What is Service Tax?

Service tax is, as the name suggests, a tax on Services. It is a tax levied on the transaction of certain services specified by the Central Government under the Finance Act, 1994.  It is an indirect tax (akin to Excise Duty or Sales Tax) which means that normally, the service provider pays the tax and recovers the amount from the recipient of taxable service.

Who is liable to pay service tax?

Normally, the ‘person’ who provides the taxable service on receipt of service charges is responsible for paying the Service Tax to the Government (Sec.68 (1) of the Act). However, in the following situations, the receiver of the Services is responsible for the payment of Service tax :

  1. Where taxable services are provided by foreign service providers with no establishment in India , the recipient of such services in India is liable to pay Service Tax.
  2. For the services in relation to Insurance Auxiliary Service by an Insurance Agent, the Service Tax is to be paid by the Insurance Company
  3. For the taxable services provided by a Goods Transport Agency for transport of goods by road, the person who pays or is liable to pay freight is liable to pay Service Tax , if the consignor or consignee falls under any of the seven categories viz. (a) a factory (b) a company (c) a corporation (d) a society (e) a co-operative society (f) a registered dealer of excisable goods (g) a body corporate or a partnership firm
  4. For the taxable services provided by Mutual Fund Distributors in relation to distribution of Mutual Fund the Service Tax is to be paid by the Mutual Fund or the Asset Management Company receiving such service.

What are the various taxable services?

Taxable Services have been specified under Section 65(105) of the Finance Act, 1994. All the taxable services as on 01.07.2010 are listed here. The list also shows the relevant Accounting Heads required to be mentioned on the tax payment documents (GAR-7), while depositing the Service Tax and other related dues in the banks.

What is the rate of Service Tax?

At present, the effective rate of Service Tax is 10.3% on the value of the taxable service. The above effective rate comprises of Service Tax @10% payable on the “gross value of taxable service”, Education Cess @ 2% on the service tax amount, and Secondary and Higher Education Cess @ 1% on the service tax amount.

Where can I download the forms for the service tax payment, rebate and other applications?

You can download all the relevant forms related to service tax in india from here.

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7 Comments on Service tax in India

  1. K SRIDHAR says:

    Sir,

    My company paid commission to a foreigner in US Dollers for helping the Company in procuring export orders. He has rendered the service outside India.

    Please clarify whether my Company is liable to pay Service Tax on the above commission or not ?

  2. ritesh says:

    if a tour & travel agent purchasing his tickets indirect means (other agent ) and sell his costumer can he take service tax no

  3. CS.Chandra Prakash Pande says:

    hello sridhar
    according to service tax act service provider is liable to pay the tax ,but there are exception to this such as, Where taxable services are provided by foreign service providers with no establishment in India , the recipient of such services in India is liable to pay Service Tax. so need to pay a tax.

  4. Prashant Arge says:

    What is service tax slab rate for 2012 to 2013 financil year

  5. Prashant says:

    I started proprietorship and registered service tax for it. so is it necessary to pay the service tax if gross income is less than 9L(annual)? which is service tax upper limit.

  6. nasir ali says:

    please send us service tax slab in residential houseing complex with cercular no.

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