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revised service tax rates

Ashley (cs) (178 Points)

03 March 2009

I would like to know if the revision in rate of service tax by way of reduction of 2% applies only to cases where service tax of 12.36% is levied or there is some relaxation in other cases where rate of service tax is different like incase of airline ticketing business, foreign exchange business etc. views solicited thanks

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Rajesh Kumar (Advocate- Tax) (7806 Points)
Replied 03 March 2009

It is not known as to on what date service tax is charged. It is not clear in the charging section (Section 66 of the Finance Act). Nothing is there in the rules also. Thus there is confusion.

The solution is, if the buyer is getting credit, in case of doubt charge higher rate. If the service has been completed before 24.02.2009, charge higher rate. In other cases, charge lower rate. In fact, date of invoice should be the relevant date for charging service tax.

mamta (student) (57 Points)
Replied 12 March 2009

Originally posted by :Ashley
"	I would like to know if the revision in rate of service tax by way of reduction of 2% applies only to cases where service tax of 12.36% is levied or there is some relaxation in other cases where rate of service tax is different like incase of airline ticketing business, foreign exchange business etc. views solicited thanks	"

No, the reduction of 2% in the rate of service tax applies to case only where service tax was applicable @ 12%. But there is no reduction in rates where service tax is applicable at a different rate. For e.g. in case of Works Contract if tax is chargeable @ 4%, there is no change in rate. On the other hand, if there is an exemption or there is an abatement & tax is charged on the remaining value @ 12%, then reduced rate of 10% will apply. For E.g. in case of "Goods Transport Agency" service tax is chargeable @ 10.3% after exempting 75% of gross value,i.e, on (25%of gross value*10.3%)