Service Tax

Service Tax 

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Service tax refers to tax paid to the administration of India from various service providers since they are offering and providing certain services. A person who is required to pay this tax can be either a service provider or a receiver or simply any other individual responsible in the provision of certain services. This is a form of indirect tax since the providers of the services pay the required tax amount and later on recover the cost from the service receivers who will purchase or receive the service, which has been taxed.

It is a type of tax you pay to the government for enjoying certain services. Service tax was implemented in India in 1994 following the Finance Act. The services, which tax was imposed on were considered taxable under the Act section 65.

The 2012 budget increased the range of services, which were then taxable under the Act. The services which were incorporated included long or short term lodging services provided by hotels or even private guest houses as well as services provided by AC restaurants.

As per the new regulations implemented, the service tax charge is applicable to individuals as well as various companies. Individuals can use cash in the service tax payment while companies pay it on the accrual basis. This tax can only be paid if the service value exceeds Rs.10 lakh as per one financial year.

However the new regulations which have been recently added are not applicable to the Kashmir and Jammu state.


Rules governing this tax

As the Finance Act in 1994, the government came up with rules so as to govern the collection of service tax.

  1. Short commencement and title rule
  2. Definitions rules
  3. Officers appointment rules
  4. Registration rules

4[a] Information on services that are taxable to be provided on challan, bill or invoice

4[b] Consignment note rule

  1. Records rules

5[a] Registered premises access

  1. Service tax payment

6[a] Service export

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  1. Returns

7[a] taxable services return provided by the operators of transport

7 [b] return revision

7 [c] amountpaid for furnishing returns delay

  1. Central excise commissioner appeal
  2. Appellate tribunal appeals form
  3. Procedures and facilities for large tax payers

Payment of the service tax in India

You can easily make payment on the service tax using a G.A.R-7. Challanwhich is found at several banks in certain branches which have been specified. You are required to properly fill in the challan and then submit it at you bank. However one can also make the required payment online while using epayment facility which has been offered by central bank.

If an individual or a companyfail in topay tax. They shall be penalized under the 76, 78 and 77 section of the act of finance.

Normally the tax is payed on all services apart from those found in the negative service list. Providers for government services as well as those in the private sector are liable in the tax payment. However there are sometimes few scenarios that are exempted from taxation.