Did you know that Service tax rules get amended every now and then and disseminated among the people by means of service tax circulars? Until and unless there are major amendments in the law, the newspaper would not use bold fonts to highlight that. However, as a responsible citizen of India you should be aware of what is going on with the service tax rules and regulations. That will not only help you comply with the law of the land, but at the same time will also ensure that you do not fall prey to any false statement issued by any party that will lead to you paying extra money on accounts of service tax.
What is service tax?
Service tax is the tax levied by the Central Government of India, which is payable by every individual or entity when they receive or are about to receive services from government, non-government, or private individual or entities. Service tax is basically an indirect tax, as the tax payer is not paying the same directly to the government. Instead, the tax payer, i.e., the receiver of the services if paying the tax to the service provider, who gets the tax deposited in the government’s account.
While initially the rate of service tax was held at 14.5% of the total value of the services, with the introduction of Swachh Bharat Cess and Krishi Kalyan Cess, the same has gone up to 15%. Although these are not service taxes technically, but as these taxes are to be levied on services which are eligible for getting service tax, the overall ST is considered after counting these two new taxes in.
Importance of circulars
When the Swachh Bharat Cess and Krishi Kalyan Cess and were included in the service tax, it made to the headlines of the newspaper, but apart from that there are many other small amendments, which are not issued publicly. This is where the service tax circulars come handy. Going through these circulars will ensure that the individual is totally updated with the latest amendments of the law pertaining to service tax.
You would be amazed to learn that in the last one year, there have been as many as 14 service tax circulars being floated by the Department of Revenue, Ministry of Finance. Not each one of these made it big to the news headlines as they did not have any havoc impact on the population. Some of the most important circulars carried updated about the following:
- Classification on issues regarding service taxes being levied on services provided by government agencies or local authorities to business entities. This was issued on 1th April 2016.
- Instructions pertaining to the provisional attachment of property under Section 73C of the Finance Act of 1994. This was issued on 27th July 2016.
- Liability of service taxes if goods are being hired without the transfer of right to use them. This was issued on 6th September 2016.
- Guidelines for arresting an individual on grounds of offenses at found punishable under the Central Excise Act, 1994 and the Finance Act, 1994. This was issued on 30th September 2016.
These were just the major updated which are floated by means of the circulars. If you want to stay updated about these amendments, you would need to visit or sign up with good finance websites where you would be getting to read the service tax circulars as issued by the Ministry of Finance.