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'Services' constitute a very heterogeneous spectrum of economic activities. Over a period of time, the definition of 'service' has also undergone change. Service sector now occupies the centre stage of the economy, so much so that in the contemporary world, development of the service sector has become synonymous with the advancement of the economy. The share of the services sector in the real GDP in India has surpassed that of agriculture and industry at a relatively faster pace, as compared to other industrialised nations.
Service Tax is administered by the Central Excise Commissionerates working under the Central Board of Excise & Customs (CBEC), Department of Revenue, Ministry of Finance, Government of India. It deals with the tasks of formulation of policy, concerning levy and collection of Customs and Central Excise duties, prevention of smuggling, and administration of matters relating to Customs. The unique feature of Service Tax is reliance on collection of tax, primarily through voluntary compliance.
Article 265 of the Constitution lays down that no tax shall be levied or collected except by the authority of law. Schedule VII divides this subject into three categories-
- Union list (only Central Government has power of legislation)
- State list (only State Government has power of legislation)
- Concurrent list (both Central and State Government can pass legislation).
The growth of service sector at higher rate offers opportunities, as well as challenges to bring under the tax net, hitherto uncovered services. This offers tremendous revenue potential to the Government. It is expected that in due course, Service Tax would reduce the tax burden on international trade (Customs duty) and domestic manufacturing sector (Excise duty). So a planned growth of service tax would be commensurate with the goals of economic liberalization and globalization. This process requires levy of taxes on new services, without substantial rise in the rate or cost of collection.
Service Tax Act
Chapter V of the Finance Act of 1994 provides directives on Service Tax.
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Service Tax Rule
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Service Tax is levied by the Union of India and is charged on the gross value of services. Generally, it is payable on receipt basis. As it is an indirect tax, it is payable by the service provider but it is ordinarily recovered from the recipient of services.
A mechanism for set-off of service tax, i.e. credit for input service tax is provided whereby, the law provides for input tax credit across the board, irrespective of the fact whether the output service and the input service fall within the same category of service or not. Every person liable to pay service tax is required to register itself with Service Tax Authorities and comply with procedural requirements like paying taxes, filing returns, etc. However, in case of non-residents, who do not have any office in India and who are liable to pay service tax in India, this burden is shifted to the recipient of service with effect from 16 August 2002.
The growth of service sector at higher rate offers opportunities, as well as challenges to bring under the tax net, hitherto uncovered services. This offers tremendous revenue potential to the Government. It is expected that in due course, Service Tax would reduce the tax burden on international trade (Customs duty) and domestic manufacturing sector (Excise duty). So a planned growth of service tax would be commensurate with the goals of economic liberalization and globalization. This process requires levy of taxes on new services, without substantial rise in the rate or cost of collection.
Services
The official website of CBEC offers different facilities, and enables the user to get an idea about the classification and duty rates on their products and services. It also enables Central Excise and Service Tax applicants to locate the addresses of their jurisdictional offices. They can also file their Central Excise and Service Tax returns electronically.
E-File
To file your service tax online, you should have a 15 Digit Service Tax Payer (STP) Code, a valid e-mail address, and create a user name with the help of your Jurisdictional Commissionerate (you will be intimated by e-mail once username and password is created). This done, you can file service tax returns electronically.
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