Service tax is payable to services provided by the provider. It’s similar to excise duty where an amount is payable on goods that are manufactured. It’s a type of indirect tax that is collected by the Government after consuming the taxable services provided by travel agents, restaurants, cable providers, cab services etc. Service tax was announced in the year of 1994 as a part of the Finance Act per section 65.
Service Tax
Service tax is a type of tax levied by central government of India on certain services rendered. These exclude services listed under the negative list. The service tax payer can be anyone, the service provider, service receiver or anyone else who is liable. As of June 2015, the service tax levied is at 15%.
Service tax is a tax on services provided in India levied by the Central Government under the Finance Act, 1994. It is an indirect tax which means that normally, the service provider pays the tax and recovers the amount from the recipient of taxable service. However, in some cases the person or entity that receives the taxable service which is responsible for payment of the service tax. Some instances where the receiver of the services is responsible for payment of service tax include: i) 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, ii)for the services in relation to Insurance Auxiliary Service by an Insurance Agent, the Service Tax is to be paid by the Insurance Company and iii)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.
What is Applicability of Service Tax?
Service tax is described in detail under Section 65B (44) of the Finance Act of 1984. This Act clearly mentions the complete list of services that fall under the purview of service tax. It also includes the ‘Negative List’ which are non-taxable list of services and is mentioned under Section 66D of the Finance Act. Also, there are certain ‘Special services’ too that are exempted from service tax.
Taxable Services
Almost all of the services provided in India are taxable under service tax and a list of taxable services have been specified under Section 65(105) of the Finance Act, 1994. Some of the taxable services include advertising, architects, chartered accountants, beauty parlours, clubs, consulting engineers, cosmetic surgeries, interior decorators, packaging services, real estate agents, restaurants and security agencies; click here for the complete list of taxable services.
Rate of Taxation
At present, the service tax rate is 12.36% on the gross value of the service provided. It can be broken down as Service Tax of 10.3% on the value of the taxable service, Education Cess @ 2% on the service tax amount, and Secondary and Higher Education Cess @ 1% on the service tax amount. The “value of taxable service” means, the gross amount received by the service provider for the taxable service provided or to be provided by him.
Service Tax Registration Online Procedure
Step 1: Go to the official ACES website
Step 2: Select the option ‘Service tax’
Step 3: Once the user selects the ‘New User’ option, they will be directed to a relevant registration page
Step 4: The assessee has to provide certain details such as name of the unit, designation, phone number, etc, in order to register
Step 5: The user can submit the form once they are done entering the details
Step 6: The user will receive the username and password on the email provided within 24 hours of submitting the details.
Service Tax Registration Form
- Name
- Address
- Details of Permanent Account Number
- Constitution of applicant
- Contact details of the proprietor
- Category of registrant
FAQs
What are taxable services under Service Tax?
- Telecommunication services
- Hotel accommodation
- Transport services
- Consulting services
- Advertising services
Who needs to register for Service Tax in India?
- Any service provider whose aggregate turnover exceeds ₹10 lakh in a financial year needs to obtain Service Tax Registration.
- If the turnover exceeds ₹9 lakh (for a new business), registration should be done before crossing the threshold.
- Service providers of taxable services must also register under the Service Tax Act if their turnover exceeds the prescribed limit.