Finance ministry announces service tax exemptions for various sectors

Our Economy Bureau
08 June 2005

New Delhi: The finance ministry has announced a slew of service tax exemptions to provide an impetus to the infrastructure, construction, shipping and ports, and gems and jewellery sectors.

Briefing newspersons on the latest changes in the service tax regime, Dr Parthasarathy Shome, advisor to the finance minister, said that the changes have been made to bring about equity in certain areas, align the service tax regime of the country with international practices and also provide a policy thrust to crucial areas like infrastructure.

He also announced that service tax would become applicable on nine new services from June 16. From the same date, the scope of 12 existing services will also be expanded for service tax purposes. Among others, the 12 services whose scope has been expanded include broadcasting services, beauty parlours, franchisee services, business auxiliary services and manpower recruitment services.

Elaborating on the exemptions, which would also come into effect from June 16, Dr Shome said that commercial or industrial construction services in relation to the construction of major and minor ports would be exempted from service tax.

Further, no service tax will be applicable on site formation and clearance, excavation and earth moving and demolition services provided in the course of construction of roads, airports, railways, transport terminals, bridges, tunnels, dams and ports.

In a move that could give fillip to the gems and jewellery sector, the finance ministry has said that production or processing of goods through job workers in the course of manufacture of cut and polished diamonds and gemstones, plain and studded jewellery of gold, and other precious metals would be exempt from service tax.