Service tax

SACHIN KUMAR
IPCC REG. NO.:- CRO 0502131
BATCH COMMENCEMENT DATE:24-November-2014
PROJECT TOPIC: SERVICE TAX
SUBMITTED BY:
ITT CENTRE NAME: BIKANER BRANCH OF CIRC OF ICAI
1

INDEX
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1)Basic concept of service tax ………………………. 7-8
2)Genesis of service tax in India …………………… 9
3)Service tax on services ……………………………. 10-11
4)Approaches of service tax ………………………... 11
5) levy of service tax …………………………………….. 12
6)Meaning of service tax ……………………………. 13-15
7)Negative list …………………………………………….. 16-23
8)Conclusion ………………………………………………. 26
9)Bibliography ……………………………………………. 27

Submitted By :- SACHIN KUMAR
Regn. No. CRO 0502131
7
SERVICE
TAX

8
ENTRY NO. ITEMS
92C TAXES ON SERVICES
97 ANY OTHER MATTER NOT INCLUDED IN LIST II OR LIST III
(LEVY OF SERVICE TAX THROUGH FINANCE ACT,1994)
NOTE:- Although the Govt. has amended the constitution
and inserted entry no. 92C but no separate Act has been
passed yet and service tax is still being governed by entry 97
i.e. Residuary Entry
Service tax is governed and administered by the Central
Board of Excise and Custom (CBEC)
List I UNION LIST

9
GENESIS OF SERVICE TAX IN INDIA
• The tax reform committee headed by Dr. Raja J. chelliah
recognized the revenue potential of the service sector in
India and recommended imposition of “Service Tax”.
• Based on these recommendation, Dr. Manmohan Singh, the
Union Finance Minister, in his Budget Speech for the year
1994-95 introduced the new concept of “SERVICE TAX”.

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Service Tax on Services
•The introduction of the service tax was under the
Residuary entry of the constitution and as such, could
not be brought through a separate enactment.
•Therefore the Service tax was levied under chapter V
of the Finance Act, 1994
•It was introduced for the first time on following Three
Services :-
1.Telephone facility
2.Stock Broker
3.Non-life Insurance

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• Subsequent finance act have added more and more
services Tax purpose. As such,119 services were
chargeable to service Tax till 30-06-2012
Approach Comprehensive Approach Selective Approach
Taxation of
Services
1. Taxation of all services
2. Negative list Is given in
case some services are
to be exempted.
1. Selective services are
subject to service
tax.
2. Coverage of activities
is specific to each
service.
Time period This approach has been
adopted w.e.f 01-07-2012,
with the introduction of
the Negative list as part of
Finance Act 2012
Was in effect till 30-6-
2012
APPROACHES TO SERVICE TAX

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Levy of Service Tax
• Levy of Service Tax extends whole of India except Jammu
and Kashmir
1. Service tax is Destination based and service is taxable only
if provided in Taxable Territory.
2. The levy of service tax extends whole India except J&K.
The following are the observation in this regard-
a) Services rendered in J&K, will not be liable to Service tax.
b) Services rendered by a person established in J&K, but
rendered outside the state is liable to Service Tax.
3. Import of services is also liable to service tax in this case
liability to pay service tax is on service receiver.
4. Export of services to a country outside India is not taxable.

13
Meaning of SERVICE
“SERVICE” MEANS ANY
1)ACTIVITY CARRIED OUT BY
2)A PERSON FOR ANOTHER, FOR
3)CONSIDERARTION
SPECIFIC EXCLUSIONS:-
a)Mere transfer of title in goods, movable or immovable
b)Mere Delivery or supply of any goods which is Deemed to be
a sale.
c)A transaction in money or actionable claim.
d)A provision of service by an employee to the employer in
course of or in relation to his employment.
e)Fees taken in any Court or Tribunal established under any law
for the time being in force.

14
1st
Condition – ACTIVITY
In term of common understanding the word activity would
include:-
a)An act done,
b)Work done,
c)An operation carried out,
d)Execution of an act,
e)Provision of a facility, etc.
Note:- Activity could be Active or passive.
2nd
Condition – SERVICE SHOULD BE PROVIDED BY
A PERSON TO ANOTHER.
NOTE:- Self consumption of service is not liable for service
tax.

15
3rd
condition – CONSIDERATION
“Consideration” means everything received or
recoverable in return for a provision of service.
Consideration includes any amount that is payable for the
taxable services provided or to be provided.
Form :- consideration may be monetary or Non monetary
1). Monetary consideration means in money
2). Non – monetary consideration means compensation in
kind.
66B Charge of Service Tax
The effective rate of Service tax is 12.36%.

