Service Tax

Service Tax is a form of indirect tax imposed on specified services called "taxable services". Service tax cannot be levied on any service which is not included in the list of taxable services. Over the past few years, service tax been expanded to cover new services. The intention of the government is to gradually increase the list of taxable services until most services fall within the scope of service tax.

In the Union Budget of India for the year 2006-2007, service tax has been increased from 10% to 12%. For the purpose of levying service tax, the value of any taxable service should be the gross amount charged by the service provider for the service rendered by him.

In 2005-2006, the services sector is estimated to 54% of GDP. As such, it should contribute also contribute significantly to the exchequer. To attain this objective, the Finance Minister has proposed to bring more services under the services tax net. The new services to be covered include: