File Content -
Basic of Service Tax & Reverse
Felix Advisory Private Limited
1. India’s GDP Components
2. India Tax Revenue in 2014 - 15
3. What is Service tax
4. History of Service tax
5. Rates of Service Tax
7. Charging of Service tax
8. Declared Services
9. Negative List
10. Valuation of Services
11. POT Rules, 2011
12. POPS Rules, 2012
13. Reverse Charge
15. Payment & Default in Payment
16. Return & Default in Return
17. Exemption Notification 26/2012
18. Exemption Notification 25/2012
19. Export of Service
India’s GDP Components (Sector)
Gross Domestic Product ( GDP ) is the broadest quantitative measure of a nation's
total economic activity . More specifically, GDP represents the monetary value of all
goods and services produced within a nation's geographic borders over a specified
period of time .
India Tax Revenue in 2014 - 15
Corporate tax Income tax Customs Excise Service taxRs. In Crores
What is Service Tax ?
• Tax on Services.
• It is an Indirect tax.
• It is actually borne by the Consumers.
• It came into existence under the Finance Act, 1994.
• Service tax is a tax levied by Central Government of
India on services provided or to be provided
excluding services covered under negative list and
considering the Place of Provision of Services Rules,
2012 and collected as per Point of Taxation Rules,
2011 from the person liable to pay service tax .
• Person liable to pay service tax is governed by
Service Tax Rules, 1994 he may be service provider or
service receiver or any other person made so liable .
• Few services are presently exempt in public interest
via Mega Exemption Notification 25 / 2012 - ST as
amended up to date & few services are charged
service tax at abated rate as per Notification No .
26 / 2012 - ST as amended up to date .
• Presently from 15 November 2015 , service tax rate
has been increased to @ 14 . 50 % (including 0 . 5 %
Swatch Bharat Cess) of value of services provided or
to be provided .
History of Service tax
• Dr . Raja Chelliah Committee on tax reforms
recommended the introduction of service tax . The tax
collections have grown substantially since 1994 - 95
i . e . from ₹ 407 crore in 1994 - 95 to ₹ 1 , 68 , 132 crore in
2014 - 15 . The total number of Taxable services also
increased from 3 (Telephone, Stock Broker & General
Insurance) in 1994 to 119 in 2012 . However, from 1
July 2012 the concept of taxation on services was
changed from a 'Selected service approach' to a
'Negative List regime' . This changed the taxation
system of services from tax on some Selected
services to tax being levied on the every service other
than services mentioned in Negative list .
Service tax rate since 1994
From 01.07.1994 to 13.05.2003 5%
From 14.05.2003 to 09.09.2004 8%
From 10.09.2004 to 17.04.2006 10%
From 18.04.2006 to 10.05.2007 12.24%*
From 11.05.2007 to 24.02.2009 12.36%*
From 25.02.2009 to 31.03.2012 10.30%*
From 01.04.2012 to 31.05.2015 12.36%*
From 01.06.2015 to 14.11.2015
Now At Present 14.50% *
* Inclusive of cess
• Section 64 Applicable to the whole of India except
Jammu & Kashmir .
• India includes Territorial Waters(TWI), Continental
Shelf, Exclusive Economic Zone(EEZ) and Union
• It will not apply to outside India .
Charging of Service tax
• Section 66 - B of the Finance Act, 1994 levis a
charge of service tax on the “Value of taxable
services” provided or to be provided .
9 Declared Services
1. Renting of Immovable Property .
2. Construction of a complex, building, civil structure
or a part thereof .
3. Temporary Transfer or permitting the use or
enjoyment of any IPR .
4. Development, design programming, customization,
adaptation, up gradation, enhancement,
implementation of IT Software .
5. Agreeing to the obligation to refrain from an act, or
To tolerate an act or a situation, or To do an act ;.
6. Transfer of Goods by way of hiring, leasing, licensing or
in any such manner without transfer of right to use such
7. Activities in relation to delivery of goods on Hire
Purchase or any system of payment by installments .
8. Service portion in the execution of a Works Contract .
9. Service portion an activity where in goods, being food
or any other article of human consumption or any drink
is supplied in any manner as a part of the activity .
NEGATIVE LIST OF SERVICES COVERS
SPECIFIED 17 SERVICES
1. Services provided by Government or local authority .
2. Services provided by Reserve Bank of India .
3. Services by a foreign diplomatic mission located in
4. Services relating to agriculture or agricultural
5. Trading of goods .
6. Any Processes amounting to manufacture or
production of goods .
7. Selling of space for advertisements in Print Media .
8. Access to a road or a bridge on payment of toll
9. Betting, gambling or lottery .
10. Entry to Entertainment Events or Access to
Amusement Facilities .
11. Transmission or distribution of electricity .
12. Specified services relating to education .
13. Services by way of renting of residential dwelling for
use as residence .
14. Financial sector .
15. Service relating to transportation of passengers .
16. Service relating to transportation of goods (except
GTA & Courier Agency) .
17. Funeral, burial, crematorium or mortuary services
including transportation of the deceased .
Valuation Of Taxable Services
• As per the provision of the section 67 of the
Act, the value of Taxable Services shall be the
“ Gross amount charged” by the services
provider for services provided or to be
Service tax valuation Rules, 2006
• Original Works – 40% of the
total amount charged.
• All other works contract -
70% of the total amount
charged. Restaurant or Outdoor Catering
• Restaurant – 40% of total
• Outdoor Catering - 60% of
total amount charged.
POT Rules, 2011
Rule - 3
Rule - 7SP SR
days from the
Service Invoice not
30 days from
the date of
earlier Completion or
POT shall be
the date on
made Payment not
POT shall be
POPS Rules, 2012
• Rule - 3 Default Rule
Location of SR(If location of SR is not available then location
of SP) .
