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Services Exempt from Service Tax

Finance Minister in Finance Act, 2012 has introduce the new concept of negative list in service tax and given the list of services which are exempted from service tax. Read How to Register Under Service Tax Online. So the Central Board of Excise and Customs (CBEC) has issued the Notification No. 25/2012 dated 20th June, 2012, giving detail list of services which will be exempted from payment of service tax w.e.f. 01-07-2012 (1st July 2012).

The following List of taxable services have been exempt from the whole of the service tax

  1. Services provided to the united nations or a specified international organization;
  2. Health care services by a clinical establishment, an authorized medical practitioner or Para-medics;
  3. Services by a veterinary clinic in relation to health care of animals or birds;
  4. Services by an entity registered under section 12AA of the income tax act, 1961 (43 of 1961) by way of charitable activities;
  5. Services by a person by way of-
    1. Renting of precincts of a religious place meant for general public; or
    2. Conduct of any religious ceremony;
  6. Services provided by-
    1. An arbitral tribunal to –
      1. Any person other than a business entity; or
      2. A business entity with a turnover up to rupees ten lakhs in the preceding financial year;
    2. An individual as an advocate or a partnership firm of advocates by way of legal services to,-
      1. An advocate or partnership firm of advocates providing legal services ;
      2. Any person other than a business entity; or
      3. A business entity with a turnover up to rupees ten lakhs in the preceding financial year; or
    3. A person represented on an arbitral tribunal to an arbitral tribunal;
  7. Services by way of technical testing or analysis of newly developed drugs, including vaccines and herbal remedies, on human participants by a clinical research organisation approved to conduct clinical trials by the drug controller general of India;
  8. Services by way of training or coaching in recreational activities relating to arts, culture or sports;
  9. Services provided to or by an educational institution in respect of education exempted from service tax, by way of,-
    1. Auxiliary educational services; or
    2. Renting of immovable property;
  10. Services provided to a recognised sports body by-
    1. An individual as a player, referee, umpire, coach or team manager for participation in a sporting event organized by a recognized sports body;
    2. Another recognised sports body;
  11. Services by way of sponsorship of sporting events organised,-
    1. By a national sports federation, or its affiliated federations, where the participating teams or individuals represent any district, state or zone;
    2. By association of Indian universities, inter-university sports board, school games federation of India, all India sports council for the deaf, Paralympic committee of India or special Olympics bharat;
    3. By central civil services cultural and sports board;
    4. As part of national games, by Indian Olympic association; or
    5. Under Panchayat Yuva Kreeda Aur Khel Abhiyaan (pykka) scheme;
  12. Services provided to the government, a local authority or a governmental authority by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of –
    1. A civil structure or any other original works meant predominantly for use other than for commerce, industry, or any other business or profession;
    2. A historical monument, archaeological site or remains of national importance, archaeological excavation, or antiquity specified under the ancient monuments and archaeological sites and remains act, 1958 (24 of 1958);
    3. A structure meant predominantly for use as (I) an educational, (ii) a clinical, or (iii) an art or cultural establishment;
    4. Canal, dam or other irrigation works;
    5. Pipeline, conduit or plant for (I) water supply (ii) water treatment, or (iii) sewerage treatment or disposal; or
    6. A residential complex predominantly meant for self-use or the use of their employees or other persons specified in the explanation 1 to clause 44 of section 65 b of the said act;
  13. Services provided by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of,-
    1. A road, bridge, tunnel, or terminal for road transportation for use by general public;
    2. A civil structure or any other original works pertaining to a scheme under Jawaharlal Nehru national urban renewal mission or Rajiv Awaas Yojana;
    3. A building owned by an entity registered under section 12AA of the income tax act, 1961(43 of 1961) and meant predominantly for religious use by general public;
    4. A pollution control or effluent treatment plant, except located as a part of a factory; or
