What is service tax and its main features in India?

Service tax is a tax levied by the government on service providers on certain service transactions, but is actually borne by the customers. It is categorized under Indirect Tax and came into existence under the Finance Act, 1994.

When did service tax started in India?

July 1, 1994
The provisions relating to Service Tax were brought into force with effect from July 1, 1994 vide chapter V of the Finance Act, 1994. It extends to the whole of India except the State of Jammu and Kashmir.

What is service tax and how it is charge?

Service Tax was a tax that was levied by the Central Government of India on the services provided by service providers. This indirect tax came into being under the Finance Act, 1994. It was set at 15% for transactions that occurred on or after 01 June, 2016.

What are the features of service tax?

Features – Service Tax, Indirect Tax Laws Notes | Study Indirect Tax Laws – B Com

  • Scope: It is leviable on taxable services ‘provided’ or ‘to be provided’ by a service provider.
  • Rate: It is leviable @ 12% of the value of taxable services.
  • Taxable services: Service tax is leviable only on the taxable services.

What are the types of service tax?


Normal Charge Reverse Charge
Service tax is paid by service provider Service tax is paid by service receiver
Service Provider charges service tax from service reciever, and collects and deposits to government Service receiver deposits service tax directly to government
It is most normal case It is a rare case

What is the importance of service tax?

Service tax is a type of indirect Tax that you are liable to pay to the government once you. The consumer pays the service tax to the service provider while paying the bill (for example, your restaurant bill has a component of service tax). The government in turn collects the tax from the service providers.

What are the rules of service tax?

Service Tax Registration Rules Every individual liable to pay service tax should register through Form ST-1 within 30 days from the date on which service tax was levied. If an assessee is providing more than one taxable service, they can mention all the taxable services provided by them in a single application.

Who is eligible for service tax?

All service providers in India are required to obtain service tax registration once the annual aggregate taxable services revenue exceeds Rs. 9 lakhs. Service tax payment or liability accrues once the aggregate value exceeds Rs. 10 lakhs.