RATES OF SERVICE TAX AT GLANCE
Optional compound service tax rates allow specified services to pay prescribed rates under the Finance Act, with cesses applying. An optional compound payment mechanism under the Service Tax Rules permits certain service providers to discharge tax at prescribed compound rates instead of on taxable value, applying to categories such as air travel agents, life insurers, foreign exchange dealers, and lottery distributors; education cesses apply additionally and the option to use compound rates is available under the prescribed rate framework, with rate changes implemented prospectively. (AI Summary)
SERVICE TAX RATES
Sr. No. | Period | Rate of Service Tax | Rate of Education Cess | Rate of Secondary and Higher Secondary Education Cess |
1. | 1-7-1994 to 13-5-2003 | 5% | Nil | Nil |
2. | 14-5-2003 to 9-9-2004 | 8% | Nil | Nil |
3. | 10-9-2004 to 17-4-2006 | 10% | 2% of S.T. | Nil |
4. | 18-4-2006 to 31-5-2007 | 12% | 2% of S.T. | Nil |
5. | 1-6-2007 to 23-2-2009 | 12% | 2% of S.T. | 1% of S.T. |
6. | 24-2-2009 to 31-3-2012 | 10% | 2% of S.T. | 1% of S.T. |
7. | 1-4-2012 till date | 12% | 2% of S.T. | 1% of S.T. |
COMPOUND RATES UNDER SERVICE TAX RULES- Rule 6 of the Service Tax Rules, 1994 provides optional compound Rate of Service Tax.
Nature of service | Compound Rate of Service Tax |
Booking of tickets for Air Travel provided by Air Travel Agents | - 0.6% on the basic fare in case of domestic booking.
- 1.2% on the basic fare in case of international booking.
|
Insurer carrying on life insurance business | - On the gross premium charged from the Policyholder reduced by the amount allocated for investment and savings on behalf of the Policyholder.
- In all other cases, 3% of the premium charged in the first year and 1.5% of premium charged in subsequent years.
|
Purchase or sale of foreign currency including money changing | - 0.12% of the gross amount of currency exchanged for an amount up to 1 lac subject to maximum amount of 30/-.
- 120/- and 0.06% of the gross amount of currency exchanged for an amount exceeding 1 lac and up to 10 lacs.
- 660/- and 0.012% of the gross amount of currency exchanged for an amount exceeding 10 lacs but subject to maximum amount of 6,000/-.
|
Distributors and selling agents or persons assisting in organizing lottery | - 7,000/- on every 10 lacs (or part of 10 lacs) of aggregate face value of lottery provided, lottery or lottery scheme is one where guaranteed price pay- out is more than 80%.
- 11,000/- on every 10 lacs (or part of 10 lacs) of aggregate face value of lottery provided, lottery or lottery scheme is one where guaranteed price pay-out is less than 80%
|
- The Education Cess and SHEC are payable in addition to the above rates or amount of Service Tax.
- The above rates are optional and the Service Tax assessee can pay the tax at the prescribed rate under Section 66B of the Finance Act, 1994
- If there is any change in rate of service tax then the same is effected prospectively and not retrospectively.
CA Akash Phophalia
9799569294
[email protected]
Office No 3
Second Floor
Amrit Kalash
Residency Road
Near Bombay Motor Circle
Jodhpur-342001
Rajasthan
Service Tax
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