Mukesh Raj And Company
Mukesh Raj & Company
Mukesh Raj & Company



Mukesh Raj And Company
Mukesh Raj And Company
Mukesh Raj And CompanyMukesh Raj And CompanyMukesh Raj And Company
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Service Tax


Service Tax is levied on the notified services. It is a union levy administered by the Central Excise Department and governed by Chapter V of Finance Act, 1994 (the Act) as amended from time to time. The rate of service tax till 9 September, 2004 was 8 per cent and from 10 September, 2004, it was increased to 10 per cent. Education cess at 2 per cent is levied on service tax amount from 10 September, 2004. The effective rate of service tax works out to 10.2 per cent. Service tax is charged on the gross value of services and is generally payable on receipt basis. It is an indirect tax - it is payable by the service provider but it is ordinarily recovered from the recipient of services. The law requires separate mention of service tax amount in the invoices.

Ordinarily, every person liable to pay service tax is required to register itself with service tax authorities and comply with procedural requirements like paying taxes, filing returns, etc. However, in case of non-residents, who do not have any office in India and who are liable to pay service tax in India, this burden is shifted to the recipient of service with effect from 16 August, 2002.

There is a basic exemption limit of INR 0.4 million which means that service tax shall be exempted for service providers providing taxable services up to INR 0.4 million. A mechanism for credit of input service tax and central excise duty on specified inputs and capital goods is also in place.

Any service for which payment was received in convertible foreign exchange in India and which was not repatriated or sent outside India was exempt from levy of service tax up to 28 February, 20031. But this exemption was withdrawn with effect from 1 March, 20032, although export of services continued to remain taxfree even after such a withdrawal. This exemption was reinstated with effect from 20 November, 20033 as a stop-gap arrangement till the government could satisfactorily determine "what constitutes export of services". The government has now notified the new "Export of Service Rules 2005" which defines as to what constitute "export of services". These rules are effective from 15 March, 2005. Consequently, the exemption from service tax on payments received in convertible foreign exchange has now been removed with effect from 15 March, 2005.

When two or more services are bundled together it would be classifiable under the category which gives essential character to the service. Classification rules are in place from 14 May, 2003. If in case of composite activities, one or more of the activities are liable to service tax and the others are not liable to service tax, service tax would ordinarily be payable only on the charges received for the services to which service tax is applicable, provided charges for each activity can be separately identified / determined and it is not incidental to the main service.There are no rules for such identification / allocation and, therefore, such allocation, if required, must be made on a reasonable basis.

Service tax is a comparatively new levy in India and very few judicial precedents are available on the subject. The language of the law is quite broad and generic and uses terms like "directly or indirectly" and "in any manner" which raise a number of issues regarding scope of specific category of service. Revenue authorities have been issuing explanatory circulars from time to time in relation to specific issues. Yet, there is, considerable ambiguity in the applicability of the service tax law to various services.
Service tax is currently levied on following 80 notified categories of services:

Advertising Agency Air Travel Agent Airport Architect Sound Recording
Authorized Service Station Banking and Other Financial Services Beauty Treatment Broadcasting Steamer Agent
Business Auxiliary Services Business Exhibition Cable Operator Cargo Handling Stock Broker
Chartered Accountant Cleaning Activity Services Clearing and Forwarding Agent Construction Storage and Warehousing
Construction of Complex Services Consulting Engineer Convention Cost Accountant Survey and Exploration of Mineral
Courier Credit Rating Agency Custom House Agent Dredging Services Survey and Map-making Services
Dry Cleaning Erection, Commissioning and Installation Agency Event Management Facsimile Technical Inspection and Certification
Fashion Designing Forward Contract Franchise General Insurance Technical Testing or Analysis
Goods Transport by Air Goods Transport by Road Health Club and Fitness Centre Insurance Auxiliary Services Telegraph
Intellectual Property Interior Decorator Internet Café Leased Circuit Telephone and Pager
Life Insurance Mailing List Mailing List Compilation Maintenance or Repair Mailing Services Telex
Management Consultant Mandap Keeper Database Opinion Poll Access or Retrieval Tour Operator
Outdoor Caterer Packaging Activity Services Pandal and Shamiana Photography Studio Transport of goods other than water
Port (major and others) Programme Production Rail Travel Agent Real Estate Agent Travel Agents (other than air and rail) through pipeline or other conduit services
Rent-a-cab Scientific or Technical Consultancy Security Agency Site Formation and Clearance, etc., Services Underwriters
Video Production

Octroi Duty
Octroi Duty is a local authority levy, which is levied on entry of goods into a municipal / local area for use, consumption or sale. The rate of octroi duty varies from local area to local area.

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Entry Tax


Stamp Duty
Stamp duty is imposed on execution of specified instruments. The levy is governed by the Indian Stamp Act, 1899 or the State Stamp Acts. Some states have enacted separate legislations, whereas some have adopted Indian Stamp Act with or without modifications. The rates vary from state to state.

Research and Development Cess
A research and development cess is a special levy on all payment made for the purchase of technology from abroad, including royalty payments, payments for technicians, lump sum payments, and payments for design and drawings.

Local Property Taxes
Property tax is payable as per local municipal laws on commercial and residential property

We provide following service tax services for their service tax clients:
  • Registration
  • Record to be maintained and invoice.
  • Payment of tax
  • Classification of goods/services
  • Adjustment of excess tax paid
  • Credit of service tax paid
  • Interest and penalty
  • Notice and visit by departmental officer
  • Assessment
  • Revision and appeal.
  • Refund of tax

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