Tax Exemption List for Port, Airport Services to be Released Soon

May 19, 2010 Posted by India Briefing Reading Time: < 1 minute

May 19 – India will soon announce a list of tax exempt port and airport services as it tests aspects of the pending comprehensive service tax regime.

“We will tax even non-taxable services but spare some essential services such as medical, education, pollution control and emergency services such as fire fighting, special services provided at time of emergency landing from the tax,” the official said. Other services provided and consumed at ports and airports, but are not generally taxed and also do not fall in the category of essential services, will have to face tax, the official added.

The list hints at government direction for the upcoming goods and service tax regime that might follow a negative list approach that specifically mentions services exempt from tax while the rest are taxed accordingly.

“Exempting essential services within the airport will be a positive step towards implementing a jurisdictional service tax in right earnest. It is essential that the term ‘service’ be defined in the statute for proper interpretation of the definition of airport service,” Bipin Sapra, a partner at Ernst & Young told The Economic Times.

This means that export services that are tax exempted will maintain tax-free status. Tax abatement for specific services like transportation will will be available if the service is done at a port or airport.