NEW SERVICE TAX RATE OF 14% EFFECTIVE FROM 1st JUNE 2015

Government of India i.e. Ministry of Finance (Department of Revenue) has issued the notification no D.O.F.No.334/5/2015-TRU on 19th may 2015 regarding the change in service tax rate from 12% to 14% and new service tax rate of 14% will be effective from 1st June 2015. Current Service Tax Rate of 12%+2%+1%=12.36% will remain applicable till 30th May 2015 from 1st June 2015 new rate of 14% shall come into force. Another addition of 2% i.e. Swachh Bharat Cess to this rate of 14% will remain pending till notified by the central government.

New Delhi, the 19th May, 2015
D.O.F.No.334/5/2015-TRU

The Finance Bill, 2015, has received the assent of the Honorable President and has been notified. In the Budget, 2015, certain amendments in the Finance Act, 1994 have been incorporated through the Finance Act, 2015, which will come into effect from a date to be notified. In this regard, 1st June, 2015 is being notified as the date on which the provisions as specified in paragraph 2 below will come into effect. Certain provisions in some notifications already issued, will also come into effect from 1st June, 2015.

2. Following provisions will come into effect from 1st June, 2015.

2.1 Section 66B of the Finance Act, 1994, prescribes the service tax rate. It has been amended by Section 108 of the Finance Act, 2015. The rate of Service Tax is being increased from 12% to 14% (including cesses). The increase in Service Tax rate will come into effect from 1st June, 2015. (Notification No.14/2015-Service Tax, dated 19th May, 2015 refers)

2.2 Sections 153 and 159 of the Finance Act, 2015 provide that section 95 of the Finance (No.2) Act, 2004 and section 140 of the Finance Act, 2007, levying Education Cess and Secondary and Higher Education Cess, respectively, on taxable services, shall cease to have effect from a date to be notified by the Central Government. The above provisions levying Education Cess and Secondary and Higher Education Cess should also cease to have effect from 1st June, 2015. (Notification No.14/2015-Service Tax, dated 19th May, 2015 refers), that is the date with effect from which the increase in the Service Tax rate comes into effect.

2.3 The Negative List entry [section 66D (j)] that covers “admission to entertainment event or access to amusement facility” is to be omitted vide section 109 (4) of The Finance Act, 2015. Section 65B (9) and 65B (24) of the Finance Act, 1994 defines amusement facility and entertainment event, respectively. These entries in the definitions have been omitted by the Section 107 (a) and (c) of the Finance Act, 2015. These changes will come into effect from 1st June, 2015. The implication of these changes are as follows,-
(a) Service Tax shall be levied on the service provided by way of access to amusement facility providing fun or recreation by means of rides, gaming devices or bowling alleys in amusement parks, amusement arcades, water parks and theme parks.
(b) Service tax shall be levied on service by way of admission to entertainment event of concerts, pageants, musical performances concerts, award functions and sporting events other than the recognized sporting event, if the amount charged is more than Rs. 500 per person for the right to admission to such an event.
This levy would come into effect from 1st June, 2015. (Notification No.14/2015-Service Tax, dated 19th May, 2015 refers)

2.3.1 However, the existing exemption, by way of the Negative List entry, to service by way of admission to entertainment event, namely, exhibition of cinematographic film, circus, recognized sporting event, dance, theatrical performance including drama and ballet shall be continued, through the route of exemption. Entry 47 and definition of “recognised sporting event” [paragraph 2 entry „zab‟] has been inserted in notification No. 25/2012-ST vide S.No.1.(xii) and S. No. 2.(b) respectively of notification No. 06/2015-ST dated 1st March, 2015. This entry will also come into effect from 1st June, 2015. (Notification No.16/2015-Service Tax, dated 19th May, 2015)

2.4 The entry in the Negative List [section 66D (f)] that covers service by way of any process amounting to manufacture or production of goods has been amended vide section 109(2) of Finance Act, 2015, to exclude any service by way of carrying out any processes for production or manufacture of alcoholic liquor for human consumption. Consequently, Service Tax shall be levied on contract manufacturing/job work for production of potable liquor for a consideration. In this context, the definition of the term “process amounting to manufacture or production of goods” [section 65 B (40)] has also been amended vide section 107 (f) of the Finance Act, 2015. This levy would come into effect from 1st June, 2015. (Notification No.14/2015-Service Tax, dated 19th May, 2015 refers)

2.4.1 A consequential amendment in S. No. 30 of notification No. 25/2012-ST dated 20th June, 2012, to exclude intermediate production of alcoholic liquor for human consumption from ambit of the exemption, will also come into effect from 1st June, 2015. [Notification No. 06/2015-ST dated 1st March 2015 Entry at Sl. No. 1.(ix)] (Notification No.16/2015-Service Tax, dated 19th May, 2015 refers)

2.5 An entry in the Negative list covers betting, gambling or lottery [Section 66D (i)]. This entry has been amended by section 109 (3) of the Finance Act, 2015 so as to include an explanation that “betting, gambling or lottery” shall not include the activity carried out by a lottery distributor or selling agent in relation to promotion, marketing, organising, selling of lottery or facilitating in organising lottery of any kind, in any other manner. The objective of making these exclusions was to make it explicitly clear that while lottery per se is not subject to service tax, aforesaid services in relation to lottery will be taxable. This will come into effect from 1st June, 2015. (Notification No.14/2015-Service Tax, dated 19th May, 2015 refers)

2.6 In respect of certain services like money changing service, service provided by air travel agent, insurance service and service provided by lottery distributor and selling agent, the service provider has been allowed to pay service tax at an alternative rate subject to the conditions as prescribed under rules 6(7), 6(7A), 6(7B) and 6(7C) of the Service Tax Rules, 1994. Consequent to the upward revision in Service Tax rate, the said alternative rates shall also be revised proportionately.

2.6.1 Amendments to this effect have been made in the Service Tax Rules which will also come into effect from 1st June, 2015, that is the date with effect from which the increase in the Service Tax rate is made effective. [Notification No. 05/2015-ST 1st March 2015 Entry at Sl. No. 2(a)(e)(ii)] (Notification No.15/2015-Service Tax, dated 19th May, 2015 refers)
3. Presently, services provided by Government or a local authority, excluding certain services specified under clause (a) of section 66D, are covered in the Negative List. An enabling provision has been made, by amending section 66D (a) (iv), to exclude all services provided by the Government or local authority to a business entity from the Negative List [section 109(1) of Finance Act, 2015]. Consequently, the definition of “support service” [section 65 B (49)] is also to be omitted from date to be notified [section 107(h) of Finance Act, 2015].

As and when this amendment is given effect to, all services provided by the Government or local authority to a business entity, except the services that are specifically exempted, or covered by any another entry in the Negative List, shall be liable to service tax. The date from which this amendment would come into effect will be notified in due course.

4. An enabling provision has been incorporated in the Finance Act, 2015 vide section 117 (Chapter VI) to impose a Swachh Bharat Cess on all or any of the taxable services at a rate of 2% or lower on the value of such taxable services. This cess shall be levied on such services at such rate from such date as may be notified by the Central Government. The date from which this amendment would come into effect will be notified in due course.