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NEGATIVE LIST (Section 66D of the
Finance Act, 1994)
(A) SERVICE PROVIDED BY GOVERNMENT OR A LOCAL
AUTHORITY
Service provided by a Govt. shall not be liable to service tax. However, the
following service provided by a Govt. shall be taxable.
i) Service provided (other than to Govt.) by the Department of Post by way
of-
a) Speed post,
b) Express parcel post
c) Rural postal life insurance
d) Agency service include distribution of mutual fund, bonds etc.
ii) Services in relation to an AIRCRAFT OR A VESSEL,
iii) TRANSPORT OF GOODS OR PASSENGER
iv) SUPPORT SERVICES

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(B) SERVICES PROVIDED BY THE RESERVE BANK OF INDIA
Any service provided by the RBI to any person is not liable to service tax.
However, Services provided to RBI are not in negative list and would be
taxable.
(C)ALL SERVICES PROVIDED BY A FOREIGN DIPLOMATIC MISSION/
UNITED NATION / SPECIFIED INTERNATION ORGANISATION
LOCATED IN INDIA
(D) SERVICES RELATING TO AGRICULTURE
Services relating to Agriculture or agriculture produce by way of-
i)Agriculture operation
ii)Supply of farm labor
iii)Process carried out an agriculture farm including tending, pruning, cutting,
harvesting, drying, cleaning, trimming, sun drying, fumigating, curing, sorting,
grading, cooling, or bulk packaging.
iv)Renting or leasing of agro machinery or vacant land with or without a
structure incidental to its use,

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vi) Agriculture extension service,
vii) Services by any Agriculture produce Marketing committee or
Board or services provided by a COMMISSION AGENT for sale
or purchase of Agriculture produce;
Meaning of “AGRICULTURE”:- Agriculture means the
cultivation of plant and rearing of all life-forms of
animals,(EXCEPT THE REARING OF HORSE) for food, fuel,
raw material, or other similar products.
Meaning of “AGRICULTURE EXTENSION” :- Agriculture
extension means application of scientific research and
knowledge to agriculture practices through farmer
education or training.

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(E) TRADING OF GOODS
Goods which are purchased and sold are not liable to service
tax.
Negative list contains the entry trading of goods and not the
services provided in relation to trading of goods.
TAXABLE:- activities of a commission agent or a clearing and
forwarding agent who sell goods on behalf of another for a
commission are not in the nature of trading of goods and
hence such services provided by the agent shall be liable for
service tax.
(F) ANY PROCESS AMOUNTING TO
MANUFACTURE OR PRODUCTION OF GOODS
Any process amounting to manufacture or production of goods on which
excise duty is leviable under the Central excise act will not be liable to
service tax.

20
(G)Selling of space or time slots for
advertisement other than advertisements broadcast
by radio or television.
TAXABLE:- 1) Service provided by advt. agencies relating to
making of advts.
2) Mare canvassing for advt. for publishing on a commission
basis.
(H)On payment of toll charges
Service provided by way of access to a road or a bridge on
payment of toll charges shall not be liable to service tax
whether the road national highway or state highway.
(I)Betting, gambling or lottery
Taxable:- Auxiliary services that are used for organizing betting or
gambling events.

21
(J)Admission to entertainment events or
access to amusement facilities.
Taxable:- Auxiliary services provided by a person for organizing an
entertainment events.
(K)Transmission or distribution of electricity
by an electricity transmission or distribution utility
Taxable:- Services provided by way of installation of genets' or similar
equipment by private contractor for distribution of electricity does not
fall in the negative list and hence would be liable to service tax.

22
(M)Services by way of renting of residential
dwelling for use as residence.
Taxable:- It does not includes hotel, motel, guest house, lodge, house boat or like
places meant for temporary stay, office etc.
(N)A few financial services like deposits, loans
advance, foreign currency sale or purchase by banks or
authorized dealers etc.)
(O)Service of transportation of passengers, with
or without accompanied belongings.

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(L)A few of services relating to education.
(P)Services by way of transportation of goods.
The following services provided by way of
transportation of goods shall not be liable to service
tax.
i)By road except the services of –
a) a goods transportation agency,
b) a courier agency
ii)By an aircraft or a vessel from a place outside India to the
first custom stations of landing in India,
iii)By inland waterways

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(Q)Funeral services

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Due date for payment :- 1) any person other than an individual or
proprietary firm or partnership firm. => 5th
/ 6th
(in case of e-payment)
day of the month immediately following the calendar month. For march
31st
March.
2) An individual or partnership firm => 5th
/6th
(in case of e-payment) day
of the month immediately following the quarter. For march 31st
March.

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CONCLUSION
Service tax is a tax governed and administered by the
Central Board of Excise and Customs (CBEC) Which is
under the control of Department of Revenue,
Ministry of Finance.
Service tax is levied on all services except Exclusion,
Negative list, Mega Exemption notification,
Abatement.
Service tax levied on whole India except Jammu and
Kashmir.

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BIBLIOGRAPHY
• God
• Parents
• Sonali mam
• IPCC Study material
• Service tax notes
• Internet

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