Applicability of Service Tax in Jammu & Kashmir (J

Posted @ August 12, 2016, 3:40 am under (Service Tax Updates)

Invariably, applicability of service tax in the state of Jammu and Kashmir seems to be one of the most confusing aspect of the Finance Act 1994. So let us try and understand its applicability and settle the matter fo good.

Section 64, Chapter V of the Finance Act 1994 (Chapter V contains the Service Tax Law) extends to the whole of India except the state of Jammu and Kashmir. 

In addition to this, if any taxable service in provided in the the state of Jammu & Kashmir to the clients of other states, then the same service is liable to service tax. To understand this, lets take up an example - Suppose a person is providing chopper services ( Helicopter transportation services) to transport pilgrims at vaishno Devi pilgrimage. Now the question is whether in the mentioned case, is service tax applicable or not. In this case as the law states, services being provided to pilgrims belonging to other states and not J&k, are liable to pay service tax, and the service provider is liable to charge the same. If the pilgrim is a resident of J and K using the chopper services, then he is not liable to pay service tax.

Thus it can be concluded that service tax is exempted on people of Jammu and Kashmir for using services inside the state of J&K. For others, its very much applicable.