Abatements in respect of various taxable services

Abatements in respect of various taxable services :

When full exemption from service tax is not granted but only a part of the tax is exempted, it is generally referred to as abatement (partial exemption). Notification No. 26/2012 ST dated 20.06.2012 extends such abatements to taxable services subject to fulfillment of certain conditions as given hereunder:

S. No.	Description of taxable service	% of abatement	Conditions
1.	Services in relation to financial leasing including hire purchase	90	Nil.
2.	Transport of goods by rail	70	CENVAT credit on inputs, capital goods and input services, used for providing the taxable service, has not been taken under the provisions of CENVAT Credit Rules, 2004.
3.	Transport of passengers, with or without accompanied belongings by rail	70	Same as above.
4.	Transport of goods in a vessel	70	Same as above.
5.	Services of goods transport agency in relation to transportation of goods	70	CENVAT credit on inputs, capital goods and input services, used for providing the taxable service, has not been taken by the service provider under the provisions of the CENVAT Credit Rules, 2004.
6.	Transport of passengers by air, with or without accompanied belongings in (i) economy class	60	CENVAT credit on inputs and capital goods, used for providing the taxable service, has not been taken under the provisions of the CENVAT Credit Rules, 2004.
6.	(ii) other than economy class	40
7.	Transport of passengers, with or without accompanied belongings, by – a contract carriage other than motor cab b. a radio taxi	60	CENVAT credit on inputs, capital goods and input services, used for providing the taxable service, has not been taken under the provisions of CENVAT Credit Rules, 2004.
8.	Renting of motorcab	60	(i) CENVAT credit on inputs and capital goods, used for providing the taxable service, has not been taken under the provisions of the CENVAT Credit Rules, 2004; (ii) CENVAT credit on input service of renting of motorcab has been taken under the provisions of the CENVAT Credit Rules, 2004, in the following manner: (a) Full CENVAT credit of such input service received from a person who is paying service tax on 40% of the value; or (b) Up to 40% CENVAT credit of such input service received from a person who is paying service tax on full value; (iii) CENVAT credit on input services other than those specified in (ii) above, has not been taken under the provisions of the CENVAT Credit Rules, 2004.
9.	Bundled service by way of supply of food or any other article of human consumption or any drink, in a premises (including hotel, convention center, club, pandal, shamiana or any other place, specially arranged for organizing a function) together with renting of such premises	30	CENVAT credit on any goods classifiable under Chapters 1 to 22 of the Central Excise Tariff Act, 1985 used for providing the taxable service, has not been taken under the provisions of the CENVAT Credit Rules, 2004.
10.	Renting of hotels, inns, guest houses, clubs, campsites or other commercial places meant for residential or lodging purposes.	40	CENVAT credit on inputs and capital goods, used for providing the taxable service, has not been taken under the provisions of the CENVAT Credit Rules, 2004.
11.	Services by a tour operator in relation to,- (i) a package tour	75	(i) CENVAT credit on inputs, capital goods and input services other than the input service of a tour operator, used for providing the taxable service, has not been taken under the provisions of the CENVAT Credit Rules, 2004. (ii) The bill issued for this purpose indicates that it is inclusive of charges for such a tour.
11.	(ii) a tour, if the tour operator is providing services solely of arranging or booking accommodation for any person in relation to a tour	90	(i) CENVAT credit on inputs, capital goods and input services other than the input service of a tour operator, used for providing the taxable service, has not been taken under the provisions of the CENVAT Credit Rules, 2004. (ii) The invoice, bill or challan issued indicates that it is towards the charges for such accommodation. (iii) This exemption shall not apply in such cases where the invoice, bill or challan issued by the tour operator, in relation to a tour, only includes the service charges for arranging or booking accommodation for any person and does not include the cost of such accommodation.
	(iii) any services other than specified at (i) and (ii) above.	60	(i) CENVAT credit on inputs, capital goods and input services other than the input service of a tour operator, used for providing the taxable service, has not been taken under the provisions of the CENVAT Credit Rules, 2004. (ii) The bill issued indicates that the amount charged in the bill is the gross amount charged for such a tour.
12.	Construction of a complex, building, civil structure or a part thereof, intended for a sale to a buyer, wholly or partly except where entire consideration is received after issuance of completion certificate by the competent authority:-		(i) CENVAT credit on inputs used for providing the taxable service has not been taken under the provisions of the CENVAT Credit Rules, 2004. (ii)The value of land is included in the amount charged from the service receiver.
	(a) for a residential unit satisfying both the following conditions, namely:– (i) the carpet area of the unit is less than 2000 square feet; and (ii) the amount charged for the unit is less than rupees one crore;	75
	(b) for other than the (a) above.	70

Notes:

A. For the purpose of exemption under S.No. 1. above: –

(i) Amount charged is an amount, forming or representing as interest.

Amount charged = Installments paid towards repayment of the lease amount – Principal amount contained in such installments

(ii) The exemption shall not apply to an amount other than an amount forming or representing as interest, charged by the service provider such as: –

lease management fee
processing fee
documentation charges
administrative fee

which shall be added to the amount calculated in terms of (i) above.

B. For the purposes of exemption at S.No. 9, the amount charged shall be computed as follows:-

Particulars		Amount
Gross amount charged			xxxx
Add: Value of all goods & 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	FMV of such goods & services (determined in accordance with generally accepted accounting principles)	xxxx
	Less: (i) the amount charged for such goods or services supplied to the service provider, if any; and	xxxx
	(ii) VAT/sales tax, if any, levied thereon	xxxx	xxxx
Amount charged			xxxx

C. For the purposes of exemption at S.No. 12, the amount charged shall be computed as follows:-

Particulars		Amount
Amount charged for the construction service			xxxx
Add: Value of all goods & services supplied by the recipient(s) in/in relation to the service, whether or not supplied under the same contract or any other contract	FMV of such goods & services (determined in accordance with the generally accepted accounting principles)	xxxx
	Less: (i) the amount charged for such goods or services, if any; and	xxxx
	(ii) VAT/sales tax, if any, levied thereon	xxxx	xxxx
Amount charged			xxxx

Important definitions

1. 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.

2. 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.

3. Motorcab means any motor vehicle constructed or adapted to carry not more than six passengers excluding the driver for hire or reward [Section 2(25) of Motor Vehicles Act, 1988].

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