A Reference Library for Customs, Excise, Goods & Services Tax Officers and Tax Payers

Service Tax - Introduction

Service Tax - Today

Pay Your Tax Honestly


Service tax, as the term denotes, is levied on specified services rendered in India and the responsibility of payment of this tax is on the service provider. As provided by the Finance Act, 2001 the service providers are expected to make self-assessment of the tax and file the returns on a half yearly basis. The Directorate of Service Tax with its Headquarters at Mumbai over sees the activities for technical support as well as policy formulations.

Legal Provisions

Empowered under section 67 of the Finance Act, 1994, the provisions relating to the levy and collection of service tax were brought into force with effect from 1st July 1994. The provisions extend to the whole of India except the state of Jammu & Kashmir. Currently around 100 services are already under this new levy.

Service Tax Rates

The rate of service tax with effect from the 1st June, 2015 is 14%. 2% Primary Education Cess and 1% Secondary & Higher Secondary Education Cess on the amount of service tax has been dispensed with.

Administrative Mechanism

Service Tax is administered by the Central Board of Excise and Customs (CBEC) through the Central Excise Commissionerates working under it. Corporate assessees are given the liberty to pay tax on the value of taxable service provided by them in a month, by the 25th of the following month while the individual assessees are required to pay the levy only once in a quarter. Returns are required to be filed half yearly and by the 25th of the month following the half-year.

Penal Provisions

Failure to obtain registrations, failure to pay the tax, failure to furnish the prescribed returns, suppression of the correct value of the taxable services and failure to comply with notice attract penal provisions. But, it is specifically provided that no penalty is imposable on the assessee for any of the above failures, if the assessee proves that there was reasonable cause for the failure. Provisions, under sections 87 to 93 of the Finance Act, 1994, were also provided for prosecution of offenders. However, these provisions were subsequently withdrawn.

Note : This tax has been subsumed in the CGST after the introduction of GST w.e.f. 01-07-2017.

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