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Service Tax in India

Do you know who the Finance Minister was when the Service Tax was first implemented in the 1994-95 Budget? It was none other than the current PM of India, Dr. Manmohan Singh.

Service Tax is an indirect tax levied in all the states of India, except Jammu and Kashmir. It is a part of the Central Excise in India and the responsibility of its collection is with the Central Board of Excise and Customs (CBEC). In simple words, it is a tax on services which is known as ‘taxable services’.

What brought Service Tax to India?

Service Tax was first introduced to the Indian system in the 1994-95 Union Budget. The idea behind imposing Service Tax is to reduce the degree and extent of tax on core business, industry and trade without reducing the revenue stream for the government.

Services of non-life insurance brokers, telephones and stock brokers were the only 3 ‘taxable services’ were subject to this tax when it was first introduced.

The list of ‘taxable services’ is now comprehensive and includes more than 100 categories. The scope has now been broadened to increase revenue and to encompass almost all services under the net of Service Tax.

Who pays Service Tax and how much?

Like we mentioned earlier, there is a list of ‘taxable services’ which are subject to Service Tax. If you are an individual or a company which offers a taxable service, you will be responsible and liable to pay Service Tax.

You must also know that the Service Tax can be recovered from the receiver of the service in normal course of business transactions. The current rate of Service Tax is 10% of the gross amount that is charged by you as a service provider who provides a ‘taxable service’.

How do you register yourself?

We are not going to provide you only with textbook information and leave you high and dry to figure out the rest for yourself. Here are the basic steps, subject to the current Finance Act, that you need to take as a provider of a taxable service to get the ball rolling for Service Tax.

  • 30 days from the commencement of providing your service, or from the day on which the particular service comes under the scope of Service Tax, you must file an application for registration as a service provider of a taxable serve.
  • At your service is the Form ST-1, the duplicate of which must be taken to the Central Excise Office.
  • If you provide more than one service, you must mention all of them in the same application.
  • If you start to provide a new service, a new application form is not required. The required amendments will need to be filled out in the Form ST-1 and submitted to the relevant authority.
  • If your business is transferred to another person, a new application must be made.

When do you pay Service Tax?

Service Tax is payable on a quarterly basis, on the 5th of the month immediately following the quarter except the last quarter. The payment date for Service Tax relating to the last quarter is 31st March itself.

Given below is an exhaustive list of taxable services that come under the scope of Service Tax.

List of services taxable under Service Tax

  • Advertising Agency Service
  • Advertisement- sale of space or time services
  • Air travel agent’s services
  • Airport services
  • Architect’s Services
  • Asset Management Services By Individuals
  • ATM operation, maintenance or management services
  • Auction Service
  • Authorised Service Stations for motor vehicles servicing or repairs
  • Banking and other financial services
  • Beauty treatment Services
  • Brand Promotion Services
  • Broadcasting Services
  • Business Auxiliary Service
  • Business Exhibition Service
  • Business Support Service
  • Cable Operator’s services
  • Cargo handling Services
  • Chartered Accountant’s (practising) services
  • Cleaning Services
  • Clearing and forwarding agent’s services
  • Clearing & processing house services
  • Club’s or Association’s membership services
  • Commercial training or coaching services
  • Commercial use or exploitation of any event service
  • Commodity exchange service
  • Company secretary’s (practising) services
  • Construction of residential complex service
  • Construction or renovation of commercial / industrial buildings / pipelines / conduits services
  • Construction Services – Preferential Location and Development
  • Consulting engineer’s service
  • Convention services
  • Copyright Services
  • Cosmetic or Plastic Surgery Service
  • Cost accountant’s (practising) services
  • Courier Services
  • Credit card, debit card, charge card or other payment cards related services
  • Credit rating agency’s services
  • Custom house agent’s services
  • Design services
  • Development & supply of content for telecommunication, advertising and on-line information services
  • Dredging services
  • Dry cleaning services
  • Electricity Exchange services
  • Erection, commissioning or installation service
  • Event management Service
  • Fashion Designer Service
  • Foreign Exchange broking services
  • Forward Contract Service
  • Franchise Services
  • Health club and fitness centre services
  • Health Services
  • Information Technology software services
  • Insurance auxiliary services concerning general insurance business
  • Insurance auxiliary services concerning Life Insurance business
  • Insurance business services (General Insurance)
  • Insurance business services (Life Insurance)
  • Intellectual property services
  • Interior decorator’s services
  • Internet café’s services
  • Internet telecommunication services
  • Investment management service under ULIP
  • Legal consultancy services
  • Lottery and other Games of Chance Services
  • Mailing list compilation and mailing services
  • Management or business consultant’s services
  • Management, maintenance or repair services for goods, equipments or properties
  • Mandap keeper’s services
  • Manpower recruitment or supply agency’s services
  • Market research agency’s services
  • Medical records maintenance service
  • Mining service
  • On-line information and database access and/or retrieval services
  • Opinion poll service
  • Outdoor caterer
  • Packaging services
  • Pandal or shamiana services
  • Photography services
  • Port services by major ports
  • Port services by other ports (minor ports)
  • Programme (T. V. or Radio) services
  • Public Relation Service
  • Rail travel agent’s services
  • Real estate agent’s services
  • Recovery agent’s services
  • Registrar to an issue services
  • Rent-a-cab services
  • Renting of immovable property services
  • Scientific or Technical Consultancy Services
  • Security agency’s services
  • Share transfer agent service
  • Ship management services
  • Site formation and clearance, excavation and earthmoving and demolition services
  • Sound recording services
  • Sponsorship service
  • Steamer agent’s services
  • Stock broking services
  • Stock exchange service
  • Storage and warehousing services
  • Supply of tangible goods services
  • Survey and exploration of mineral services
  • Survey and map making services
  • Technical inspection and certification services
  • Technical testing and analysis services
  • Telecommunication services
  • Tour operator’s services
  • Transport of coastal goods and transport of goods through national water way/inland water service
  • Transport of goods by air services
  • Transport of goods by road
  • Transport of goods by rail service
  • Transport of goods through pipeline / conduit services
  • Travel agent’s (other than air or rail) services
  • Travel by air services
  • Travel by cruise ship service
  • Underwriter’s services
  • Video tape production services
  • Works contract Services

If you have any questions in regards to Service Tax in India, please do not hesistate to ask in comments. We will try to answer them

  1. DARSHAN S. BHULLAR says

    What is service tax on rented immovable property? Beyond what limit of rent gst is applicable?

  2. Shruti Corp says

    very nice article and full of useful knowledge. we have cosultancy firm for all tax related work.

    At ShrutiCorp.com we provide service for company registration, taxation, auditing, income tax returns, trademarks and other ROC related services. Shruti Corp offers a combination of specialized skill sets that are geared to offer sound and effective financial solutions along with services.

    Our Specialization/Services: –

    • Income Tax Related services
    • Sales Tax / VAT Related Services
    • Service Tax Related Services
    • Company Registration Related Services
    • Accounting Services

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    ShrutiCorp.com

  3. Prakash Patil says

    nice

  4. Roshan gupta says

    a forigner provide architechservice in india.
    payment made in USD.
    whether forigner is liable to pay service tax in india?

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