Service Tax Act,1994

• Service tax is imposed under Finance Act, 1994 as amended from time to time.

• Current service tax rate is 15% (plus education cess of 2% and 1% secondary and higher education cess i.e. total 15.45%)
• Service tax is payable on taxable services as defined in various clauses of section 65(105) of Finance Act, 1994. Presently, about 117 services are taxable.
• Service tax is payable on gross amount charged for taxable service provided or to be provided [Section 67]. If consideration is partly not in money, valuation is required to be done as per Valuation Rules. Tax is payable when advance is received.
• Small service providers upto ten lakhs are exempt. Export of service is exempt from service tax under Notification No. 6/2005-ST dated 1-3-2005. Services provided in J&K are not taxable [section 64(1)]
• Cenvat credit is available of inputs, input services and capital goods used for providing taxable output services.
• In some cases, receiver of service is liable to pay service tax. This is termed as ‘reverse charge’ [Section 68(2)].

We will be discussing below under this section: