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As you are aware that Central Government has issued a total of sixteen new notifications numbering from 25/2012-ST to 40/2012-ST on 20th June, 2012, the team “Do You Know” has made an attempt to provide you a gist of provisions contained in these notifications. These notifications will assist in implementation of new regime of Service Tax based on negative list of services. Detailed discussion enumerating the impact of these notifications will be shared in due course.

Note: All these notifications shall come into force on the 1st day of July, 2012.

The earlier proposed mega exemption Notification No. 12/2012-ST dated 17/03/2012 contained a list of 34 taxable services which were exempt from service tax. Vide this notification a total of 39 taxable services are exempted from service tax.

FIVE additional services which are exempted from service tax through this notification are:
  1. Lending of books and other knowledge enhancing material is now exempt from service tax.
  2. Services provided by Employees State Insurance Corporation to persons governed under the Employees Insurance Act, 1948 is now exempt.
  3. Services by way of transfer of a going concern, as a whole or an independent part thereof.
  4. Provision of facilities of public conveniences like bathroom, washrooms, toilets, urinals or lavatories is now exempt.
  5. Any service provided by Government authority in relation to any function entrusted to a municipality under article 243W of Constitution is now exempt.
  6. Services provided by a sub-contractor to other contractor in relation to works contract is exempt from service tax, if the other contractor is also providing works contract services which are exempt.

A few amendments in relation to already exempted 34 services are also made.

There has been no fundamental change in the manner of valuation of service for the purpose of payment of service tax barring some marginal changes carried out to align the scheme of valuation of taxable services and the Service Tax (Determination of Value) Rules, 2006 with the new system of taxation.

One of such change is in relation to abatements wherein all earlier issued notifications that prescribed the abatements for working out the taxable value from the gross amount charged have been merged into one single exemption notification i.e. Notification No. 26/2012- ST dated 20/6/12. The earlier proposed notification no. 13/2012-STdated 17/03/2012 in this regard is superseded vide this notification even before its implementation. The prominent changes between the two notifications are given below for your notice:

  • In relation to Supply of food or any other article of human consumption or any drink, in a premises, including hotel, convention center, club, pandal, shamiana or any place specially arranged for organizing a function, abetment is available for service tax calculated on the value of service as is in excess of the service tax computed on 70% of gross value of service, when the service is bundled together with renting of such premises.
  • In the old notification, service tax computed on 50% of the value of service is abated in relation to “Transport of goods in a vessel”,when provided from one port in India to another. Now the same benefit is available without any such condition.
  • A new abatement in relation to below mentioned service is added to the new notification, where service tax computed on total value in excess of service tax computed on 25% of value shall be exempt
    • Service by way of “Construction of a complex, building, civil structure or a part thereof, intended for a sale to a buyer, wholly or partly except where entire consideration is received after issuance of completion certificate by the competent authority”.Subject to the conditions that value of land should be included for computing the value of service provided and CENVAT credit of inputs used for providing the taxable service has not been taken.
27/2012-ST Exemption to services for the official use of foreign Diplomatic Mission

The earlier effective notification no. 33/2007-ST was issued to exempt all taxable services provided by any person for the official use of a foreign diplomatic mission or consular post in India. Further the notification no. 34/2007-ST was issued to exempt all taxable services provided for the personal use or for the use of the family members of diplomatic agents or career consular officers posted in a foreign diplomatic mission or consular post in India.

With effect from 1st July, 2012, the similar exemption benefits which were available in two different notifications cited above, are now combined under a single notification no. 27/2012-ST.

4. 28/2012-ST  Place of Provision of Services Rules,2012 

Earlier the cross-border service provision was governed by Export of service Rules, 2005 or Taxation of service (Provided from outside India and received in India) Rules, 2006. Now as an attempt to align the service tax provisions towards implementation of GST, Place of Provision of Service Rules, 2012 are introduced for governing all such cross border transactions.