5. In other words, date of effect of the provisions discussed in para 3 & 4 above are not being notified at present.

6. Amendments have been made by Sections 113, 114 and 115 in the Finance Act, 1994, in order to impart greater clarity and align the service tax provisions with those in Central Excise by adding provisions relating to closure of proceedings in sections 76, 78 and 78B. A similar alignment with the central excise provisions has been done in sections 76(2) and 78(2) with respect to cases where the appellate authority increases the duty or penalty. These changes have come into effect immediately after enactment of Finance Bill, 2015.

7. All the above changes may be brought to the notice of trade and industry and wide publicity may be made in this regard.

Section 66B of Finance Act, 1994 for Service Tax Rate and Negative List of Services Notification 25/2012

As per section 66B of the Finance Act,1994 for Service Tax Rate and Negative List of Services as per Service Tax Notification No 25/2012. Current Service Tax Rate will be 12.36% from April 2012 i.e Service Tax Rate of 12% plus education cess of 2% and Secondary & Higher Education Cess of 1% will be applicable, which leads to total of 12.36% on Services for year 2012-2013 and no changes where made in Finance Act, 2013 so service tax rate of 12.36% will remain same for year 2013-2014. Service Tax Notification No 25/2012 provided list of services which are exempted from service tax. Also Clause 6 (3) of the Notification 25/2012 given Rs 10 lakhs exemption limit from service tax.

Reference Section 66B of Finance Act 1994: Service Tax Rate 

66B. There shall be levied a tax (hereinafter referred to as the service tax) at the rate of twelve per cent. on the value of all services, other than those services specified in the negative list, provided or agreed to be provided in the taxable territory by one person to another and collected in such manner as may be prescribed.

Service Tax Notification No.  25/2012 dated 20th June, 2012

G.S.R……(E).- In exercise of the powers conferred by sub-section (1) of section 93 of the Finance Act, 1994 (32 of 1994) (hereinafter referred to as the said Act) and in supersession of notification number 12/2012- Service Tax, dated the 17th March, 2012, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i) vide number G.S.R. 210 (E), dated the 17th March, 2012, the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts the following taxable services from the whole of the service tax leviable thereon under section 66B of the said Act, namely:-

  1. Services provided to the United Nations or a specified international organization;
  2. Health care services by a clinical establishment, an authorised medical practitioner or  para-medics;
  3. Services by a veterinary clinic in relation to health care of animals or birds;
  4. Services by an entity registered under section 12AA of the Income tax Act, 1961 (43 of 1961) by way of charitable activities;
  5. Services by a person by way of- (a)     renting of precincts of a religious place meant for general public; or (b)     conduct of  any religious ceremony;
  6. Services provided by

(a) an arbitral tribunal to –

(i) any person other than a business entity; or

(ii) a business entity with a turnover up to rupees ten lakh in the preceding financial year;

(b)  an individual as an advocate or a partnership firm of advocates by way of   legal services to,-

(i) an advocate or partnership firm of advocates providing legal services ;

(ii) any person other than a business entity; or

(iii) a business entity with a turnover up to rupees ten lakh in the preceding financial  year; or

(c)  a person represented on an arbitral tribunal to an arbitral tribunal;

7.  Services by way of technical testing or analysis of newly developed drugs, including vaccines and herbal remedies, on human participants by a clinical research organisation approved to conduct clinical trials by the Drug Controller General of India;

8.  Services by way of training or coaching in recreational activities relating to arts, culture or sports;

9.    Services provided to or by an educational institution in respect of education     exempted from service tax, by way of,-

(a)  auxiliary educational services; or

(b)  renting of immovable property;

10. Services provided to a recognised sports body by-

(a)  an individual as a player, referee, umpire, coach or team manager for participation in a sporting event organized by a recognized sports body;

(b)  another recognised sports body;

  1. Services by way of sponsorship of sporting events organised,-

(a)     by a national sports federation, or its affiliated federations, where the participating teams or individuals represent any district, state or zone;

(b)     by Association of Indian Universities, Inter-University Sports Board, School Games Federation of India, All India Sports Council for the Deaf, Paralympic Committee of India or Special Olympics Bharat;

(c)      by Central Civil Services Cultural and Sports Board;

(d)     as part of national games, by Indian Olympic Association; or

(e)     under Panchayat Yuva Kreeda Aur Khel Abhiyaan (PYKKA) Scheme;

12. Services provided to the Government, a local authority or a governmental authority by way ofconstructionerection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of –

(a)  a civil structure or  any other original works meant predominantly for  use other than for commerce, industry, or any other business or profession;

(b)  a historical monument, archaeological site or remains of national importance, archaeological excavation, or antiquity specified under the Ancient Monuments and Archaeological Sites and Remains Act, 1958 (24 of 1958);

(c)    a structure meant predominantly for use  as (i) an educational, (ii) a clinical, or  (iii) an art or cultural establishment;

(d)  canal, dam or other irrigation works;

(e)  pipeline, conduit or plant for (i) water supply (ii) water treatment, or (iii) sewerage treatment or disposal; or

(f)    a residential complex predominantly meant for self-use or the use of their employees or other persons specified in the Explanation 1 to clause 44 of section 65 B of the said Act;

  1. Services provided by way of constructionerection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of,-

(a)     a road, bridge, tunnel, or terminal for road transportation for use by general public;

(b)     a civil structure or  any other original works pertaining to a scheme under Jawaharlal Nehru National Urban Renewal Mission or Rajiv Awaas Yojana;

(c)      a building owned by an entity registered under section 12 AA of the Income tax Act, 1961(43 of 1961) and meant predominantly for religious use by general public;

(d)     a pollution control or effluent treatment plant, except located as a part of a factory; or

a structure meant for funeral, burial or cremation of deceased;

14. Services by way of construction, erection, commissioning, or installation of original works pertaining to,-

(a)  an airport, port or railways, including monorail or metro;

(b)  a single residential unit otherwise than as a part of a residential complex;

(c)   low- cost houses up to a carpet area of 60 square metres per house in a housing project approved by competent authority empowered under the ‘Scheme of Affordable Housing in Partnership’ framed by the Ministry of Housing and Urban Poverty Alleviation, Government of India;

(d)  post- harvest storage infrastructure for agricultural produce including a cold storages for such purposes; or

(e)  mechanised food grain handling system, machinery or equipment for units  processing  agricultural produce as food stuff excluding alcoholic beverages;

15. Temporary transfer or permitting the use or enjoyment of a copyright covered under clauses (a) or (b) of sub-section (1) of section 13 of the Indian Copyright Act, 1957 (14 of 1957), relating to original literary, dramatic, musical, artistic works or cinematograph films;

16. Services by a performing artist in folk or classical art forms of (i) music, or (ii) dance, or (iii) theatre, excluding services provided by such artist as a brand ambassador;

  1. Services by way of collecting or providing news by an independent journalist, Press Trust of India or United News of India;

18. Services by way of renting of a hotel, inn, guest house, club, campsite or other commercial places meant for residential or lodging purposes, having declared tariff of a unit of accommodation below rupees one thousand per day or equivalent;

19. Services provided in relation to serving of food or beverages by a restaurant, eating joint or a  mess, other than those having (i) the facility of air-conditioning or central air-heating in any part of the establishment, at any time during the year, and (ii) a licence to serve alcoholic beverages;

