Milestone in Services Tax - New Delhi.

NEW DELHI: Starting next month, there will be no service tax on construction of some low-cost housing, power distribution, foreign travelers in transit, those flying to and from the Northeast, services within ports and airports, and certain tournaments and championships.

"The notification shall come into force on July 1," the Central Board of Excise and Customs (CBEC) today said in several notifications related to separate areas issued to enforce the provisions of the Finance Act 2010.

Low-cost housing under the Jawaharlal Nehru National Urban Renewal Mission and the Rajiv Awas Yojana have been exempted from service tax beginning July 1. The government also exempted certain services that are provided within ports and airports from tax.

"Repair of ships or boats or vessels belonging to the Government of India, including the Navy or the Coast Guard or the Customs, but does not include government owned public sector undertakings," the CBEC said as to the services exempted from tax.

Other services within ports and airports that have been exempted from tax are supply of water, supply of electricity, medical treatment, formal education, fire service agencies and pollution control services.

The Finance Ministry exempted the taxable services provided to any person by another person authorised to distribute power under the Electricity Act 2003 for power distribution. Besides, tax exemption has been allowed to tournaments and championships organised by certain bodies such as national sports federations or federations affiliated to it, School Games Federation of India, Association of Indian Universities and Paraolympic Committee of India, among others.

The government also exempted foreign travelers from service tax if they are in transit to a different country without passing the immigration and customs area.

People employed or engaged by the aircraft operators in any capacity on board the aircraft have also been exempted.

Further, those flying to and from the Northeastern states, Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura and Baghdogra (in West Bengal), have also been exempted from service tax.

However, the finance ministry has postponed the exemption of service tax in relation to transport of specified goods by railroads. The exemption, which was earlier delayed to July 1 from April 1, has now further been delayed till January, 2011.