1. 1
SERVICE TAX
WHAT IS SERVICE TAX
Service Tax is a tax levied by Central Government of India on services provided or to be
provided excluding services covered under negative list and considering the Place of
Provision of Services Rules, 2012 and collected as per Point of Taxation Rules, 2011 from
the person liable to pay service tax.
WHAT IS SERVICE
‘Service’ has been defined in clause (44) of the new section 65B and means –
any activity
for consideration
carried out by a person for another
and includes a declared service.
The said definition further provides that ‘Service’ does not include –
any activity that constitutes only a transfer in title of (i) goods or (ii) immovable
property by way of sale, gift or in any other manner
(iii) a transfer, delivery or supply of goods which is deemed to be a sale of goods
within the meaning of clause (29A) of article 366 of the Constitution
a transaction only in (iv) money or (v) actionable claim
a service provided by an employee to an employer in the course of the employment
fees payable to a court or a tribunal set up under a law for the time being in force
SERVICE TAX AND CONSTITUTION OF INDIA
No tax can be levied without authority of the law and no law can be made without the
authority of the constitution.
Accordingly, power to levy service tax has been derived from the entry No. 92C of the List I
(called as Union list) of the Seventh Schedule read with article 246 of the Constitution of
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India. Entry No. 92C is appearing as under: “92C Taxes on services”. This entry has been
inserted by the Constitution (Eighty-eighth Amendment) Act, 2003.
TAXABILITY OF SERVICE TAX
According to Section 66B, to be taxable, a service should be –
provided or agreed to be provided
by a person to another
in the taxable territory, and
should not be specified in the negative list.
Please note that a taxable service may also be exempt under notification number 25/2012
dated 20/06/2012.
From the point of view of service provider it is also relevant to note that the service may be
taxable but the service provider is not liable to pay service tax if he is availing exemption
available to the small service provider.
APPLICABILITY OF SERVICE TAX
Define the applicability of Service tax provisions given under Sec 64 of the Finance Act 1994
This Chapter extends to the whole of India, except the State of Jammu and Kashmir.
Definition of INDIA: According to Sec 65B(27) India means –
the territory of the Union;
its territorial waters, continental shelf, exclusive economic zone or any other maritime
zone;
the seabed and the subsoil underlying the territorial waters;
the air space above its territory and territorial waters; and
the installations, structures and vessels located in the continental shelf of India and the
exclusive economic zone of India, for the purposes of prospecting or extraction or
production of mineral oil and natural gas and supply thereof
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HISTORY OF SERVICE TAX
Dr. Raja Chelliah Committee on tax reforms recommended the introduction of service tax.
Service tax had been first levied at a rate of five per cent flat from 1 July 1994 till 13 May
2003, at the rate of eight percent flat w.e.f 1 plus an education cess of 2% thereon w.e.f 10
September 2004 on the services provided by service providers. The rate of service tax was
enhanced to 12% by Finance Act, 2006 w.e.f 18.4.2006. Finance Act, 2007 has imposed a
new secondary and higher education cess of one percent on the service tax w.e.f 11.5.2007,
increasing the total education cess to three percent and a total levy of 12.36 percent. The
revenue from the service tax to the Government of India have shown a steady rise since its
inception in 1994. The tax collections have grown substantially since 1994-95 i.e. from Rs.
410 crore (US$61 million) in 1994-95 to Rs. 132518 crore (US$20 billion) in 2012-13. The
total number of Taxable services also increased from 3 in 1994 to 119 in 2012. However,
from 1 July 2012 the concept of taxation on services was changed from a 'Selected service
approach' to a 'Negative List regime'. This changed the taxation system of services from tax
on some Selected services to tax being levied on the every service other than services
mentioned in Negative list.
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PROVISION OF SERVICE TAX
Short title, extent and commencement
(1) These rules may be called the Place of Provision of Services Rules, 2012.