20. Services by way of transportation by rail or a vessel from one place in India to another of the following goods –

(a)  petroleum and petroleum products falling under Chapter heading 2710 and  2711 of the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986);

(b)  relief materials meant for victims of natural or man-made disasters, calamities, accidents or mishap;

(c)   defence  or military equipments;

(d)  postal mail or mail bags;

(e)  household effects;

(f)    newspaper or magazines registered with the Registrar of Newspapers;

(g)  railway equipments or materials;

(h)  agricultural produce;

(i)    foodstuff including flours, tea, coffee, jaggery, sugar, milk products, salt and edible oil, excluding alcoholic beverages; or

(j)    chemical fertilizer and oilcakes;

21. Services provided by a goods transport agency by way of transportation of –

(a)  fruits, vegetables, eggs, milk, food grains or pulses in a goods carriage;

(b)  goods where gross amount charged for the transportation of goods on a consignment transported in a single goods carriage does not exceed one thousand five hundred rupees; or

(c)   goods, where gross amount charged for transportation of all such goods for a single consignee in the goods carriage does not exceed rupees seven hundred fifty;

22. Services by way of giving on hire –

(a)     to a state transport undertaking, a motor vehicle meant to carry more than twelve passengers; or

(b)     to a goods transport agency, a means of transportation of goods;

23. Transport of passengers, with or without accompanied belongings, by –

(a)  air, embarking from or terminating in an airport located in the state of Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, or Tripura or at Bagdogra located in West Bengal;

(b)  a contract carriage for the transportation of passengers, excluding tourism, conducted tour, charter or hire; or

(c)    ropeway, cable car or aerial tramway;

24. Services by way of vehicle parking to general public excluding leasing of space to an entity for providing such parking facility;

25. Services provided to Government, a local authority or a governmental authority by way of –

(a)  carrying out any activity in relation to any function ordinarily entrusted to a municipality in relation to water supply, public health, sanitation conservancy, solid waste management or slum improvement and upgradation; or

(b)  repair or maintenance of a vessel or an aircraft;

26. Services of general insurance business provided under following schemes –

(a)     Hut Insurance Scheme;

(b)     Cattle Insurance under Swarnajaynti Gram Swarozgar Yojna (earlier known as Integrated Rural Development  Programme);

(c)      Scheme for Insurance of Tribals;

(d)     Janata Personal Accident Policy and Gramin Accident Policy;

(e)     Group Personal Accident Policy for Self-Employed Women;

(f)       Agricultural Pumpset and Failed Well Insurance;

(g)     premia collected on export credit insurance;

(h)     Weather Based Crop Insurance Scheme or the Modified National Agricultural Insurance Scheme, approved by the Government of India and implemented by the Ministry of Agriculture;

(i)       Jan Arogya Bima Policy;

(j)       National Agricultural Insurance Scheme (Rashtriya Krishi Bima Yojana);

(k)     Pilot Scheme on Seed Crop Insurance;

(l)       Central Sector Scheme on Cattle Insurance;

(m)  Universal Health Insurance Scheme;

(n)     Rashtriya Swasthya Bima Yojana; or

(o)     Coconut Palm Insurance Scheme;

27. Services provided by an incubatee up to a total turnover of fifty lakh rupees in a financial year subject to the following conditions, namely:-

(a)  the total turnover had not exceeded fifty lakh rupees during the preceding financial year; and

(b)  a period of three years has not been elapsed  from the date of entering  into an agreement as an incubatee;

28. Service by an unincorporated body or a non- profit entity registered under any law for the time being in force, to its own members by way of reimbursement of charges or share of contribution –

(a)  as a trade union;

(b)  for the provision of carrying out any activity which is exempt from the levy of service tax; or

(c)   up to an amount of five thousand rupees per month per member for sourcing of goods or services from a third person for the common use of its members in a housing society or a residential complex;

29. Services by the following persons in respective capacities –

(a)  sub-broker or an authorised person to a stock broker;

(b)  authorised person to a member of a commodity exchange;

(c)   mutual fund agent to a mutual fund or asset management company;

(d)  distributor to a mutual fund or asset management company;

(e)  selling or marketing agent of lottery tickets to a distributer or a selling agent;

(f)    selling agent or a distributer of SIM cards or recharge coupon vouchers;

(g)  business facilitator or a business correspondent to a banking company or an insurance company, in a rural area; or

(h)  sub-contractor providing services by way of works contract to another contractor providing  works contract services which are exempt;

30. Carrying out an intermediate production process as job work in relation to –

(a)  agriculture, printing or textile processing;

(b)  cut and polished diamonds and gemstones; or plain and studded jewellery of gold and other precious metals, falling under Chapter 71 of the Central Excise Tariff Act ,1985 (5 of 1986);

(c)   any goods on which appropriate duty is payable by the principal manufacturer; or

(d)  processes of electroplating, zinc plating, anodizing, heat treatment, powder coating, painting including spray painting or auto black, during the course of manufacture of  parts of  cycles or sewing machines upto an aggregate value of taxable service of the specified processes of  one hundred and fifty lakh rupees in a financial year subject to the condition that such  aggregate value had not exceeded  one hundred and fifty lakh rupees during the preceding financial year;

31. Services by an organiser to any person in respect of a business exhibition held outside India;

32. Services by way of making telephone calls from –

(a)  departmentally run public telephone;

(b)  guaranteed public telephone operating only for local calls; or

(c)   free telephone at airport and hospital where no bills are being issued;

33. Services by way of slaughtering of bovine animals;

34. Services received from a  provider of service  located in a non- taxable territory by –

(a)  Government, a local authority, a governmental authority or an individual in  relation to any purpose other than commerce, industry or any other business or profession;

(b)  an entity registered under section 12AA of the Income tax Act, 1961 (43 of 1961) for the purposes of providing charitable activities; or

(c)   a person located in a non-taxable territory;

35. Services of public libraries by way of lending of books, publications or any other knowledge- enhancing content or material;

36. Services by Employees’ State Insurance Corporation  to persons governed    under the Employees’ Insurance Act, 1948 (34 of 1948);

37. Services by way of transfer of a going concern, as a whole or an independent part thereof;

38. Services by way of public conveniences such as provision of facilities of bathroom, washrooms, lavatories, urinal or toilets;

39. Services by a governmental authority by way of any activity in relation to any function entrusted to a municipality under article 243 W of the Constitution.

