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Service
Tax
Introduction
Service Tax was first introduced in India in the year 1994 vide Chapter V (Sections 64 to 96) of the Finance Act, 1994 by making certain specific services subject to a special tax levy.
Since then the coverage of services has been enlarged considerably.
Service Tax is administered by the Central Excise Department of Ministry of Finance, Government of India.
Chargeability
Tax is levied by Section 66 of Finance Act, 1994 on specified taxable services defined under section 65 (105).
Rate
Service Tax is presently levied @ 12% + Education Cess of 2%+ Secondary & Higher Education Cess Of 1% of the value of Taxable Services. Effective Rate is thus 12.36%.
Registration
Every person liable for paying the service tax shall apply for registration in form ST-1 within 30 days of commencement of Business.
Payment
Service Tax shall be paid by the 5th of the month immediately following the calendar month in which the payments are received.
Where the assessee is an individual or proprietary firm or partnership firm, Service Tax shall be paid by the 5th of the month following the quarter in which the payments are received.
Provided that service tax on the amount received during March or Quarter ending March shall be paid by March 31.
In case of ‘Associate Enterprises’ as defined in Section 92A of the Income Tax Act 1961, Service tax is required to be paid after receipt of payment or crediting/debiting of the amount in the books of accounts whichever is earlier.
In relation to any service provided or to be provided from outside India and received in India under section 66A, the receiver of such service is liable for paying Service Tax (Reverse Charge Mechanism).
Return
Every assessee shall submit a half yearly return in Form ST-3 by 25th of the month following the particular half-year, along with copy of the challans for the months covered in the half-yearly return
Exemption to Small Scale Service Provider
Service Tax is fully exempted in respect of the taxable services of aggregate value not exceeding Rs.10, 00,000 in financial year subject to the conditions under Notification No. 6/2005.
Relevant Rules regarding Service Tax
For Detailed Provisions regarding Service Tax please refer FAQs on Service Tax.
For amendments made by Finance Act 2008, please refer Corporate Updates-Budget Special Issue Feb 2008 |