(2) They shall come into force on 1st day of July, 2012. 2 Definitions In these rules, unless
the context otherwise requires,-
(a) “Act” means the Finance Act, 1994 (32 of 1994);
(b) “account” means an account bearing interest to the depositor, and includes a non-resident
external account and a non-resident ordinary account;
(c) “banking company” has the meaning assigned to it in clause (a) of section 45A of the
Reserve Bank of India Act, 1934 (2 of 1934);
(d) “continuous journey” means a journey for which a single or more than one ticket or
invoice is issued at the same time, either by one service provider or through one agent acting
on behalf of more than one service provider, and which involves no stopover between any of
the legs of the journey for which one or more separate tickets or invoices are issued;
(e) “financial institution” has the meaning assigned to it in clause (c) of section 45-I of the
Reserve Bank of India Act,1934 (2 of 1934);
(f) “intermediary” means a broker, an agent or any other person, by whatever name called,
who arranges or facilitates a provision of a service (hereinafter called the ‘main’ service)
between two or more persons, but does not include a person who provides the main service
on his account;
(g) “leg of journey” means a part of the journey that begins where passengers embark or
disembark the conveyance, or where it is stopped to allow for its servicing or refuelling, and
ends where it is next stopped for any of those purposes; Service Tax in India A Handbook 71
(h) “location of the service provider” means-
(a) where the service provider has obtained a single registration, whether centralized or
otherwise, the premises for which such registration has been obtained;
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(b) where the service provider is not covered under sub-clause
(a): (i) the location of his business establishment; or
(ii) where the services are provided from a place other than the business establishment, that
is to say, a fixed establishment elsewhere, the location of such establishment; or
(iii) where services are provided from more than one establishment, whether business or
fixed, the establishment most directly concerned with the provision of the service; and
(iv) in the absence of such places, the usual place of residence of the service provider.
(i) “location of the service receiver” means:-
(a) where the recipient of service has obtained a single registration, whether centralized or
otherwise, the premises for which such registration has been obtained;
(b) where the recipient of service is not covered under sub-clause
(a): (i) the location of his business establishment; or
(ii) where services are used at a place other than the business establishment, that is to say, a
fixed establishment elsewhere, the location of such establishment; or
(iii) where services are used at more than one establishment, whether business or fixed, the
establishment most directly concerned with the use of the service; and
(iv) in the absence of such places, the usual place of residence of the recipient of service.
Explanation 1:- For the purposes of clauses
(h) and (i), “usual place of residence” in case of a body corporate means the place where it is
incorporated or otherwise legally constituted.
Explanation 2:- For the purpose of clause
(i), in the case of telecommunication service, the usual place of residence shall be the billing
address.
(j) “means of transport” means any conveyance designed to transport goods or persons from
one place to another;
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(k) “non-banking financial company” means-
(i) a financial institution which is a company; or
(ii) a non-banking institution which is a company and which has as its principal business the
receiving of deposits, under any scheme or arrangement or in any other manner, or lending in
any manner; or
(iii) such other non-banking institution or class of such institutions, as the Reserve Bank of
India may, with the previous approval of the Central Government and by notification in the
Official Gazette specify;
(l) “online information and database access or retrieval services” means providing data or
information, retrievable or otherwise, to any person, in electronic form through a computer
network;
(m) “person liable to pay tax” shall mean the person liable to pay service tax under section 68
of the Act or under sub-clause
(d) of sub-rule (1) of rule 2 of the Service Tax Rules, 1994;
(n) “provided” includes the expression “to be provided”;
(o) “received” includes the expression “to be received”;
(p) “registration” means the registration under rule 4 of the Service Tax Rules, 1994;
(q) “telecommunication service” means service of any description (including electronic mail,
voice mail, data services, audio text services, video text services, radio paging and cellular
mobile telephone services) which is made available to users by means of any transmission or
reception of signs, signals, writing, images and sounds or intelligence of any nature, by wire,
radio, visual or other electromagnetic means but shall not include broadcasting services.
(r) words and expressions used in these rules and not defined, but defined in the Act, shall
have the meanings respectively assigned to them in the Act. 3 Place of provision generally
The place of provision of a service shall be the location of the recipient of service: Provided
that in case the location of the service receiver is not available in the ordinary course of
business, the place of provision shall be the location of the provider of service. 4 Place of
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provision of performance based services. The place of provision of following services shall
be the location where the services are actually performed, namely:-
(a) services provided in respect of goods that are required to be made physically available by
the recipient of service to the provider of service, or to a person acting on behalf of the
provider of service, in order to provide the service: Provided that when such services are
provided from a remote location by way of electronic means the place of provision shall be
the location where goods are situated at the time of provision of service: Provided further that
this sub-rule shall not apply in the case of a service provided in respect of goods that are
temporarily imported into India for repairs, reconditioning or reengineering for re-export,
subject to conditions as may be specified in this regard.
(b) services provided to an individual, represented either as the recipient of service or a
person acting on behalf of the recipient, which require the physical presence of the receiver or
the person acting on behalf of the receiver, with the provider for the provision of the service.
5 Place of provision of services relating to immovable property The place of provision of
services provided directly in relation to an immovable property, including services provided
in this regard by experts and estate agents, provision of hotel accommodation by a hotel, inn,
guest house, club or campsite, by whatever, name called, grant of rights to use immovable
property, services for carrying out or coordination of construction work, including architects
or interior decorators, shall be the place where the immovable property is located or intended
to be located.
