2. This Presentation covers:
Concept of service tax and why its needed.
Valuation of taxable service.
Services under negative list.
Point of Taxation Rules, 2011.
Payment of service tax.
Registration.
Classification of services.
Reverse Charge.
2
SERVICE TAX OVERVIEW
3. History:
At the Recommendations of Raja J. Chelliah Committee.
Finance Act, 1994.
Levied at the rate of 5%
Applicable to Telecommunication,
Stock broker and Non-life insurance.
3
CONCEPT OF SERVICE
TAX
4. Extent of service tax law Section 64.
Whole of India except State of J&K
includes territorial waters upto 12 nautical miles
extended to the whole of Exclusive Economic Zone &
continental shelf upto 200 miles from the landmass
4
CONCEPT OF SERVICE
TAX
5. Why service tax is needed?
Need for higher public revenue.
Growth of services.
Shifting of spending preference from commodity to services.
Declining receipt from Excise and Custom.
Equity in taxation
5
CONCEPT OF SERVICE
TAX
7. Exclusions:
I. Immovable Property
M. Money and Actionable Claims.
A. Authority.
G. Deemed Sale (Goods).
E. Employer Employee Relationship.
7
CONCEPT OF SERVICE
TAX
8. Deemed Services :
R. Renting of Immovable Property
A. Agreement not to do something
S. Services related to information technology
C. Construction of Complex and Works Contracts.
A. Allotment of Intellectual Property for temporary use.
L. Leasing, Licensing and Hiring of Movable Property.
S. Services relating to food supply in Hotels and Restaurants .
8
CONCEPT OF SERVICE
TAX
9. Effective rate of service tax:
Effective rate 12.36%
Small service provider with turnover of taxable services
less then Rs. 10 Lac.
9
CONCEPT OF SERVICE
TAX
10. SERVICES NOT
CHARGEABLE TO TAX
10
Negative list 17 Services
Exemption list 42 Services
Other exempted services 8 Services
Excluded services 6 services
11. Negative List(Section 66D):
Services by government or local authorities.
Services provided by RBI
Service related to agriculture.
Trading of goods.
Manufacture or production of goods.
Toll charges
Betting, Gambling or Lottery
11
SERVICES UNDER
NEGATIVE LIST
12. Negative List(Section 66D):
Entertainment or amusement facilities
Transmission or distribution of electricity
Services relating to education
Financial services
Transportation of passengers
Transport of goods
Funeral Services
12
SERVICES UNDER
NEGATIVE LIST
13. 13
VALUATION OF TAXABLE
SERVICE
Whole Consideration in money:
•Value of taxable service will be gross amount charged for service.
Whole Consideration is not wholly in money
Value of taxable service will be :
Money value = XXX
+FMV of kind = +
If quantifiable = XXX
Consideration not ascertained:
As per Rule 3 of Determination of Value
Rules , 2006 i.e. value of other similar
services
If not possible then cost of services
14. Rule 3: [Main Rule] This rule is attracted when no specific
rule is prescribed for any situation.
Rule 4: Determination P.O.T. in case of change of rate of
tax. This rule is very significant in case there is change in
effective rate of tax. 14
POINT OF TAXATION
RULES 2011
15. 15
PAYMENT OF SERVICE
TAX
Mode of Payment
Payment of service tax became mandatory for all assesses who have
paid service tax of Rs. 1 Lac or above during last financial year or
current financial year.
Amendment: W.E.F. 1st October, 2014 payment of service tax shall be
made only by the use of internet i.e. online
16. A. Any person other than individual/ proprietorship
firm/partnership firm including LLP:
Electronically 6th of the following month.
However for the month of March service tax has to be
deposited by 31st March.
B. Individual/ proprietorship firm/partnership firm:
Electronically 6th of the Month following quarter.
However the quarter ending in the month of March service tax
has to be deposited in March itself.
16
PAYMENT OF SERVICE
TAX
17. REGISTRATION
17
NON SSP REVERSE
CHARGE
SSP
INPUT
SERVICE
DISTRIBUTOR
SUPERINTENDENT OF CENTRAL
EXCISE
FORM NO ST-1
WITHIN 30 DAYS
From commencement
of business or date
on which service is
taxable as the case
may be
From the date of
receipt of service or
the date of payment
for service
whichever is earlier
From the date o
n which value of
taxable service
provided exceed
Rs. 9 Lac
From the
date of
commence-
ment of
business
18. Rules for classification:
Rule 1: The most specific description.
Rule 2 : (i) naturally bundled : essential character
(ii) not naturally bundled : highest tax rate.
Rule 3: In case if service cannot be classified either as per rule 1
or rule 2: which comes first under the categories of services
specified under Section 65(105).
18
CLASSIFICATION OF
SERVICES
19. Where service receiver is liable to pay service tax instead of
service provider is termed as reverse charge. In that case
service receiver is liable to obtain mandatory registration
irrespective of any turn over limit, further limit of 10 Lac in case
SSP is also not available it means service tax is payable even on a
single penny of Rupee.
19
REVERSE CHARGE
