Abatements – changes

Various abatements have been granted by the principal Notification No. 26/2012 – Service Tax, dated 20th June, 2012, vide number G.S.R. 468 (E), dated the 20th June, 2012 and amended by notification No.9/2013- Service Tax, dated the 8th May, 2013 vide G.S.R. 296 (E), dated 8th May, 2013. Now this Notification No. 08/2014 makes further amendments as follows :

1. For services of GTA in relation to transportation of goods:
The condition of non-availment of CENVAT Credit on inputs, input services and capital goods is required to be satisfied by the service provider. The ambiguity whether the same is not to be availed by the service provider or receiver is ironed out by inserting the phrase ‘by service provider’ in Entry 7.

2. For services provided in relation to Chit:
The following condition has been added stating that 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.

3. For services of renting of any motor vehicle designed to carry passengers:
i. The phrase ‘motor vehicle designed to carry passengers’ is replaced with ‘motor cab’. Hence, effectively the services of renting of motor cab is only covered under this entry.
ii. The following conditions are substituted for the existing conditions:
CENVAT Credit on inputs and capital goods are not to be taken;

CENVAT Credit of input services of rent a cab has been taken as under:

Full credit if received from a person who is paying service tax on 40% of value; Upto 40% of such credit, if service tax is paid on the entire value,

CENVAT Credit of input services other than above shall not be taken.

4. For services of transport of passengers by a contract carriage other than motor cab:
i. A new entry since the services provided by contract carriage is brought into tax net in this notification. The abatement specified for such services shall be 60% subject to a condition that 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.
ii. Further, this entry also covers the services provided by radio-taxis from the date the phrase ‘radio taxi’ is deleted from the negative list to be notified by the Central Government in the Official Gazette.

5. For transport of goods in a vessel:
The abatement has been increased from 50% to 60%.

6. For services provided by a tour operator:
The credit of input services received from tour operator is being made available which is not allowed hitherto.