In addition to this, these rules are equally applicable for those who have operations with suppliers or customers in the state of Jammu and Kashmir. Additionally service providers operating within India from multiple locations, without having centralized registration will find them useful in determining the precise taxable jurisdiction applicable to their operations

These rules are formed to ensuring a certain level of harmonization with international practices in order to avoid both the double taxation as well as double non-taxation of services.

5. 29/2012-ST Exemption on property tax paid on immovable property

There is no change in the benefit granted under earlier effective Notification No. 24/2007-ST in this regard. The purpose of issuing this notification is to give effect of the new charging Section 66B of the Finance Act.

Notification No. 24/2007-ST is now rescinded.

The effective Notification No. 36/2004-ST dated 31/12/2004 in this regard and the earlier proposed Notification No. 15/2012-ST dated 17/03/2012 is superseded by this notification.

The effect of this notification is summarized below:

A Services deleted from reverse charge mechanism i.e. w.e.f. 1/07/2012 service tax for below mentioned services shall be collected from service provider instead of service receiver:
  • Insurance Auxiliary service by an agent
  • Services in relation to General Insurance business
  • Services in relation to distribution of Mutual Fund by a distributor or agent of mutual fund.
B. New services which are brought under the ambit of reverse charge mechanism from 1/07/2012 are:
  • Services provided or agreed to be provided by an arbitral tribunal to business entity – 100% reverse charge.
  • services provided or agreed to be provided by individual advocate or a firm of advocates by way of legal services to business entity – 100% reverse charge.
  • 100% reverse charge for services provided or agreed to be provided by Government or local authority by way of support services to business entity excluding
    • renting of immovable property, and
    • services specified in Section
      • 66D(a)(i): service by department of Posts to any person other than government.
      • 66D(a)(ii): services in relation to an aircraft or a vessel, inside or outside the precincts of a port or an airport 
      • 66D(a)(iii): transport of goods or passengers.
  • Service provided by any individual, partnership firm or an HUF whether registered or not including association of persons to a body corporate in relation to:
    • supply of manpower for any purpose – 75% reverse charge
    • service portion in execution of works contract – 50% reverse charge
    • provision of service in relation to Rent a cab service on abated value to any person who is not engaged in the similar line of business – 100% reverse charge
    • provision of service in relation to Rent a cab service on non-abated value to any person who is not engaged in the similar line of business – 40% reverse charge.

7. 31/2012-ST Exemption to specified services received by exporter of goods

One of the benefits given by Central Government for export promotion includes exemption of certain specified taxable service received by an exporter of goods and used for export of good, from the whole of the service tax leviable under Finance Act, 1994. The benefit was granted vide Notification No. 18/2012-ST which is now superseded by a new Notification No. 31/2012-ST. There are two major consequential effect which are pointed below for your notice:
  • Service provided by a commission agent located outside India and received by an exporter of goods, who is engaged under a contract or agreement or any other document by the exporter in India, to act on behalf of the exporter, to cause sale of goods exported by him is now taxable i.e. exemption from such services is withdrawn.
  • Earlier there was a condition to pay an amount of service tax even on such specified services equivalent to the service tax in excess of 1% of the F.O.B. value of goods exported. Now this condition is no more effective.

8. 32/2012-ST Exemption of services provided by TBI/STEP

With effect from 1st April 2007, vide Notification No. 9/2007-ST, the services provided by Technology Business Incubator (TBI) or Science and Technology Entrepreneurship Park (STEP) recognized by the National Science and Technology Entrepreneurship Development Board (NSTEDB) of the Department of Science and Technology, were exempted from whole of Service Tax. Further the services provided by an entrepreneur located within the premises of so recognized TBI/STEP were also exempted vide Notification No. 10/2007-ST.

In the new regime of Service Tax, the benefits of exemption given to entrepreneurs under Notification No. 10/2007-ST is totally rescinded but TBI/STEP are provided with similar benefits as they were enjoying before, vide this Notification No. 32/2012-ST. The new notification also contains revised formats for information to be furnished in this regard.

9. 33/2012-ST Exemption to Small Service Providers

Vide this notification the government has granted exemption in relation to taxable services of aggregate value not exceeding ten lakh rupees in any financial year from the whole of the service tax leviable thereon under Section 66B of the Finance Act, 1994.

