LEARNING

OUTCOME
Introduction to Service Tax:
1) Assessment Procedure
2) Point of Taxation
3) Taxable Territory
4) Gross Amount

Negative List (Section 66 D)

Services provided by:
Category 1: Govt./ Local authority
Category 2: RBI
Category 3: foreign diplomatic mission
located in India
Category 4: agricultural/ agricultural produce
Category 5: trading of goods
Category 6: any process manufacturing/
production of goods
Category 7: selling of space or time slots for
advertisement TV or Radio

Negative List (Section 66 D)

Services:
Category 8: by way of access to a road/ bridgepayment of toll charges
Category 9: betting/ gambling or lottery
Category 10: admission to entertainment event
Category 11: transmission/ distribution electricity
Category 12: Education
Category 13: residential dwellings residence use
Category 14: financial sector
Category 15: transportation of passenger
Category 16: Transportation of goods
Category 17: funeral services

Assessment Procedure
Value of services: declared
Basis of charge: 12.36%
Service not in negative list/ exemption
notification
Provided in taxable territory
Computation of tax liability
Point of taxation
Reverse charge mechanism
Threshold limit

Assessment Procedure
Point of taxation:
date of completion of service
Or
Receipt of payment towards service
Whichever is earlier

Assessment Procedure
Gross Amount:
Value of service:
Cum-tax gross amount charged
____________________________X 100
(100 + Rate of Service Tax)
Service Tax:
Cum-tax gross amount charged
____________________________X Rate of
Tax
(100 + Rate of Service Tax)

Assessment Procedure
1. Expenses - not part of services but
incurred as per business practice/
administrative convenience
And recovered Customer not
includible Value of Service
Example: Taxes, transport, loading charges,
paid on behalf of the customer

Assessment Procedure
2. If Value of services not ascertainable
(Rule 3 of Service Tax Valuation Rules)

Value of similar services

Equivalent
money value
(Rule 3a)
of consideration
(Rule 3b)

EXEMPTED SERVICES
1.
2.
3.
4.
5.
6.
7.
8.

Services to UN
Medical and Health Care
Charitable activities
Religious services
Legal services by Arbitral Tribunal
Classical or Folk artists
Sponsorship of certain sports event
Technical testing or analysis of newly
develpoed drugs.
Etc.

ABATEMENT SERVICES
1. Accommodation booking service by tour operator
10% of the gross amount charged.
2. Air travel agent: Option to pay flat rate tax:
. 0.6% - domestic booking
. 1.2% - international booking
3. Mandap keepers, hotels, convention services:
providing full catering services:
60% of the gross amount charged.
NOTE: Refer page No. 103-104 for more
services (29th edition)

REVERSE CHARGE MECHANISM

Service Receiver Pays tax
Exceptions:
1. Services provided by non- resident
2. Insurance agents
3. Consignor/ consignee paying freight GTA
services
4. Agents of mutual fund

Registration
Less than 9 Lacs
Even if more than one premises
Electronic filing
No registration all services being
exported
Penalty for non-registration: Rs.10,000 or
Rs.200 per day (which ever is higher)
Interest of 18%: for late payment of tax
Returns: ST3 Half yearly (25th day)
Rs.20,000 for late filing of returns

Registration
Less than 9 Lacs
Even if more than one premises
Electronic filing
No registration all services being
exported
Penalty for non-registration: Rs.10,000 or
Rs.200 per day (which ever is higher)
Interest of 18%: for late payment of tax