Basic

Service Tax is a tax imposed by Government of India on services provided in India. The service provider collects the tax and pays the same to the government. It is charged on all services except the services in the negative list of services.

The current rate is 14% on gross value of the service. The Service Tax Rate has been increased from 12.36% to flat 14%. This new rate of Service Tax @ 14% is applicable from 1st June 2015.

The Current Service Tax Rate in India is 14% and Swachh Bharat Cess is applicable @ 0.5%. Therefore, the effective rate of Service Tax is 14.5% from 15th Nov 2015

Service tax is only liable to be paid in case the total value of the service provided during the financial year is more than Rs. 10,00,000. If the value of services provided during a financial year is less than Rs 10,00,000, it is optional.

A Cess is a Tax that is collected by the government to be used for a specific purpose. The collections from levy of cess can be used only for the purpose for which it has been collected and not for any other purpose.

Income tax rules for new financial year

What is Krishi Kalyan Cess ?

Just like Swachh Bharat Cess has been levied for cleanliness, similarly Krishi Kalyan Cess has been introduced for improving agricultural facilities.

This Cess won’t be levied on your Income but would be levied on all Services on which Service Tax levied. Therefore, from 1st June, 2016 the effective rate of service tax would be 15% i.e.

Negative List

(a) Services by Government or a local authority excluding the following services to the extent they are not covered elsewhere:

• services by the Department of Posts by way of speed post, express parcel post, life insurance, and agency services provided to a person other than Government;
• services in relation to an aircraft or a vessel, inside or outside the precincts of a port or an airport;
• transport of goods or passengers; or
• support services, other than services covered under clauses (i) to (iii) above, provided to business entities.

(b) Services by the Reserve bank of India.

(c) Services by a foreign diplomatic mission located in India.

(d) Services relating to agriculture or agricultural produce by way of –

• agricultural operations directly related to production of any agricultural produce including cultivation, harvesting, threshing, plant protection or seed testing;
• supply of farm labour;
• processes carried out at an agricultural farm including tending, pruning, cutting, harvesting, drying, cleaning, trimming, sun drying, fumigating, curing, sorting, grading, cooling or bulk packaging and such like operations which do not alter essential characteristics of agricultural produce but make it only marketable for the primary market;
• renting or leasing of agro machinery or vacant land with or without a structure incidental to its use;
• loading, unloading, packing, storage or warehousing of agricultural produce;
• agricultural extension services;
• services by any Agricultural Produce Marketing Committee or Board or services provided by a commission agent for sale or purchase of agricultural produce.

(e) Trading of goods.

(f) Any process amounting to manufacture or production of goods.

(g) Selling of space or time slots for advertisements other than advertisements broadcast by radio or television.

(h) Service by way of access to a road or a bridge on payment of toll charges.  

(i) Betting, gambling or lottery.

(j) Admission to entertainment events or access to amusement facilities.

(k) Transmission or distribution of electricity by an electricity transmission or distribution utility.

(l) Services by way of –

• pre-school education and education up to higher secondary school or equivalent;
• education as a part of a curriculum for obtaining a qualification recognized by law;
• education as a part of an approved vocational education course.

(m) Services by way of renting of residential dwelling for use as residence;

(n) Services by way of –

• extending deposits, loans or advances in so far as the consideration is represented by way of interest or discount;
• inter-se sale or purchase of foreign currency amongst banks or authorized dealers of foreign exchange or amongst banks and such dealers;

(o) Service of transportation of passengers, with or without accompanied belongings, by –

• a stage carriage;
• railways in a class other than – (A) first class; or (B) an air conditioned coach;
• metro, monorail or tramway;
• inland waterways;
• public transport, other than predominantly for tourism purpose, in a vessel between places located in India; and
• metered cabs, radio taxis or auto rickshaws;

(p) Services by way of transportation of goods –

• by road except the services of – (A) a goods transportation agency; or (B) a courier agency;
• by an aircraft or a vessel from a place outside India up to the customs station of clearance in India; or
• by inland waterways;

(q) Funeral, burial, crematorium or mortuary services including transportation of the deceased.