• Rule - 4 Service provided in respect of Goods/ Services
provided to an Individual
Place of Performance of Service .
• Rule - 5 Services in relation to Immovable Property
Location of Immovable Property .
• Rule - 6 Event Organization
Location where event held .
• Rule - 7 Provisioning of Service rendered at Multiple
Location where the greatest proportion of the service is
• Rule - 8 (SP+SR)TT
Location of SR(i.e. TT).
• Rule - 9 HOBI
Location of SP.
• Rule 10 Transport of Goods
Destination of Goods.
• Rule - 11 Transport of Passengers
Place of Embarkation of Passenger.
• Rule - 12 Catering etc. on Board
First Scheduled Departure Point of Conveyance.
• Rule 13
• Rule 14 Later is better.
Full - Reverse Charge
12 cases - 100% ST to be paid by SR
Status Person liable to pay ST
• Insurance Agent Insurance Company
• Recovery Agent Bank/FI/NBFC
• Lottery Marketing Agent Lottery Distributor
• MF Agent/Distributor Mutual Fund/Asset
• GTA(Transport of Goods by road) Any person liable to Pay freight
• Any Person(Sponsorship) Body Corporate/
• Arbitral Tribunal Business Entity
• Lawyer/Law Firm Business Entity
• Govt./Local Authority Business Entity
• HIPA(Supply of Manpower/Security Service)
• Director Company/Body Corporate
• Any Person(Any Taxable Service)
• Any Person(Any Taxable Service - Involving Aggregator)Any Person
Partial - Reverse Charge
2 cases - ST to be paid by SP and SR
HUF/Indl./Partnership/AOP/BOI Business entity registered as
50% Execution of Work Contract 50%
0% 100%(After Abatement 40%)
Renting of Passenger Vehicle
Registration under Service Tax
– Application for registration is to be made by every
person liable for paying the Service Tax .
– In Form ST - 1 within 30 days from the date on which
Service Tax is levied or within 30 days from the date of
commencement of business whichever is later, to the
Central Excise Officer having jurisdiction .
– Failure to take registration – Maximum Penalty Rs .
10 , 000 / - .
• Any provider of taxable services whose aggregate
value of taxable service in a financial year exceeds
Rs . 9 lacs, has to get themselves registered .
• Up to Rs . 10 lacs, no Service tax to be levied .
• Exemption limit is One time benefit in life of assessee
not in each year .
E - Payment is Mandatory for all assessee
• Individuals, Proprietary concern and Partnership Firms.
• For all others (like Company, HUF, etc)
• Failure to pay ST electronically – Max. 10,000
Penalty. Payable on amounts received during the Quarter Payable on or before
April to 30 th
June (Quarter I) 6 th
July to 30 th
September (Quarter II) 6 th
October to 31 st
December (Quarter III) th
January to 31 st
March (Quarter IV) 31 st
Payable on amounts received during the Quarter Payable on or before
For April to February 6th of following
For March 31st March
Delay in deposit of Payments
Period of Delay Applicable rate of Interest Applicable rate of Interest
for Small Assessee#
First 6 months of delay 18% p.a. 15% p.a.
For next 6 months 24% p.a. 21% p.a.
For period in excess of 1
Year 30 % p.a. 27% p.a.
#Small Assessee – Whose value of taxable services provided during the last preceding
financial year up to 60 lakhs.
• Every assessee (Provider/Receiver) shall
submit the half - yearly return electronically in
Form ‘ST - 3 ’ .
• Return can be revised within a period of 90
days from the date of submission of the
return . For the Half year To be filed on or before
April to 30 th
September 25 th
October to 31 st
March 25 th
Delay in Filing Return
Period of Delay Late fee Payable
Up to to 15 days Rs. 500
16 to 30 days Rs. 1000
Beyond 30 days Rs.1000/ - plus Rs.100/ - per day from the 31 st
till date of filing return
# The maximum Late fee shall not be exceeded Rs. 20,000/ -
Exemption Notification 26/2012
Sn Taxable Service Abatement Taxable Portion
1 Financial Leasing 90% 10%
2 Transport of Goods by rail 70% 30%
3 Transport of Passengers by rail 70% 30%
4 Bundled service by way of Supply of food, etc in a
premise together with Renting of such premise 30% 70%
5 Transport of Passengers by Air 60%/40% 40%(E)/60%(OE)
Renting of Hotels, guest house, etc 40% 60%
7 Transport of Goods by road by GTA 70% 30%
9 Renting of Motor Cab 60% 40%
9A Transport of Passengers by a contract carriage
other than motor cab or a radio taxi 60% 40%
10 Transport of Goods in a vessel 70% 30%
11 Tour Operator 75%/90%/60% 25%/10%/40%
12 Construction of a complex, building, civil structure 75%/70% 25%/30%
Mega Exemption – 25/2012
• Till date 47 Services specified in Mega
Export of Service Conditions
• The provider of service is located in the TT .
• The recipient of service is located outside
• Not a negative list service .
• POPS is Outside India .
• The Payment received in convertible foreign
• The provider and recipient should not be
associated persons .
CENVAT Credit - Some Aspects
• CENVAT stands for Central Value Added Tax .
• CENVAT Credit Rules, 2004 are made effective from 10 -
09 - 2004 .
• These rules deal with both manufacturers and with
• The interest and penalty amounts cannot be taken as credit .
• The Act provides for the self - assessment by the
Assessee i . e . the assessee shall himself assess and
pay the tax .
• Thus every Assessee (Service Provider or Service
Receiver) has to himself assess his Service Tax
provide/paid and thereafter file returns in Form No .
ST - 3 on Half yearly basis .