INTRODUCTION OF SERVICE TAX & ITS NEED IN THE ALL-ROUND DEVELOPING ECONOMY

SERVICE TAX ? service industry It is an Indirect Tax on service industry. performance of any duties or work Service is a performance of any duties or work for another. not on tangible objects. Levied upon specified services and not on tangible objects. specified persons specified consumers Levied upon specified persons on service provided to specified consumers.

levied on service Tax is levied on service and not on Manufacturing,Profession, Income, Profit or Sale of Goods. carrying the tax Service Tax is thus carrying the tax to the point of consumption to the point of consumption i.e. the last point. SERVICE TAX ?

Need For Taxing Services full- fledged ‘VAT For moving towards full- fledged ‘VAT’. stream of central taxation To include service sector into the stream of central taxation. broadening tax base. For broadening tax base. more revenue For collection of more revenue

Dr. Manmohan singh introduced service tax in 1994 Service tax introduced in 1994

Increase In Taxable Categories of Services 100 Categories of Taxable Services

Percentage of GDP Service SERVICE SECTOR in INDIA at 55%

INDUSTRY 26.4% of GDP SERVICE 55.1% of GDP AGRICULTURE 18.5% of GDP Change in contribution Sectors Of Economy PRAPORTION OF DIFFERENT SECTORS OF ECONOMY PER CAPITA INCOME OVER TIME SERPASSING OTHER SECTORS % Growth

Share of services in GDP

Finance Minister Speaks continued buoyancyservice sector “………….Growth will be sustenance by increased production and value added in agriculture, a marked amount in industrial production and continued buoyancy in the performance of service sector”. He further added that he would like to align Indian Tariff strongly to those of ASEAN Countries and would also desire to have a uniform rate of tax on goods and services.

REVENUE GROWTH

GROWTH IN ASSESSEE BASE NumberService Tax Assesses Number of Service Tax Assesses in India ,03, ,74,988 Increase of 91% ,46,155 Increase of 9.18%

Salient Features Of Service Tax whole of India except J&K Extend to whole of India except J&K.. Service provider is normally responsible for payment of tax. In specified situations the person receiving the service is liable to pay service tax. Service Tax can be charged on specified taxable services. 12% 2% Educational Cess & 1% Secondary Higher Education Cess Service Tax is 12% of value of service charged with 2% Educational Cess & 1% Secondary Higher Education Cess. credit is allowed across goods and services. Service Tax credit is allowed across goods and services.

Salient Features Of Service Tax rvice provider is responsible Se rvice provider is responsible for payment of tax. liability created when chargedpaid only when payment is received. Service Tax liability created when charged but has to be paid only when payment is received. Threshold exemption from exempting from service tax, the aggregate value of taxable services not exceeding eight lakh rupees received by the service provider during a financial year.

Salient Features Of Service Tax Export of services without payment of service tax has been made with effect from Import of services brought into the tax net. Administered by the Central Excise Commissionerates working under the Central Board of Excise & Customs through the process of self-assessment, revision, appeals, penalties, etc. Powers given to Government to grant exemption and rebates in appropriate cases.

Definition Of Words Service ProviderCategories of Services’ ‘Service Provider’ and ‘Categories of Services’ as defined can only be taxed. Understanding the definition interpretation. Understanding the definition of specified words is important for interpretation. 100 Categories of services are presently taxable out of 107 specified categories of service on 74 types of person liable to pay and 8 broad types of person to receive the service.

Mission of Ministry of Finance Realizing the revenues in a fair, equitable and efficient manner Administering the Government's economic, tariff and trade policies with a practical and pragmatic approach. Facilitating trade and industry by streamlining and simplifying Customs, Excise and Service Tax Processes and helping Indian business to enhance its competitiveness. Creating a climate for voluntary compliance by providing guidance and building mutual trust. Combating revenue evasion, commercial frauds and social menace in an effective manner.

CONCLUSION SERVICE TAX ADMINISTRATION Requires revamping and separate comprehensive legislation. Distinct Administrative Machinery Aimed to bring in greater clarity, streamlined-procedures, greater taxpayer assistance & new tax culture of voluntary compliance Aimed to bring in greater clarity, streamlined-procedures, greater taxpayer assistance & new tax culture of voluntary compliance

Information on WEB SITE Web Sites service tax Web Sites loaded with information provided by the Government to guide assesses in service tax matters:

brother colleaguesMr. Naveen Garg, Chartered Accountant Mr. Arvind Sharma, Advocate I sincerely acknowledge the guidance and feed back received from my brother colleagues specially Mr. Naveen Garg, Chartered Accountant and Mr. Arvind Sharma, Advocate. I express my sincere thanks to my office staff in assisting me for preparation of this presentation. R-13/24, RAJ NAGAR, OPP. A.L.T.C., GHAZIABAD PH: ,