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Jun 17, 2011

How To Decide Whether Service Tax is Payable by a Person or Not?

A.) If you are engaged in providing a service to any person, please check:-  

(i) Whether the service rendered by you is falling under the scope of any of the taxable services listed in the Appendix-1 

(ii) Whether there is a general or specific exemption available for the category of service provided under any notification issued under section 93 of the Finance 
Act, 1994. 

(iii) Whether you are entitled to the value based exemption available for small service providers under notification No.6/2005-ST dated 1.3.05 as amended from 
time to time. Details are explained in para 8.1 of this Booklet. 

(iv) Whether the service charges were received for the services provided or to be provided. 

In case the service provided by a person falls within the scope of the taxable services and if such service is not fully exempted, the service tax is payable on the value of the taxable service received, subject to the eligible abatements.

B. If you are availing the services of the service provider, please check:- 

a. Whether the service received by you is falling under the scope of any of the services  where the recipient of the service is liable to pay Service Tax  in terms of Section 68(2) of the Act read with Rule 2(d) of the Service Tax Rules, 1994 

b. In case the service received by recipients of such service is falling under the scope of any of the taxable services defined under section 65 of the Finance Act, 1994, the recipients of the service shall pay Service Tax after considering specific exemptions/abatements admissible, if any. 

c. Please note that the value based exemption for small scale service providers under Notification No.6/2005 ST dated 01.03.2005 as amended is  not admissible to such recipients of taxable services. 

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