FM 302 : MANAGEMENT OF

DIRECT AND INDIRECT

TAXES
SERVICE TAX

12/08/21 SUMAN JAIN; SBIM 1

 SERVICE TAX - CONTENTS
• OVERVIEW
• DEFINITION
• CONCEPT
• LIABILITY OF SERVICE TAX
• RECORDS
• RETURNS

12/08/21 SUMAN JAIN; SBIM 2

 Service Tax - Overview
• Service tax is a tax levied on services
rendered by a person and the
responsibility of payment of the tax is cast
on the service provider.
• It is an indirect tax as it can be recovered
from the service receiver by the service
provider in course of his business
transactions.

12/08/21 SUMAN JAIN; SBIM 3

 Service Tax - Definition

• “Service tax can be defined as an indirect

tax which is levied on services and paid by
the concern service provider”.

12/08/21 SUMAN JAIN; SBIM 4

 Service Tax - Concept
• Service Tax was introduced in India in 1994 by
Chapter V of the Finance Act, 1994. 
• It was imposed on a initial set of three services
in 1994 and the scope of the service tax has
since been expanded continuously by
subsequent Finance Acts.
• The Finance Act, extends the levy of service tax
to the whole of India, except the State of Jammu
& Kashmir.

12/08/21 SUMAN JAIN; SBIM 5

 Service Tax - Concept
• The
Central Board of Excise & Customs (CBEC
)
under Department of Revenue in the
Ministry of Finance, deals with the task of
formulation of policy concerning levy and
collection of Service Tax.
• In exercise of the powers conferred, the
Central Government makes
service tax rules for the purpose of the
assessment and collection of service tax.
12/08/21 SUMAN JAIN; SBIM 6
 Service Tax - Concept
• The Service Tax is being administered by
various Central Excise Commissionerates,
working under the Central Board of Excise &
Customs.
• There are six Commissionerates located at
metropolitan cities of Delhi, Mumbai, Kolkata,
Chennai, Ahmadabad and Bangalore which deal
exclusively with work related to Service Tax.
•  Directorate of Service Tax at Mumbai oversees
the activities at the field level for technical and
policy level coordination.
12/08/21 SUMAN JAIN; SBIM 7
 Service Tax – Registration &
Liability
• Registration
• A person liable to pay service tax should file an
application for registration within thirty days from the
date on which the service tax on particular taxable
service comes into effect or within thirty days from the
commencement of his activity.

• Every service provider of a taxable service is required to

take registration by filing the Form ST-1 in duplicate with
the jurisdictional Central Excise Office.

• A ‘registered' service provider is referred to as an

‘assessee'.

12/08/21 SUMAN JAIN; SBIM 8

 Service Tax – Registration &
Liability
• A single registration is sufficient even  when an assessee
is providing more than one taxable services. However,
he has to mention all the services being provided by him
in the application for registration and the field office shall
make suitable entries/endorsements in the registration
certificate.

• A fresh registration is required to be obtained in case of

transfer of business to another person.

• Any registered assessee when ceases to provide the

taxable service shall surrender the  registration
certificate immediately.

12/08/21 SUMAN JAIN; SBIM 9

 Service Tax – Registration &
Liability
• In case a registered assessee starts providing
any new service from the same premises, he
need not apply for a fresh registration.
• He can simply fill in the Form S.T.1 for
necessary amendments he desires to make in
his existing information.
• The new form may be submitted to the
jurisdictional Superintendent for necessary
endorsement of the new service category in his
Registration certificate.

12/08/21 SUMAN JAIN; SBIM 10

 Service Tax – Records & Returns
• In case of Individuals or Proprietary Concerns and Partnership Firm,
service tax is to be paid on quarterly basis.
• The due date for payment of service tax is the 5th of the month
immediately following the respective quarter. (Quarters are : April to
June, July to September, October to December and January to
March).
• However, payment for the last quarter i.e. January to March is
required to be made by 31st of March itself.
• In case of any other category of service provider than specified
above, service tax is to be paid on a monthly basis, by the 5th of the
following month.
•  However, payment for the month of March is required to be made
by 31st of March itself.  Service tax is to be paid on the amount
realized / received by the assessee during the relevant period ( i.e.
a month or a quarter as the case may be).  

12/08/21 SUMAN JAIN; SBIM 11

Service Tax – Records & Returns
• The unique feature of Service Tax is collection of tax,
primarily through voluntary compliance.
• System of self-assessment of Service Tax Returns by
service tax assesses was introduced w.e.f. 01.04.2001.
• The jurisdictional Superintendent of Central Excise is
authorized to cross verify the correctness of self
assessed returns.
• Tax returns are expected to be filed half yearly. Central
Excise officers are authorized to conduct surveys to bring
the prospective service tax assesses under the tax net.
• Service tax is payable @ 12% of the ‘gross amount'
charged by the service provider for providing such
taxable service. The Education Cess is payable @ 2% of
the service tax payable.

12/08/21 SUMAN JAIN; SBIM 12

 Service Tax Exemptions
• Service Tax Exemptions
• The Central Government can grant partial
or total exemption by issuing an exemption
notification.
• But it cannot be granted by the
Government with retrospective effect. The
general exemptions are :-

12/08/21 SUMAN JAIN; SBIM 13

 Service Tax Exemptions –
CONTD.
• Small service providers whose turnover is less than
4 lakh per annum are exempt from service tax.

• There is no service tax on export of services.

• Services provided to UN and International Agencies

and supplies to SEZ (Special Economic Zones) are
exempt from service tax.

• Service tax is not payable on value of goods and

material supplied while providing services. Such
exclusion is permissible only if Cenvat credit on such
goods and material is not taken.

12/08/21 SUMAN JAIN; SBIM 14

12/08/21 SUMAN JAIN; SBIM 15