Download Service - The Law

INTRODUCTION OF
SERVICE TAX
&
ITS NEED IN THE
ALL-ROUND
DEVELOPING ECONOMY
SERVICE TAX ?
It is an Indirect Tax on service
industry.
Service is a performance of any duties
or work for another.
Levied upon specified services and
not on tangible objects.
Levied upon specified persons on
service
provided
to
specified
consumers.
SERVICE TAX ?
Tax is levied on service and not on
Manufacturing,Profession, Income,
Profit or Sale of Goods.
Service Tax is thus carrying the tax
to the point of consumption i.e. the
last point.
Need For Taxing Services
For moving
towards fullfledged ‘VAT’.
To include service
sector into the
stream of central
taxation.
For broadening tax
base.
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
100
90
100
80
71
80
63
70
53
60
50
42
40
27
30
27
18
20
10
93
3
3
6
0
1994
1996
1998
2001
2003
Categories of services
2005
2007
Sectoral structure of world economies
Percentage of
GDP
High Income
Countries
Service
66%
32%
2%
Middle Income
Countries
Low Income
Countries
Agriculture
SERVICE SECTOR in INDIA at 55%
Service
52%
35%
11%
Service
35%
38%
25%
Industry
Services
Change in contribution Sectors Of Economy
PRAPORTION OF DIFFERENT SECTORS OF ECONOMY
AGRICULTURE
18.5% of GDP
SERVICE 55.1% of GDP
SERPASSING OTHER SECTORS - 68.6% Growth
INDUSTRY 26.4% of GDP
PER CAPITA INCOME OVER TIME
Share of services in GDP
Finance Minister Speaks
“………….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
40000
38169
Rs. (in crores)
35000
30000
23055
25000
20000
14150
15000
8300
10000
5000
411
846
1022
976
1788
2072
2612 3305
4125
0
199495
199697
service tax
199899
200001
Years
200203
200405
200607
GROWTH IN ASSESSEE BASE
Number of Service Tax
Assesses in India
2003-04
2004-05
4,03,856
7,74,988
Increase of 91%
2005-06
8,46,155
Increase of 9.18%
Salient Features Of
Service Tax
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.
Service Tax is levied @ 12% of value of service
charged with 2%
Educational Cess &
1% Secondary Higher Education Cess.
Service Tax credit is allowed across goods
and services.
Salient Features Of
Service Tax
Service provider
is responsible for
payment of tax.
Service Tax liability created
when
charged but has to be paid
only
when payment
is received.
Threshold exemption from 1.4.2007
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 15.3.2005.
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 Provider’ and ‘Categories of
Services’ as defined can only be
taxed.
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
Information on
WEB SITE
Web Sites loaded with
information provided by the
Government to guide
assesses in service tax
matters:
www.finmin.nic.in
www.cbec.gov.in
www.excise.gov.in
www.exciseandcustoms.gov.in
www.exciseandservicetax.nic.in
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: 0120-2820380, 2821407