Service tax waived on maintenance of highways, dams and airports

In a move that will bring respite to the highway users, the Union finance ministry has exempted the usage of structures such as bridges, tunnels and flyovers on national highways from 10.33% service tax.

The ministry, in a notification issued last week, has also extended the sop to management and maintenance in other infrastructure sectors such as dams, and airports, among others.

This will reduce the burden on the consumer as toll for highway usage and user development at the airports are likely to go down.
Through the notification, the term “management, maintenance or repair of roads”, in the service tax exemptions notified in July last year has been substituted by “management, maintenance or repair of roads, bridges, tunnels, dams, airports, railways and transport terminals.”

In effect, the government, while shrinking the infrastructure sector’s exposure to service tax realm, has also clarified its stand on the exemptions in the road sector.

M Murali, director general of the National Highways Builders Federation — a representative of the highway construction companies — said the federation pursued for exemption of all infra sectors from service tax with the ministry.