Tax on these services will be effective from June 1, according to a notification issued by the Central Board of Excise and Customs on Tuesday.

The notification follows the enactment of the Finance Act 2007. Finance Minister P Chidambram had announced in the Budget 2007-08 to bring these services under the tax net.

Now, service providers will also have to pay service tax on services like fax, telecom connection, pager, leased circuit and communication through telegraph.

However, property owners have been given a marginal relief as property tax would be deductible for the purpose of service tax on commercial rentals though any penalty paid under the property tax cannot be deducted.

The notification also broadened the existing services tax net to include maxi-cab capable of carrying more than 12 persons for educational bodies or vehicles for driving schools, and rent-a-cab services, tent services, event management and manpower recruitment.

The notification, however, exempted services provided for execution of works contract in relation to port construction. Though, services provided for repair, renovation, restoration, maintenance or repair in relation to existing ports would be liable for service tax.

Following demand from the construction sector, the government has also provided an option to service providers of work contracts to pay service tax equivalent to two per cent of the total value of the works contracted instead of paying service tax at the specified rate.

The Finance Act has raised the threshold limit for service tax exemption for small providers from Rs 4 lakh to Rs 8 lakh.