Abatement means reduction or decrease of amount from taxable value of services. Service provider has to pay service tax after arriving at appropriate value of service as per section 67 of Finance Act, 1994 read with the Service Tax (Determination of Value) Rules, 2006. The Government can provide for reduction in the value of any service either completely or up to a certain limit. Such reductions or partial exemptions are provided subject to certain conditions and made known to everybody involved by way of notifications, popularly known as abatement notifications.
Notification No. 26/2012-ST, dated 20/06/2012 provides a list of different percentage on 12 different services. Cenvat credit on input services received or capital goods brought in has also been allowed. However in respect of some services, abatement is provided only if cenvat credit is not availed of input services received and/or input credit on capital goods is not taken.
Abatement will be allowed at the following rates for the following services on the levy of service tax; i.e. Service tax will be charged on the balance value after abatement.
| Sr. No. | Description of Taxable Service |
Abatement Value |
Taxable Value | Conditions |
| 1 | Financial leasing and Hire purchase | 90% | 10% | No Condition |
| 2 | Transport of goods by rail | 70% | 30% | No condition |
| 3 | Transport of passengers, with or without accompanied belongings by rail |
70% | 30% | No Condition |
| 4 | Bundled service by way of 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 other place, specially arranged for organizing a function) together with renting of such premises |
30% | 70% | CENVAT credit on any goods classifiable under Chapters 1 to 22 of the Central Excise Tariff Act, 1985 (5 of 1986) used for providing the taxable service, has not been taken under the provisions of the CENVAT Credit Rules, 2004. |
| 5 | Transport of passengers by air, with or without accompanied belongings |
60% | 40% | CENVAT credit on inputs and capital goods, used for providing the taxable service, has not been taken under the provisions of the CENVAT Credit Rules, 2004 |
| 6 | Renting of hotels, inns, guest houses, clubs, campsites or other commercial places meant for residential or lodging purposes |
40% | 60% | CENVAT credit on inputs and capital goods, used for providing the taxable service, has not been taken under the provisions of the CENVAT Credit Rules, 2004 |
| 7 | Services of goods transport agency in relation to transportation of goods |
75% | 25% | CENVAT credit on inputs, capital goods and input services, used for providing the taxable service, has not been taken under the provisions of the CENVAT Credit Rules, 2004. |
| 8 | Services provided in relation to chit |
30% | 70% | CENVAT credit on inputs, capital goods and input services, used for providing the taxable service, has not been taken under the provisions of the CENVAT Credit Rules, 2004 |
| 9 | Renting of any motor vehicle designed to carry passengers |
60% | 40% | CENVAT credit on inputs, capital goods and input services, used for providing the taxable service, has not been taken under the provisions of the CENVAT Credit Rules, 2004 |
| 10 | Transport of goods in a vessel |
50% | 50% | CENVAT credit on inputs, capital goods and input services, used for providing the taxable service, has not been taken under the provisions of the CENVAT Credit Rules, 2004 |
| 11 |
Services by a tour operator in relation to,- (i) a |
75% | 25% | (i) CENVAT credit on inputs, capital goods and input services, used for providing the taxable service, has not been taken under the provisions of the CENVAT Credit Rules, 2004. (ii)
|
| (ii) a tour, if the tour operator is providing services solely of arranging or booking accommodation for any person in relation to a tour |
90% | 10% | (i) CENVAT credit on inputs, capital goods and input services, used for providing the taxable service, has not been taken under the provisions of the CENVAT Credit Rules, 2004. (ii) The invoice, bill or challan issued (iii)
|
|
| (iii) any services other than specified at (i) and (ii) above. |
60% | 40% | (i) CENVAT credit on inputs, capital goods and input services, used for providing the taxable service, has not been taken under the provisions of the CENVAT Credit Rules, 2004. (ii)The |
|
| 12 | 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 |
75% | 25% | (i) CENVAT credit on inputs used for providing the taxable service has not been taken under the provisions of the CENVAT Credit Rules, 2004. (ii)The
|
| a. Residential properties having a carpet area above 2000 sq ft and where amount charged is equal to or more than Rs. 1 crore, b. Commercial properties. |
70% | 30% | (i) CENVAT credit on inputs used for providing the taxable service has not been taken under the provisions of the CENVAT Credit Rules, 2004. (ii)The |
We can see from the above table that, abatement has not been uniformly allowed for all types of services. Also, cenvat credit has been fully allowed for some types of services and partially allowed in some types services and for some services, abatement is provided only if cenvat credit is not taken.
Respected Sir,
Is there any abatement for services rendered by Chartered Accountant. Kindly Advise.
regards,
Krishna
Respected Sir,
Is there any abatement for services rendered by Chartered Accountants. Kindly Advise.
regards,
Krishna