Basic of Service Tax & Reverse Charge

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 6. Applicability 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 14. Registration 15. Payment & Default in Payment 16. Return & Default in Return 17. Exemption Notification 26/2012 18. Exemption Notification 25/2012 19. Export of Service 20. Cenvat 21. Assessment v

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.

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 goods. 7. Activities in relation to delivery of goods on Hire Purchase or any system of payment by instalments. 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 India. 4. Services relating to agriculture or agricultural Produce. 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 charges. 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 provided.

Service tax valuation Rules, 2006

Work Contract

• Original Works – 40% of the total amount charged. • All other works contract70% of the total amount


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