Date:28/05/2005 URL: http://www.thehindubusinessline.com/2005/05/28/stories/2005052802070700.htm

Back `Govt examining tax exemption for certain site preparation services'

Our Bureau

New Delhi , May 27

SITE preparation and clearance services undertaken for certain exempted infrastructure activities such as roads, airports, dams and bridges may not attract service tax.

"We have received representation from builders' associations that service tax should not be applicable on site preparation services undertaken in respect of exempted infrastructure construction activities like roads and dams. This is being examined," Mr R. Sekar, Joint Secretary, Finance Ministry, told newspersons here on the sidelines of service tax conference organised by Assocham here on Friday.

Service tax is applicable on commercial/industrial construction. However, this does not include roads, airports, railways, bridges and dams. It has now been highlighted by industry that site preparation was an integral part of construction activities and therefore when roads, dams etc are exempted from service tax the same treatment should be granted for site preparation services even if such services were outsourced.

The Finance Bill 2005, now enacted into law, had proposed the inclusion of site preparation and clearance, excavation, earth moving and demolition services (other than those provided to agriculture, irrigation, and watershed development) under the service tax net. The service tax was to come into effect from a date to be notified after the enactment of the Finance Bill 2005.

`Date not finalised for implementation'

THE Finance Ministry on Friday promised trade and industry that sufficient notice would be given to them before service tax was made applicable on the nine new services brought under the service tax net in the recent Union Budget.

"We will give you sufficient time before it is implemented. The date from which the service tax on the new services would come into effect has not been finalised. But you can start gearing up for it as if the date is tomorrow," Mr R. Sekar, Joint Secretary, Finance Ministry said.

Construction of residential complexes having more than 12 residential houses or apartments, dredging services of rivers, ports, harbours, backwaters and estuaries, survey and map making, membership of clubs and associations, transport of goods through pipeline and site preparation services are among the new services that have been brought under the service tax net.