Service tax in India

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Service Tax in India

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Contents

• Service Tax
• Service Tax Rate
• Service Tax Liabilities
• Service Tax payment
• Service Tax Due Date

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Service Tax

• Service tax is a tax imposed by Central
  Government of India on services offered.
• An assessee who pays service tax can be either a
  service receiver or a service provider.
• Service Tax is coming under Indirect Tax category
• Service means a useful result of labour, which is
  intangible. Thus, service is an addition that can
  be only felt but cannot be seen.
• As per Section 65B(44) of the Finance Act,
  1994, Service means an activity carried out by
  one person for another for consideration. 

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• The service tax has been enforced on all
  services. It is a tax imposed on the transaction
  of certain services specified by the Central
  Government under the Finance Act, 1994.
• Service Tax is a destination based consumption
  tax leviable in services provided within the
  country. 
• Unlike profession tax, it is not leviable only
  when some service is rendered.

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• Unlike Income tax, it is not a tax on revenue
  generated from services but is a tax on the
  rendition of services. 
• It is not like sales tax/ Value Added Tax which
  is a tax on the sale of goods. Service tax was
  levied on specified services before
  1.07.2012. From 1st July 2012, there is a
  paradigm shift in the levy of service tax
• Service Tax is payable by the individual, who
  offers the service on receipt of service charges
  to the Government of India.

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Service tax Liabilities

• Where the taxable services are offered by the
  foreign service providers with no establishment
  in India, the recipient of that services in India
  is liable to pay Service Tax.
• The Service Tax is paid by the Insurance Company,
  for the services providing the Insurance
  Auxiliary Service by an Insurance Agent.
• For the taxable services offered by a Goods
  Transport Agency for transport of goods by road,
  the person who pays or is liable to pay freight
  is likely to pay Service Tax, if
  the consignee or consignor comes under any of the
  seven categories listed below.

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Liabilities

• A factory.
• A company.
• A corporation.
• A Co-operative Society
• A Society.
• A registered dealer of excisable goods
• For the taxable services offered by Mutual Fund
  Distributors about the distribution of Mutual
  Fund. In such case the Service Tax is to be paid
  by the Mutual Fund or the Asset Management
  Company receiving such service.

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Service Tax Rate

• In Union Budget 2016 Finance Minister introduced
  a new Cess called the Krishi Kalyan Cess. This
  Cess will be applicable from 1/06/2016. 
• Krishi Kalyan Cess would be levied on all
  services(taxable) and will be charged _at_ 0.5 of
  the total value of service.
• KK Cess would be levied over and above the
  Service Tax the Swachh Bharat Cess.
• From 1st June 2016 onwards the Service Tax rate
  in India could be 15 including Krishi Kalyan
  Cess.
• Service Tax Rate Service Tax_at_14 Swachh Bharat
  Cess _at_ 0.5 Krishi Kalyan Cess_at_0.5 15.  

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Service Tax Payment

• Assessee can make a service tax payment manually
  using G.A.R.-7 Form.
• G.A.R.-7 is a challan available in all specified
  branches of banks.
• The Taxpayer needs to fill the challan with
  relevant information and submit the challan in
  nearest branch.
• However, Assessee can also have Service tax
  online payment provision offered by the Central
  Board of Excise Custom.
• For E-payment of Service Tax, internet banking
  account in the authorized bank is mandatory.

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Service Tax Due Dates

• As per the Service Tax Rules of Govt of India,
  Online Service Tax Payment should be made at
  regular intervals.
• The Tax received by the Service Provider shall be
  paid to the credit of the Central Government on a
  regular basis before the Due date.
• In a case of Late Payment of Service Tax, Late
  Payment Interest shall also be payable as
  prescribed by Service tax rules
• As per Service Tax Rules 1994, Rule 6, the
  Service Tax Payment due dates are different for
  Individual, Partnership Firms, and others.

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