    5. A structure meant for funeral, burial or cremation of deceased;
  14. Services by way of construction, erection, commissioning, or installation of original works pertaining to,-
    1. An airport, port or railways, including monorail or metro;
    2. A single residential unit otherwise than as a part of a residential complex;
    3. Low- cost houses up to a carpet area of 60 square meters per house in a housing project approved by competent authority empowered under the ‘scheme of affordable housing in partnership’ framed by the ministry of housing and urban poverty alleviation, government of India;
    4. Post- harvest storage infrastructure for agricultural produce including a cold storages for such purposes; or
    5. Mechanised food grain handling system, machinery or equipment for units processing agricultural produce as food stuff excluding alcoholic beverages;
  15. Temporary transfer or permitting the use or enjoyment of a copyright covered under clauses (a) or (b) of sub-section (1) of section 13 of the Indian copyright act, 1957 (14 of 1957), relating to original literary, dramatic, musical, artistic works or cinematograph films;
  16. Services by a performing artist in folk or classical art forms of (I) music, or (ii) dance, or (iii) theatre, excluding services provided by such artist as a brand ambassador;
  17. Services by way of collecting or providing news by an independent journalist, press trust of India or united news of India;
  18. Services by way of renting of a hotel, inn, guest house, club, campsite or other commercial places meant for residential or lodging purposes, having declared tariff of a unit of accommodation below rupees one thousand per day or equivalent;
  19. Services provided in relation to serving of food or beverages by a restaurant, eating joint or a mess, other than those having (I) the facility of air-conditioning or central air-heating in any part of the establishment, at any time during the year, and (ii) a licence to serve alcoholic beverages;
  20. Services by way of transportation by rail or a vessel from one place in India to another of the following goods –
    1. Petroleum and petroleum products falling under chapter heading 2710 and 2711 of the first schedule to the central excise tariff act, 1985 (5 of 1986);
    2. Relief materials meant for victims of natural or man-made disasters, calamities, accidents or mishap
    3. Defence or military equipments;
    4. Postal mail or mail bags;
    5. household effects;
    6. Newspaper or magazines registered with the registrar of newspaper
    7. Railway equipments or materials;
    8. Agricultural produce;
    9. Foodstuff including flours, tea, coffee, jaggery, sugar, milk products, salt and edible oil, excluding alcoholic beverages; or
    10. Chemical fertilizer and oilcakes;
  21. Services provided by a goods transport agency by way of transportation of –
    1. Fruits, vegetables, eggs, milk, food grains or pulses in a goods carriage;
    2. Goods where gross amount charged for the transportation of goods on a consignment transported in a single goods carriage does not exceed one thousand five hundred rupees; or
    3. Goods, where gross amount charged for transportation of all such goods for a single consignee in the goods carriage does not exceed rupees seven hundred fifty;
  22. Services by way of giving on hire –
    1. To a state transport undertaking, a motor vehicle meant to carry more than twelve passengers; or
    2. To a goods transport agency, a means of transportation of goods;
  23. Transport of passengers, with or without accompanied belongings, by –
    1. Air, embarking from or terminating in an airport located in the state of raunchily Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, or Tripura or at Bagdogra located in west Bengal;
    2. A contract carriage for the transportation of passengers, excluding tourism, conducted tour, charter or hire; or
    3. Ropeway, cable car or aerial tramway;
  24. Services by way of vehicle parking to general public excluding leasing of space to an entity for providing such parking facility;
  25. Services provided to government, a local authority or a governmental authority by way of –
    1. Carrying out any activity in relation to any function ordinarily entrusted to a municipality in relation to water supply, public health, sanitation conservancy, solid waste management or slum improvement and upgradation; or
    2. Repair or maintenance of a vessel or an aircraft;
  26. Services of general insurance business provided under following schemes –
    1. Hut insurance scheme;
    2. Cattle insurance under Swarnajaynti gram Swarozgar Yojna (earlier known as integrated rural development programme);
    3. Scheme for insurance of Tribals;
