Service Tax

What is Service Tax and who pays this 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 :

(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
(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.
(iv) 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.[ Refer: Sec. 68(2) of the Act read with Rule 2(1)(d) of the Service Tax Rules, 1994.]

Under what authority service tax is levied?
Vide Entry 97 of Schedule VII of the Constitution of India, the Central Government leviesservice tax through Chapter V of the Finance Act, 1994. The taxable services are defined in Section 65 of the Finance Act, 1994. Section 66 is the charging section of the said Act.

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.

Is the value added tax imposed by States required to be included for the purpose of service tax?
For the purpose of service tax, State Value Added Tax (VAT) has to be excluded from the taxable value.

What is the meaning of an assessee in relation to Service Tax?
As per the sub-section (7) of Section 65 of the Finance Act, 1994 (Chapter V), assessee means a person liable to pay Service Tax and includes his agent.

What are the taxable service?
Why registration is necessary?
What is the procedure for Registration? Who should be approached for
Service Tax Registration?
How much time is taken for the issuance of the Registration Certificate?
What should be done with the Registration in case of transfer business to another person?
Is there any penal provision for non-registration?
When is Service Tax required to be paid?
How to pay Service Tax?
Whether service is to be paid on processing of visa applications?
What is the interest rate applicable on delayed payment of Service Tax?
What is e-Payment of Central Excise and Service Tax?
Is E-payment of Service Tax mandatory?

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