What is Service Tax? Here is simple definition
of Service Tax
Service Tax
Service Tax is a form of indirect tax imposed on specified services called "taxable services". Service tax cannot be levied on any service which is not included in the list of taxable services. Over the past few years, service tax been expanded to cover new services. The objective behind levying service tax is to reduce the degree of intensity of taxation on manufacturing and trade without forcing the government to compromise on the revenue needs. The intention of the government is to gradually increase the list of taxable services until most services fall within the scope of service tax. 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.
Service Tax was first brought into force with effect from 1 July 1994. All service providers in India, except those in the state of Jammu and Kashmir, are required to pay a Service Tax in India. Initially only three services were brought under the net of service tax and the tax rate was 5%. Gradually more services came under the ambit of Service Tax. The rate of tax was increased from 5% to 8% w.e.f 14 May 2003. From 10 September 2004 the rate of Service Tax was enhanced to 10% from 8%. Besides this 2% education cess on the amount of Service Tax was also introduced. In the Union Budget of India for the year 2006-2007, service tax was increased from 10% to 12%. On February 24, 2009 in order to give relief to the industry reeling under the impact of economic recession, The rate of Service Tax was reduced from 12 per cent to 10 per cent.
Some of the major services that come under the ambit of Service Tax are:
- Telephone
- Stockbroker
- General Insurance
- Advertising agencies
- Courier agencies
- Consulting engineers
- Custom house agents
- Steamer agents
- Clearing & forwarding agents
- Air travel agents
- Tour operators
- Rent-a-Cab Operators
- Manpower recruitment Agency
- Mandap Keepers
- Architects
- Interior Decorators
- Management Consultants
- Practicing Chartered Accountants
- Practicing Company Secretaries
- Practicing Cost Accountants
- Real Estates Agents/Consultants
- Credit Rating Agencies
- Private Security Agencies
- Market Research Agencies
- Underwriters Agencies
- Scientific and technical consultancy services
- Photography
- Convention
- Telegraph
- Telex
- Facsimile
- Online information and database access or retrieval
- Video-tape production
- Sound recording
- Broadcasting
- Insurance auxiliary activity
- Banking and other financial services
- Port
- Authorised Service Stations
- Leased circuits Services
- Auxiliary services to life insurance
- Cargo handling
- Storage and warehousing services
- Event Management
- Cable operators
- Beauty parlours
- Health and fitness centres
- Fashion designer
- Rail travel agents
- Dry cleaning services
- Commercial vocational institute, coaching centres and private tutorials
- Technical testing and analysis (excluding health & diagnostic testing) technical inspection and certification service
- Maintenance & repair services
- Commission and Installation Services
- Business auxiliary services, namely business promotion and Support services (excluding on information technology services)
- Internet café
- Franchise Services
- Out door Caterer’s service
- Airport Services
- Transport of Goods by Air Services
- Business Exhibition Services
- Intellectual Property Services
- Opinion Poll Services
- TV or Radio Programme Services
- Survey and Exploration of Minerals Services
- Travel Agent's Services other than Rail and Air travel agents
- Forward Contract Services
- Transport of goods through pipe line or other conduit Service
- Site preparation & clearance Services
- Dredging Services
- Survey & Mapmaking Services
- Cleaning Services
- Membership of Clubs & Associations
- Packaging Services
- Mailing list compilation & Mailing Services