Government has rescinded the earlier effective Notification No. 6/2005-ST and issued Notification No. 33/2012-ST amending the definition of “aggregate value”. The new definition is given below:
“aggregate value means the sum total of value of taxable services charged in the first consecutive invoices issued during a financial year but does not include value charged in invoices issued towards such services which are exempt from whole of service tax leviable thereon under Section 66B of the said Finance Act under any other notification”.
10. 34/2012-ST Rescinding of certain notifications

In order to give way to the new regime of service tax based upon the negative list of services it was necessary to do away with certain existing provisions which in the new era stands to be inconsistent.

Accordingly, Central Government has rescinded a total of eighty one notifications vide Notification no. 34/2012-ST.

11. 35/2012-ST Rescinding of notification 32/2007-ST

For the purpose of determining the taxability of service involved in execution of works contract, the Central Government had issued Works Contract (Composition Scheme for Payment of Service Tax) Rules, 2007 via Notification No. 32/2007-ST.

With effect from 1st July 2012, the said rules are rescinded vide this notification. In order to determining taxability of the same, Rule 2A has been substituted in “Service Tax (Determination of Value) Rules, 2006 vide Notification No. 24/2012-ST.

12. 36/2012-ST Amendment in Service Tax Rules, 1994

The Central Government seeks to amend Service Tax Rules, 1994 in light of introduction of negative list of services and to facilitate various changes made in the Finance Act.

The new amended rules shall be known as Service Tax (Second Amendment) Rules, 2012. The gist of changes made in the said rules is given below:
  • In Rule 2-Definitions: there is an insertion of various definitions of the terms used in these rules like legal service, life insurance business etc…
  • Changes brought in Rule 2(1)(d) for effecting the revised reverse charge mechanism.
  • Substitution of the word and figures “Section 66B” for the word and figure “Section 66” wherever used in the said rules.
  • Insertion of new Rule 6A for determining whether the service is exported or not.
  • Omission of Rule 5B-Date for determination of rate.
  • Various other changes primarily focused to give operational and legal stability to the various changes made to the Act.
13. 37/2012-ST Seeks to amend Point of Taxation Rules, 2011

Vide this notification, there are only two amendments being made to the Point of taxation Rules, 2011:
  • From Rule 2 of the said rules, the definition of associated enterprises and taxable services as given in sub-rule 2(b) and 2(f) respectively is omitted.
  • the words, “provided or to be provided” wherever they occur in the said rules, are substituted by the words “provided or agreed to be provided”
14. 38/2012-ST Amendment of Notification 28/2011-ST

This notification is issued to amend the provisions as contained in Rule 2(c) of Point of Taxation Rules in relation to continuous supply of service.

With effect from 1st July, 2012, the Central Government vide Notification No. 38/2012-ST has prescribed the provision of:-

  • taxable services of telecommunication service, and
  • service portion in execution of a works contract
Shall be treated as continuous supply of service, for the purpose of Rule 2(c) of Point Of Taxation Rules, 2011.

The other three services which were also notified by central government as continuous supply of service vide notification no. 28/2011-ST, are now removed and the works contract service is now redefined as above in point no. 

The three services which were earlier notified are:

1. Commercial or Industrial Construction
2. Construction of Complex
3. Internet telecommunication

15. 39/2012-ST Notification under Rule 6A of Service Tax Rules

Prior to 1st July, 2012, provisions related to export of services are governed by “Export of Service Rules, 2005” wherein the exporter of service was granted rebate of service tax or duty paid on input services or inputs which are used for providing such taxable service as per Rule 5 of said rules.

In the new era of Service Tax effective from 1st July, 2012, a new Rule 6A is incorporated in Service Tax Rules, 1994 for governing the provisions of export of services as from the said date Export of Service rules, 2005 are no more effective.

This Notification No. 39/2012-ST has been issued to incorporate similar benefits in relation to rebate of duty paid on inputs and service tax paid on input services, which are used for providing services which are exported. The said notification also contains conditions and limitations of such rebate along with procedures and forms of application for rebate claims.

