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Published on: Jul 30, 2026

Basics of Service Tax

The basic concepts of service tax is reviewed by Mr. S. Jaikumar, Advocate and Country Head of Swamy Associates. The concepts reviewed in this article include:

  • What is service tax?
  • What is the rate of service tax?
  • What is service tax exemption?
  • Am I liable to pay service tax once service tax registration is obtained?
  • Can a business be re-eligible for service tax exemption if taxable services dips below the exemption threshold?
  • What services are exempt from service tax?

What is Service Tax?

https://www.youtube.com/watch?v=JT30EFKtFc4

What is the rate of service tax?

https://www.youtube.com/watch?v=HYN6SrTG_24

What is service tax exemption?

https://www.youtube.com/watch?v=D6PqcdPfoZA

Service tax exemption re-eligibility

https://www.youtube.com/watch?v=7FewYWOo7CA

Which services are exempt from service tax?

https://youtu.be/S0ZOx7VFq6g

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Frequently Asked Questions

Common questions about Service Tax Basics and Exemptions Explained in India.

Service tax is a tax levied by the government on certain services provided by individuals, partnerships, companies, or organizations. It is an indirect tax, meaning the service provider collects the tax from the service recipient and remits it to the government.
The current rate of service tax in India is 18%. This rate has been in effect since the implementation of the Goods and Services Tax (GST) regime in July 2017, which subsumed various indirect taxes, including service tax.
A service tax exemption refers to certain services that are exempt from the levy of service tax. These services are specified in the relevant tax laws and notifications issued by the government from time to time.
No, obtaining service tax registration does not automatically make you liable to pay service tax on all your services. You are only required to pay service tax on taxable services rendered by you, as per the applicable tax laws and rates.
Yes, if your taxable services in a financial year fall below the exemption threshold limit specified by the government, you may become re-eligible for service tax exemption in the subsequent financial year, subject to meeting the prescribed conditions.
Some services that are generally exempt from service tax include certain educational services, healthcare services provided by clinical establishments, services provided by the Reserve Bank of India, and services provided to the United Nations or any of its specialized agencies.
To determine if a particular service is exempt from service tax, you need to refer to the relevant tax laws, notifications, and circulars issued by the government. Additionally, you can seek professional advice from a tax consultant or chartered accountant to ensure compliance.
If you provide both taxable and exempt services, you need to maintain separate accounts for each category of services. Service tax is applicable only on the taxable services, and you must follow the prescribed procedures for calculation, collection, and remittance of service tax.
Yes, service tax exemptions can change over time based on amendments to tax laws or notifications issued by the government. It is important to stay updated on the latest tax regulations and exemptions to ensure compliance.
To claim service tax exemption for eligible services, you need to maintain proper records and documentation related to the exempt services provided. You may also need to follow certain procedures prescribed by the tax authorities, such as filing declarations or obtaining specific approvals, depending on the nature of the exempt services.