Notifications and Circular issued w.r.t services provided by Government or local authority (April 2016)

This Tax Alert summarizes Notification No 22, 23 and 24 of 2016 – ST, Notification No 24/2016 – CE (NT) and Circular No 192/02/2016 – ST dated 13 April 2016 issued by the Ministry of Finance (‘MoF’) granting exemption and issuing clarifications with reference to various services provided by Government or a local authority. With respect to such services, Point of Taxation Rules, 2011, Service Tax (Determination of Value) Rules, 2006 and CENVAT Credit Rules, 2004 have also been amended.

Key highlights of the Notifications are as follows:
► Following services provided by Government or a local authority are exempt:
► Gross amount charged for services does not exceed INR 5000/-
► Fines or liquidated damages payable to the Government or the local authority for non-performance of contracts
► Registration required under any law for the time being in force
► Testing, calibration, safety check or certification relating to protection or safety of workers, consumers or public at large, required under any law
► Right to use any natural resource assigned by the Government or the local authority before 1 April 2016.
► Point of taxation in case of services provided by the Government to any business entity would be earlier of the date on which payment is due or the date of actual payment.
► CENVAT credit on one-time charges payable for services by way of assignment of right to use any natural resource shall be spread evenly over a period of three years.