    4. Janata personal accident policy and Gramin accident policy;
    5. Group personal accident policy for self-employed women;
    6. Agricultural Pumpset and failed well insurance;
    7. Premia collected on export credit insurance;
    8. Weather based crop insurance scheme or the modified national agricultural insurance scheme, approved by the government of India and implemented by the ministry of agriculture;
    9. Jan Arogya Bima policy;
    10. National agricultural insurance scheme (Rashtriya Krishi Bima Yojana);
    11. Pilot scheme on seed crop insurance;
    12. Central sector scheme on cattle insurance;
    13. universal health insurance scheme;
    14. Rashtriya Swasthya Bima Yojana; or
    15. Coconut palm insurance scheme;
  27. Services provided by an incubatee up to a total turnover of fifty lakhs rupees in a financial year subject to the following conditions, namely:-
    1. The total turnover had not exceeded fifty lakhs rupees during the preceding financial year; and
    2. A period of three years has not been elapsed from the date of entering into an agreement as an incubatee;
  28. Service by an unincorporated body or a non- profit entity registered under any law for the time being in force, to its own members by way of reimbursement of charges or share of contribution –
    1. As a trade union;
    2. For the provision of carrying out any activity which is exempt from the levy of service tax; or
    3. Up to an amount of five thousand rupees per month per member for sourcing of goods or services from a third person for the common use of its members in a housing society or a residential complex;
  29. Services by the following persons in respective capacities –
    1. Sub-broker or an authorized person to a stock broker;
    2. Authorized person to a member of a commodity exchange;
    3. Mutual fund agent to a mutual fund or asset management company;
    4. Distributor to a mutual fund or asset management company;
    5. Selling or marketing agent of lottery tickets to a distributer or a selling agent;
    6. Selling agent or a distributer of sim cards or recharge coupon vouchers;
    7. Business facilitator or a business correspondent to a banking company or an insurance company, in a rural area; or
    8. Sub-contractor providing services by way of works contract to another contractor providing works contract services which are exempt;
  30. Carrying out an intermediate production process as job work in relation to-
    1. Agriculture, printing or textile processing;
    2. Cut and polished diamonds and gemstones; or plain and studded jewellery of gold and other precious metals, falling under chapter 71 of the central excise tariff act ,1985 (5 of 1986);
    3. Any goods on which appropriate duty is payable by the principal manufacturer; or
    4. Processes of electroplating, zinc plating, anodizing, heat treatment, powder coating, painting including spray painting or auto black, during the course of manufacture of parts of cycles or sewing machines up to an aggregate value of taxable service of the specified processes of one hundred and fifty lakhs rupees in a financial year subject to the condition that such aggregate value had not exceeded one hundred and fifty lakhs rupees during the preceding financial year;
  31. Services by an organiser to any person in respect of a business exhibition held outside India;
  32. Services by way of making telephone calls from –
    1. Departmentally run public telephone;
    2. Guaranteed public telephone operating only for local calls; or
    3. Free telephone at airport and hospital where no bills are being issued;
  33. Services by way of slaughtering of bovine animals;
  34. Services received from a provider of service located in a non- taxable territory by-
    1. Government, a local authority, a governmental authority or an individual in relation to any purpose other than commerce, industry or any other business or profession;
    2. An entity registered under section 12aa of the income tax act, 1961 (43 of 1961) for the purposes of providing charitable activities; or
    3. A person located in a non-taxable territory;
  35. Services of public libraries by way of lending of books, publications or any other knowledge- enhancing content or material;
  36. Services by employees’ state insurance corporation to persons governed under the employees’ insurance act, 1948 (34 of 1948);
  37. Services by way of transfer of a going concern, as a whole or an independent part thereof;
  38. Services by way of public conveniences such as provision of facilities of bathroom, washrooms, lavatories, urinal or toilets;
  39. Services by a governmental authority by way of any activity in relation to any function entrusted to a municipality under article 243 w of the constitution.