  1. Definitions. – For the purpose of this notification, unless the context otherwise requires, –

(a) “Advocate” has the meaning assigned to it in clause (a) of sub-section (1) of section 2 of the Advocates Act, 1961 ( 25 of 1961);

(b) “appropriate duty” means duty payable on manufacture or production under a Central Act or a State Act, but shall not include ‘Nil’ rate of duty or duty wholly exempt;

(c)  “arbitral tribunal” has the meaning assigned to it in clause (d) of section 2 of the Arbitration and Conciliation Act, 1996 (26 of 1996);

(d) “authorised medical practitioner” means a medical practitioner registered with any of  the  councils of the recognised system of medicines established or recognized by law in India and includes a medical professional having the requisite qualification to practice in any recognised system of medicines in India as per any law for the time being in force;

(e) “authorised person” means any person who is appointed as such either by a stock broker (including trading member) or by a member of a commodity exchange and who provides access to trading platform of a stock exchange or a commodity exchange as an agent of such stock broker or member of a commodity exchange;

(f) “auxiliary educational services” means any services relating to imparting any skill, knowledge, education or development of course content or any other knowledge – enhancement activity, whether for the students or the faculty, or any other services which educational institutions ordinarily carry out themselves but may obtain as outsourced services from any other person, including services relating to admission to such institution, conduct of examination, catering for the students under any mid-day meals scheme sponsored by Government, or transportation of students, faculty or staff of such institution;

(g) “banking company” has the meaning assigned to it in clause (a) of section 45A of the Reserve Bank of India Act,1934(2 of 1934);

(h) “brand ambassador” means a person engaged for promotion or marketing of a brand of goods, service, property or actionable claim, event or endorsement of name, including a trade name, logo or house mark of any person;

(i) “business facilitator or business correspondent” means an intermediary appointed under the business facilitator model or the business correspondent model by a banking company or an insurance company under the guidelines issued by Reserve Bank of India;

(j) “clinical establishment” means a hospital, nursing home, clinic, sanatorium or any other institution by, whatever name called, that offers services or facilities requiring diagnosis or treatment or care for illness, injury, deformity, abnormality or pregnancy in any recognised system of medicines in India, or a place established as an independent entity or a part of an establishment to carry out diagnostic or investigative services of diseases;

(k) “charitable activities” means activities relating to –

(i) public health by way of –

(a)  care or counseling of (i) terminally ill persons or persons with  severe physical or mental disability, (ii) persons afflicted with HIV or AIDS, or (iii) persons addicted to a dependence-forming substance such as narcotics drugs or alcohol; or

(b)  public awareness of preventive health, family planning or  prevention of HIV infection;

(ii) advancement of religion or spirituality;

(iii) advancement of educational programmes or skill development relating to,-

(a)     abandoned, orphaned or homeless children;

(b)     physically or mentally abused and traumatized persons;

(c)      prisoners; or

(d)     persons over the age of 65 years residing in a rural area;

(iv) preservation of environment including watershed, forests and wildlife; or

(v) advancement of any other object of general public utility up to a  value of,-

(a)  eighteen lakh and seventy five thousand rupees for the year 2012-13 subject to the condition that total value of such activities had not exceeded twenty five lakhs rupees during 2011-12;

(b)  twenty five lakh rupees in any other financial year subject to the condition that total value of such activities had not exceeded twenty five lakhs rupees during the preceding financial year;

(l) “commodity exchange” means an association as defined in section 2 (j) and recognized under section 6 of the Forward Contracts (Regulation) Act,1952 (74 of 1952);

(m) “contract carriage” has the meaning assigned to it in clause (7) of section 2 of the Motor Vehicles Act, 1988 (59 of 1988);

(n)“declared tariff” includes charges for all amenities provided in the unit of accommodation (given on rent for stay) like furniture, air-conditioner, refrigerators or any other amenities, but without excluding any discount offered on the published charges for such unit;

(o) “distributor or selling agent” has the meaning assigned to them in clause (c) of the rule 2 of the Lottery (Regulation) Rules, 2010 notified by the Government of India in the Ministry of Home Affairs, published in the Gazette of India, Extraordinary, Part-II, Section 3, Sub-section (i), vide number G.S.R. 278(E), dated the 1st April, 2010 and shall include distributor or selling agent authorised by the lottery- organising State;

(p) “general insurance business” has the meaning assigned to it in clause (g) of section 3 of General Insurance Business (Nationalisation) Act, 1972 (57 of 1972);

(q)“general public” means the body of people at large sufficiently defined by some common quality of public or impersonal nature;

(r)“goods carriage” has the meaning assigned to it in clause (14) of section 2 of the Motor  Vehicles Act, 1988 (59 of 1988);

(s) “governmental authority’’ means a board, or an authority or any other body established with 90% or more participation by way of equity or control by Government and set up by an Act of the Parliament or a State Legislature to carry out any function entrusted to a municipality under article 243W  of the Constitution;

(t) “health care services” means any service by way of  diagnosis or treatment or care for illness, injury, deformity, abnormality or pregnancy in any recognised system of medicines in India and includes services by way of transportation of the patient to and from a clinical establishment, but does not include hair transplant or cosmetic or plastic surgery, except when undertaken to restore or to reconstruct anatomy or functions of body affected due to congenital defects, developmental abnormalities, injury or trauma;

(u) “incubatee” means an entrepreneur located within the premises of a Technology Business Incubator (TBI) or Science and Technology Entrepreneurship Park (STEP) recognised by the National Science and Technology Entrepreneurship Development Board (NSTEDB) of the Department of Science and Technology, Government of India and who has entered into an agreement with the TBI or the STEP to enable himself to develop and produce hi-tech and innovative products;

(v)“insurance company” means  a company carrying on life insurance business or general insurance business;

(w)“legal service”  means any service provided in relation to advice, consultancy or assistance in any branch of law, in any manner and includes representational services before any court, tribunal or authority;

(x)“life insurance business” has the meaning assigned to it in clause (11) of section 2 of the Insurance  Act, 1938 (4 of 1938);

(y) “original works” means  has the meaning assigned to it in Rule 2A of  the Service Tax (Determination of Value) Rules, 2006;

(z) “principal manufacturer” means any person who gets goods manufactured or processed on  his account from another person;

(za) “recognized sports body” means – (i) the Indian Olympic Association, (ii) Sports Authority of India, (iii) a national sports federation recognised by the Ministry of Sports and Youth Affairs of the Central Government, and its affiliate federations, (iv) national sports promotion organisations recognised by the Ministry of Sports and Youth Affairs of the Central Government, (v) the International Olympic Association or a federation  recognised by the International Olympic Association or (vi) a federation or a body which regulates a sport at international level and its affiliated federations or bodies regulating a sport in India;

(zb) “religious place” means a place which is primarily meant for conduct of prayers or worship pertaining to a religion, meditation, or spirituality;

(zc) “residential complex” means any complex comprising of a building or buildings, having more than one single residential unit;

(zd)“rural area” means the area comprised in a village as defined in land revenue records, excluding-

the area under any municipal committee, municipal corporation, town area committee, cantonment board or notified area committee; or

any area that may be notified as an urban area by the Central Government or a State Government;

(ze)“single residential unit” means a  self-contained residential unit which is designed for use, wholly or principally, for residential purposes for one family;

(zf) “specified international organization” means an international organization declared by the Central Government in pursuance of section 3 of the United Nations (Privileges and Immunities) Act, 1947 (46 of 1947), to which the provisions of the Schedule to the said Act apply;

(zg)”state transport undertaking” has the meaning assigned to it in clause (42) of section 2 of the Motor Vehicles Act, 1988 (59 of 1988);

(zh)”sub-broker” has the meaning assigned to it in sub-clause (gc) of clause 2 of the Securities and Exchange Board of India (Stock Brokers and Sub-brokers) Regulations, 1992;

(zi) “trade union” has the meaning assigned to it in clause (h) of section 2 of the Trade Unions Act,1926(16 of 1926).