16. 40/2012-ST Special Economic Zones: 

Exemption of services provided to a unit located in a Special Economic Zone or Developer of SEZ and used for the authorized operations, from the whole of the service tax, education cess and secondary and higher education cess leviable thereon.

Via this notification the formula for ‘determination of refund of service tax paid’, given in Notification No. 17/2011-ST is redefined in more simplistic manner. Also, definitions for the terminologies used in the above said formula are revised. The notification also contains procedures for claiming the benefits of the exemptions contained in this notification.

By CA Atul Kumar Gupta
Former Chairman NIRC of ICAI
Former Chairman NIRC of ICWAI
Author of “An Introduction to Service Tax”
Author of “Comprehensive Guide to Service Tax”
Mobile : 9810103611
Do not Copy/Paste on other website/blog/forum site,we may demand compensation from you.However ,You may Provide only link back to our site.
Service Tax Rate Chart Wef 01.06.2015 on all Services
CHANGES IN SERVICE TAX WEF 01.07.2012 BRIEF NOTES Reviewed by RAJA BABU on 7/03/2012 Rating: 5 As you are aware that Central Government has issued a total of sixteen new notifications numbering from 25/2012-ST to 40/2012-ST on 20th J...


  1. Dear Sir,

    In the recent changes in service tax rules & in that both service provider & service recipient are liable to pay proportionate service tax in some cases. In such condition how much service tax is to be levied by service provider in their bills?

    Suppose service provider is manpower supplier & in that case he is liable to pay 25 % of total service tax & receipient is liable to pay 75% of service tax. In this case service provider charge 12.36% service tax or 25% of 12.36%.

    Please explain on above point

    1. He should charge 25 % of the 12.36%.But pls confirm it is payable by the sp and discuss it before doing so.

  2. One of my client is doing supply of manpower to various companies. He is running PVT LTD. company. Will it be applicable for the new amendment for 25% - 75%. Kindly explain me.

    1. If service provider is company (pvt or public) then it is not covered by reverse charge.As your client is handling these contract through company so reverse charge no applicable.


  3. Sir,
    We are in waterproofing works of residential/commercial buildings which maybe new or old.Pls. guide us about rate of service tax to be charged and reverse charge mechanism (What rate of service tax in invoice to client).

    1. You have not given whether material is used in work or not and second is what is your status or your client status means individual /huf/firm /company etc.

      without which it is difficult to tell you the position.

      If you are company or your client is not a company then no reverse charge applicable.

      Further if you are providing material then it is a work contract and taxable value of services may vary 40-70% depending upon nature of the work .

  4. Sir,
    Service Tax in Freight Forwarding Business, is my topic. Please give some clarity with tax section links.

    1. Internationa Freight by AIR / Ocean - Taxable or not?

    2. Services provided Out of India, Example. Customs Clearance & Delivery Charges in USA [Any Other Country than India], But thease charges paid by Shipper in India in INR. - Taxable or Not?

    Look forward for your soonest responce on above.

    Srinivasa Reddy

    1. A freight forwarder provides domestic transportation within taxable territory (say, from the
      exporter’s factory located in Pune to Mumbai port) as well as international freight service
      (say, from Mumbai port to the international destination), under a single contract, on his own
      account (i.e. he buys-in and sells fright transport as a principal), and charges a consolidated
      amount to the exporter. This is a service of transportation of goods for which the place of supply is the destination of goods. Since the destination of goods is outside taxable territory,this service will not attract service tax. Here, it is presumed that ancillary freight services (i.e. services ancillary to transportation- loading, unloading, handling etc) are “bundled” with the principal service owing to a single contract or a single price (consideration).

      On an import shipment with similar conditions, the place of supply will be in the taxable territory,and so the service tax will be attracted.

      2. When the freight forwarder acts as an intermediary : Where the freight forwarder acts as an intermediary, the place of provision will be his location.Service tax will be payable on the services provided by him. However, when he provides a
      service to an exporter of goods, the exporter can claim refund of service tax paid under notification for this purpose.
      Similarly, persons such as call centres, who provide services to their clients by dealing with the customers of the client on the client’s behalf, but actually provided these services on their own account, will not be categorized as intermediaries.

