PROVISONS

ON SERVICE TAX

By CA.S.SEETHALA DEVI

K.HARIHARAN & ASSOCIATES

 INTRODUCTION

TYPES OF TAXES

DIRECT TAX INDIRECT TAX

COMPONENTS OF TAXES

DIRECT TAXES

INCOME TAX WEALTH TAX

COMPONENTS OF TAXES

INDIRECT TAXES

EXCISE CUSTOMS S.TAX VAT

FEATURES OF INDIRECT TAXES

 They are levied on goods and services.

 The amount of tax determined indirectly.
 Tax burden shifted to subsequent user.
 It is relatively easy to collect compared to
direct taxes.
 Currently 109 services are within S.T
purview.
 CONCEPT OF SERVICE TAX

 Service tax is a tax on services.

 Services are intangible in nature cannot be
seen but felt.
 Sales tax and VAT is on goods and it is levied
by state government.
 CONCEPT OF SERVICE TAX

 Service tax is levied by central government

and additionally handled by excise dept
 It was introduced in the year 1994 through
Finance Act, 1994.
 It is imposed by central government through
powers conferred under entry 97 of union list .
 VARIOUS RELEVANT ACTS
 Service Tax Rules, 1994.
 CENVAT Credit Rules, 2004
 Export of service rules, 2005
 Service Tax ( Determination of value)
Rules,2006.
 Service Tax ( Registration of special category
of persons) Rules, 2005
 SCOPE OF TAXABILITY
 Chapter V of Finance Act, 1994 came in to
force from 1.7.1994 extends to whole of India
except the state of Jammu and Kashmir.
 Services provided in J&K are not taxable and
location of service provider or recipient is
irrelevant.
 SCOPE OF TAXABILITY
 For example:

1. In case of services provided in the state of

Rajasthan, by a service provider having a
office in J&K will be taxable.
2. In case of services provided in the state of J
&K, by a service provider having office in
Rajasthan will not be taxable.
 SCOPE OF TAXABILITY

 Service tax extends to territorial waters of

India, since India includes territorial waters,
continental shelf and Exclusive Economic
Zone.
 Service tax is leviable on taxable services
provided and to be provided.
 SCOPE OF TAXABILITY
 Services provided to self not taxable and
services rendered free of cost not covered.
 Services to be provided in future taxable only
if advance payment in respect of the same is
received.
 Service tax is to be paid only after receipt of
value of the taxable services.
 SCOPE OF TAXABILITY
 The relationship between service provider and
recipient should be on principal to principal
basis. Therefore, employer- employee
relationship does not get covered.
 S.T leviable only on taxable services covered
under sec 65(105) of Finance Act, 1994.
 SCOPE OF TAXABILITY
 The value of taxable services shall be
computed in accordance with sec.67 along
with Service tax (Determination of value)
rules, 2006
 Rate of service tax to be applied on value is
Basic rate : 10
Add: Educational cess: .3
10.30%
 EXCEPTIONS TO S.TAX
 Services provided by an unincorporated
association or body of persons to a member
thereof for cash, deferred payment or any
other valuable consideration.
 Performance of statutory activities/ duties, not
constitute provision of taxable service.Eg:
RTO’s issuing fitness certificate & CBFC’s
issuing film certificate.
CLASSIFICATION OF SERVICES
 Objective: For purpose of charge of service
tax, services are to be classified in to different
categories based on their characteristic
features.
 Based on proper classification only exemption
notifications of central government can be
properly availed.
 PRINCIPLES OF
CLASSIFICATION
 It shall be classified under the category which
provides more specific description.
 In case the service is of composite in nature
consisting of combination of different services, it
shall be classified under the category that gives
them their essential character.
 When a service cannot be categorized in manner
as per (a)or(b), then it shall be classified under
category that occurs first in the clause 65(105).
 VALUATION OF TAXABLE
SERVICE U/S 67

