Service Tax is an indirect levy imposed under Chapter V of the Finance Act, 1994 as amended. The tax is applicable to services specified in the chapter called "taxable services". At present the rate of Service Tax is eight percent to be levied on the "value of taxable service". Generally speaking "value of taxable service" means the gross amount received by the service provider for the taxable service rendered by him. The person who provides the taxable service on receipt of charges is responsible for paying the Service Tax to the Government. Where the service is provided by a person other than Indian resident or who does not have any establishment in India then the services receiver in India is liable to pay service tax.
Service Tax is administered by the Central Excise Commissionerates working under the Central Board of Excise & Customs, Department of Revenue, Ministry of Finance, Government of India.
Services subject to tax
The provisions relating to Service Tax were brought into force with effect from 1st July 1994 . It extends to whole of India except the state of Jammu & Kashmir. The services, brought under the tax net are:
(3) General Insurance
(4) Advertising agencies,
(5) Courier agencies
(6) Radio pager services.
(7) Consulting engineers (7th July, 1997 )
(8) Custom house agents (15th June, 1997 )
(9) Steamer agents (15th June, 1997)
(10) Clearing & forwarding agents (16th July, 1997)
(11) Air travel agents (1st July, 1997)
(12) Tour operators (exempted upto 31.3.2000 Notification No.52/98, 8th July, 1998 , reintroduced w.e.f . 1.4.2000)
(13) Rent-a-Cab Operators (exempted upto 31.3.2000 Vide Notification No.3/99 Dt.28.2.99, reintroduced w.e.f . 1.4.2000)
(14) Manpower recruitment Agency (1st July, 1997)
(15) Mandap Keepers (1st July, 1997)
(17) Interior Decorators
(18) Management Consultants
(19) Practicing Chartered Accountants
(20) Practicing Company Secretaries
(21) Practicing Cost Accountants
(22) Real Estates Agents/Consultants
(23) Credit Rating Agencies
(24) Private Security Agencies
(25) Market Research Agencies
(26) Underwriters Agencies
(27) Scientific and technical consultancy services
(32) Facsimile (fax)
(33) Online information and database access or retrieval
(34) Video-tape production
(35) Sound recording
(37) Insurance auxiliary activity
(38) Banking and other financial services
(40) Authorized Service Stations
(41) Leased circuits Services
(42) Auxiliary services to life insurance
(43) Cargo handling
(44) Storage and warehousing services
(45) Event Management
(46) Cable operators
(47) Beauty parlours
(48) Health and fitness centers
(49) Fashion designer
(50) Rail travel agents.
(51) Dry cleaning services.
(52) Commercial vocational institute, coaching centers and private tutorials
(53) Technical testing and analysis (excluding health & diagnostic testing) technical inspection and certification service.
(54) Maintenance & repair services
(55) Commission and Installation Services
(56) Business auxiliary services, namely business promotion and Support services (excluding on information technology services)
(57) Internet café
(58) Franchise Services
(59) Foreign Exchange broking services
(60) Maxicab repair services
(61) Minor ports (other than major ports)
The Service Tax is leviable on the 'gross amount' charged by the service provider from the client, from the dates as notified and indicated above.
The rate of Service Tax has also been increased from 5% to 8% on all the taxable services w.e.f. 14.5.2003.