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Service Tax Exemption for Government Contractors

Service tax exemption for government contractors is an important topic that deserves attention. The government of India has introduced several schemes and policies that aim to support government contractors, including service tax exemption. This policy helps to reduce the financial burden on contractors and makes it easier for them to provide services to the government.

The service tax is a tax levied on the value-added of the services rendered. This tax is charged on all services except those that are included in the list of services that are exempt from service tax. The government of India has made it mandatory for service providers to pay this tax. However, there are certain exemptions available to government contractors.

As per the Finance Act, 1994, the following services provided to the government or local authority are exempt from service tax:

1. Services provided by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of a civil structure or any other original works meant predominantly for use other than commerce, industry, or any other business or profession.

2. Services provided by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of a building owned by the government or local authority meant predominantly for use other than commerce, industry, or any other business or profession.

3. Services provided to the government or local authority by way of renting of immovable property.

4. Services provided to the government or local authority by way of transport of goods or passengers.

5. Services provided to the government or local authority in relation to water supply, public health, sanitation, conservancy, solid waste management, or slum improvement and up-gradation.

6. Services provided to the government or local authority by way of repair or maintenance of aircraft.

7. Services provided to the government or local authority by way of repair or maintenance of ships.

8. Services provided to the government or local authority by way of port services.

9. Services provided to the government or local authority by way of transport of goods by railways.

10. Services provided to the government or local authority by way of transport of goods by inland waterways.

It is important to note that the exemption is only available to government contractors who provide services to the government or local authority. This exemption does not apply to private entities that provide services to the government or local authority.

In conclusion, service tax exemption for government contractors is a significant policy that reduces the financial burden on contractors. This exemption helps to make it easier for contractors to provide services to the government and local authority. It is important for contractors to understand the services that are exempt from service tax to take advantage of this policy. The government of India is committed to supporting government contractors and promoting the growth of the economy.

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