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21 thoughts on “Services Exempt from Service Tax
  • DS Appa Rao says:

    Sir, Please clarify as to whether Air Pollution, Water testing, Sewage and Effluent treatment plant maintenance services comes under SERVICE TAX EXEMPTION. I am running small testing lab. Please guide me Sir,
    Best regards,
    Appa rao

    • Kanekor Balaji says:

      Dear Appa Rao sir,

      Can i get your business profile?
      My business also with some fluid properties to be tested.

  • RAGHAVENDRA K says:

    supply of water to projects is exempted service?

    • admin says:

      Services provided to the government, a local authority or a governmental authority by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of –
      Pipeline, conduit or plant for (I) water supply (ii) water treatment, or (iii) sewerage treatment or disposal; or
      is exempted from service tax.

    • admin says:

      19.Services provided to government, a local authority or a governmental authority by way of –
      1.Carrying out any activity in relation to any function ordinarily entrusted to a municipality in relation to water supply, public health, sanitation conservancy, solid waste management or slum improvement and upgradation; is exepmted from service tax

  • R B PAUDEL says:

    Sir,

    Amendment letter from july, 2012 for service provider and service receiver

    kindly give the details of above information.

    thanks
    with kind regards,

    R B PAUDEL

  • Kanekor Balaji says:

    Dear Sir,

    I am running a small engineering consulting service company for power plant equipments.
    Does my business services comes under SERVICE TAX EXEMPTION.

    Waiting for your reply sir.

  • Manik Thapar says:

    Sir please confirm if waste management services, provided to the private sector comes under the preview of tax exemption.

    • admin says:

      No Service tax on Services provided to Government, a local authority or a governmental authority by way of -
      (a) carrying out any activity in relation to any function ordinarily entrusted to a municipality in relation to water supply, public health, sanitation conservancy, solid waste management or slum improvement and upgradation.

  • DINESH JHA says:

    service tax is applicable or not on installation and commissioning service to indian railway.

    • admin says:

      Dinesh Ji, as per mega notification for exemption of services
      Services by way of construction, erection, commissioning, or installation of original works pertaining to,-
      An airport, port or railways, including monorail or metro.

      So exemption is only for original work not for repair and maintenance with railways.

  • nikhil doshi says:

    i am an architect.i started practising from the financial year 2011/12. in that year my fees collected was rs2.2 lakhs. in the year 2012/13 i got the receipts of rs.6.6lakhs. for this two years i have not claimed any service tax from the party .this year i think my fees collection will cross 10 lakhs. so how do i collect service tax. ie. can i collect now before i cross 10 lakhs receipt or i start collecting the same once i cross. when do i register with the service tax department.

    • admin says:

      Nikhil ji, you can collect service tax after registration with service tax department and for the first time you have to collect service tax prospectively.i,e only on bills you raising post registration after 10 Lakh turnover

  • Ravi says:

    If we provide any training services to the ICAI and its branches, will we get any service tax exemption.

  • chaitanya says:

    Dear Sir,

    Pls clarify Cold storage constructed by Food Processing unit to store the agricultural produce is exempt from service tax / not.

    • admin says:

      In case if you found any lost PAN card, you can send that PAN card to Income Tax PAN Card Service Unit address given at the end.
      or Contact
      ITO WARD 3, MARGOA, Karnataka – PAN Card Name Shilpa Shinde

  • Avinash says:

    Dear Sir,

    we are running the college which is affiliated to University Grant Commission. we have taken the premises on rent. This time the owner of the premises is asking for service tax. kindly confirm whether the society who is imparting the education is eligible for paying service tax. our college is running under sankalp education society, Nagpur

    • admin says:

      Any college which is affiliated to University Grant Commission and providing any certificate or degree is exempted from service tax as per our view. But one can have different view on same like if you are paying any rent to private person then service tax is applicable on it but if you are paying rent to other educational institute then no service tax on rent. But one can have two different view on same.
      As per service tax notification no 25/2012 clause 9 no service tax
      Services provided to or by an educational institution in respect of education exempted from service tax, by way of,-
      Auxiliary educational services; or
      Renting of immovable property;

      Circular No. 107/01/2009 – ST
      F.No137/23/2007-CX.4
      Government of India
      Ministry of Finance
      Department of Revenue
      Central Board of Excise and Customs
      ***
      New Delhi, dated 28th January 2009

