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Abatement Rates on Different Services were Notified by Notification 26/2012

 

It was later amended by

Notification 8/2014

and Notification 8/2015

 

Latest amended Abatement Chart is as follows 

Name of Service Abatement notified Rate Applicable (100%-Abatement) Effective Rate of ST (14.5%* Rate Applicable)
Rail Transport (both goods and passengers) 70% 30% 4.4%
Air transport (passenger)      
Economy Class 60% 40% 5.8%
Other than Economy Class 40% 60% 8.7%
Goods transport by road 70%*  30% 4.4%
Chit fund No abatement* 100% 14.5%
Cab transport(rent a cab) 60% 40% 5.8%
Goods transport by vessel 70%* 30% 4.4%
Transport of passengers other than by      
Radio taxi 60% 40% 5.8%
Others (except  Cab) 60% 40% 5.8%
Tour Operator Service      
Of package tour 75% 25% 3.6%
Service of only booking or arranging accommodation only 90% 10% 1.5%
Others 60% 40% 5.8%

 

 *Amendments applicable from 1.4.2015 vide Notification 8/2015 

Particulars

Old

(tIll 31.3.15)

New

(From 1.4.15 onwards)

Transport of Goods by Road 75% 70%
Transport of Goods by Vessel 60% 70%
     
Transport of Passengers by air  
Economy Class 60% 60%
Other than Economy Class 60% 40%
     
Chit FUND 70% No Abatement

 

  These abatements are subject to certain conditions as mentioned below

 

Other Services mentioned in Notification

(Not Covered in CA IPCC Study Module

Name of Service Abatement notified Applicable rate Effecive rate
Financial Leasing Services 90% 10% 1.5%
       

Bundled Service

Supply of Food/Drinks with Rent

(like Hotel/Banquet hall/Pandal)

30% 70% 10.2%
Renting of Hotel/Guest house/Lodge 60% 40% 5.8%
       
Construction of Building/Complex etc 75% 25% 3.6%

 

  Exam Questions

Question 7
Mr. Sinha has travelled by air from Delhi to Mumbai in economy class. The Airlines has
charged ` 1,372 as service tax from Mr. Sinha. The Airlines does not avail CENVAT credit on
inputs and capital goods used for providing the taxable service.
Compute the value of taxable service provided by the airlines.

View Answer

Question 9
Mr. Kapur has taken a package tour for Australia from Great Tours, a tour operator. Great
Tours has raised a bill of ` 2,50,000 for the said package tour. The bill indicates that it is
inclusive of service charges of Great Tours for arranging the said tour.
Mr. Kapur intends to visit New Zealand after vacationing in Australia. However, he wants to
explore New Zealand without any fixed itinerary and thus has asked Great Tours to arrange
only for his accommodation in New Zealand. Great Tours has raised a bill of ` 1,00,000 for
the said accommodation. The bill indicates that it includes the cost of such accommodation as
well as the service charges of Great Tours for arranging the said accommodation.

Great Tours does not avail CENVAT credit on inputs, capital goods and input services used
for providing taxable service. Compute the total amount of service tax charged by Great Tours
from Mr. Kapur.

View Answer

Question 12
Examine the validity of following statements with reference to service tax law:

(ii) The transport of goods in a vessel attracts service tax at 40% of the gross amount
charged.
(iii) Both service providers and service receivers need to satisfy the condition of nonavailment
of CENVAT credit for claiming abatement of 70% of gross amount charged in
case of GTA service.

View Answer

 

  1. Service Tax
  2. Exemptions and Abatement
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About the Author

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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