LEARNING OUTCOME

Introduction to Service Tax:1) Levy 2) Collection3)Taxable Event

Why Service Tax?

1. Additional Source of Revenue.2. Boom in Service Industry (rising base in GDP)3. Tax equity

History and Present

Recommended in 1990: Dr. Raja J. Chelliah (Tax Reforms Committee).

Implemented in 1994: Through Finance Act, 1994Tax on: 03 Services:

- Telephone Services, - General Insurance services- Stock Brokers services

There are 119 TAXABLE SERVICESFinance Act, 2012: All services taxable EXCEPT those

specified in NEGATIVE LIST.

TAXABLE EVENT?

Service Tax – imposed – U/s 66 of Finance Act, 1994(Charging Section)

‘Services provided’ or ‘to be provided’

It is payable – when advance is received

Destination based consumption tax

Levy?

Service Tax – levied/ imposed under Entry 97 of List 1 of Schedule VII- Constitution of India.

Taxable Services Value of Taxable Services

Must be two parties. Tax on Value of Services – not on goods () VAT and

Service Tax – mutually exclusive). Charged – GROSS AMOUNT: Inclusive/ Exclusive of tax Taxable Territory

SERVICES?

Activity carried out – person – another – for consideration (monetary/ non-monetary)

Declared to be a Service U/s 66 E

Example: A, a singer, received award (including cheque of Rs. 20,00,000 and a memento). Find out service tax liability of A.

Negative List (Section 66 D)

Services provided by:Category 1: Govt./ Local authorityCategory 2: RBICategory 3: foreign diplomatic mission located in

IndiaCategory 4: agricultural/ agricultural produceCategory 5: trading of goodsCategory 6: any process – manufacturing/ production

of goodsCategory 7: selling of space or time slots for

advertisement – TV or Radio

Negative List (Section 66 D)

Services: Category 8: by way of access to a road/ bridge- payment

of toll charges Category 9: betting/ gambling or lottery Category 10: admission to entertainment event Category 11: transmission/ distribution – electricity Category 12: Education Category 13: residential dwellings – residence use Category 14: financial sector Category 15: transportation of passenger Category 16: Transportation of goods Category 17: funeral services