Service tax Manual

Service Tax was introduced by Central Government in 1994 with three services at the rate of 5% through Chapter V of The Financial Act, 1994 that is governing Act for this tax till the date. The administration of Service tax is with the Central Excise Department. The collection from service tax was merely Rs. 410.61 crore in 1994-95.

Since then number of Services covered under Service tax has increased to 100 services and collection to Rs 23052.94 crore in 2005-06. The rate of Service Tax has also been increased to 12%.

Service Tax is governed by Chapter V of The Financial Act, 1994. The provision relating to law and procedures, as applicable to service tax, are incorporated in this Chapter and the rules framed there under, such as the Service tax Rules, 1994; the CENVAT Credit Rules 2004; the Export of Service Rules, 2005; the Taxation of Services received from outside India, Rules 2006 and the Service Tax (Determination of Value) Rules, 2006.

Significance of Service Tax increasing with the growth of Service Sector in Indian economy and more & more services are coming under Service Tax net every year. This is becoming a major source of Revenue for the Central Government of India.

Main Features of Service Tax are as follows:-