      Subject: Levy of service tax on educational institutions- regarding

      ****************

      Various educational institutions impart training and conduct courses in different fields. Many of these institutions issue certificates/degrees/diplomas to the candidates upon their successfully completing such courses. Apart from government run or aided institutes imparting education, training or coaching, there are several private run institutes or centers, which impart education/ training/ coaching, teach skills, help in preparing for competitive examinations or run classes on various subjects. Service tax is leviable on services provided by ‘commercial training and coaching centers’, since the year 2003. Over a period of time, certain doubts /disputes have arisen in the field in respect of the chargeability of service tax on the fees/ charges collected by such institutes and education centers. Some of such issues have been discussed below.

      2. COMMERCIAL NATURE OF INSTITUTE
      The first issue arises from the very name i.e. Commercial training or coaching center’. Many service providers argue that the word ‘commercial’ appearing in the aforementioned phrase, suggests that to fall under this definition, the establishment or the institute must be commercial (i.e. having profit motive) in nature. It is argued that institutes which are run by charitable trusts or on no-profit basis would not fall within the phrase commercial training or coaching center and none of their activities would fall under the taxable service. This argument is clearly erroneous. As the phrase ‘commercial training or coaching center ‘has been defined in a statute, there is no scope to add or delete words while interpreting the same. The definition commercial training or coaching center has no mention that such institute must have ‘commercial’ (i.e. profit making) intent or motive. Therefore, there is no reason to give a restricted meaning to the phrase. Secondly, service tax, unlike direct taxes, is chargeable on the gross amount received towards the service charges, irrespective of whether the venture is ‘profit making, loss making or charity oriented’ in its motive or its outcome. The word “Commercial” used in the phrase is with reference to the activity of training or coaching and not to the nature or activity of the institute providing the training or coaching. Thus, services provided by all institutes or establishments, which fulfills the requirements of definition, are leviable to service tax.

      3. POST SCHOOL EDUCATION
      3.1 Determination of taxability of education, other than school education is more complex and poses more questions. This is because, it covers an entire gamut of educational courses, such as formal higher education (i.e. bachelors, masters, doctoral, post doctoral course), specialized education, vocational education, language (including foreign language) courses etc. These vary in terms of their content; purpose; scope; and the type of institutes or establishments, which impart them.
      3.2 The system of statutory recognition of educational establishments or institutions in India is still in the state of evolution. As regards university education, University Grants Commission (UGC) is the apex regulating body. As per the objects of the University Grants Commission Act, 1956 (which established UGC) the said Act is ‘to make provision for the co-ordination and determination of standards in Universities and for that purpose, to establish a University Grants Commission’.
      ·
      As per the definition, in terms of Section 2(f) of the Act, a University means a University established or incorporated by or under a Central Act, a Provincial Act or a State Act, and includes any such institution as may, in consultation with the University concerned, be recognized by the Commission in accordance with the regulations made in this behalf under this Act. . Therefore, all universities which are a creature of a State or Union Act fall within this definition of ‘University’.

      · Further, Section 3 of the Act, explains the scope of a ‘deemed university’ and defines that the Central Government may, on the advice of the Commission, declare by notification in the Official Gazette, that any institution for higher education, other than a University, shall be deemed to be a University for the purposes of this Act, and on such a declaration being made, all the provisions of this Act shall apply to such institution as if it were a University within the meaning of clause (f) of section 2.
      · Also, UGC, with the approval of Central Government and under the Recognition of College in Terms of Regulations, 1974 framed under the UGC Act, can grant recognition to a college or institution run by a trust, a registered society or a body corporate or body incorporated under Central or state Act as an institution affiliated to or form as constituent member with a university, providing education up to a bachelors degree, masters degree or diploma of a duration of minimum one academic year

      · As per National Policy on Education, 1986, a scheme of autonomous colleges was promoted. In the autonomous colleges, whereas the degree continues to be awarded by the university, the name of college is also included. These colleges develop and submit new courses of study for approval by the university. These autonomous colleges are fully responsible for the conduct of examination.