6 Place of provision of services relating to events The place of provision of services provided
by way of admission to, or organization of, a cultural, artistic, sporting, scientific,
educational, or entertainment event, or a celebration, conference, fair, exhibition, or similar
events, and of services ancillary to such admission, shall be the place where the event is
actually held. 7 Place of provision of services provided at more than one location Where any
service referred to in rules 4, 5, or 6 is provided at more than one location, including a
location in the taxable territory, its place of provision shall be the location in the taxable
territory where the greatest proportion of the service is provided.
8 Place of provision of services where provider and recipient are located in taxable territory
Place of provision of a service, where the location of the provider of service as well as that of
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the recipient of service is in the taxable territory, shall be the location of the recipient of
service. 9 Place of provision of specified services The place of provision of following
services shall be the location of the service provider:-
(a) Services provided by a banking company, or a financial institution, or a nonbanking
financial company, to account holders;
(b) Online information and database access or retrieval services;
(c) Intermediary services;
(d) Service consisting of hiring of means of transport, upto a period of one month. 10 Place of
provision of goods transportation services The place of provision of services of transportation
of goods, other than by way of mail or courier, shall be the place of destination of the goods:
Provided that the place of provision of services of goods transportation agency shall be the
location of the person liable to pay tax. 11 Place of provision of passenger transportation
service The place of provision in respect of a passenger transportation service shall be the
place where the passenger embarks on the conveyance for a continuous journey.
12 Place of provision of services provided on board a conveyance Place of provision of
services provided on board a conveyance during the course of a passenger transport
operation, including services intended to be wholly or substantially consumed while on
board, shall be the first scheduled point of departure of that conveyance for the journey.
13 Powers to notify description of services or circumstances for certain purposes In order to
prevent double taxation or non-taxation of the provision of a service, or for the uniform
application of rules, the Central Government shall have the power to notify any description of
service or circumstances in which the place of provision shall be the place of effective use
and enjoyment of a service.
14 Order of application of rules Notwithstanding anything stated in any rule, where the
provision of a service is, prima facie, determinable in terms of more than one rule, it shall be
determined in accordance with the rule that occurs later among the rules that merit equal
consideration.
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POINT OF TAXATION RULES USE:
It decides taxable event date and due date of payment of service tax. As per rule 6(1) of
service tax rules, service tax shall be deemed to be paid to the credit of government by 6th of
the month /quarter immediately following the month/quarter in which service is deemed to be
provided.
Point of taxation covers following rules:
Rule 2A of POT rules : Meaning of date of payment
Rule 3 of POT rules: Determination of point of taxation.
Rule 4 of POT rules: Point of taxation when there is change in effective rate of tax
Rule 5 of POT rules: point of taxation when service is taxed first time.
Rule 7 of POT rules: Point of taxation for specified services – reverse charge
mechanism.
Rule 8 of POT rules: Royalty services POT rules
Rule 8A of POT rules: best of judgement rule (residual rule)
RULE 3 OF POT RULES: DETERMINATION OF POINT OF
TAXATION:
As per rule 3 of POT rules,
POT is earlier of the following
When invoice is issued within due date of issue of invoice
When payment is actually received by service provider
Due date of issue of invoice: Invoice should be issued within 30 days from the date of
completion of service.
There is another condition that when invoice is not issued within due date,
POT is earlier of the following:
When payment is actually received by service provider
Date of completion of service
DATE OF PAYMENT MEANING UNDER POT RULES ( RULE 2A):
Date of payment for payment shall be earlier date from the following
Date when payment is entered in the books of accounts
Date when the bank account of the person is credited. or cash received.
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But date of payment is date of credit in bank account when
There is change in effective rate of tax or the service is taxed first time during the
period of credit in books of accounts and credit in bank account
The payment is credited after 4 working days from the date when there is change in
effective rate of tax or the service is taxed first time.
It is important because rate of duty is determined as per POT rule. When date of payment is
before date of change of duty, old rate will be considered for service tax purpose.
Kindly note that this rule is applicable for bank payment only and not when payment is
received by cash.
RULE 4 OF POINT OF TAXATION RULES: POT WHEN THERE IS
CHANGE IN EFFECTIVE RATE OF TAX:
This rule will be applied when there is change in effective rate of tax. New service tax rate
14% is applicable from 1st June, 2015.
Note: First June should be considered as date of change of effective rate of tax.
Consider three factors:
Date of provision of service
Date of payment received
Date of invoice issued.
When two factors are before the date of change in service tax rate, old rate will be
considered. If two factors are on or after the date of change in service tax, new rate will be
applicable.
Swachh Bharat cess is levied on 15/11/2015 and service tax rate is increased to 14% to
14.5%.