3. This notification shall come into force on the 1st day of July, 2012.

Service Tax Exemption List

Services Tax Exemption List as declared by Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts the following taxable services from the whole of the service tax leviable thereon under section 66B of the said Act, namely Services provided to the United Nations,  an individual as an advocate or a partnership firm,renting of precincts of a religious place, Services provided to or by an educational institution in respect of education, Services provided to the Government, a local authority or a governmental authority, Services by way of renting of a hotel, inn, guest house, club, campsite or other commercial places having traffic of Less than Rs 1000/-,  for details list please read the Service tax Notification No. 25/2012.

Service Tax Notification No.  25/2012 dated 20th June, 2012

G.S.R……(E).- In exercise of the powers conferred by sub-section (1) of section 93 of the Finance Act, 1994 (32 of 1994) (hereinafter referred to as the said Act) and in supersession of notification number 12/2012- Service Tax, dated the 17th March, 2012, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i) vide number G.S.R. 210 (E), dated the 17th March, 2012, the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts the following taxable services from the whole of the service tax leviable thereon under section 66B of the said Act, namely:-

  1. Services provided to the United Nations or a specified international organization;
  2. Health care services by a clinical establishment, an authorised medical practitioner or  para-medics;
  3. Services by a veterinary clinic in relation to health care of animals or birds;
  4. Services by an entity registered under section 12AA of the Income tax Act, 1961 (43 of 1961) by way of charitable activities;
  5. Services by a person by way of-

(a)     renting of precincts of a religious place meant for general public; or

(b)     conduct of  any religious ceremony;

6, Services provided by

(a) an arbitral tribunal to –

(i) any person other than a business entity; or

(ii) a business entity with a turnover up to rupees ten lakh in the preceding financial year;

(b)  an individual as an advocate or a partnership firm of advocates by way of   legal services to,-

(i) an advocate or partnership firm of advocates providing legal services ;

(ii) any person other than a business entity; or

(iii) a business entity with a turnover up to rupees ten lakh in the preceding financial  year; or

(c)  a person represented on an arbitral tribunal to an arbitral tribunal;

7.  Services by way of technical testing or analysis of newly developed drugs, including vaccines and herbal remedies, on human participants by a clinical research organisation approved to conduct clinical trials by the Drug Controller General of India;

8.  Services by way of training or coaching in recreational activities relating to arts, culture or sports;

9.    Services provided to or by an educational institution in respect of education     exempted from service tax, by way of,-

(a)  auxiliary educational services; or

(b)  renting of immovable property;

10. Services provided to a recognised sports body by-

(a)  an individual as a player, referee, umpire, coach or team manager for participation in a sporting event organized by a recognized sports body;

(b)  another recognised sports body;

  1. Services by way of sponsorship of sporting events organised,-

(a)     by a national sports federation, or its affiliated federations, where the participating teams or individuals represent any district, state or zone;

(b)     by Association of Indian Universities, Inter-University Sports Board, School Games Federation of India, All India Sports Council for the Deaf, Paralympic Committee of India or Special Olympics Bharat;

(c)      by Central Civil Services Cultural and Sports Board;

(d)     as part of national games, by Indian Olympic Association; or

(e)     under Panchayat Yuva Kreeda Aur Khel Abhiyaan (PYKKA) Scheme;

12. Services provided to the Government, a local authority or a governmental authority by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of –

(a)  a civil structure or  any other original works meant predominantly for  use other than for commerce, industry, or any other business or profession;

(b)  a historical monument, archaeological site or remains of national importance, archaeological excavation, or antiquity specified under the Ancient Monuments and Archaeological Sites and Remains Act, 1958 (24 of 1958);

(c)    a structure meant predominantly for use  as (i) an educational, (ii) a clinical, or  (iii) an art or cultural establishment;

(d)  canal, dam or other irrigation works;

(e)  pipeline, conduit or plant for (i) water supply (ii) water treatment, or (iii) sewerage treatment or disposal; or

(f)    a residential complex predominantly meant for self-use or the use of their employees or other persons specified in the Explanation 1 to clause 44 of section 65 B of the said Act;

  1. Services provided by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of,-

(a)     a road, bridge, tunnel, or terminal for road transportation for use by general public;

(b)     a civil structure or  any other original works pertaining to a scheme under Jawaharlal Nehru National Urban Renewal Mission or Rajiv Awaas Yojana;

(c)      a building owned by an entity registered under section 12 AA of the Income tax Act, 1961(43 of 1961) and meant predominantly for religious use by general public;

(d)     a pollution control or effluent treatment plant, except located as a part of a factory; or

a structure meant for funeral, burial or cremation of deceased;

14. Services by way of construction, erection, commissioning, or installation of original works pertaining to,-

(a)  an airport, port or railways, including monorail or metro;

(b)  a single residential unit otherwise than as a part of a residential complex;

(c)   low- cost houses up to a carpet area of 60 square metres per house in a housing project approved by competent authority empowered under the ‘Scheme of Affordable Housing in Partnership’ framed by the Ministry of Housing and Urban Poverty Alleviation, Government of India;

(d)  post- harvest storage infrastructure for agricultural produce including a cold storages for such purposes; or

(e)  mechanised food grain handling system, machinery or equipment for units  processing  agricultural produce as food stuff excluding alcoholic beverages;

15. Temporary transfer or permitting the use or enjoyment of a copyright covered under clauses (a) or (b) of sub-section (1) of section 13 of the Indian Copyright Act, 1957 (14 of 1957), relating to original literary, dramatic, musical, artistic works or cinematograph films;

16. Services by a performing artist in folk or classical art forms of (i) music, or (ii) dance, or (iii) theatre, excluding services provided by such artist as a brand ambassador;

  1. Services by way of collecting or providing news by an independent journalist, Press Trust of India or United News of India;

18. Services by way of renting of a hotel, inn, guest house, club, campsite or other commercial places meant for residential or lodging purposes, having declared tariff of a unit of accommodation below rupees one thousand per day or equivalent;

19. Services provided in relation to serving of food or beverages by a restaurant, eating joint or a  mess, other than those having (i) the facility of air-conditioning or central air-heating in any part of the establishment, at any time during the year, and (ii) a licence to serve alcoholic beverages;

20. Services by way of transportation by rail or a vessel from one place in India to another of the following goods –

(a)  petroleum and petroleum products falling under Chapter heading 2710 and  2711 of the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986);

(b)  relief materials meant for victims of natural or man-made disasters, calamities, accidents or mishap;

(c)   defence  or military equipments;

(d)  postal mail or mail bags;

(e)  household effects;

(f)    newspaper or magazines registered with the Registrar of Newspapers;

(g)  railway equipments or materials;

(h)  agricultural produce;

(i)    foodstuff including flours, tea, coffee, jaggery, sugar, milk products, salt and edible oil, excluding alcoholic beverages; or

(j)    chemical fertilizer and oilcakes;

21. Services provided by a goods transport agency by way of transportation of –

(a)  fruits, vegetables, eggs, milk, food grains or pulses in a goods carriage;

(b)  goods where gross amount charged for the transportation of goods on a consignment transported in a single goods carriage does not exceed one thousand five hundred rupees; or

