Service charge collected from government for that service ch

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pradeep .t.v

pradeep .t.v (Querist)
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27 March 2013 service charge collected from government for that service charge service tax is applicable or not.

CA Nagaraj Bhat

CA Nagaraj Bhat (Expert)
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27 March 2013 Service provided by Govt is covered under Negative List.

As per exemption notification service provided to Govt in relation to following service is covered:

Services provided to the Government or local authority or a Governmental authority by way of construction, erection, commissioning, installation, completion, fitting out, repair,
maintenance, renovation or alteration of -
(a) a civil structure or any other original works meant predominantly for use other than for commerce, industry or any other business or profession;
(b) a historical monument, archaeological site or remains of national importance,
archaeological excavation, or antiquity specified under Ancient Monuments and
Archaeological Sites and Remains Act, 1958 (24 of 1958);
(c) a structure meant predominantly for use as (i) an educational, (ii) a clinical, or (iii) an art or cultural establishment;
(d) canal, dam or other irrigation works;
(e) pipeline, conduit or plant for (i) water supply (ii) water treatment, or (iii) sewerage treatment or disposal; or
(f) a residential complex predominantly meant for self-use or the use of their employees or other persons specified in the

pradeep .t.v

pradeep .t.v (Querist)
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27 March 2013 Financial corporate body act as agent loan borrowed form bank on behalf of government for that government pay service charges 0.5% to the Financial corporate body for this service tax applicable or not

pradeep .t.v

pradeep .t.v (Querist)
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Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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23 July 2025 In the case you're describing — where a **financial corporate body** acts as an **agent** for **arranging loans on behalf of the Government**, and the **Government pays a service charge (e.g., 0.5%)** for that — here’s the tax treatment under **Service Tax law (pre-GST)**:

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### ✅ Is Service Tax applicable on service charges received from Government?

#### 📌 **Short Answer**:

**Yes, service tax is applicable**, **unless** the service is covered under an **exemption** or falls under the **Negative List**.

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### 🔍 Explanation:

#### 1. **Nature of Service**:

* The financial body is acting as an **agent or intermediary** to **arrange loans** from banks on behalf of the Government.
* This falls under **“Business Auxiliary Service”** or **intermediary financial services**, which are generally **taxable services**.

#### 2. **Recipient is Government**:

* Merely **providing services to Government** does **not automatically** exempt the service.

* Exemptions apply **only** when the service is in relation to **infrastructure**, **public utilities**, **education**, etc., as listed in **Notification No. 25/2012-ST** (Mega Exemption Notification).

* In your case, arranging loans **does not qualify** for any specific exemption under the notification.

#### 3. **Negative List Approach (Post-July 2012)**:

* Services **provided by Government** are covered in the **Negative List**, not **services received by Government**.
* So, when **a private entity provides a service to the Government**, it is **taxable unless exempted**.

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### 🧾 Conclusion:

> ✔️ **Service Tax is applicable** on the **0.5% service charge** paid by the Government to the financial corporate body, unless a specific exemption under the Mega Exemption Notification applies (which it doesn't, based on your description).

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### 💡 What to Check:

* Review **Notification 25/2012-ST**, especially clauses 12 and 25.
* Ensure if the service is part of any **sovereign function** or **public infrastructure project**, in which case an exemption **may apply** (rare in financial agency services).

If you share more details (e.g. name of the scheme, function performed, status of the agency), I can cross-check any applicable exemptions.

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