Nature of service tax
As per section 65 (95) of finance act , 1994 ,’sevice tax ‘ means tax leviable under the provision. Section 66 of Finance Act, 1994 is the charing section of service tax. Section 66 provides that there shall be levied a tax (service tax) @12% of the value of taxable service referred to in various clauses of section 65(105).It will be collected in a manner as may be prescribed. Though the tariff rate is 12%, the effective rate is 10% w.e.f 24-2-2009.Thus; total service tax payable is 10.30%w.e.f.24-2-2009.
In respect of each type of service , it is necessary to determine two things namely
(a) Taxable Service and
(b) Value of taxable service.
Taxable Service – As per section 66 of Finance Act, 1994, service tax is payable on taxable service. Service 65(105) of Finance Act 1994 defines what “taxable service” is. The definition is different for each class of service, e.g. in case of stock broker, any service provided by stock broker to investor in connection with sale or purchase of securities listed on a recognized stock exchange will be “taxable service”.
Service tax can be collected by service provider from service recever – Service tax is on indirect tax. Though liability is on provider, the tax can be collected by him from service receiver.
Excise and service tax are independent taxes– Though excise and service tax are administered by same department ,both are independent taxes. Payment of excise is not same thing as paying service tax .… Read the rest