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SERVICE TAX

Group members:-

Pratiksha Karambe{22}

Noopur Koli{24}

Pallavi Dalvi{25}

Contents

O Service Tax

O Need for Service Tax

O Meaning of Service

O Declared Services

O Taxable services

O Negative List of services

O Liability to pay service tax

O Service Tax Rate

O Example

Concept of Service Tax

Service Tax is a form of indirect tax imposed on specified services called taxable service.

It is an indirect tax.

First brought into force with effect from 1st July 1994.

The objective behind levying service tax is to reduce degree of intensity of taxation on manufacturing and trade.

The intension of the govt is to gradually increase the list of taxable.

Need for Service Tax

It is prime responsibility of the govt is

to fulfill the increasing developmental needs of the country and

its people by way of public expenditure.

Meaning of Service

O SERVICE,First time in the history of this law the term Service has been defined u/s 65B(44) of theActinserted w.e.f. 01-07-2012.

O Service means any ACTIVITY carried out by a person for another for CONSIDERATION and includes declared services.

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Declared ServicesO constitutes merely transfer of title in Goods or Immovable

Property

O Section 66E of the Act provides certain activities

O Renting of Immovable Property;

O Construction of a Complex, building, civil structure

O Temporary transfer or permitting the use or enjoyment of any intellectual rights;

O Development, Designing, Programming, Up- gradation, Customizing, Adaption, Implementation, Enhancement of Information Technology Software;

Declared ServicesO Agreeing for not doing any act or tolerate any act, or to do an act;

O Transfer of Goods by way of hiring, licensing without transfer of right to use such goods;

O Activities in relation to delivery of goods on hire purchase;

O Service portion in Works Contract; and

O Service portion in an activity where food or any article for human consumption or any drink is supplied in any manner as part of such activity.

O Construction includes additions, alterations, replacements or remodelling of any existing civil structure.

Taxable Services

There are about 116 services covered under the service tax.

Some of the major services are as follows:

Telephone

Stockbroker

Courier agencies

General Insurance

Commercial Training and coaching

Works contract

What services are taxable?O Prior to July, 2012 Service Tax was charged on specified list of

services.

O chargeability of service tax has been shifted from Positive List to Negative List.W.e.f. 01-07-2012,

O Service Tax shall be charged by virtue of Section 66B of the Act which reads as under:

There shall be levied a tax at the rate of 12% on the value of all services, other than those services specified in the negative list, provided or agreed to be provided in the taxable territory by one

person to another and collected in such manner as may be prescribed

NEGATIVE LIST OF SERVICESO Section 66D of the Act specifies 17 categories of

services on which no tax shall be levied.

Following are such categories listed in negative list: Services by RBI,

Foreign Diplomatic Mission in India,

Government or Local Authority;

Trading or Manufacture of Goods;

Betting, gambling or lottery &

Transmission or distribution of Electricity;

NEGATIVE LIST OF SERVICES

Funeral, burial, crematorium or mortuary services including conveyance of deceased;

Selling of space or time slots for advertisements other than broadcasted by radio or television;

Admission to entertainment events or amusement facilities;

Services relating to agriculture or agricultural produce like supply of farm labour, loading, unloading, storage or warehousing of agricultural produce;

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Who is liable to pay Service Tax?

OO (Sec.68 (1) of the Act) says that(Sec.68 (1) of the Act) says that--the Person the Person who provides the taxable service is who provides the taxable service is responsible for paying the Service Tax to the responsible for paying the Service Tax to the Government.Government.

Persons Liable to Pay Service Tax in Certain

Cases

1.INSURERin case of

service provided by insurance

agent

2.INDIAN RESIDENTin case of import of service

3.BODY CORPORATE

OR FIRMin case of receipt of

sponsorship service

4.ASSET MANAGEMENT COMPANY

in case service

provided by a distributor to

them

5.SPECIFIED CONSIGNOR

OR CONSIGNEEin case of service

provided by goods transport

agency

Service Tax Rate

The current of service tax rate is 12.36%

Service Tax 12%

(+)Education Cess[2%] 0.2%

(+)Senior and Higher Education Cess[1%] 0.1%

Effective Service Tax Rate 12.36

Example

If a CA, provides services in the capacity of auditor to ABC Ltd. And the audit fees is Rs.100000 then the

service tax chargeable will be 12.36% on Rs.100000 i.e INR 12360. Hence, the total billing to be done by

CA to ABC Ltd will be Rs.112360.

Thank You