      As all these institutions or establishment are either created or recognized in terms of the power conferred by statutes, they would fall in the category of institutes/ establishments which issues diploma or certificate recognized by the law for the time being in force. As regards issuance of degree, section 22(1) of the said Act, provides for right of conferring or granting degrees only by a ‘university’ (as defined above) or a ‘deemed university’ (as defined above).

      3.3 In addition, for recognition of professional courses, promotion of professional institutions and providing grants to various programmes, a number of ‘professional councils (Such as All India Council for Technical Education-AICTE, Medical Council of India-MCI, Indian Council for Agricultural Research-ICAR, Bar Council of India-BCI) have been created through independent Union Acts. Since, inter alia these councils are entrusted with ensuring norms and standards of the courses, physical and instructional facilities, undertaking assessment etc., they have also been provided with powers to make subordinate legislations (i.e. through notifications, circulars, rules) that the institutions or the establishments within their ambit must abide. In case of default, the councils have the power to derecognize an institution or establishment or a particular course being conducted by them, even if they are recognized as a university, a deemed university or an affiliated college. If an institution or establishment is derecognized, then such institution or establishment cannot be called to be an institute or establishment which issues any certificate or diploma or degree or any educational qualification recognized by the law for the time being in force. With the result, the courses conducted would fall under the ambit of ‘commercial training or coaching centers’ and would be charged to tax. It may however, be noted that for exercising such power, there should be a valid rule / notification / circular, prescribing the minimum requirements or standards as also the consequences of default.

      3.4 All India Council for Technical Education-AICTE, was started in 1945 with the objectives stated above. Based on the recommendations of a ‘National Working Group’ (constituted by the Government of India) that AICTE be vested with the necessary statutory authority, it was given legislative support through an Act, called the AICTE Act, 1987. AICTE, using the powers conferred on it through 1987 Act, issued the ‘AICTE (Grant of Approval for Starting New Technical Institutions, Introduction of Courses or Programme and Approval), Regulation 1994. Theses were amended in the years 1997 and 2000. Under Regulation 4 (Requirement of Grant of approval) of these Regulations, AICTE prescribed that,-

      “After the commencement of these regulations,-
      a. No new Technical Institution or University Technical Department shall be started; or
      b. No course or programme shall be introduced by any Technical Institution, University including a Deemed University or University Department or Collage; or
      c. No Technical Institution, University or Deemed University or University Department or College shall continue to admit students for Degree or Diploma course; or
      d. No approved intake capacity of seats shall be increased or varied;

      Except with the approval of the council.

      The powers to issue regulations for approval are conferred on AICTE under Section 23 read with Section 10 of the AICTE Act.

