Abatement in Service Tax was First Introduced Vide Principal Notification No. 26/2012-Service Tax, dated 20th June 2012 and subsequently been amended vide Notification No. 2/2013 – Service Tax, dated the 1st March, 2013Notification No. 9/2013 – Service Tax, Dated: May 8, 2013Notification No. 08/2014 – Service Tax Dated-11th July, 2014 , Notification No. 8/2015-ST, Dated: March 01, 2015,, Notification No. 13/2015-ST, Dated: May 19, 2015 Notification No. 8/2015-ST, Dated: March 01, 2015.

Vide Union Budget 2016 government has made several changes to Service Tax Abatement Provisions and Abatement rates. Some of the changes were applicable from 01.04.2016 and some were applicable from 01.06.2016. in this Article we have compiled the abatement rate on Table Services, Taxable Value and Tax Rate after applying the abatement  as applicable from 01.06.2016

Service Tax Abatement Rate Chart as Applicable from 01.06.2016 updated with Changes Made Vide Budget 2016   and after imposition of Krishi Kalyan Cess (KKC), for  ready reference of our readers

Table

Sl. No. Description of taxable service Percentage Net Tax Rate % wef 01.06.2016 Conditions
Taxable Value Abatement
(1) (2) (3) (4) (5) (6)
1 Services in relation to financial leasing including hire purchase (Refer Note-1) 10 90 1.50% Nil.
2 Transport of goods by rail 30 70 4.50% CENVAT credit on inputs, capital goods and input services, used for providing the taxable service, has not been taken under the provisions of the CENVAT Credit Rules, 2004
2A Transport of goods in containers by rail by any person other than Indian Railway

(Entry inserted vide NN 8/2016-ST dated 01.03.2016 w.e.f 01.04.2016)

40 60 6% 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
3 Transport of passengers, with or without accompanied belongings by rail 30 70 4.50% 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  services shall be allowed

4 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 (Refer Note-2) 70 30 10.50% (i) CENVAT credit on any goods classifiable under Chapters 1 to 22 of the Central Excise Tariff Act, 1985 (5 of 1986) used for providing the taxable service, has not been taken under the provisions of the CENVAT Credit Rules, 2004.
5 Transport of passengers by air, with or without accompanied belongings in 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.
(i) economy class 40 60 6%
(ii) other than economy class 60 40 9%
6 Renting of hotels, inns, guest houses, clubs, campsites or other commercial places meant for residential or lodging purposes. 60 40 9% Same as above.
7 Services of goods transport agency in relation to transportation of goods other than used household goods 30 70 4.50% CENVAT credit on inputs, capital goods and input services, used for providing the taxable service, has not been taken by the service providerunder the provisions of the CENVAT Credit Rules, 2004.
7A Services of goods transport agency in
relation to transportation of used household
goods.(Entry inserted vide NN 8/2016-ST dated 01.03.2016  )
40 60 6% 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 rovisions of the CENVAT Credit Rules, 2004.
8 Services provided by a foreman of chit fund in relation to chit

(Entry inserted vide NN 8/2016-ST dated 01.03.2016 w.e.f. 01.04.2016, earlier omitted vide NN 08/2015-ST dated 01.03.2015.)

70 30 10.50% CENVAT credit on inputs, capital goods and input services, used for providing the taxable service has not been taken under the provisions of the CENVAT Credit Rules, 2004
9 Renting of motor cab 40 60 6% (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 forty percent of the value; or

(b) Up to forty percent 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.

9A Transport of passengers, with or without accompanied belongings, by-

a. a contract carriage other than motorcab.

b. a radio taxi.

c.  a stage carriage

(Also refer Note-5)

40 60 6% CENVAT credit on inputs, capital goods and input services, used for providing the taxable service, has not been taken under the provisions of the CENVAT Credit Rules, 2004.
10 Transport of goods in a vessel  30 70 4.50% 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 tour, only for the purpose of arranging or booking accommodation for any person

(Refer Note-4)

10 90 1.50% (i) CENVAT credit on inputs, capital goods and input services other than input services 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, includes only the service charges for arranging or booking accommodation for any person but does not include the cost of such accommodation.
(ii) tours other than (i) above 30 70 4.50% (i) CENVAT credit on inputs, capital goods and input services other than input services 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 and the amount charged in the bill is the gross amount charged for such a tour.

NN 8/2016-ST dated 01.03.2016 w.e.f. 01.04.2016: Abatement rates in respect of services by a tour operator in relation to a tour other than (i) has been rationalised from 75% (package tour) and 60% (others) to 70%. Consequently, the category of “package tour” stands deleted w.e.f. 01.04.2016
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 (Also Refer Note-3)
30 70 4.5% (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.

Effective from 01.04.2016, a uniform abatement at the rate of 70% is prescribed for services of construction of complex, building, civil structure, or a part thereof, subject to fulfilment of the existing conditions.

 

 

Note-1 For the purposes of exemption at Serial number 1 –

(i) The amount charged shall be an amount, forming or representing as interest, i.e. the difference between the installments paid towards repayment of the lease amount and the 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 and administrative fee, which shall be added to the amount calculated in terms of (i) above.

Note-2. For the purposes of exemption at Serial number 4 –

The amount charged shall be the sum total of the gross amount charged and the fair market value of all goods and 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, after deducting-

(i) the amount charged for such goods or services supplied to the service provider, if any; and

(ii) the value added tax or sales tax, if any, levied thereon:

Provided that the fair market value of goods and services so supplied may be determined in accordance with the generally accepted accounting principles.

Note-3. For the purposes of exemption at Serial number 12 –

The amount charged shall be the sum total of the amount charged for the service including the fair market value of all goods and services supplied by the recipient(s) in or in relation to the service, whether or not supplied under the same contract or any other contract, after deducting-

(i) the amount charged for such goods or services supplied to the service provider, if any; and

(ii) the value added tax or sales tax, if any, levied thereon:

Provided that the fair market value of goods and services so supplied may be determined in accordance with the generally accepted accounting principles.

Note-4 “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,

Note-5 For the purposes of exemption at Serial number 9, the amount charged shall be the sum total of the amount charged for the service including the fair market value of all goods (including fuel) and services supplied by the recipient(s) in or in relation to the service, whether or not supplied under the same contract or any other contract.

Provided that the fair market value of goods and services so supplied may be determined in accordance with the generally accepted accounting principles.