- No, all services provided by the Government or
a local authority are not exempt from tax. - As for instance,services, namely,
(i) services by the Department of Posts by way of speed post, express parcel post, life insurance, and agency services provided to a person other than Government;
(ii) services in relation to an aircraft or a vessel, inside or
outside the precincts of an airport or a port;
(iii) transport of goods or passengers; or
(iv) any service, other than servicescovered under (i) to (iii) above, provided to business entities are not exempt and that these services are liable to tax.
That said, most of the services provided by the Central
Government, State Government, Union Territory or local
authority are exempt from tax.
These include services provided by government or a local authority or governmental authority by way of any activity in relation to any function
entrusted to a municipality under Article 243W of the Constitution and services by a governmental authority by way of any activity in relation to any function entrusted to a Panchayat under article 243G of the Constitution.
[FAQ1: Government Services