Service of Construction of Tube Wells to the Government are eligible for Service Tax exemption: CBEC [Read Circular]

Service Tax

The Central Board of Excise and Customs recently issued a circular to its officials clarifying the service tax liability of contractors providing the service of construction of tube wells to Government.

As per the circular, contractors providing the service of construction of tube wells to a Government, a local authority or a governmental authority are entitled to get exemption from service tax since such services are duly covered under the Notification No.25/2012 Service Tax dated 26.12.2012

Presently, the services provided to the Government, local authority or a governmental authority by way of water supply, public health, sanitation conservancy, solid waste management or slum improvement and up-gradation are exempted under the entries at Serial No. 12(e) and 25(a) of notification 25/2012 Service Tax dated 26.12.2012.

The circular clarifies that “the phrase ‘water supply’ is a general phrase. Basically, it will involve providing users access to a source of water. The source may be natural or artificial like tanks, wells, tube wells etc. providing users access to such a source will involve activities like drilling, laying of pipes, valves, gauges etc, fitting of motors etc., so as to eventually result in the supply of water.”It is in this context, the Board directed its officials to grant exemption in respect of service of construction of tube wells to government.

Read the full text of the Circular below.

taxscan-loader