RULE 5: POINT OF TAXATION WHEN SERVICE IS TAXED FIRST
TIME:
When service is taxed first time, no service tax should be payable
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When invoice has been issued and payment received for such invoice before the
service becomes taxable.
If the payment has been received before the service becomes taxable and invoice has
been issued within 14 days from the date when the service is taxed first time.
RULE 7: POINT OF TAXATION WHEN SERVICE TAX IS PAYABLE
UNDER REVERSE CHARGE MECHANISM:
When service receiver is liable to pay service tax under RCM, the point of taxation shall be
the date when the payment is made. There is one condition in this rule that the payment
should be made within six months of date of invoice.
RULE 8: POINT OF TAXATION FOR ROYALTIES, COPYRIGHTS
ETC.:
Rule 8 applies when amount received for royalties, patent, copyrights etc. The whole amount
is not receivable in these cases. The amount is some percentage of sales amounts or sale
value of copies sold.
In this case, service shall be deemed to have been provided at earlier of the following:
Payment received or benefit is received
Invoice is raised.
RULE 8A: RESIDUAL RULE- BEST OF JUDGEMENT:
This rule is residual rule. When assessee has no information available for payment received
or date of invoice (one or both), the central excise officer require to concern person produce
such books of accounts or documents which are necessary and after taking into accounts all
the facts and rate prevailing at that time, shall by order in writing, after giving opportunity of
being heard, determine the point of taxation to the best of his judgement.
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NEGATIVE LIST OF SERVICES
66D. Negative list of services: -
The negative list shall comprise of the following services, namely:––
(a) services by Government or a local authority excluding the following services to the
extent they are not covered elsewhere—
(i) services by the Department of Posts by way of speed post, express parcel post,
life insurance and agency services provided to a person other than Government;
(ii) services in relation to an aircraft or a vessel, inside or outside the precincts of a
port or an airport;
(iii) transport of goods or passengers; or
(iv) support services, other than services covered under clauses (i) to (iii) above,
provided to business entities;
(b) services by the Reserve Bank of India;
(c) services by a foreign diplomatic mission located in India;
(d) services relating to agriculture by way of—
(i) agricultural operations directly related to production of any agricultural produce
including cultivation, harvesting, threshing, plant protection or testing;
(ii) supply of farm labour;
(iii) processes carried out at an agricultural farm including tending, pruning, cutting,
harvesting, drying, cleaning, trimming, sun drying, fumigating, curing, sorting,
grading, cooling or bulk packaging and such like operations which do not alter
the essential characteristics of agricultural produce but make it only marketable
for the primary market;
(iv) renting or leasing of agro machinery or vacant land with or without a structure
incidental to its use;
(v) loading, unloading, packing, storage or warehousing of agricultural produce;
(vi) agricultural extension services;
(vii)services by any Agricultural Produce Marketing Committee or Board or services
provided by a commission agent for sale or purchase of agricultural produce;
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(e) trading of goods;
(f) any process amounting to manufacture or production of goods;
(g) selling of space for advertisements in print media;
(h) service by way of access to a road or a bridge on payment of toll charges;
(i) betting, gambling or lottery;
(j) admission to entertainment events or access to amusement facilities;
(k) transmission or distribution of electricity by an electricity transmission or
distribution utility;
(l) services by way of—
(i) pre-school education and education up to higher secondary school or equivalent;
(ii) education as a part of a curriculum for obtaining a qualification recognised by
any law for the time being in force;
(iii) education as a part of an approved vocational education course;
(m) services by way of renting of residential dwelling for use as residence;
(n) services by way of—
(i) extending deposits, loans or advances in so far as the consideration is represented
by way of interest or discount;
(ii) inter se sale or purchase of foreign currency amongst banks or authorised dealers
of foreign exchange or amongst banks and such dealers;
(o) service of transportation of passengers, with or without accompanied belongings,
by—
(i) a stage carriage;
(ii) railways in a class other than—
(A) first class; or
(B) an air-conditioned coach;
(iii) metro, monorail or tramway;
(iv) inland waterways;
(v) public transport, other than predominantly for tourism purpose, in a vessel of less
than fifteen tonne net; and
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(vi) metered cabs, or auto rickshaws;
(p) services by way of transportation of goods—
(i) by road except the services of—
(A) a goods transportation agency; or
(B) a courier agency;
(ii) by an aircraft or a vessel from a place outside India to the first customs station of
landing in India; or
(iii) by inland waterways;
(q) funeral, burial, crematorium or mortuary services including transportation of the
deceased
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EXEMPT LIST OF SERVICES
List of Services fully exempt from service tax under Notification No. 25/2012 dated
20.06.2012
100% Exemption as Per Notification No. 25/2012- Service Tax Dated 20.06.2012
S.