      3.5 In 2003, when service tax was first imposed on commercial training and coaching centers, the AICTE regulations required that for (a) starting or establishing new technical institutions; (b) introduction of additional programmes; or (c) increase in ‘intake’ in the existing programmes of AICTE approved institutions, a ‘no objection certificate’ from the concerned State government /UT would be required (notification F.37-3/Legal (iii)/2002 dated 10.09.2003). This notification does not prescribe any certification for existing institutes or establishments, which did not introduce any additional programme or did not increase in ‘intake’ in an existing programme. Thus, at that stage, not having a AICTE approval for such existing institution or establishment did not make them ineligible for being an institute or establishment which issues any certificate or diploma or degree or any educational qualification recognized by the law for the time being in force. Thus, if otherwise recognized or accepted, this sole reason of absence of AICTE approval did not cause such institutions or establishments to be within the service tax net. On 6.01.2005, vide notification No. F.37-3/Legal/2004, the previous AICTE Regulations was replaced by new Regulations. These Regulations expanded the scope and stated (Regulation No. 5) that no new technical institution of the Government, Government Aided or Private institution shall be introduced; no new courses or programs in technical education shall be introduced or no variation of intake shall be effected or no existing technical institution of the Government, Government Aided or Private institution shall conduct any technical course without prior approval of the council. The Regulation No. 7 of these Regulations also stated that the council shall, in every year publish the names of approved technical institutions, conducting course in technical education, the course and programs approved by the council and the number of seats permitted for each course etc. These Regulations were again superseded by another set of Regulations issued vide Not. No. F-37-3/Legal/2004 dated 28.11.2005, where the requirement of grant of approval by AICTE was further elaborated to specifically include universities, deemed universities and any admission authority etc. Vide notification No. F-2-1/2006 U.3 (A) dated 5.04.2006 the Central Government issued clarification regarding the role and the powers of AICTE and UGC with respect to ‘Deemed to be University’. From the above it emerges that from the year 2005 onwards, a technical institution or establishment (which is otherwise recognized being a university, or affiliate college) not having AICTE approval cannot be called to be the one issuing any certificate or diploma or degree or any educational qualification recognized by the law for the time being in force and thus be within the ambit of service tax. However ‘Deemed to be University’ have been exempt from this requirement. As per the said notification for the institutes ‘Deemed to be University’, it is not a pre-requisite to obtain the approval of AICTE to start any programme in technical or management education leading to an award, including degrees in disciplines covered under the AICTE Act, 1987. However, such institutes are required to ensure the maintenance of the minimum standards prescribed by the AICTE for various courses under the jurisdiction of the said council.

      3.6 Similar would be the situation in case of other Statutory Councils.

      3.7 A related issue is, that since the concept of recognition of an educational qualification in India has been dynamic in nature (i.e. the degree/ diploma/ certificate an institute or establishment may be recognized by the law at one time and not recognized at other, due to change in legal provisions) the taxability of the courses conducted would depend on the legal status of such institute or establishment at the point of time when such service is provided (i.e. course is conducted). It cannot be said that once recognized an institute or establishment would remain so even in future or was so in the past.

      3.8 Many a time private institutes conduct courses and issue diplomas or certificates in collaboration with certain foreign institutes universities. In many cases private enterprises conduct campus interviews of the students of such institutes and offer them jobs. Such certificates / diplomas may be accepted for higher education abroad. However, such a certificate / diploma cannot be called as the one ‘recognized by the law for the time being in force’ unless such a diploma/ certificate has been specifically recognized by the statutory authorities such as UGC, AICTE. Consequently, such institutes would not fall under the exempted category and would be subjected to tax.

      4. VOCATIONAL TRAINING INSTITUTE
      The vocational training institutes are exempted from service tax vide notification no. 24/2004-ST, dated 10.09.2004 (as amended). By definition, such institutes should provide training or coaching that imparts skill to enable the trainee to seek employment or undertake self-employment, directly after such training or coaching. Disputes have arisen in respect of institutes that offer general course on improving communication skills, personality development, how to be effective in group discussions or personal interviews, general grooming and finishing etc. It is claimed that such training or coaching improves the job prospects of a candidate and therefore they are eligible for exemption as ‘vocational training institutes. However, a careful reading of the definition shows that the exemption is available only to such institutes that impart training to enable the trainee to seek employment or self-employment. The courses referred to above do not satisfy this condition because on their own such courses do not prepare a candidate to take up employment or self-employment directly after such training or coaching. They only improve the chances of success for a candidate who already has the required skill. Therefore, such institutes are not covered under the exemption.

      5. CONCLUSION
      All pending cases may be disposed of accordingly. In case any difficulty is faced in implementing these instructions, the same may be brought to the notice of the undersigned.

      (Gautam Bhattacharya)
      Commissioner (Service Tax)
      CBEC, New Delhi

  • Mohd Irshad says:

    Dear Sir I want to know is vocation training instituted (pvt. ltd company) exempted from service tax

    • admin says:

      It will exempted only if you are giving any diploma, degree under some recognized university otherwise service tax will be payable on fees and other sum collected by you.

  • jlr says:

    Sir what about projects that have been started before 1/7/2012. Will those also be exempt from tax?