The Revenue Department today said government institution or local authority offering vocational educational courses (VEC) won't have to pay service tax.

"When a VEC is offered by an institution of the government or a local authority, question of service tax does not arise," the Central Board of Excise and Customs (CBEC) said in a circular.

The CBEC has issued the circular in view of the doubts expressed in respect of levy of service tax on certain vocational education courses offered by the government or local authority themselves or by an entity independently established by the government under the law, as a society.

Presently, 12 per cent tax is levied on all services except 14 in the negative list and some exemptions.

Advocates serving entities with turnover of up to Rs 10 lakh, libraries and entities providing public conveniences are among the 14 services and exempt services which don't attract 12 per cent tax under the guidance note on implementation of the negative list of service tax which came into effect from July 1.

As per the negative list, services like metered taxis, auto rickshaws, betting, gambling, lottery, entry to amusement parks, transport of goods or passengers and electricity transmission or distribution by discoms have been kept in the negative list.

The services sector account for about 60 per cent of the country's Gross Domestic Product ( GDP).

The government aims to garner Rs 1.24 lakh crore from the Service Tax during 2012-13.