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Since Service tax is charged at lower rate,Government has imposed a condition that Cenvat or Input will not be available
Conditons for Different Services
| Name of Service | Abatement Rate | Taxable Rate | Effective Rate of Service Tax | INPUTS | CAPITAL GOODS | INPUT SERVICE |
| Goods Transport Agency (Road) | ||||||
| Normal Cases | 70.00% | 30% | 4.50% | NO | NO | NO |
| For Supply of Old Household Items | 60.00% | 40% | 6.00% | NO | NO | NO |
| Goods Transport by Railways | ||||||
| by Private Railways | 60.00% | 40% | 6.00% | NO | NO | NO Yes |
| by Indian Railways | 70.00% | 30% | 4.50% | NO | NO | NO Yes |
| Passenger Transport by Railways | 70.00% | 30% | 4.50% | NO | NO | NO Yes |
| Goods transport by vessel (Like Ship) | 70.00% | 30% | 4.50% | NO | NO | NO Yes |
| Chit Fund | 70.00% | 30% | 4.50% | NO | NO | NO |
| Construction Services | ||||||
| For Residential unit less than 2000 sq feet + Price Charged > 1 cr | 70.00% | 30% | 4.50% | NO | YES | YES |
| Other Cases | 70.00% | 30% | 4.50% | NO | YES | YES |
| Tour Operator Service | ||||||
| Booking Accomodation | 90.00% | 10% | 1.50% | NO | NO | NO (For Tour Operator Yes) |
| Package Tour Service | 70.00% | 30% | 4.50% | NO | NO | NO (For Tour Operator Yes) |
| Other Cases | 70.00% | 30% | 4.50% | NO | NO | NO (For Tour Operator Yes) |
| Transport of Passengers | ||||||
| Motor Cab | 60.00% | 40% | 6.00% | NO | NO | NO (For Cab Operator Input Service YES) |
| Radio Taxi | 60.00% | 40% | 6.00% | NO | NO | NO |
| Stage Carriage (AC Bus) | 60.00% | 40% | 6.00% | NO | NO | NO |
| Stage Carriage (Non AC Bus) | Exempt | 0.00% | NO | NO | NO (For Stage Carriage Input Service YES) | |
| Air transport (passenger) | ||||||
| Economy Class | 60% | 40% | 6.00% | NO | NO | YES |
| Other than Economy Class | 40% | 60% | 9.00% | NO | NO | YES |
| Financial Leasing Services | 90% | 10% | 1.50% | YES | YES | YES |
| Supply of Food.Drinks with Rent | 30% | 70% | 10.50% | NO | NO | YES |
| (like Hotel/Banquet hall/Pandal) | ||||||
| Renting of Hotel/Guest house/Lodge | 60% | 40% | 6.00% | Yes (no for food items) | YES | YES |
| Restaurant Services | 60% | 40% | 6.00% | Yes (Except Chapter 1 to Chapter 22 of Central Excise Act) | YES | YES |
Change in Conditions for Abatement from 1 April 2016 (Notification 9/2016)
Now Cenvat of Input Services can be taken in case of following Services also
- Transportation of Goods by Rail
- Transportation of Passengers by Rail
- Transportation of Goods in a Vessel.
Explanation in case of Motor Cab Service
Cost of fuel should be included in the consideration charged for providing renting of motorcab services for availing the abatement.
(Insertion of Explanation ‘BA’ in notification No. 26/2012ST)
Other Important Points
Goods Transport Agency
There is reverse charge on Goods Transport Agency (Freight charges) in some cases
Hence, the service receiver pays Service Tax
However, condition for not claiming cenvat is on Service provider and not on service receiver
Service Provider cannot claim cenvat of all 3 (inputs/capital goods/input services)
Cab Transport
Service Provider cannot claim cenvat of all 3 (inputs/capital goods/input services)
However,it may happen that he has availed input service of some other cab operators (hired cabs of some other cab operators)
In this case, Cenvat of Input Service is available as follows
If such other Cab Operator has charged
Full Service Tax-40% Input is available
40% Service tax (i.,e.claimed 60% Abatement)-Full Input Available
Tour Operator
Service Provider cannot claim cenvat of all 3 (inputs/capital goods/input services)
However,it may happen that he has availed service of some other tour operator
Input of service of such other tour operator is available
Also abatement is only applicable if gross amount charged in Bill and commission not shown separately
| Type of Service | Amount in Bill |
| Package Tour | Bill shall indicate gross amount of whole package |
| (Service tax rate is Charged on Whole Package) | |
| Booking Charges | Bill shall indicate gross amount of total charges |
| (If Hotel charges and Commission shown separately, then Service tax at full rate on Booking Charges) | |
| Other Cases | Bill shall indicate gross amount charged (Commission not shown separately) |
Bundled Service Supply of Food/Drinks with Rent
(like Hotel/Banquet hall/Pandal)
No Cenvat of Goods covered in Chapters 1 to 22 of the Central Excise Tariff Act, 1985 (called CETA)
(No Input of Food items purchased in restaurant)
Construction of Complex,building ,structure
No Cenvat on Inputs
The value of land is included in the amount charged from the service receiver.
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