(c)   goods, where gross amount charged for transportation of all such goods for a single consignee in the goods carriage does not exceed rupees seven hundred fifty;

22. Services by way of giving on hire –

(a)     to a state transport undertaking, a motor vehicle meant to carry more than twelve passengers; or

(b)     to a goods transport agency, a means of transportation of goods;

23. Transport of passengers, with or without accompanied belongings, by –

(a)  air, embarking from or terminating in an airport located in the state of Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, or Tripura or at Bagdogra located in West Bengal;

(b)  a contract carriage for the transportation of passengers, excluding tourism, conducted tour, charter or hire; or

(c)    ropeway, cable car or aerial tramway;

24. Services by way of vehicle parking to general public excluding leasing of space to an entity for providing such parking facility;

25. Services provided to Government, a local authority or a governmental authority by way of –

(a)  carrying out any activity in relation to any function ordinarily entrusted to a municipality in relation to water supply, public health, sanitation conservancy, solid waste management or slum improvement and upgradation; or

(b)  repair or maintenance of a vessel or an aircraft;

26. Services of general insurance business provided under following schemes –

(a)     Hut Insurance Scheme;

(b)     Cattle Insurance under Swarnajaynti Gram Swarozgar Yojna (earlier known as Integrated Rural Development  Programme);

(c)      Scheme for Insurance of Tribals;

(d)     Janata Personal Accident Policy and Gramin Accident Policy;

(e)     Group Personal Accident Policy for Self-Employed Women;

(f)       Agricultural Pumpset and Failed Well Insurance;

(g)     premia collected on export credit insurance;

(h)     Weather Based Crop Insurance Scheme or the Modified National Agricultural Insurance Scheme, approved by the Government of India and implemented by the Ministry of Agriculture;

(i)       Jan Arogya Bima Policy;

(j)       National Agricultural Insurance Scheme (Rashtriya Krishi Bima Yojana);

(k)     Pilot Scheme on Seed Crop Insurance;

(l)       Central Sector Scheme on Cattle Insurance;

(m)  Universal Health Insurance Scheme;

(n)     Rashtriya Swasthya Bima Yojana; or

(o)     Coconut Palm Insurance Scheme;

27. Services provided by an incubatee up to a total turnover of fifty lakh rupees in a financial year subject to the following conditions, namely:-

(a)  the total turnover had not exceeded fifty lakh rupees during the preceding financial year; and

(b)  a period of three years has not been elapsed  from the date of entering  into an agreement as an incubatee;

28. Service by an unincorporated body or a non- profit entity registered under any law for the time being in force, to its own members by way of reimbursement of charges or share of contribution –

(a)  as a trade union;

(b)  for the provision of carrying out any activity which is exempt from the levy of service tax; or

(c)   up to an amount of five thousand rupees per month per member for sourcing of goods or services from a third person for the common use of its members in a housing society or a residential complex;

29. Services by the following persons in respective capacities –

(a)  sub-broker or an authorised person to a stock broker;

(b)  authorised person to a member of a commodity exchange;

(c)   mutual fund agent to a mutual fund or asset management company;

(d)  distributor to a mutual fund or asset management company;

(e)  selling or marketing agent of lottery tickets to a distributer or a selling agent;

(f)    selling agent or a distributer of SIM cards or recharge coupon vouchers;

(g)  business facilitator or a business correspondent to a banking company or an insurance company, in a rural area; or

(h)  sub-contractor providing services by way of works contract to another contractor providing  works contract services which are exempt;

30. Carrying out an intermediate production process as job work in relation to –

(a)  agriculture, printing or textile processing;

(b)  cut and polished diamonds and gemstones; or plain and studded jewellery of gold and other precious metals, falling under Chapter 71 of the Central Excise Tariff Act ,1985 (5 of 1986);

(c)   any goods on which appropriate duty is payable by the principal manufacturer; or

(d)  processes of electroplating, zinc plating, anodizing, heat treatment, powder coating, painting including spray painting or auto black, during the course of manufacture of  parts of  cycles or sewing machines upto an aggregate value of taxable service of the specified processes of  one hundred and fifty lakh rupees in a financial year subject to the condition that such  aggregate value had not exceeded  one hundred and fifty lakh rupees during the preceding financial year;

31. Services by an organiser to any person in respect of a business exhibition held outside India;

32. Services by way of making telephone calls from –

(a)  departmentally run public telephone;

(b)  guaranteed public telephone operating only for local calls; or

(c)   free telephone at airport and hospital where no bills are being issued;

33. Services by way of slaughtering of bovine animals;

34. Services received from a  provider of service  located in a non- taxable territory by –

(a)  Government, a local authority, a governmental authority or an individual in  relation to any purpose other than commerce, industry or any other business or profession;

(b)  an entity registered under section 12AA of the Income tax Act, 1961 (43 of 1961) for the purposes of providing charitable activities; or

(c)   a person located in a non-taxable territory;

35. Services of public libraries by way of lending of books, publications or any other knowledge- enhancing content or material;

36. Services by Employees’ State Insurance Corporation  to persons governed    under the Employees’ Insurance Act, 1948 (34 of 1948);

37. Services by way of transfer of a going concern, as a whole or an independent part thereof;

38. Services by way of public conveniences such as provision of facilities of bathroom, washrooms, lavatories, urinal or toilets;

39. Services by a governmental authority by way of any activity in relation to any function entrusted to a municipality under article 243 W of the Constitution.

 

  1. Definitions. – For the purpose of this notification, unless the context otherwise requires, –

(a) “Advocate” has the meaning assigned to it in clause (a) of sub-section (1) of section 2 of the Advocates Act, 1961 ( 25 of 1961);

(b) “appropriate duty” means duty payable on manufacture or production under a Central Act or a State Act, but shall not include ‘Nil’ rate of duty or duty wholly exempt;

(c)  “arbitral tribunal” has the meaning assigned to it in clause (d) of section 2 of the Arbitration and Conciliation Act, 1996 (26 of 1996);

(d) “authorised medical practitioner” means a medical practitioner registered with any of  the  councils of the recognised system of medicines established or recognized by law in India and includes a medical professional having the requisite qualification to practice in any recognised system of medicines in India as per any law for the time being in force;

(e) “authorised person” means any person who is appointed as such either by a stock broker (including trading member) or by a member of a commodity exchange and who provides access to trading platform of a stock exchange or a commodity exchange as an agent of such stock broker or member of a commodity exchange;

(f) “auxiliary educational services” means any services relating to imparting any skill, knowledge, education or development of course content or any other knowledge – enhancement activity, whether for the students or the faculty, or any other services which educational institutions ordinarily carry out themselves but may obtain as outsourced services from any other person, including services relating to admission to such institution, conduct of examination, catering for the students under any mid-day meals scheme sponsored by Government, or transportation of students, faculty or staff of such institution;

(g) “banking company” has the meaning assigned to it in clause (a) of section 45A of the Reserve Bank of India Act,1934(2 of 1934);

(h) “brand ambassador” means a person engaged for promotion or marketing of a brand of goods, service, property or actionable claim, event or endorsement of name, including a trade name, logo or house mark of any person;

(i) “business facilitator or business correspondent” means an intermediary appointed under the business facilitator model or the business correspondent model by a banking company or an insurance company under the guidelines issued by Reserve Bank of India;