No
Service Service Provider Service Receiver
1 Any service Any person 1. United Nations
2.Specified
International
Organization e.g.
WTO
2 Health care Service i.e. Diagnosis/
treatment/ Care/ Ambulance/ hair
transplant/ plastic surgery.
1. Clinical
Establishment i.e.
Hospital, Nursing
Home, Clinic,
Sanatorium, testing
lab etc.
2.Medical practitioner
i.e. Doctor.
3.Paramedics
i.e. Nursing Staff.
Any person
2A Preservation of stem cells i.e. Storage of
blood.
Any other service i.e. Bifurcation of
blood.
Core blood bank. Any person
2B
Common Bio-medical Waste
Treatment Facility i.e. treatment or
disposal of bio-medical
waste/ processes incidental.
Operator. Clinical
establishment.
3 Health care of animals or birds. Veterinary clinic. Any person
16. 16
4 Charitable activities i.e.1. Public health
by way of-
i) Care and counseling of*
ii) Public awareness of prevention
health, family planning, prevention of
HIV infection.
2. Advancement of religion or
Spirituality.
3. Advancement of educational
programmer /skill development #
4. Preservation of environment
including watershed, forests and
Wildlife.
An entity registered
under section 12 AA
of the IT Act, 1961.
1) (i) Care and
counseling of*
a) Terminally ill
persons with
physical/ mental
disability.
b) Persons
afflicted with HIV.
c) Persons
addicted to a
dependence-
forming substance
such as narcotics
Drugs or alcohol.
2) Advancement
of educational
programmer /skill
development
i)Abandoned/
orphaned/
homeless children.
ii)Physically/
mentally abused
and traumatized
persons.
iii) Prisoners.
iv) Persons over
the age of 65
years residing in a
rural area.
5 1.Renting of precincts of a Religious
Place.
Any person Any person
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2. Any religious ceremony.
5A
Tour facilitated by the MEA of
government of India.
Specified Organization
i.e. Kumaon Mandal
vikas Nigam Ltd.
(Undertaking of
Uttarakhand govt.) or
Committee/State
committee.
Religious
pilgrimage.
6. Legal Services. 1. Arbitral Tribunal.
2. Individual as an
Advocate or a
partnership firm of
advocates.
3. Person represented
on an arbitral tribunal.
1. (i) Any person
other than a
Business entity.
(ii) Business
entity with a
turnover upto Rs.
10 lakhs in
preceding F/y.
2.(i) an Advocate
or a partnership
firm of advocates.
(ii) Any person
other than a
Business entity.
(iii) Business
entity with a
turnover upto Rs.
10 lakhs in
preceding F/y.
3.An arbitral
tribunal.
7. DELETED
8. Training or coaching in recreation
activities related to Arts/ Culture/
Any Person Any Person
18. 18
Sports.
9. Any service Educational institution Students/ Faculty/
Staff of
educational
institution
1.Transportation of students/ faculty/
staff.
2.Catering including mid-day meals
scheme sponsored by the government.
3.Security/Cleaning/House-keeping in
educational institution.4.Related to
admission to educational institution or
conduct of examination by educational
institution.
Any Person Educational
institution means
any institution
providing –
1. Pre-education
and education up
to higher
secondary school.
2. Education as a
part of a
curriculum for
obtaining a
qualification
recognized by
Indian law.
3. Education as a
part of an
approved
vocational
education course.
9A Any Service 1.National skill
Development
Corporation (NSDC).
2.Sector skill council
(SSC) approved by
NSDC.
3.Assessment agency
Any person
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approved by
NSDC/SSC.
4. Training partner by
NSDC/SSC.
10.
1.Participation in a tournament/
championship organized by RSB.
2.Any service
1. An individual as a
player/Referee/umpire/
coach/manager.
2.RSB
Recognized Sport
Body (RSB).
11. 1.Sponsorship of sporting events where
participating teams/ individual
represent any district/ state/ zone/
country.
2. Sponsorship of sporting events.
3. Sponsorship of sporting events under
Panchayat Yuva Kreed and Khel
Abhiyaan(PYKKA)
1.National sport
federation or its
affiliated federations.
2.Association of Indian
universities, Inter-
university sports board,
School games
federation of India,
All India sports
council for the deaf,
Paralympics
committee of India,
Special Olympics
Bharat, Central civil
service cultural and
sports board.
3. Any person
Any person
12. Construction/ erection/ commissioning/
installation/ completion/ fitting out
repair/ maintenance/ renovation/
alteration of-
1. Civil structure or any other original
works meant predominantly for use
other than for commerce, industry, any
Any person Govt./Local
Authority/Govt.
authority.
20. 20
other Business or profession.