      This is as per book by CBEC page 68-69 can be downloaded from link

    2. Hi Sir, above is clear for point 1, that this charges will not applicable for service tax.

      In Point 2.
      We are mentining saparatly in same invoice as DDU services.
      Means services from USA port to Consignee location including Liner Payment etc...

      I have been charges by liner with service tax for even DDU services. I would like to know is liner is correct or not?

    3. You should take expert advice , we are not expert & give only general advice

  5. Please let me know about Manpower Supply Services provided by Contractor to Company.

    Is there any amendment like 25% Service tax they will charge to company and company itself is liable to pay 75% of service tax to government?

    And on Bill of contractor what they have to write?? 12.36% as ST or 3.06% as ST??

    TDS will be deducted on what basis on that bills?

    Please explain

    1. Yes , change is applicable from 01.07.2012. details are available here

      Notification 30/2012 dated 20.06.2012

  6. what is exact % of service tax on TSP's?

  7. what are the services on which company has to pay service tax instead of the person who is rendering service

    1. It is called reverse charge mechanism and list of servicer covered is given in the link given below .Copy and paste in browser


  8. i have done a work in a MNC with materials as per that i have maked a invoice with 67% for materials and 33% for labour and calculated 13.5% on vat and 12.36% on labour on 07.08.2012. But my invoice was returned as quoted " We have rejected this invoice because of want of clarification, whether service tax is charged as per new Service Tax Valuation Rules”

    So, please help me to re-submit the invoice.

    1. Replied in face Book comments already.

  9. We are providing materials as well as service as a firm to both company & firm.What should be the rate of st as per new notification?

    1. read details here and after reading details ,if any query left then ask with full details

  10. i am working as service provider to a mnc do i have to pay service tax or is there any way of exemption if so what is the limit

  11. Sir, we are into international freight forwarding. Do we need to collect and pay service tax on the international freight component.
    May we have a link to the relevant clause in the ST net.

    Appreciate your comments.

  12. We are an international freight forwarding agency. Do we need to collect and pay service tax on the ocean freight part. could you please relate to the clauses for reference in the service tax rules

  13. I want to know that the medical equiptment on rent attracts service tax if yes what %.

  14. As these services are not covered in negative list hence it is taxable

    negative list available here


  15. I have booked flat at Sangamner dist. Ahmednagar Maharashtra my question is how much % service tax i have to paid?

  16. we have started a event management firm few days back .. recently we provided a service to an organisation ... i just wanted to know how much service tax we can add :)

  17. i have a dry-cleaning and laundry business , i am charging service tax on dry-cleaning , do i have to charge service tax on wet-cleaning also

  18. what should be charge service tax on vehicle passanger invoice in SEZ - vendore in exmeption under agreegate value Rs 10 Lakh

  19. do we need to deduct TDS on freight invoice raised by trasporter?
    he has charged service tax on the freight recoverable.
    also plz clarify what rate of TDS is applicable

  20. Is a municipality liable to pay service tax for renting of immovable property? lease rent from public toilets, busstand toilets, parkings, weekly market, shopts parkings etc

  21. Is Service tax payable on Membership Subscription for Trade Associations, Chambers of Commerce etc.? If yes W.E.F which date?
    It is said that as per Central Excise O.C.No.765/2012,dt. 08/10/2012 Service Tax is payable for this W.E.F. 01.04.2012. Is this correct? Is it applicable retrospectively? Please clarify. Thanks.

  22. Dear Sir,

    we had made advance payment in Feb-12 and work has been completed before March,2012. Now the final payment has to be made. Is service tax liablity towards govt. arise.

  23. Dear Sir,
    we are trader of plastic raw materials in uttarakhand. we purchase materials from delhi or other state & pay freight charge to transporter. we are non company. my question is how much tax should we pay to service tax department(rate %),any notification kindly help me in the matter.




