What is Service Tax?

Service tax is indirect tax which is imposed by government of India on services provided in India. Service Tax Registration is a tax registration required for person providing services in India. Service tax registration is an indirect tax wherein the service provider pays the tax and recovers the same from the recipient of the taxable service. At present, Service Tax is levied at 15% on the value of the taxable service. This includes swatch Bharat Cess of 0.50 (half) percent and Krushi Kalan Cess of 0.50 (half) percent on service tax. The service tax rules mandates online application for registration. Service Tax registration is compulsory for every person who has provided a taxable service of value exceeding Rs.9 lakhs, in the preceding financial year.

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Service Tax Registration

Basic exemptions is given by tax authorities. However Service tax registration must be obtained by any person who provided a taxable service of value exceeding Rs.9 lakhs, in the previous financial year. Failure to obtain service tax registration can consequence in penalty.

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Payments

Service Tax Payments must be deposited to government treasury by quarterly / six monthly depending upon nature of person registered. For delayed payment of service tax interest will be applicable.

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Service Tax Returns

Service Tax Return Form ST-3 must be filed half yearly. Return for half year ending 30th September and 31st March are required to be filed by 25th October and 25th April, respectively.

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No Service tax on Export

For services which are classifying as export of service from India the service provider is not required to pay service tax. Moreover under Rule 5 of CCR person exporting services become eligible for refund of service tax.

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Frequently Asked Questions (FAQs)

What is Service Tax?

Service tax is a tax on services provided in India. Service tax is levied under the Finance Act, 1994 on certain services as specified by the Government. It is categorized under Indirect Tax.

Who has to pay Service Tax to government?

Service tax is a form of indirect taxation. Service tax is to be paid by the receiver of the service. Therefore, the person who provides the taxable service charges along with the service tax on services amount. He is liable for paying the service tax portion to the Government. Also, small scale service providers who provide less than Rs.10 lakhs of taxable service a year is exempt from service tax.

What is the rate of Service Tax?

The current effective rate of Service Tax is 14% on the value of the taxable service in addition to 0.50% swatch Bharat cess and 0.50% Krishi Kalyan Cess the effective rate becomes 15%.

Can recipient of service be also asked to pay service tax?

In certain cases revers charge Government may shift the liability of payment of service tax to the receiver of service as a measure of administrative convenience. It is often mentioned to as ‘reverse charge’ in tax language.