Applicability of service tax on free services

[K Balasubramanian]

Whether Service Tax is payable on services rendered free of cost after 18/04/2006?.

[Surender Gupta]

There is no provision in the Service Tax as of now to levy tax on services rendered free of cost. However, changes have been made to levy service tax on the value of consideration received in "kind" besides received in money.

[Guest]

Yes, now service even rendered free of cost is taxable. valuation rules hve been introduced to cover such type of situations

[Madhukar N Hiregange]

As on date the rule on payment of ST only on receipt continues. However the fact that the valuation rules are in place mean that in time thsi would also be amended. Hopefully they would not do so retrospectively.

AI Summary

Debate Over Service Tax on Free Services Post-April 18, 2006: Opinions Clash on Valuation Rules and Future Amendments. A discussion on the applicability of service tax on free services post-April 18, 2006, received varied opinions. One participant stated that there is no current provision to levy tax on services rendered free of cost, though service tax can be applied to non-monetary considerations. Another participant asserted that new valuation rules make even free services taxable. A third participant noted that while current rules require payment only upon receipt, the existence of valuation rules suggests potential future amendments, possibly not retroactively.