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Pay 10,000/month for 10 years, Get 1,65,805/Year* for next 15 years.
ARN. No. KLI/23-24/E-BB/1201
Features
Ref. No. KLI/22-23/E-BB/999
Service tax encompassed a wide range of services, except those listed under the exempt list or exempted by the government, with detailed provisions governed by the service tax rules.
Service tax, once a significant component of India’s indirect tax system, played a crucial role in revenue generation and regulatory compliance. Levied on various services provided by businesses, it ensured financial accountability and facilitated the government’s socio-economic objectives.
With new updates and amendments and the constant push for economic development, new tax regulations are inevitable. However, to understand these new rules, you must know what is service tax in India and how it impacts the taxation for people and the government.
Service tax is a form of indirect tax levied by the government on certain services provided by service providers. It applies to a wide range of services, covering almost every aspect of the service sector, except for a few services listed under the negative list or exempted by the government.
Service tax rules provide detailed provisions regarding various aspects of service tax; let us take a quick look.
Businesses providing taxable services must register for Service Tax and collect tax from their clients. Payment methods include challan forms submitted at authorized banks or online payment through the ACES portal. The specific tax rate depends on the service provided and could have changed over time.
Service tax exemption refers to the relief provided by the government from paying service tax on certain specified services. Service tax is a form of indirect tax levied by the government on providing services, and it is governed by the Finance Act. Exemptions from service tax can be granted for various reasons, such as to promote specific industries, encourage investment, support social welfare objectives, or alleviate the burden on certain categories of taxpayers.
Service tax billing typically included invoices issued by service providers that had to comply with the prescribed format under the Service Tax Rules. This format included details such as the service provider’s name and address, the service recipient’s name and address, a unique invoice number, the date of issuance, a description of the services provided, the value of the services, and the applicable service tax rate.
Under India’s service tax regime, various penalties are prescribed for non-compliance with the provisions of the Finance Act, 1994, and the Service Tax Rules. Tax authorities enforce these penalties to ensure compliance with service tax laws and deter instances of tax evasion or negligence. For instance, If a taxpayer fails to remit the service tax amount to the government within the prescribed due date, they are liable to penalty payment on the outstanding tax amount.
While Service Tax is no longer applicable in India since the introduction of GST (Goods and Services Tax) in 2017, here’s how the payment procedure for Service Tax used to work:
TR-6 Challan is the primary method to pay service tax. You must download the challan form from the Central Board of Excise and Customs (CBEC) website or obtain it from designated branches of authorized banks. The challan contains details like your service tax registration number, tax period, and tax amount. It is then submitted to a designated branch of any authorized bank to make the payment.
The ACES (Automation of Central Excise and Service Tax) portal offered an online payment option. You can access the portal and use the e-payment functionality to pay service tax electronically through your Internet banking account.
The rate of service tax in India went through several revisions over the years. Here’s a quick timeline:
According to the new taxation system introduced in Budget 2012, all services, except those outlined in the negative list, are liable for taxation. Section 66D lists the specific services exempt from this tax.
Service tax applies to both companies and individual service providers. While companies can pay taxes based on accrual, individuals must settle this tax in cash.
In compliance with regulations, service providers must remit taxes for services they have contracted to provide. Therefore, services agreed upon but not rendered are still subject to taxation. This includes any advance payments made to the service provider, even when the service contract is subsequently canceled.
Certain services are completely exempt from Service Tax. These typically included essential services considered crucial for public well-being. Examples include:
All eligible income taxpayers must make service tax payments online. Nevertheless, special requests for manual payments can be considered under specific circumstances.
To facilitate manual payments, individuals can access the official website of the Central Board of Indirect Taxes and Customs using their taxpayer login credentials. Individuals who directly pay service tax must maintain their own records. These records can be electronically maintained and should be retained for a minimum of 5 years.
Service tax played a pivotal role in revenue mobilization and regulatory compliance. Its robust framework of rules, coupled with evolving tax rates and exemptions, shaped the working of the service sector. With the beginning of GST, service tax’s legacy stays, highlighting the importance of tax compliance and the seamless transition toward a unified indirect tax regime.
1
Service tax is levied on the service provider, although in some cases, the burden may fall on the service recipient under a reverse charge mechanism.
2
Service tax is an indirect tax imposed by the government on certain services provided by service providers in India.
3
Service tax can be paid online through designated portals provided by the tax authorities or authorized banking channels.
4
Yes, failure to pay service tax on time may attract penalty fees, which the tax authorities impose based on the amount of overdue tax.
5
Service tax applies to service providers who exceed the government-specified threshold for the aggregate value of taxable services provided.
6
The charge of service tax is typically a percentage of the value of the taxable service provided, as specified by the government.
7
Services without a specific GST rate (non-exempt) fall under the default 18% category.
Amit Raje is an experienced marketer who has worked in various Fintechs and leading Financial companies in India. With focused experience in Digital, Amit has pioneered multiple digital commerce in India. Now, close to two decades later, he is the vice president and head of the D2C business department. He masters the skill of strategic management, also being certified in it from IIMA. He has challenged his challenges and contributed his efforts in this journey of digital transformation.
Prasad Pimple has a decade-long experience in the Life insurance sector and as EVP, Kotak Life heads Digital Business. He is responsible for developing user friendly product journeys, creating consumer awareness and helping consumers in identifying need for life insurance solutions. He has 20+ years of experience in creating and building business verticals across Insurance, Telecom and Banking sectors
Pay 10,000/month for 10 years, Get 1,65,805/Year* for next 15 years.
ARN. No. KLI/23-24/E-BB/1201
Features
Ref. No. KLI/22-23/E-BB/999
The information herein is meant only for general reading purposes and the views being expressed only constitute opinions and therefore cannot be considered as guidelines, recommendations or as a professional guide for the readers. The content has been prepared on the basis of publicly available information, internally developed data and other sources believed to be reliable. Recipients of this information are advised to rely on their own analysis, interpretations & investigations. Readers are also advised to seek independent professional advice in order to arrive at an informed investment decision. Further customer is the advised to go through the sales brochure before conducting any sale. Above illustrations are only for understanding, it is not directly or indirectly related to the performance of any product or plans of Kotak Life.
