Services by Government or Local Authority

Services by Government or Local Authority, There are many services which are provided by the government to the common people or the general public. The question comes in the mind that whether all the services provided by the government are exempt or some are taxable. There have been some extraordinary changes in the exclusions from the service tax by the government. This change has been broadly elaborated in this article and would clear your all doubts in the service tax applicability by government.Now check more details for “Services by Government or Local Authority” from below..

Service Tax on Services by Government

Services by Government or the local authority would be fully exempt the following services, if not covered else where in the Act.

  1. Services provided by the Department of Post by way of speed post or express parcel post or life insurance or agency services provided to a person other than government.
  2. Services provided in relation to aircraft or vessel which may be inside or outside of the premises of the port or the airport.
  3. Transportation provided for goods or services by the government or the local authority.
  4. Any services* (other than the services mentioned in the above three cases) to any business entity.

*Any services – Previously there was a provision for services which are supportive in nature but from amendment in Section 66D on 14.05.2015, the word “support services” has been omitted and which means that any services provided by the government or the local authority to the business entity would be taxable.

Meaning of Government:

The meaning of Government has not been mentioned in the Act. So the meaning of Government basically means the following –

It includes the following:

  1. Central Government
  2. State Government
  3. Department of State Government
  4. Union Territory
  5. Department of Union Territories

It excludes the following- The entity which any entity which may be incorporated by statue or not, which are not required to keep the accounts of which are not required to be kept.

Meaning of Local Authority:

The meaning of Local Authority has not been mentioned in the Act. So the meaning of Local Authority basically includes the following-

  1. Municipality (As per Article 243P of Constitution)
  2. Panchayat (As per Article 243 of Constitution)
  3. Municipal Committee
  4. A District Board
  5. Cantonment Board (As per Section 3 of Cantonments Act)
  6. Regional Council
  7. A District Council
  8. A Development Board (As per Section 371 of Constitution)

(Note – The word Local Authorities would not include any bodies which are merely prescribed as local body by the local laws)

Other Important points:

  1. Services which are provided by the government through some private entities are not exempt under this section. They are fully taxable. The services are exempt only if the services are exclusively provided by the government or local authority. If the work is job worked to some private entity then such services would not be exempt.
  2. The services provided by the postal department are not fully taxable, but the name or the natures of the services mentioned above are only taxable.

Must Read –

Join the Discussion