Service Tax in Detail

Service Tax is levied on the notified services. It is a union levy administered by the Central Excise Department and governed by Chapter V of Finance Act, 1994 (the Act) as amended from time to time. The rate of service tax till 9 September, 2004 was 8 per cent and from 10 September, 2004, it was increased to 10 per cent. Education cess at 2 per cent is levied on service tax amount from 10 September, 2004. The effective rate of service tax works out to 10.2 per cent. Service tax is charged on the gross value of services and is generally payable on receipt basis. It is an indirect tax - it is payable by the service provider but it is ordinarily recovered from the recipient of services. The law requires separate mention of service tax amount in the invoices..

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Registration Requirement

Service tax registration is mandatory when any person who has provided a taxable service not exceeding Rs. 9 lakh in the previous Financial Year or in case of a new service provider taxable service provided not exceeding Rs. 10 lakh in the current year. As per section 68(1) of the Finance Act, every person liable for paying service tax has to register with the Superintendent of Central Excise. He should register within 30 days from date of commencement of the business of providing taxable services. At present the service tax rate is 12.36% (including the education cess). The same is applicable since 01.04.2012. Service tax is currently levied on 119s notified categories of services..

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