Service Tax Service tax is the tax levied on services.

It is imposed by Central Government by virtue of powers given to it under Entry 97 of the Union List of Schedule VII of the Constitution of India. History It was imposed in India firstly in 1994 with three services covered under the tax net. They were (i) share broking (ii) telephone services and (iii) general insurance. Salient features of service tax - It is payable on taxable services - If bills is raised or payments is received after the service tax on that particular service comes into effect, the service tax will not be taxable if it was provided before the date when service tax on that service came into effect. - Total 120 services are covered under service tax net at present - Service tax was payable @5% at first time in 1994 but at present the rate is 10% tax in addition to 3% Education cess on tax, i.e. 10.3% It extends to the Whole of India except Jammu and Kashmir. This means that the services provided in the territorial jurisdiction of the State of Jammu and Kashmir are not liable to service tax. The location of the service provider of the service recipient doesnt matter. - Service tax is payable on the value of services. Value of service shall be the gross amount charged by the service provider for such service rendered by him. No tax is levied if the service is provided for free. - Every person providing taxable service to any person has to pay service tax at the prescribed rates. Such service provider whose annual turnover services is not more than Rs. 10 lakhs shall not be covered under service tax net. They shall not pay service tax on service provided. - Service tax is payable only on value of service actually received and not billed - No registration fees - No specific record has been prescribed - Tax at uniform rate for all taxable services - Simple interest @ 13% p.a. on delay of tax payment - Tax payment on quarterly basis for non-corporate assessee and monthly for corporate assessee. - Credit of service tax paid on input services - Self assessment - Refund of service tax and appeal against the rejection of refund - Administration of Central Excise Dept. Payment liability Liability of service tax is cost on assessee. An assessee is a person liable to pay service tax and includes his agent. Generally a service provider is responsible to pay service tax on gross amount charged in relation to service provided by him. Thus, person providing any taxable services would be responsible to collect and pay service tax. In case of insurance agent, the liability is cast on the insurance company.

General Exemption available from the levy of service tax (i) Exemption to exports: Any taxable service may be exported without payment of service tax. (ii) Exemption to services provided or received by RBI in certain cases (iii) Exemption to services provided to United Nations or International Organisation (iv) Exemption to services provided for transmission of electricity (v) Exemption to foreign diplomatic mission or consular post in India (vi) Exemption to services provided to SEZ (vii) The Central Government has exempted from service tax so much of the value of all taxable services as is equal to the value of goods and materials sold by the service provider to the recipient of service. This exemption is subject to the following condition : (a) the sale of goods is evidenced and sale value is quantified and shown separately in the invoice and (b) no credit of duty paid on such goods and materials sold, has been taken under the provisions of the Cenvat Credit Rules (viii) No tax on reimbursement of expenses (ix) No tax on goods and material supplied by service provider (x) No tax on advance received (xi) No tax on service provided free of cost Registration Procedure Every person liable to pay service tax has to register with superintendent of central excise. He should register within 30 days from the date of commencement of the business of providing taxable service. If value of taxable service is more than Rs.9 lakhs in the year 2009-10, the person will have to apply for registration in form ST-1. An acknowledgement will be given on duplicate copy of ST-1 by superintendent of Central Excise in whose jurisdiction the person operates. If a person is providing more than one taxable service, he may make a single application. He should mention in the application all the taxable services provided by him. In case a person is providing a taxable service from multiple offices or providing multiple services, the following registration procedure would be applicable: (i) When an assessee is providing a taxable service from more than one premises/ office & he have a centralized billing system in respect of services from all such premises/offices, he may opt for registration only of only the premises/ office from where such billing is done. (ii) Where an assessee is providing a taxable service from more than one premises/ office but he does not have any centralised billing system, he is required to obtain registration in respect of each of such premises/ office (iii) Where an assess is providing more than one taxable service from the same premises, he only have to make a single application for registration mentioning there in all the taxable services provided by him Procedure for Registration (1) filing of application in form ST-1 (2) The following documents have to be attached along with the application

(a) Proof of address (b) Copy of PAN (c) Copy of partnership deed ( in case of a firm) (d) Copy of memorandum of association and Article of Association ( in case of a company) (3) Every person liable to pay the service tax should make an application to the concerned central excise officer for registration within 30 days from the date of commencement of his activities (4) The Superintendent of Central Excise verifies the information and grant certificate of registration on Form ST-2. It is granted in 7 days from the date of receipt of application (5) Surrender of certificate of registration: (a) When a registered assessee transfers his business to another person (b) When a registered assessee ceases to provide the taxable service In both the conditions Assessee should surrender the registration certificate to the Central Excise Authority (6) Penalty for failure to registration is Rs. 200 per day. (7) Service Tax Code Number: The Central Government has decided to issue common identification number which is known as Service Tax Code (STC). It is necessary to quote STC on all documents and challan. It is an identification no. for the dealers for E0-filing of return. Valuation of Taxable Services & Compoutation od Service Tax Section 67 lays down a universal method for valuation of service The value of any taxable service shall be the gross amount charged by the service provider for such service rendered by him Gross amount here indicates that no deduction (abatement/reduction) shall be allowed in respct of any expenditure incurred by the service provider which has proximate connection in rendering the services by him. The government has declared that if the value of taxable service is not exceeding Rs. 10 lakh, the service tax liability will noit be arising for the year 2009-10 If service is provided free of cot by service providers no service tax is payable Taxable value of some important services 1. Advertising services: Advertisin agency means any concern engaged in providing service connected with makinbg, preparation, display or exhibition of advertisement and its consultants. Advertisment SSI Exemption This exemption applies to a small service provider. Small service provider means a service provider the aggregate value of taxable services rendered by him from one or more premises, does not exceed Rs. 10 lakhs in the preceding financial year. A small service provider is entitled to 100% exemption from service tax during the current financial year. If the aggregate value in any financial year exceeds Rs. 10 lakhs, then such excess over Rs. 10 lakhs shall be chargeable to service tax.