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Some basics about Service Tax

Q.           What is meant by Service?

Ans.       ‘Service’ has been defined in clause (44) of Section 65B and means –

  • Any activity
  • For consideration
  • Carried out by a person for another
  • And includes a declared service.

Q.           ‘Service’ does not include what?

Ans.       ‘Service’ does not include –

                Any activity that constitutes only a transfer in title of

  1. Goods or
  2. Immovable property by way of sale, gift or in any other manner
  3. A transfer, delivery or supply of goods which is deemed to be a sale of goods within the meaning of clause (29A) of Article 366 of the Indian Constitution.
  4. A transaction only in money or actionable claim.
  5. A service provided by an employee to an employer in the course of his employment.
  6. Fees payable to a court or a tribunal set up under a law for the time being in force.

Q.           What is Service tax?

Ans.       Service tax is an indirect form of tax levied on certain services provided by certain categories of persons including companies, association, firms, body of individuals etc. Service tax is a value added destination based consumption tax on commercial activities. It is not a charge on the business but on the consumer.

Q.           How do I know that I am performing a taxable service in the absence of a positive list?

Ans.       The practice to identify whether you are providing a taxable service is very easy. Just ask the questions listed in step 1 & 2 below –

Step – 1

To determine whether you are providing a ‘Service’

S. No.

Question

Answer

1.

Am I doing an activity (including, but not limited to, an activity specified in section 65E of the Act) for another person?

Yes

2.

Am I doing such activity for a consideration?

Yes

3.

Does this activity consist only of transfer of title in goods or immovable property by way of sale, gift or in any other manner?

No

4.

Does this activity constitute only a transfer, delivery or supply of goods which is deemed to be a sale or goods within the meaning of clause (29A) of article 366 of the Indian Constitution?

No

5.

Does this activity consist only of a transaction in money or actionable claim?

No

6.

Is the consideration for the activity in the nature of court fees for a court or a tribunal?

No

7.

Is such an activity in the nature of a service provided by an employee of such person in the course of employment?

No

8.

Is the activity covered in any of the categories specified in Explanation 1 or 2 to clause (44) of section 65B of the Act?

No

Step – 2

To determine whether service provided by you is ‘taxable’

If you are providing a ‘service’ as determined by step – 1 then pose the following questions to your self –

S. No.

Question

Answer

1.

Have I provided or have I agreed to provide the service?

Yes

2.

Have I provided or agreed to provide the service in the taxable territory?

Yes

3.

Is this activity entirely covered in any of the services described in the negative list of services specified in section 66D of the Act?

No

If the answer to the above questions is also same as given in the answer column above then you are providing a taxable service.

Q.           Will I have to pay service tax for all taxable services provided in the taxable territory?

Ans.       No. you will not have to pay service tax on taxable services provided by you in the following cases –

  • If in the previous financial year the aggregate value of taxable services provided by you was less than Rs. 10 lakh and in the present fin. Yr. the aggregate value of taxable services provided by you is also less than Rs. 10 lakh.
  • If the taxable service provided by you is covered under any one of the exemptions issued under section 93 of the Act.

Q.           Which are the services taxed under the new negative list based Service Tax Provisions?

Ans.       With the introduction of negative list based service tax, all services, other than services specified in the negative list, but confirms to the definition of ‘service’, provided or agreed to be provided in the taxable territory by a person to another is chargeable to tax.


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Category Service Tax, Other Articles by - CA Abhishek 



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