The Finance Act of 1994 introduced Service Tax in India. According to this act, it is obligatory on the part of all the service providers in India (excluding those of Jammu and Kashmir) to pay a service tax to the government. It is essentially a form of indirect tax levied on the service providers of the country. The provisions pertaining to the Act came into effect from 1st July, 1994. Service tax is directed by the Central Excise Commissionerates, who falls under Department of Revenue, Ministry of Finance; Central Board of Excise and Customs and Government of India.
One of the most noteworthy features of service tax in India is that the government relies to a great extent on the voluntary observance of the service tax payers. This step is targeted towards promoting a healthy outlook towards the various taxation schemes of the Indian government. The amount of service tax to be paid in India is based on the gross amount which the service providers charge from their clients. Initially, the amount was fixed at 5%. However, in 2003, it was increased to 8%. At present, the rate of service tax in India is 10.2%, including a 2% education cess.
During the initial phases of its introduction in India, only three services came under its tax range. Today, about 100 categories have been incorporated in the range. Indian government intends to boost its revenue earnings by including more and more categories in its ambit of service tax. Some of the categories that require payment of Service Tax in India include:
