Applicable Changes in Service Tax Mega Exemptions w.e.f. 1st April, 2013

Changes in Service Tax Mega Exemptions (Applicable w.e.f. 1.4.2013)


(A) The following exemptions are being withdrawn:

* Services provided by an educational institution by way of renting of immovable property.

* Temporary transfer or permitting the use or enjoyment of a copyright relating to cinematographic films was fully exempt so far; now, this exemption will be restricted to exhibition of cinematographic films in a cinema hall or a cinema theater.

* Services by way of vehicle parking to general public.

* Services provided to Government, a local authority or a governmental authority, by way of repair or maintenance of aircraft.

(B) The following exemptions are being rationalized:

* Rationalization of exemption limit prescribed for charitable organizations, providing service towards any other object of general public utility. So far, the limit was 25 Lakh Rupees per annum. Now, they will be covered by the threshold exemption.

* Exemption provided to restaurants other than those having (i) air-conditioning and (ii) license to serve liquor, is being rationalized; condition regarding ‘license to serve liquor’ is being omitted. Therefore, with effect from 1st April, 2013, service tax will be leviable on taxable service provided in restaurants with air-conditioning or central air heating in any part of the establishment at any time during the year.

* Rationalization of exemption to transport of goods by road and rail/vessel.

(C) To give effect to the above changes following changes are being made w.e.f April 1, 2013 in the exemption notification number 25/2012-ST dated June 20, 2012:

(i) Exemption by way of auxiliary educational services and renting of immovable property by (and not to) specified educational institutes under S. No 9 will not be available; his will have the effect of restricting the scope of exemption to “Auxiliary educational services” and “Renting of immovable property services” only when

  • Provided by any person to Educational Institutes;
  • Provided by one Educational Institute to another Educational Institute.

(ii) The benefit of exemption under S. No 15 of the notification in relation to copyrights for cinematographic films will now be available only to films exhibited in a cinema hall or theater  This will allow service providers to pass on input tax credits to taxable end-users;

(iii) Exemption under S. No 19 will now be available only to non air-conditioned (non-centrally air-heated) restaurants; the dual requirement earlier that it should also have a license to serve alcohol is being done away with;

(iv) The exemptions available to transportation of goods by railway and vessel under S. No 20 and services provided by a goods transportation agency (GTA) under S. No.21 are being harmonized. Thus exemption to transportation of petroleum and petroleum products, postal mails or mail bags and household effects by railways and vessels will not be available while the benefit of transportation of agricultural produce, foodstuffs, relief materials for specified purposes, chemical fertilizers and oil-cakes, registered newspapers or magazines and defense equipments will be available to GTAs;

(v) The exemptions under S. No 24 for vehicle parking to general public and S. No 25 for repair or maintenance of government aircrafts are being withdrawn; and

(vi) The definition of “charitable activities” is being changed by deleting the portion listed in sub-clause (v) of clause (k). Thus the benefit to charities providing services for advancement of “any other object of general public utility” up to Rs. 25 Lakh will not be available. However the threshold exemption will continue to be available up to Rs. 10 lakh.

(vii) Exemption for vehicle parking to general public is now being withdrawn so that all type of parking facility granting whether by way of reserved (i.e. leasing of space to an entity for providing such parking facility) or unreserved (i.e. General Parking) parking will be liable to service tax.

(viii) Exemption for services provided to Government, a local authority or a governmental authority, by way of repair or maintenance of aircraft is being withdrawn.


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