Service tax is an indirect tax introduced by the government under the Indian Finance Act,
1994, which is levied on service providers on certain service transactions. Though the tax is
levied on service providers, it is actually borne by customers. Service tax is payable only if
the net value of services provided in a financial year is above Rs. 10 lakhs.
Initially, service tax was levied only on three services. However, currently more than 100 services come under its ambit. At present, service tax is charged at the rate of 12.3%. The failure to pay service tax will invite a penalty under the section 77 of Indian Finance Act, 1994.
Only service providers rendering services above Rs. 10 lakhs per financial year has to pay service tax and prepare service tax registration.
Any service provider not paying the tax within the stipulated time will be fined with a penalty under the Finance Act, 1994.
To promote exports, they are exempted from service tax. However, it is better for service exporters to obtain service tax registration.
To promote exports, they are exempted from service tax. However, it is better for service exporters to obtain service tax registration. .
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