  26. Dear Sir,

    Please let me know about or management consultant & commercial training, coaching /technical testing & analysis and Inspection & certification company.

    Is there any amendment like 25% Service tax they will charge to company and company itself is liable to pay 75% of service tax to government? [Amendment in reverse charge]


  27. Dear Sir, What is TDS rate for providing laundry service?

    1. It is covered under 194C so rate is 1% for HUF/Individual and two % in other cases

  28. Sir I am a Mutual Fund Distributor and have earned brokerage income of around 12 lacs in this financial year
    do i have to pay service tax even if I am passing the brokerage to my sub brokers who have facilitated to get the business

  29. Dear Sir, We are Proprietorship providing Insurance Claims Investigation Services to General as well as Life Insurance Companies. What % of Service Tax Bill should we raise to GIC/LIC Co.s & do we have to pay Service Tax on Invoices Cut for the Quarter or payments received for earlier Invoices raised by us, kindly reply please

    1. There is no abatement available for given category as such .so you should charge 12.36% service tax from Insurance company.

      Further as you are prop. firm,Due date to deposit the Service tax is quarterly by 5th of next month after end of quarter .However for last quarter of Financial year due date is 31.03 itself.

  30. What all can event management add service tax, for eg if they are paying airlines for airtickets, hotel for food and accomodation. do they have to add service tax when they invoice the client, they have already taxed by airline and hotel. it would be like tax on tax

    1. if these has been done as an agent to service receiver and amount as per actual has been got reimbursed from company then no service tax is payable on such amount ,however if you are charging total as lump sum then you have to charge on total amount

  31. Is service tax liable to be paid or levied on provident Fund as it is not mentioned in notification no.25/2012-ST

    1. it is not covered under service definition like bank FDR

  32. services received during the month of june
    invoice date 2 july 2012
    payment date 25 july 2012

    will joint charge of service tax apply ?

    1. yes reverse charge is applicable in such case.

  33. Dear Sir,
    I want service tax new budget for which was appear in IPCC in May 2013.

  34. Sir,
    I want to know that under reverse charge mechanism both service provider and service receiver is liable to pay service tax but if service receiver is opting exemption for payment of service tax and we are paying service tax under reverse charge and he is not paying is there is any dispute regarding that.
    Kindly clarify.

    1. means you are asking for trouble knowingly . No such option available ,service receiver has to deposit his share directly

    2. Sir,
      If service provider opting the exemption but whether he is liable to pay under reverse charge mechanism, if he haven`t paid then service receiver don`t have to face any trouble regarding credit which he has taken under reverse charge mechanism ????
      kindly reply.

  35. Is service reciever entitled to cenvat credit on service tax paid rent a cab service under reverse charge mechanism. My Client is call centre.Please provide the relevant notification,if any.
    Kindly reply

  36. Dear Sir,

    I am working in a MNC firm on retainership basis and in his contract Letter they have written nothing about the taxes only written the lump sum amount;now I am asking from them to pay a separate cheque of service tax to pay to the Govt.now they are denying please send me the suggestion what to do in this case because I am paying 10% TDS on my fee and 12.36% as a service taxes.

    Please help


    Ravi Dhir

    1. As the contract has no provision of service tax , you can not enforce payment of service tax from the company .

      However you can renegotiate with them

  37. I am an consultant in an MNC Captive centre in India. US Parent company has issued options to me. Does service tax attract, why i exercise these vested options. I am clear that income tax will attract, whereas confused withregards to service tax. Can you please help me in clarifying the same. Also, will there by any service tax when i sell these purchased stocks. Keep note that US Parent company is a unlisted company in US.

  38. Dear Sir,

    What is the new notification no and S.N no for Air travel agency paying service tax of 0.62 for domestic tickets booking and 1.24 for international tickets booking..........Pls write back soon

  39. dear sir,
    Earlier services of pandal and shamiana provided for religious functions were exempt from service tax, what is the position as on today

  40. Does wet cleaning attract any ervice taxs

  41. does Sale of Sites in a layout will attract Service Tax