Few Points on negative list of service tax.

 The charging section of the Finance Act, 1994, Section 66B provides that service tax should be levied on all services except the services which are specified in Section 66D of the said Act. As per Section 66D of the Financial Act, 1994, Negative list of Service Tax for 2013-14 is given here which is revised as per latest budget. There are currently 17 heads of Services which are given in the “negative list”. This Negative list of service tax is very important because

every activity not covered under this list is chargeable to Service Tax.

Negative List of Service Tax 2013-14

Negative list of Service Tax is comprised of following 17 heads. I have given all the 17 heads of negative list of Service Tax below.

1. Services by Government or a local authority excluding the following services to the extent they are not covered elsewhere:
1. services by the Department of Posts by way of speed post, express parcel post, life insurance, and agency services provided to a person other than Government;
2. services in relation to an aircraft or a vessel, inside or outside the precincts of a port or an airport;
3. transport of goods or passengers; or
4. Support services, other than services covered under clauses (i) to (iii) above, provided to business entities. 

Ex – Police protection to Cricket tournament, CRPF at Infosys campus. Further not  include any government company like NTPC etc.

2. Services by the Reserve bank of India;
3. Services by a foreign diplomatic mission located in India.
4. Services relating to agriculture or agricultural produce by way of –
1. agricultural operations directly related to production of any agricultural produce including cultivation, harvesting, threshing, plant protection or seed testing;
2. supply of farm labour;
3. processes carried out at an agricultural farm including tending, pruning, cutting, harvesting, drying, cleaning, trimming, sun drying, fumigating, curing, sorting, grading, cooling or bulk packaging and such like operations which do not alter essential characteristics of agricultural produce but make it only marketable for the primary market ;

Note : Paddy include rice.   Hence, cash crop like tea & rubber are now exempt  and preparation of pototochips, packing of agricultural produce etc are taxable.

4. renting or leasing of agro machinery or vacant land with or without a structure incidental to its use;
5. loading, unloading, packing, storage or warehousing of agricultural produce;
6. agricultural extension services;
7. Services by any Agricultural Produce Marketing Committee or Board or services provided by a commission agent for sale or purchase of agricultural produce.
4. Trading of goods.
5. Any process amounting to manufacture or production of goods.
6. Selling of space or time slots for advertisements other than advertisements broadcast by radio or television.

Means all advertisement i.e at internet, hordings etc are exempt.

8. Service by way of access to a road or a bridge on payment of toll charges.
9. Betting, gambling or lottery.
10. Admission to entertainment events or access to amusement facilities.
11. Transmission or distribution of electricity by an electricity transmission or distribution utility.

Not include electricity provided by building society etc.

12. Services by way of –
1. Pre-school education and education up to higher secondary school or equivalent;
2. Education as a part of a curriculum for obtaining a qualification recognized by law;
3. Education as a part of an approved vocational education course.
13. Services by way of renting of residential dwelling for use as residence;
14. Services by way of –
1. extending deposits, loans or advances in so far as the consideration is represented by way of interest or discount;
2. inter-se sale or purchase of foreign currency amongst banks or authorized dealers of foreign exchange or amongst banks and such dealers;
15. Service of transportation of passengers, with or without accompanied belongings, by –
1. a stage carriage;
2. railways in a class other than – (A) first class; or
   (B) an air conditioned coach;
3. metro, monorail or tramway;
4. inland waterways;
5. public transport, other than predominantly for tourism purpose, in a vessel between
6. places located in India; and
7. metered cabs, radio taxis or auto rickshaws;
16. Services by way of transportation of goods –
1. by road except the services of –
1. a goods transportation agency; or
2. a courier agency; 

Please note that only GTA is taxable and hence others freight are exempt.

2. by an aircraft or a vessel from a place outside India up to the customs station of clearance in India; or
3. by inland waterways;

17. Funeral, burial, crematorium or mortuary services including transportation of the deceased.

(a)    Transportation of other family members are not  exempt.

(b)    Construction of samadhi is also not exempt.

2 extra services included in Negative list

Two more services have been included in the negative list for service tax. These are:

Vocational courses offered by institutes affiliated to the State Council of Vocational Training; and, testing activities in relation to agriculture and agricultural produce.

The Finance Minister has also accepted the request of the Film Industry that full exemption of service tax granted on copy right on cinematography be limited to the films exhibited in cinema halls only.

All air conditioned restaurants will be brought under the service tax net. At present service tax does not apply to those air conditioned restaurants which do not serve liquor. But considering this distinction to be artificial, P. Chidambaram has proposed the uniformity of service tax for the two.

The rate of abatement for such homes and Flats which have a carpet area of 2000 sq. ft. or more; or have a value of Rs. 1 crore or more, has been reduced from 75% to 70%. However, low cost housing and single residential units will continue to enjoy existing exemptions from service tax.

That’s all in the list of Negative Services for 2013-14

Service	Exception	Comment
Governement or local authority	Speed post, express parcel post, life insurance by Postal Department; transporation of passengers & goods; aircraft or ship service; services to businesses	Other Postal services like letter, book post, registered post, money transfer, pension payments etc are not liable to service tax
RBI		All services by RBI are exempted from service tax
Foreign diplomatic mission in India		All services provided by foreign embaissies is exempt from service tax
Agriculture		Not all agriculture services are in the negative list
Trading goods
Manufacturing goods
Selling space or time slots for Ads		Only applicable for radio and TV Ads
Toll charge on bridge or road
Betting, gambling, lottery
Entry fee in amusment parks, entertainment programs		Club membership does not come in this list
Electricity transmission, distribution
Education		Education services which are approved by a govt board are covered. Coaching institutes not covered
Rent of residential house
Financial services		Only applies to deposits and loans of banks and financial institutions
Public transport	First class or AC coach in railways
Goods transport	Courier, express cargo	Not all goods transport by road is exempted from tax
Funeral, burial, crematorium, mortuary services