Services of construction to government and taxability aspect under service tax

By | November 25, 2013

Services of construction to government and taxability aspect under service tax

Services provided to the Government, a local authority or a governmental authority 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 for commerce, industry, or any other business or profession;
  • a historical monument, archaeological site or remains of national importance, archaeological excavation, or antiquity specified under the Ancient Monuments and Archaeological Sites and Remains Act, 1958 (24 of 1958);
  • A structure meant predominantly for use as (i) an educational, (ii) a clinical, or (iii) an art or cultural establishment;
  • A canal, dam or other irrigation works;
  • A pipeline, conduit or plant for (i) water supply (ii) water treatment, or (iii) sewerage treatment or disposal; or
  • A residential complex predominantly meant for self-use or the use of their employees or other persons specified in the Explanation 1 to clause 44 of section 65 B of the said Act;

Services covered by this clause will be exempted only if these services are provided to the Government, a local authority or a governmental authority. So it can be said that if services covered by this clause are provided to other then the Government, a local authority or a governmental authority then the benefit of this clause cannot be availed.

In this, exemption is provided to the Government, a local authority or a governmental authority by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation or restoration of the specified structures.

The condition is that they should be predominantly for use other than for commerce, industry or any other business or profession. However, the exemption would not be denied if the structure is also used incidentally for say, commercial purpose.

In this exemption, roads, hospitals, educational institutions would be covered.

However, the exemption is recipient centre which means only service provided to the Government or local authority or governmental authority would get covered. A sub-contractor would not be covered even if he provides service to the main contractor, who in turn provides service to Government in relation to the specified structures. This will add-up the cost of the main contractor.

Leave a Reply

Your email address will not be published. Required fields are marked *