 Where the provision of service is for a

consideration in money:
a. The gross amount charged by the service
provider for the service provided or to be
provided.
 VALUATION OF TAXABLE
SERVICE U/S 67
 where the consideration is wholly or partly in
cash – such amount in cash with addition of
service tax charged as equal to the
consideration.
 Where provision of service is for a
consideration which is not ascertainable-
Amount as may be determined in the manner
prescribed under service tax rules, 2006.
 VALUATION OF TAXABLE
SERVICE U/S 67
 Determination of value when consideration is
wholly or partly not in money:
1. Reasonable amount fetched to provide
similar service to any other person in ordinary
course of trade and commerce.
2. where value cannot be determined as above,
the value affixed shall never be less than the
cost of provision of such service.
 GENERAL EXEMPTION FROM
SERVICE TAX – SEC 93
 Exemptions to exports.
 Exemptions to services provided or levied by
RBI
 Services provided to United nations or
international organization.
 Services provided in relation to SEZ.
 SSP- small service providers.
 VALUATION OF TAXABLE
SERVICE U/S 67
 Services provided by any person to foreign
diplomatic missions or consular post in India
are exempt from tax and includes services for
personal use of family member of diplomatic
agents or consular officers.
SMALL SERVICE PROVIDER
 A service provider whose aggregate value of
taxable services from one or more premises
does not exceed 10 lakh in preceding financial
year.
 Quantum of exemption: An eligible SSP can
can claim exemption only up to first
consecutive receipt not exceeding Rs.10 lacs.
SMALL SERVICE PROVIDER

 It shall pay @ normal rates beyond Rs.10 lacs.

 This exemption is optional for an SSP, if they
choose not to avail any exemption then they
will pay @ normal rates for entire profits.
 EXPORT AND IMPORT OF
SERVICES
 Export of services generally can be understood
to mean rendering of services by a service
provider from India to place outside India.
 Import of services generally can be understood
where the service provider is a person outside
India and recipient resides in India.
 EXPORT AND IMPORT OF
SERVICES

 Category A – such taxable services provided

in relation to immovable property which is
situated outside India. Eg: Architect services
in relation to building outside India
 Category B – such services which are
performed outside India.Eg: Indian event
manager arranging seminar outside India .
 EXPORT AND IMPORT OF
SERVICES
 Category C –
- when services rendered wrt business or
commerce and the recipient located outside
India.Eg: call centres , medical transcription
business
- when services provided otherwise where the
recipient is located outside India at the time of
provision of services.
 EXPORT AND IMPORT OF
SERVICES
 Import of services covered under sec 66A
 Taxable services provided or to be provided by
a person who :
- has a established business (or)
- has a fixed establishment from which service
provided or to be provided.
- has his permanent address or place of
residence
in a country outside India.
 EXPORT AND IMPORT OF
SERVICES
 (and) received by a person who has his place
of business, fixed establishment, permanent
address or usual place of residence , in India
 Taxability: These are taxable services and
taxable in hands of recipient as if he has
himself provided service in India and all
provisions shall accordingly apply.
SERVICE TAX PROCEDURES
 Registration: Every person liable to pay
service tax must make an application for
registration with superintendent of central
excise. (Form ST-1)
 Special category persons:
- an input service distributor (and )
- any provider of taxable service whose agg.
Value of taxable service exceeds 9 lakhs in the
financial year.
SERVICE TAX PROCEDURES
 Time period for making application:
- In case of ISP – 30 days from
commencement of business.
- In case of SSP – 30 days from the date
aggregate value of taxable services exceed 9
lakhs.
- other persons- 30 days from commencement
of business or 30 days from which he starts to
pay service tax.
SERVICE TAX PROCEDURES
 A single application for multiple services
rendered by an assessee.
 If more than one office supported by
centralised billing from one or more offices
these office would be subject of registration
 Otherwise separate registration for each
premises not supported by centralised billing .
SERVICE TAX PROCEDURES
 Certificate: it will be issue by superintendent
within 7 days of receipt of application, if it
exceeds deemed to have been granted.
 Due dates for filing return:
 Isp – Half- yearly form ST-3- by last day of
the month following the half year.
 All assessee – half – yaely – by 25th of the
month following the half year.
SERVICE TAX PROCEDURES
 Payment dates:
 Individual, proprietary firm or a partnership
firm – Quarterly i.e 6th/5th of the month
following the quarter.
 Others – monthly i.e 6th/5th of the month
following the month.
SERVICE TAX PROCEDURES
 Composition schemes:
 Option to air travel agents:
- @ .6% of the basic fare in case of domestic
bookings.
- @ 1.2% of the basic fare in case of
International bookings
SERVICE TAX PROCEDURES
 Life insurance business: 1% of gross amount
of premium.
 Money changing services: .25% of the gross
amount of currency exchanged.
THANK YOU