(j) “clinical establishment” means a hospital, nursing home, clinic, sanatorium or any other institution by, whatever name called, that offers services or facilities requiring diagnosis or treatment or care for illness, injury, deformity, abnormality or pregnancy in any recognised system of medicines in India, or a place established as an independent entity or a part of an establishment to carry out diagnostic or investigative services of diseases;

(k) “charitable activities” means activities relating to –

(i) public health by way of –

(a)  care or counseling of (i) terminally ill persons or persons with  severe physical or mental disability, (ii) persons afflicted with HIV or AIDS, or (iii) persons addicted to a dependence-forming substance such as narcotics drugs or alcohol; or

(b)  public awareness of preventive health, family planning or  prevention of HIV infection;

(ii) advancement of religion or spirituality;

(iii) advancement of educational programmes or skill development relating to,-

(a)     abandoned, orphaned or homeless children;

(b)     physically or mentally abused and traumatized persons;

(c)      prisoners; or

(d)     persons over the age of 65 years residing in a rural area;

(iv) preservation of environment including watershed, forests and wildlife; or

(v) advancement of any other object of general public utility up to a  value of,-

(a)  eighteen lakh and seventy five thousand rupees for the year 2012-13 subject to the condition that total value of such activities had not exceeded twenty five lakhs rupees during 2011-12;

(b)  twenty five lakh rupees in any other financial year subject to the condition that total value of such activities had not exceeded twenty five lakhs rupees during the preceding financial year;

(l) “commodity exchange” means an association as defined in section 2 (j) and recognized under section 6 of the Forward Contracts (Regulation) Act,1952 (74 of 1952);

(m) “contract carriage” has the meaning assigned to it in clause (7) of section 2 of the Motor Vehicles Act, 1988 (59 of 1988);

(n)“declared tariff” includes charges for all amenities provided in the unit of accommodation (given on rent for stay) like furniture, air-conditioner, refrigerators or any other amenities, but without excluding any discount offered on the published charges for such unit;

(o) “distributor or selling agent” has the meaning assigned to them in clause (c) of the rule 2 of the Lottery (Regulation) Rules, 2010 notified by the Government of India in the Ministry of Home Affairs, published in the Gazette of India, Extraordinary, Part-II, Section 3, Sub-section (i), vide number G.S.R. 278(E), dated the 1st April, 2010 and shall include distributor or selling agent authorised by the lottery- organising State;

(p) “general insurance business” has the meaning assigned to it in clause (g) of section 3 of General Insurance Business (Nationalisation) Act, 1972 (57 of 1972);

(q)“general public” means the body of people at large sufficiently defined by some common quality of public or impersonal nature;

(r)“goods carriage” has the meaning assigned to it in clause (14) of section 2 of the Motor  Vehicles Act, 1988 (59 of 1988);

(s) “governmental authority’’ means a board, or an authority or any other body established with 90% or more participation by way of equity or control by Government and set up by an Act of the Parliament or a State Legislature to carry out any function entrusted to a municipality under article 243W  of the Constitution;

(t) “health care services” means any service by way of  diagnosis or treatment or care for illness, injury, deformity, abnormality or pregnancy in any recognised system of medicines in India and includes services by way of transportation of the patient to and from a clinical establishment, but does not include hair transplant or cosmetic or plastic surgery, except when undertaken to restore or to reconstruct anatomy or functions of body affected due to congenital defects, developmental abnormalities, injury or trauma;

(u) “incubatee” means an entrepreneur located within the premises of a Technology Business Incubator (TBI) or Science and Technology Entrepreneurship Park (STEP) recognised by the National Science and Technology Entrepreneurship Development Board (NSTEDB) of the Department of Science and Technology, Government of India and who has entered into an agreement with the TBI or the STEP to enable himself to develop and produce hi-tech and innovative products;

(v)“insurance company” means  a company carrying on life insurance business or general insurance business;

(w)“legal service”  means any service provided in relation to advice, consultancy or assistance in any branch of law, in any manner and includes representational services before any court, tribunal or authority;

(x)“life insurance business” has the meaning assigned to it in clause (11) of section 2 of the Insurance  Act, 1938 (4 of 1938);

(y) “original works” means  has the meaning assigned to it in Rule 2A of  the Service Tax (Determination of Value) Rules, 2006;

(z) “principal manufacturer” means any person who gets goods manufactured or processed on  his account from another person;

(za) “recognized sports body” means – (i) the Indian Olympic Association, (ii) Sports Authority of India, (iii) a national sports federation recognised by the Ministry of Sports and Youth Affairs of the Central Government, and its affiliate federations, (iv) national sports promotion organisations recognised by the Ministry of Sports and Youth Affairs of the Central Government, (v) the International Olympic Association or a federation  recognised by the International Olympic Association or (vi) a federation or a body which regulates a sport at international level and its affiliated federations or bodies regulating a sport in India;

(zb) “religious place” means a place which is primarily meant for conduct of prayers or worship pertaining to a religion, meditation, or spirituality;

(zc) “residential complex” means any complex comprising of a building or buildings, having more than one single residential unit;

(zd)“rural area” means the area comprised in a village as defined in land revenue records, excluding-

the area under any municipal committee, municipal corporation, town area committee, cantonment board or notified area committee; or

any area that may be notified as an urban area by the Central Government or a State Government;

(ze)“single residential unit” means a  self-contained residential unit which is designed for use, wholly or principally, for residential purposes for one family;

(zf) “specified international organization” means an international organization declared by the Central Government in pursuance of section 3 of the United Nations (Privileges and Immunities) Act, 1947 (46 of 1947), to which the provisions of the Schedule to the said Act apply;

(zg)”state transport undertaking” has the meaning assigned to it in clause (42) of section 2 of the Motor Vehicles Act, 1988 (59 of 1988);

(zh)”sub-broker” has the meaning assigned to it in sub-clause (gc) of clause 2 of the Securities and Exchange Board of India (Stock Brokers and Sub-brokers) Regulations, 1992;

(zi) “trade union” has the meaning assigned to it in clause (h) of section 2 of the Trade Unions Act,1926(16 of 1926).

3. This notification shall come into force on the 1st day of July, 2012.

 [F. No.334/1/2012 -TRU]

(Rajkumar Digvijay)

Under Secretary to the Government of India

Service Tax Rate and When to Pay,Charge Service Tax

Finance Act, 1994 prescribes when to pay, charge service tax and also rate of current tax and POINT OF TAXATION RULES, 2011 Provides at what time or when one has to pay the service tax. After introduction of negative list concept in 2012, every person who is providing services is liable to pay/charge service tax but question arises at what rate on one has to pay service tax? Current service tax rate is 12.36%. This new service tax rate of 12.36% was introduced in the Budget of 2012 before that service tax rate was 10% plus education cess of 3% and this current service tax rate of 12.36% is calculated in this way, 12% service tax rate and 3% education cess on bill amount.

Since service tax is indirect tax, so provider of services will charges it from the receiver of the services and similarly receiver of the services can take the credit of service tax paid, subject to CENVAT Credit Rules, 2004. Rule 3 of CENVAT Credit Rules, 2004 deals with credit of Service tax paid.

