These days it's almost impossible to escape service tax and they have been extended to almost every type of service, whether it in a restaurant or paying your telephone bill or advertisements in the media. Earlier, the restriction to service tax was rather limited, but now it extends to almost every type of service except in the case of those on the negative list. At the moment service tax is levied on all service providers, except those that are exempt. Service Tax is Exempted in the State of Jammu and Kashmir.
Service Tax is a type of tax that you pay on services rendered. For example, you pay a tax on income that you receive, which is called income tax, on the other hand a tax is levied on goods manufactured and sold, which is called excise duty, so on and so forth.
Negative List of Service Tax
There are many services that are currently on the negative list of service tax. What this means is that the service rendered on these do not attract service tax. Let's give you some examples. The services provided by the government or local authorities is on the negative list. Services provided by the post office like speed post, registered post are all exempt. Services also provided by the Reserve Bank of India is exempt from the list of service tax.
How to Calculate Service Tax in India?
From June 1, 2015, the rate of Service Tax will be charged at 14 per cent.
From November 15, Swachh Bharat Cess (SBC) will also be imposed as service tax on all the taxable services at the rate of 0.5 per cent of the value of taxable service.
The cumulative service tax and Swachh Bharat Cess liability would be [14% ST + 0.5% SBC] of 40% of the total amount, that will be 5.8% of the total amount charged. Earlier, the rate of Service Tax was charged at 14 per cent, the effective rate of tax was 5.6 per cent of the total amount charged.