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The Ins and Outs of Service Tax Finance Articles | March 12, 2011 Service tax is a major form of indirect tax, which is imposed on the services that are taxable. The Central Board of Excise and Customs (CBEC) is responsible for collecting it. There are certain forms that need to be used for submitting this tax and an official registration is also essential.
Service tax is a type of indirect tax, which is pertinent to the services that are taxable. This levy came into effect as the Central Government looked for a simple option that is clear in nature and can create revenue for the country in a simple manner. It was launched in India in 1994 according to Chapter V of the Finance Act, 1994.
Service Tax in India
Over the last few years Cheap Teuvo Teravainen Jersey , service tax has been imposed on different services. Its features are not similar to VAT, which is imposed on commodities and merchandises.
It is levied on different categories of services that are offered by financial institutions like stock exchange, banks, transaction providers, colleges, and telecom providers.
Banks were the first to impose service tax on their customers. From the time of their commencement Cheap Jaccob Slavin Jersey , they frequently expressed service costs in the form of processing charges. The duty of collecting the levy is entrusted with the Central Board of Excise and Customs (CBEC), which is an authority under the Ministry of Finance. This authority devises the tax system in India.
For the rationale of imposing it, the cost of any taxable service has to be the gross amount fixed by the service provider for the service provided by him.
Rate of Service Tax
In India, service tax first came into existence with effect from July 1, 1994. Every service provider in India, apart from those in the state of Jammu and Kashmir Cheap Victor Rask Jersey , has to pay this levy. At the outset, just three services were grouped under its net. The rate was 5% at that point. Slowly, more services were brought under the realm of this duty. The rate was raised from 5% to 8% with effect from May 14, 2003. The rate was again hiked to 10% from 8% on September 10, 2004. In addition to this, 2% education cess on the service tax amount was also initiated. In the Union Budget of Government of India for fiscal 2006-2007 Cheap Calvin De Haan Jersey , the service tax rate was upped from 10% to 12%. On February 24, 2009, with the purpose of offering reprieve to the business and commerce sector staggering under the brunt of economic slump, the rate was lowered from 12 per cent to 10 per cent.
Currently, the duty is payable @10% of the ?gross amount? charged by the service provider for offering this kind of taxable service. The education cess is payable @2%, and higher and secondary education cess is payable @1% of the amount due.