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Since Service tax is charged at lower rate,Government has imposed a condition that Cenvat or Input will not be available

 

Conditons for Different Services

Name of Service  Abatement Rate Taxable Rate Effective Rate of Service Tax INPUTS CAPITAL GOODS INPUT SERVICE
Goods Transport Agency (Road)            
Normal Cases 70.00% 30% 4.50% NO NO NO
For Supply of Old Household Items 60.00% 40% 6.00% NO NO NO
             
Goods Transport by Railways            
by Private Railways 60.00% 40% 6.00% NO NO NO    Yes
by Indian Railways 70.00% 30% 4.50% NO NO NO    Yes
             
Passenger Transport by Railways 70.00% 30% 4.50% NO NO NO    Yes
             
Goods transport by vessel (Like Ship) 70.00%  30%  4.50%  NO  NO NO    Yes  
             
Chit Fund 70.00% 30% 4.50% NO NO NO
             
Construction Services            
For Residential unit less than 2000 sq feet + Price Charged > 1 cr 70.00% 30% 4.50% NO YES YES
Other Cases 70.00% 30% 4.50% NO YES YES
             
Tour Operator Service            
Booking Accomodation 90.00% 10% 1.50% NO NO NO (For Tour Operator Yes)
Package Tour Service 70.00% 30% 4.50% NO NO NO (For Tour Operator Yes)
Other Cases 70.00% 30% 4.50% NO NO NO (For Tour Operator Yes)
             
             
Transport of Passengers            
Motor Cab 60.00% 40% 6.00% NO NO NO (For Cab Operator  Input Service YES)
Radio Taxi 60.00% 40% 6.00% NO NO NO
Stage Carriage (AC Bus) 60.00% 40% 6.00% NO NO NO
Stage Carriage (Non AC Bus)   Exempt 0.00% NO NO NO (For Stage Carriage  Input Service YES)
             
             
Air transport (passenger)            
Economy Class 60% 40% 6.00% NO NO YES
Other than Economy Class 40% 60% 9.00% NO NO YES
             
Financial Leasing Services 90% 10% 1.50% YES YES YES
             
Supply of Food.Drinks with Rent 30% 70% 10.50% NO NO YES
(like Hotel/Banquet hall/Pandal)            
             
Renting of Hotel/Guest house/Lodge 60% 40% 6.00% Yes (no for food items) YES YES
             
Restaurant Services 60% 40% 6.00% Yes (Except Chapter 1 to Chapter 22 of Central Excise Act) YES YES

 

Change in Conditions for Abatement from 1 April 2016 (Notification 9/2016)

Now Cenvat of Input Services can be taken in case of following Services also

  • Transportation of Goods by Rail
  • Transportation of Passengers by Rail
  •  Transportation of Goods in a Vessel.

 

Explanation in case of Motor Cab Service

Cost of fuel should be included in the consideration charged for providing renting of motorcab services for availing the abatement. 

(Insertion of Explanation ‘BA’ in notification No. 26/2012ST)

 

Other Important Points  

Goods Transport Agency

There is reverse charge on Goods Transport Agency (Freight charges) in some cases

Hence, the service receiver pays Service Tax

However, condition for not claiming cenvat is on Service provider and not on service receiver

Service Provider cannot claim cenvat of all 3 (inputs/capital goods/input services)

 

 

Cab Transport

Service Provider cannot claim cenvat of all 3 (inputs/capital goods/input services)

However,it may happen that he has availed input service of some other cab operators (hired cabs of some other cab operators) 

In this case, Cenvat of Input Service is available as follows

If such other Cab Operator has charged

Full Service Tax-40% Input is available

40% Service tax (i.,e.claimed 60% Abatement)-Full Input Available

 

 

Tour Operator

Service Provider cannot claim cenvat of all 3 (inputs/capital goods/input services)

However,it  may happen that he has availed service of some other tour operator

Input of service of such other tour operator is available

 

Also abatement is only applicable if gross amount charged in Bill and commission not shown separately

 

Type of Service Amount in Bill
Package Tour Bill shall indicate gross amount of whole package
(Service tax rate is Charged on Whole Package)
Booking Charges Bill shall indicate gross amount of total charges
(If Hotel charges and Commission shown separately, then Service tax at full rate on Booking Charges)
Other Cases Bill shall indicate gross amount charged (Commission not shown separately)

 

Bundled Service Supply of Food/Drinks with Rent

(like Hotel/Banquet hall/Pandal)

No Cenvat of Goods covered in Chapters 1 to 22 of the Central Excise Tariff Act, 1985 (called CETA)

 (No Input of Food items purchased in restaurant)

 

Construction of Complex,building ,structure

No Cenvat on Inputs

The value of land is included in the amount charged from the service receiver.

 

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CA Maninder Singh's photo - Expert in Practical Accounts, Taxation and Efiling
CA Maninder Singh
CA Maninder Singh is a Chartered Accountant for the past 6 years. He provides courses for Practical Accounts, Taxation and Efiling at teachoo.com .
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