2.Historical monument, archaeological
site or remains of national importance,
archaeological excavation, antiquity
specified under Ancient monuments
and archaeological sites and remains
Act, 1958.
3.Structure meant predominantly for
use as an education/clinical/art of
cultural establishment.
4. Canal/dam/other irrigation works.
5.Pipeline, conduit, plant for Water
supply, Water treatment, sewerage
treatment/disposal.
6.Residential complex predominantly
meant for govt. use or the use of their
employees or other persons specified
in the explanation 1 to clause 44
section 65B of the said act.
13.
Construction/ erection/ commissioning/
installation/ completion/ fitting out
repair/ maintenance/ renovation/
alteration of-
1.Road/ Bridge/ Tunnel/ Terminal for
road transportation for use by general
public.
2. Civil structure or any other original
works pertaining to a scheme under
Jawaharlal Nehru national urban
renewal mission or Rajiv Awaas
Yojna.
3. Building owned by entity registered
Any person Any person
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u/s-12AA of IT Act, 1961 and meant
predominantly for religious use by
general public.
4. Pollution control or effluent
treatment plant except located as a part
of a factory.
5. Structure meant for funeral, burial or
cremation of deceased.
14. Construction/ erection/ commissioning/
installation original works (no Repair
& maintenance) permitting to-
1. An airport, port, railways including
monorail or metro.
2. Single residential unit otherwise as a
part of a residential complex.
3. Low-cost houses up to a carpet area
of 60 square meters per house in a
housing project “Under the scheme of
Affordable Housing in partnership”.
4. Post-harvest storage infrastructure
for agriculture produce including a
cold storage for such purchases.
5. Mechanized food grain handling
system, machinery or equipment for
unit processing agriculture produce as
food stuff excluding alcoholic
beverages.
Any person Any person
15. Temporary transfer or permitting the
use or enjoyment of a copyright of-
1.Original literary, dramatic, musical or
artistic works covered u/s-13 of
Copyright Act,1957.
Any person Any person
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2. Cinematographic films for exhibition
in a cinema hall or cinema theatre.
16. Performance of Folk/ Classical art in form
of
1.Music
2.Dance
3.Theatre
Any artist. Any person
17. Collecting/ Providing News Independent journalist/
PTI/ UNI
Any person
18. Service for residential and lodging
purposes having declared tariff of a
unit of accommodation below Rs.
1,000 or equivalent to Rs. 1,000.
Hotel/ inn/ guest
house/ club/ campsite
Any person
19. Serving of food or beverages. Restaurant/ Eating
joint/ Mess other than
those having the
facility of air-
conditioning/ central
air-heating in any part
of establishment at
any time during the
year.
Any person
19A
.
Serving of food or beverages. Factory covered under
Factory Act, 1948
having the facility of
air-conditioning/
central air-heating in
any part of
establishment at any
time during the year.
Any person
20. Transportation by Rail or vessel from
one port in India to another of
Any person Any person
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following goods-
1. Relief material
2. Defence/ military equipment
3. Newspaper/ magazines registered with
4. Registrar of Newspaper
5. Railway equipment/ material
6. Agriculture produce
7. Foodstuff
8. Chemical fertilizer/ organic manure/oil
cakes
9. Cotton/ Ginned/ Baled
21. Transportation of goods by GTA of
following goods-
1.Relief material
2.Defence/ military equipment
3.Newspaper/ magazines registered
with Registrar of Newspaper
4.Agriculture produce
5.Foodstuff
6.Chemical fertilizer/ organic manure/
oil cakes
7.Cotton/ Ginned/ Baled
8.Consignment transported in a single
carriage does not exceed Rs. 1,500/-
9. All goods for a single consignee
does not exceed Rs. 750/-
Any person Any person
22. 1. Hiring of a motor vehicle meant to
carry more than 12 passengers.
2. Hiring of any vehicle for
transportation of goods.
Any Person 1.State transport
undertaking e.g.
DTC.2.GTA.
23. Transport of passengers-
1. By air, embarking/ termination in an
Any person Any person
24. 24
airport located in the state of
Arunachal Pradesh/ Assam/ Manipur/
Meghalaya/ Mizoram/ Nagaland/
Sikkim/ Tripura / Baghdogra in West
Bengal.
2. Non-air conditioned contract
carriage other than radio taxi/ tourism/
conducted tour/ charter (special bus).
3. Ropeway/ Cable car/ Aerial
tramway.
24. DELETED
25. 1. Water supply/ Public health/
Sanitation conservancy/ solid waste
management/ slum improvement &
up-gradation.
2. R&M of vessel
Any person Govt./ Local
authority/
governmental
authority.
