Service tax

There is no separate Act for levy of Service tax. It was introduced for the first time in the year 1994 through insertion of Chapter V of the Finance Act, 1994. The scope for taxability under the said Act was determined by providing for levy of Service tax on specified taxable categories of services. However, by Finance Act, 2012, certain radical changes were made to the Finance Act, 1994 by introduction of “negative list of services” meaning that, Service tax is payable on all services rendered in a taxable territory except those services specified in the negative list of services.

The rate of Service tax is 12% plus Education Cess and S&H Education Cess at 3% of the Excise duty, making the effective Service tax at 12.36%, i.e., Service tax of 12% and Education Cess and S&H Education Cess of 0.36% (3% on Service tax). The Finance Bill, 2015 proposes to raise the rate of Service tax from 12% to 14% thus bringing the effective rate of Service tax to come to 14.42% while, the date for the same is yet to be notified by the Central government.

For the purpose of levying Service tax, the value of any taxable service should be the gross amount charged by the service provider for the service rendered by him and is normally payable by the service provider except upon import of services and certain specific categories of services wherein service recipient is liable to deposit applicable Service tax either on full or partial basis.

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