Service Tax

Topics: Tax, Indirect tax, Value added tax Pages: 10 (4013 words) Published: December 12, 2012
Indirect Tax
1. 2. 3. 4. 5. 6. With the economics growth Govt. Expenditure Increases. The only sources of revenue for the Govt. is taxes With increases in expenditure Govt. has been increasing taxes dividing To the extend 135% of custom duty levied & it becomes matter of gossiping. India become member of GATT & entered in to WTO agreement. This agreement restricted custom duty & created a wide gap in the Govt. revenue & Govt. Expenditure & there for it become compulsory to impose Additional Taxes. 7. Government appointed a committee for tax reforms under the chairmanship of Dr. Raj Chelaiya committee recomnded in production of extensive tax system intend of existing intensive tax system = Extraction of more amt. of taxes from the same sources. This was not possible therefore committee recommended introduction of Service Tax. If goods can br taxed Why not Service Tax – Based on this principal Service Tax has been imposed. Can Govt. impose any tax was a question raised by the C.A association of Gujarat & civil engineering & artitractor of Mumbai. The validity was challenged Therefore Constitution provide for there list List A – Union List List B –State List List C – Concurrent List (Misc. List) List A has 97 item on which central Govt. is empowered to make act. & impose taxes in this list of 97 there was no Service Tax therefore it wasincluded under entry item97 residual taxes& therefore only there service were tax i.e. Telephone, Stock Broker & General Insurance Service. -Subsequently constitution was amended & entry 92© has been inserted to cover service tax & this has been pharmlise THERE ARE CARTEN STAGES TO BE FOLLOWED FOR IMPOSING TAXES:-. A. B. C. D. E. Enactment passing of an act by the parliament & approval by the precedent. Establishment of some machine for implementing of this act. Determination of assesses & his liabilities. Forcefully recovery if not voluntarily paid. Service tax yet to pass this stage no separate act has been to pass only available section from finance act has been for this purpose. F. No department has been created for services tax central excise department has been given this responsibilities. G. This is how service tax come in to force.

TYPES OF TAXES Taxes are two types:1. Direct tax 2. Indirect tax In indirect tax the burden of tax(Incident of tax) is passed on the consumer good or services. Points of Distinguish. DIRECT TAX It is on the individual Incident cannot be passed on to anybody Recovery mechanism is expansive INDIRECT TAX It is on goods Incident can be passed on the final consumer Recovery mechanism is very economic. In economic indirect tax are called duty however service tax is not called duty i.e. excise duty, custom duty, however service tax is not called like sales tax this is because service tax is recovery before and paid to the govt. later on. Whether in excise & custom payment is made first to central Govt. then is recovered.

 Service tax is a VAT i.e value added tax. Tax on value addition only. Constition prohibites Govt.from imposing tax on tax under the same act because it has a cumulative effect.(Cascading effect) & burden on the customer increases.

 Body of Service tax laws. Law is the wider term & it includes the concerned act, relevant other act, amendments, notification, Rules & regulation. The body of Service tax laws consists of------1. 2. 3. 4. 5. Service tax provision under finance act. Service tax rule CENVET credit rule. Service export rule & valuation rule. In addition to this, the notification issued by the govt. & regulation frame by the board for indirect taxes.

Service tax is VAT the concept has cone from MODVAT (Modified VAT) & CEMVET & whatever service tax is paid on input service s taken away from setoff and is adjusted while making final payment of tax. Service tax is collected first and is paid later on. The payment has to be in the prescribed manner.  The concept of service tax is not new Mrs. Romila Thapfr in one...
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