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Service tax exemption

Swapan Paul (MBA) (4 Points)

17 September 2015

Dear All,

We have small clarification regarding service tax exemption.

We have provide only labour for Piping work in Electric Locomotive and all materials are provide by railway. Is this job consider for "Service Tax Exemption"?

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Vikas (CA) (1135 Points)
Replied 18 September 2015

Dear Swapan,

There is a specific exemption granted to original works pertaining to railway. The Original works in plain language means a works contract in the nature of construction of a new building or erection, commissioning, installation of plant, machinery, equipment, structures.

A works contract would mean a contract where goods (leviable to Sales tax) are involved while execution of works.

In this event, if some material is being used by you in the contract, which is liable to Sales tax (VAT / CST) then the aforesaid exemption may be available. However, if all the goods are provided free of cost to you by Railway, then in that case, no exemption would be available and the contract would be leviable to Service tax @ 14%.