26. Service of General Insurance Business
under Hut Insurance scheme/scheme
for insurance of tribals/ Jan Arogya
Bima policy etc.
Any person Any person
26A
.
Service of Life Insurance Business
under following schemes:
Janashree Bima Yojna(JBY)
Aam Aadmi Bima Yojna(AABY)
Life micro-insurance product having
maximum amount of cover of Rs.
50,000/-.
Any person Any person
27. Any Service An Incubatee up to a
total Business
turnover of Rs. 50
lakhs in a financial
year subject to the
Any person
25. 25
following conditions-
Total Business
turnover had not
exceeded Rs. 50 lakh
during the preceding
F/Y.
Period of three years
has not lapsed from
the date of entering
into an agreement as
an incubate.
28. Reimbursement of charges/share of
contribution-
1.As a trade union.
2. For the provision of carrying out any
activity which is exempt from the levy
of ST.
3.Upto an amount of Rs. 5,000/- per
month per member for sourcing of
goods and services from a third person
for the common use of its members in a
housing society or a residential complex.
Unincorporated body
or Non-profit entity
registered under any
law
Members of
Unincorporated
body or Non-profit
entity.
29. Services by the service provider in their
respective capacities i.e. service provided
by intermediate person.
1. Sub-broker/
authorized person.
2.Authorized person.
3.Mutual fund
agent/ Distributor
4.Selling or marketing
agent of lottery
tickets.
5.Selling agent or
distributor of SIM
1.Stock broker
2.Member of a
commodity
exchange.
3.Mutual fund/
asset management
co.
4.Selling or
marketing agent.
5.Telecommunicat
26. 26
cards/recharge coupon
vouchers.
6.Business facilitator
or Business
correspondent.
7.Sub-contractor
providing service of
works contract.
ion co.
6.Banking
Co./Insurance co,
in a rural area.
7.Another
contractor who
providing works
contract service
which are exempt.
30. Carrying out an intermediate production
process as job-work in relation to-
1. Agriculture, printing, textile
processing.
2. Cut and polished diamonds and
gemstones or plain or studded jewellery
of gold and other precious metals.
3. Any goods on which appropriate duty
is payable by the principal manufacturer
(i.e. dutiable goods).
4. Processes of electro-plating, zinc
plating, powder coating, anodizing, heat
treatment, painting including spray
painting during the course of
manufacture of parts of cycles or sewing
machine upto an aggregate value of
taxable service of the specified processes
of Rs.150 lakhs in a F/Y subject to the
condition that such aggregate value had
not exceed Rs. 150 lakhs during the
preceding F/Y.
Any person Any person
31. Business Exhibition held outside India Any person Any person
32. Telephone calls 1. Departmentally run Any person
27. 27
public telephones.
2. Guaranteed public
telephones operating
only for local calls.
3. Free telephone at
airport and hospitals
where no bills are
being issued.
33. Slaughtering of animals Any person Any person
34. Any purpose other than commerce,
industry, any other Business or
profession. Charitable activities.
Any service.
Person located in a
non-taxable territory.
Govt., local
territory, govt.
authority or an
individual.
Entity registered
u/s 12AA of IT
Act,1961.
Person located in a
Non-taxable
territory.
35. Lending of books, publications or any
other knowledge-enhancing content or
material.
Public Libraries. Any person.
36. Any services Employee’s State
Insurance Corp.
Person under
Employee’s
Insurance
Act,1948.
37. Transfer of going concern (business) as a
whole or an independent part.
Any person Any person
38. Public conveniences such as facilities of
bathroom, washrooms, lavatories, urinal,
toilets.
Any person Any person.
39. Any activities in relation to any function Any person Government
28. 28
entrusted to a municipality. authority.
40. Loading, unloading, packing, storage,
warehousing of Rice, cotton, ginned,
baled.
Any person Any person.
41. Management of foreign exchange
reserves.
Person located outside
India
RBI
42. Tour conducted wholly outside India. Tour operator Foreign tourist
29. 29
PAYMENT OF SERVICE TAX
DUE DATE FOR PAYMENT OF SERVICE TAX 2015
As per Rule 6(1) of Service Tax Rules, the service tax shall be paid to the credit of
the Central Government before the following due dates
Particulars Company, AOP’s, HUF Individual / Proprietary firm
or Partnership firm
Duration Month in which the service
is deemed to be provided as
per the POT rules
Quarter in which the service
is deemed to be provided as per
the POT rules
Payment by
ECS:
6th day of the following month 6th day of the month following
the quarter
Payment by
any other
mode
5th day of the following month 5th day of the month following
the quarter
Month /
quarter ending
march
31st March 31st March Compulsory
DUE DATES FOR SERVICE TAX RETURN
Half yearly Return in Form ST-3
Period Due Date
1st April to 30th September 25th October
1st October to 31st March 25th April
PROCEDURE FOR SERVICE TAX REGISTRATION ONLINE
As per the rules framed by the Indian government, every service provider has to mandatorily
apply for service tax registration if the value of services expected to be rendered by him in a
30. 30
financial year is more than Rs. 9 lakhs. However, if the value of services rendered in a
financial year is less than Rs. 9 lakhs p.a. – the service tax registration is optional at the
option of the service tax payer.
