Service Tax – RBI exempted
By Notification No. 7/2006 dated 1.3.2006, taxable services, provided or to be provided to any person, by Reserve Bank of India were exempted from Service Tax. Probably the government felt (and rightly so) that the exemption notification was not adequate and so this is superseded and a new notification issued which provides exemption for
(i) taxable services provided or to be provided to any person, by the Reserve Bank of India;
(ii) taxable services provided or to be provided by any person, to the Reserve Bank of India when the service tax for such services is liable to be paid by the Reserve Bank of India
(iii) taxable services received in India from outside India by the Reserve Bank of India under section 66A of the Finance Act, 1994.
So now the RBI is exempted from Service Tax for the services it provides, for the services it receives for which it would be otherwise liable to pay tax and for services received from abroad.
But why this special treatment to RBI?
Then is the service to be provided in future also exempted? An alert netizen B.Venkateswaran wrote to us in March,
In the recent budget an exemption was granted to RBI from payment of service tax vide notification no 7/2006 dated 01/03/2006. However what is important to note is that the exemption is granted to RBI for all services it may provide in future also. Somebody in the TRU has confused himself with valuation of service tax with levy of service tax. Hope TOIL will bring the error to the notices of the authorities concerned.
May not be!. The whole idea is, taxable service has been defined as "taxable service" means any service provided or to be provided . So the TRU has only been careful and not confused.
NOTIFICATION NO., Dated : May 31, 2006