Secondly at what time or when one has to pay the service tax?

Time of Payment of service tax is decided by POINT OF TAXATION RULES, 2011, Rule 3 and Rule 4 will decide the Determination of point of taxation. As per the rules 3, the time when the invoice for the service provided or to be provided is issued: Provided that where the invoice is not issued within fourteen days of the completion of the provision of the service, the point of taxation shall be date of such completion.

(a)  in a case, where the person providing the service, receives a payment before the time specified in clause (a), the time, when he receives such payment, to the extent of such payment.

Explanation .- For the purpose of this rule, wherever any advance by whatever name known, is received by the service provider towards the provision of taxable service, the point of taxation shall be the date of receipt of each such advance.”

4. Determination of point of taxation in case of change in effective rate of  tax – Notwithstanding anything contained in rule 3, the point of taxation in cases where there is a change in effective rate of  tax in respect of a service, shall be determined in the following manner, namely:-

(a)     in case a taxable service has been provided before the change in effective rate of tax,-

(i)   where the invoice for the same has been issued and the payment received after the change in effective rate of  tax, the point of taxation shall be date of payment or issuing of invoice, whichever is earlier; or

(ii)  where the invoice has also been issued prior to change in effective rate of  tax but the payment is received after the change in effective rate of  tax, the point of taxation shall be the date of issuing of invoice; or

(iii)  where the payment is also received before the change in effective rate of  tax, but the invoice for the same has been issued after the change in effective rate of  tax, the point of taxation shall be the date of payment;

(b)  in case a taxable service has been provided after the change in effective rate of  tax,-

(i)  where the payment for the invoice is also made after the change in effective rate of  tax but the invoice has been issued prior to the change in effective rate of  tax, the point of taxation shall be the date of payment; or

(ii)  where the invoice has been issued and the payment for the invoice received before the change in effective rate of  tax, the point of taxation shall be the date of receipt of payment or date of issuance of invoice, whichever is earlier; or

(iii)  where the invoice has also been raised after the change in effective rate of  tax  but the payment has been received before the change in effective rate of  tax , the point of taxation shall be date of issuing of invoice.

Explanation.- For the purposes of this rule, “change in effective rate of tax” shall include a change in the portion of value on which tax is payable in terms of a notification issued under the provisions of Finance Act, 1994 or rules made thereunder.

5. Payment of tax in cases of new services.- Where a service, not being a service covered by rule 6, is taxed for the first time, then, –

(a)      no tax shall be payable to the extent the invoice has been issued and the payment received against such invoice before such service became taxable;

(b)      no tax shall be payable if the payment has been received before the service becomes taxable and invoice has been issued within the period referred to in rule 4A of the Service Tax Rules, 1994.

6.  Determination of point of taxation in case of continuous supply of service.- Notwithstanding anything contained in rules 3,4 or 8, in case of continuous supply of service, the `point of taxation’ shall be,-

(a)   the time when the invoice for the service provided or to be provided is issued:

Provided that where the invoice is not issued within fourteen days of the completion of the provision of the service, the point of taxation shall be date of such completion.

(b)  in a case, where the person providing the service, receives a payment before the time specified in clause (a), the time, when he receives such payment, to the extent of such payment.

Explanation 1. – For the purpose of this rule, where the provision of the whole or part of the service is determined periodically on the completion of an event in terms of a contract, which requires the service receiver to make any payment to service provider, the date of completion of each such event as specified in the contract shall be deemed to be the date of completion of provision of service.

Explanation 2.- For the purpose of this rule, wherever any advance, by whatever name known, is received by the service provider towards the provision of taxable service, the point of taxation shall be the date of receipt of each such advance.

7. Determination of point of taxation in case of associated enterprises.- Notwithstanding anything contained in these rules, the point of taxation in respect of,-

(a)    the services covered by sub-rule (1) of rule 3 of Export of Services Rules, 2005;

(b)    the persons required to pay tax as recipients under the rules made in this regard in respect of services notified under sub-section (2) of section 68 of the Finance Act, 1994;

(c)    individuals or proprietary firms or partnership firms providing taxable services referred to in sub-clauses (p), (q), (s), (t), (u), (za), (zzzzm) of clause (105) of section 65 of the Finance Act, 1994, shall be the date on which payment is received or made, as the case may be:

Provided that in case of services referred to in clause (a), where payment is not received within the period specified by the Reserve Bank of India, the point of taxation shall be determined, as if this rule does not exist.

Provided further that in case of services referred to in clause (b) where the payment is not made within a period of six months of the date of invoice, the point of taxation shall be determined as if this rule does not exist.

Provided also that in case of “associated enterprises”, where the person providing the service is located outside India, the point of taxation shall be the date of credit in the books of account of the person receiving the service or date of making the payment whichever is earlier.

8. Determination of point of taxation in case of copyrights, etc. .- In respect of royalties and payments pertaining to copyrights, trademarks, designs or patents, where the whole amount of the consideration for the provision of service is not ascertainable at the time when service was performed, and subsequently the use or the benefit of these services by a person other than the provider gives rise to any payment of consideration, the service shall be treated as having been provided each time when a payment in respect of such use or the benefit is received by the provider in respect thereof, or an invoice is issued by the provider, whichever is earlier.

9. Savings.- Nothing contained in these rules shall be applicable,-

(i)     where the  provision of service is completed; or

(ii)    where invoices are issued

prior to the date on which these rules come into force.

Provided that services for which provision is completed on or before 30th day of June, 2011 or here the invoices are issued upto the 30th day of June, 2011, the point of taxation shall, at the option of the taxpayer, be the date on which the payment is received or made as the case may be.

Service Tax Rate @12.36%, Service Tax Rate Chart Last 10 Years in India

Service Tax Rate Chart for Last for 10 Years in India with Current Changes in Service Tax Rates in India. After the Finance Act, 2012 New Service tax rate of 12.36% was introduced i.e.12% service tax rate and 3% education cess on service tax. Service tax rate before 1.04.2012 was 10% plus education cess of 3% of service tax and that rate was introduced in 2009. Another major change was introduction of negative list concept in service tax in year 2012, which means now all the services are covered under service tax except which are exempted by government. So the Central Board of Excise and Customs (CBEC) has   issued the Notification No. 25/2012 dated 20th June, 2012, giving detail list of services which will be exempted from payment of service tax w.e.f. 01-07-2012 (1st July 2012).

Service Tax Rate Chart for Last 10 Years .i.e From 13.05.2003 to Till Date (31.10.2013)

Sr.No.PeriodRate of Service TaxRate of Education CessRate of Secondary & Higher Education CessTotal Service Tax
1Till 13.05.20035%NilNil

5%

214.05.2003 to 09.09.20048%NilNil

8%

310.09.2004 to 17.04.200610%2% of the S.T.Nil

10.20%

418.04.2006 to 31.05.200712%2% of the S.T.Nil

12.24%

501.06.2007 to 23.02.200912%2% of S.T.1% of S.T.

12.36%

6From 24.02.200910%2% of S.T.1% of S.T.

10.30%

7From 01.04.2012 till date*12%2% of S.T.1% of S.T.

12.36%

* Service Tax Rate for Year 2013-14

Read When Service Tax is Charged or When to Pay Service Tax