taxable service

[Pradeep Kumar]

What is taxable service means, is it the gross value of service rendered or value after abatement?

Experts opinion is requested

[Mahir S]

The "value of taxable service" means, the gross amount received by the service provider for the taxable service provided or to be provided by him.

[Mahir S]

Q) What is meant by “value of taxable service"?

A) (I) Normally, the "value of taxable service" means, the gross amountreceived by the service provider for the taxable service provided or to be provided by him. Section 67 of the Finance Act, 1994 read with Service Tax (Determination of Value) Rules, 2006, has to be followed to arrive at the taxable value.

(II) For certain services, a specified percentage of abatement is allowed from the gross amount collected for rendering the services, subject to the conditions, inter alia, that CENVAT Credit has not been availed by the service provider and cost of goods sold in the process of providing the subject service is not deducted in terms of Notification No. 12/2003-ST, dated 20.6.2003.

(III) There is also a composition scheme for ‘works contract service’, where the person liable to pay service tax in relation to works contract service shall have the option to discharge his service tax liability on the works contract service provided or to be provided, instead of paying service tax at the rate specified in section 66 of the Act, by paying an amount equivalent to 4% of the gross amount charged for the works contract.

[Ganeshan Kalyani]

Taxable service refers to service which is liable to service tax as per provision of Finance Act. The value on which the tax to be levied is taxable value. Tax is generally levied on taxable value. But by virtue of notification no. 26/2012 some services are enumerated to be eligible for abatement I.e. service tax shall be worked out on the value after abatement.

[Ganeshan Kalyani]

With effect from 01.07.2012, all services are taxable unless it is exempted by way of Notification and listed is negative list of services.

[Pradeep Kumar]

Thanks experts.

If we need to pay interest on delayed payment of service tax, what would be the percentage? Is it 18 or 15??

Please advice

[Ganeshan Kalyani]

As per Notification No 13/2016 dated 01.03.2016, the rate of interest is as below:

Serial Number	Situation	Rate of simple interest
(1)	(2)	(3)
1.	Collection of any amount as service tax but failing to pay the amount so collected to the credit of the Central Government on or before the date on which such payment becomes due.	24 per cent.
2.	Other than in situations covered under serial number 1 above.	15 per cent.

[DR.MARIAPPAN GOVINDARAJAN]

If the service rendered is eligible for abatement, the gross value is to be taken after abatement.

[Pradeep Kumar]

Experts,

But our central excise range superintendent is having different opinion. They are telling that taxable service means value before any abatement. Abatement is the concession given by the government and it doesn't means that taxable service to be arrived after that abatement.

Can you give expert opinion by quoting notification9s)/circular(s), if any, please.

[Ganeshan Kalyani]

Pls. Refer Notification No. 26/2012 - Service tax. The circular is published by CBEC. The services enumerated in the said notification is eligible for abatement. The consideration received on taxable service rendered is liable to tax but if the service is covered under the notification then the taxable service to be reduced by such percentage as given in the notification.

To my mind the superintendent would be referring to such service which is not covered by the abatement notification.

AI Summary

Taxable service valuation: abatement reduces taxable value for eligible services; delayed payment interest varies by situation. The primary operative rule is that the taxable value of a service is ordinarily the gross amount received, determined under the valuation provisions and rules; however, for services specified in the abatement notification the taxable value is reduced by the notified percentage subject to conditions such as non availment of CENVAT credit and limitations on deduction of cost of goods sold, and a composition option exists for works contract services permitting discharge of liability by paying a fixed percentage of gross charges.