Dr. Sanjiv Agarwal

The consumption of services in India has become costlier w.e.f. 1.7.2012. The services which were hitherto not taxable at all are into tax net now. Those which were taxed earlier have a larger scope or are taxed with lesser exemptions. The valuation norms have been made tougher so that Service Tax is levied on gross value of service which will include even non monetary consideration.

In fact, what government has done is that they have levied tax on all services except services covered in negative list and exempted category. There are seventeen services in negative list and 39 services in exempted category. There are 8 activities which have been declared to be service for levy of Service Tax.

Service Tax will be levied on all service provided and also agreed to be provided in taxable territory (which means India). However, where service is provided from outside India including from Jammu & Kashmir State, Service Tax will be levied but payable by service receiver located in India. For the purpose of Service Tax, Jammu & Kashmir is excluded.

While levying Service Tax w.e.f. 1st July, 2012, some more exemptions have been specified. The services provided by advocates to or a firm of advocates will not be liable to Service Tax. Similarly, legal services provided by advocates to business entities with turnover upto Rs. 10 lakh in a year will be exempt. Where advocate or firm of advocates provide services to business entity, tax will be paid by such business entity and not the advocate. Similarly, services of stock brokers, mutual fund agents, sub contractors etc. have been taken out of tax net. If business exhibitions are held outside India, Service Tax will not be levied. Also public libraries, employees state insurance, public conveniences and functions of the municipal corporation will not attract Service Tax.

Transport of goods by rail which was levied in 2009 but was withdrawn till date will now be applicable w.e.f. 1.7.2012 for the first time. Tax will how ever, be levied on 30 percent of freight value. In case of catering and restaurants, Service Tax will be levied on 70 percent of bill amount. All residential units will attract Service Tax on 25 percent value only.

Since the new provisions did not talked of education cess, to clear the confusion, central government has clarified that education cess will continue to be levied on Service Tax as earlier.

So, after general inflation, rising prices of all most all items / food or non food), fuel etc, Service Tax would also add to the woes of common man, from now on.

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  1. Sushila. p .Nawalkha says:

    Interest levy on late payment of service tax to those assesees who has rental income from commercials needs review as per suggestions below:(i) interest of 12% should be charged instead of 18% (ii) there should no interst for default from SENIOR CITIZENS a humanitarian consideration like in case of advance tax in income tax. SUSHILA P.NAWALKHA 812 B GRAND GEEJGARH HAWASADAK JAIPUR 302006 MOBILE 9314506917

  2. srinivasarao says:

    payment of service tax on Directors sitting fee falls under which service. Business Axillary service or Management or Business consultancy service.

  3. Maan says:

    Dear Sir,

    I need clarification regarding service providing within the state of Jammu & Kashmir. Shall we pay the service tax for providing (service taken from the Jammu for Jammu location) the service within the J&K State??

  4. Arti Joshiq says:

    Dear Sir, can u suggest me, how can i make the payment to service provider & can i take the service tax credit fully or not. i just confuse for that.

  5. simon says:

    Hello Sir
    what do you think, services tax of 12.36 percent is applicable on when we trasfer money from paypal to our bank with NEFT transfer?

  6. CA. Subhash Chandra Podder ,FCA. says:

    Common man are frustrated to maintained their family with rise in prices /inflation added to that service tax would also woes also common man ,now on . What is the remedy ? The entire system should be re examined by the authority.Most of the masses are unable to take one course meal a day.who will think for them ? Sugar has to be tested in order to know that it is sweet.Who is responsible to feed the masses in India.
    CA. Subhash Chandra Podder, FCA

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December 2020