HOW TO APPLY FOR SERVICE TAX REGISTRATION
ONLINE
The application for service tax registration has to be filed via ST-1 Form which can be
submitted online. However, first time users have to create an account before furnishing the
details in the ST-1 Form. The account can be created on the following website:
http://www.aces.gov.in/STASE/ui/jsp/common/registerWithACES.do
The account created on the above website would be permanent account for all matters related
to service tax and you are requested to remember the username and the password for the
same.
ISSUE OF SERVICE TAX REGISTRATION
As per rule 4 of the service tax rules, 1994- the superintendent shall after verification of the
ST-1 Form either grant the service tax registration certificate (ST-2) to assessee or send
intimation for non-acceptance of service tax registration. if either of the above 2 options is
not exercised within 2 days by the superintendent the service tax registration shall be deemed
to be granted. The service tax registration i.e. ST-2 Form would be issued in the manner as
opted for by the applicant
WHAT IS ACES ?
Automation of Central Excise and Service Tax (ACES) is the e-governance initiative by
Central Board of Excise and Customs (CBEC), Department of Revenue, Ministry of Finance.
It is one of the Mission Mode Projects (MMP) of the Government of India under National e-
Governance Plan (NeGP). It is a software application which aims at improving tax-payer
services, transparency, accountability and efficiency in the indirect tax administration in
India. This application is a web-based & workflow-based system that has automated all major
procedures in central excise and service tax like registration, returns, accounting, refunds,
dispute resolution, audit, provisional assessment, export claims, intimations and permissions.
31. 31
ACES aims at reducing physical interface of the business community with the departmental
officers and to provide a transparent and paper-less business environment with improved
taxpayer services delivered through an automated process. ACES is also a valuable platform
for a smooth and successful transition to the proposed GST regime and it provides the
bedrock for a modern e-governance-based indirect tax administration in India
COMPULSORY ECS PAYMENT:
Every assessee is required to pay tax electronically. AC or DC of Central Excise may for
reasons to be recorded in writing, allow the assessees to deposit the service tax by any mode
other than internet banking. (N/N 9/14 w-e-f 1-10-14)
WHAT IS THE MANNER OF PAYMENT OF SERVICE TAX?
As per Rule 6(2), the assessee shall deposit the service tax with the bank designated
by CBEC, by using GAR-7challan
If the tax is paid by cheque, date of presentation of cheque to the bank shall be deemed to be
the date on which service tax has been paid subject to realization of that cheque.
UPDATES ON SERVICE TAX
New Update applicable from 15-11-2015 – Effective rate of service tax plus SBC, post
introduction of SBC, would be [14% + 0.5%].
Budget 2015 Update: Finance Minister while presenting the Budget 2015 has increased the
Service Tax Rate from 12.36% to flat 14%. This new rate of Service Tax @ 14% is
applicable from 1st June 2015.
The rate of Service Tax for services provided before 1st June is 12.36% and for services
provided after 1st June is 14%. If the Invoice is raised in the month of May 2015 for Services
to be provided in June 2015 – Rule 4(b) of Point of Taxation Rules will apply and the rate of
service tax applicable would be the date on which the payment is being made.
The Service Tax Rate applicable from 1st June 2015 is 14%. This rate is an inclusive rate and
SHEC and Education Cess is not required to be charged above this.
32. 32
CONCLUSION
Service Tax is a tax levied by Central Government of India on services provided or to be
provided excluding services covered under negative list and considering the Place of
Provision of Services Rules, 2012 and collected as per Point of Taxation Rules, 2011 from
the person liable to pay service tax.
Dr. Raja Chelliah Committee on tax reforms recommended the introduction of service tax.
Accordingly, power to levy service tax has been derived from the entry No. 92C of the List I
(called as Union list) of the Seventh Schedule read with article 246 of the Constitution of
India. Entry No. 92C is appearing as under: “92C Taxes on services”. This entry has been
inserted by the Constitution (Eighty-eighth Amendment) Act, 2003.
From 1 July 2012 the concept of taxation on services was changed from a 'Selected service
approach' to a 'Negative List regime'. This changed the taxation system of services from tax
on some Selected services to tax being levied on the every service other than services
mentioned in Negative list.
