice on doing taxes in India, e-mail Dezan Shira & Associates at india@dezshira.com.

4 Responses

  • sanjay mukherjee says:

    Hi,
    I believe no service tax is payable on low cost (LIG or MIG type housing below 20 lakhs) constructed by a builder and sold as apartments. I also believe that no service tax is payable for car parking space charged separately by the builder.
    Can any expert give me the details including the references of relevant Orders & Sections.
    A reply is requested urgently as the builder has claimed for the service tax already.

    Reply may be sent to my mail ID : sonmukh@gmail.com

  • Chris Devonshire-Ellis says:

    I’ve emailed you Sanjay. Thanks – Chris

  • nikunj doshi says:

    As you are aware that cotton is an agriculture produce. So does brokerage of agricultural produce come under service tax/

  • Cherry Bansal says:

    Dear Nikunj,
    Taking the current scenario , brokerage services will be taxable. Services provided for facilitating agriculture such as harvesting, planting,warehousing services, renting of either vacant agricultural land or machinery will be exempt from Service Tax. But the brokerage paid on trading of anagricultural produce is not an exempt service.
    Please let me know if you need any information.

    Thanks,
    Cherry Bansal
    Dezan Shira & Associates

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