What Is Service Tax In India

What is service tax?

A service provider who extends his services in any form of business such as consulting, software development, restaurant food service, car repair, so on and so forth attracts an additional taxable amount, that’s called Service tax.

The service provider has to pay the tax to the government of India. Even though the service provider pays the service tax, the same is collected from customers by the service provider and then submitted to the government. In a nutshell the service provider collects the service tax amount from customers and pays it on his business’s behalf to the government.

When is service tax payable?

Since the service tax came into existence in 1994 it was applicable only on few specific services. However by 2012 the service tax was collected from restaurants, hotels etc. offering air conditioned environment or lodging facilities too. The service tax regulation is applicable for a business when the total value of service offered for the financial year crosses ten lakh rupees.

What are services that do not need to pay service tax?

The following are some of the services that do not need to pay service tax:

Services provided to the United Nations or any specific international organizations do not have to pay service tax.
An authorized medical practitioner or a clinical establishment is not required to pay service tax, if ambulance service is provided for transporting patients
Services provided by means of preservation such as- blood stored in the blood bank falls in the negative list of service tax.
Service offered by a vet or a veterinary hospital/clinic too is not required to pay service tax
Renting a place for religious practice for general public and conducting of any religious ceremony falls under the negative list of service tax.
Services provided by teachers of arts to its students, faculty and staff
Transporting students
Catering services offered in the educational institution
Security and cleanliness services of the educational institutes are all not required to pay service tax.
A sporting event receiving sponsorship also does not require service tax to be paid.

There are several other services that are marked under the negative list of service tax. Service providers can look up the negative list for more information: For a complete list of services which are not taxable, click here.

What is the service tax on composite services?

When you visit a restaurant you are not just consuming food (for which VAT is applicable) but you also use the services like the space to sit, make use of waiter service, enjoy drinks so on and so forth. In such case it is hard to divide the bill amount for food as well as service provided. Technically the chef cooked the food and waiter served it. Such services which include both goods and services is called composite service. The government has offered abatement on composite services wherein service tax is applicable only on a portion of the bill and not on the entire amount.

What is the current service tax rate?

Presently, the service tax rate is 14%. This rate is applicable since 1st June 2015. Service tax is supposed to be paid quarterly or monthly. For more information about service tax due date or service tax filing, visit IndiaFilings.com

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Frequently Asked Questions

Common questions about Service Tax in India: Rates, Applicability, and Exceptions.

Service Tax is a tax levied by the Government of India on various services provided in the country. It is paid by the service provider, who then collects it from the customers and submits it to the government.

Most services offered in India, such as consulting, software development, restaurants, hotels, car repair, and more, attract Service Tax if the total value of services provided in a financial year exceeds Rs. 10 lakh.

Yes, there are certain services that are exempt from Service Tax, such as services provided to the United Nations or international organizations, medical services by authorized practitioners, blood banking services, veterinary services, religious services, and educational services, among others.

The current rate of Service Tax in India is 14%, effective from June 1, 2015.

Composite services are those that involve both goods and services, such as services provided by restaurants. For such services, the government offers an abatement, and Service Tax is applicable only on a portion of the bill amount and not on the entire amount.

Service providers are required to pay Service Tax on a quarterly or monthly basis, depending on their turnover and other factors.

Yes, the article mentions that services provided by teachers of arts to students, faculty, and staff, transportation services for students, catering services in educational institutions, security and cleanliness services in educational institutes, and sponsorship for sporting events do not require Service Tax payment.

Service Tax is levied on services provided, while VAT (Value-Added Tax) is levied on the sale of goods. In the case of composite services, such as in restaurants, both Service Tax and VAT may be applicable.

Yes, Service Tax paid by a service provider can be claimed as a deduction while calculating their income tax liability.

According to the article, you can visit IndiaFilings.com for more information about Service Tax due dates and filing procedures.