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How to Calculate Service Tax in India?


Before calculating Service Tax, it is important to understand what is Service Tax. Successive Government's have altered Service Tax to improve government revenues and have added and deleted the list of services, that come under the purview of Service Tax.


Today, this form of tax has become an important source of revenues to the government. Service Tax can simply be defined as a type of tax that is levied on a service. This could be services rendered at a hotel or simply in your telephone bill.

How to Calculate Service Tax in India?
Service Tax was levied by the Congress led Government when India's Finance Minister was Manmohan Singh, the then Finance Minister.

How to Calculate Service Tax in India?

At the moment Service Tax is levied at a flat rate of 14 per cent. While, it was 12 per cent earlier the same was increased by Finance Minister Arun Jaitley in the Union Budget 2015-16.

More recently, a Swach Bharat cess has been levied at the rate of 0.50 per cent, taking the total service tax to 14.5 per cent. This cess became applicable from Nov 15, 2015.


This takes the effective service tax rate to 14.5 per cent. Let's cite an example on how you would pay service tax in India. Say, that you have hired a lawyer and his fees amount to Rs 10,000. Now, on this there is a service tax that is payable at the rate of 14 per cent and Swach Bharat cess at 0.50 per cent. So, you would end-up paying a Service Tax of Rs 1450.This would be a service tax of Rs 1400 and cess on swach bharat at Rs 50.

The service tax has to be shown separately from the service.

Negative List of Service Tax

Not all services come under the purview of Service Tax. There are certain services like those rendered by government agencies where there is no Service Tax levied. It's quite common at post office and other government departments to see no service tax. Do check the list of services that are in the negative list of service tax, which means they do not attract service tax.

Assesses are required to main proper records of Services rendered and those that are taxed. The taxed amount has to be then deposited with the proper authorities.

Read more about: service tax duties
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