SERVICE TAX RATE-EFFECTIVE DATE OF REDUCTION

Dear Friends

After posting of following Two posts about reduction in rates many queries has been sent to me for effective date of the reduction of the service Tax & Excise Duty .

1. SERVICE TAX REDUCED TO 10 % FROM 12 %
2. Excise Duty Reduced By 2 % Notification from

So to clarify the issue Once for all ,I am giving you the effect of Service tax Notification & applicable date.

New Rate of service Tax from 24.02.2009

Basic rate =10%

education cess =2 % of basic rate

Higher 7 secondary cess : 1 % of basic rate 

total tax rate =10.30% of taxable amount of service.

Applicable Date

Service tax reduction from 12 to 10 and excise duty from 10 to 8 has been done by notifications dated 24.02.2009 so both are applicable from 24.02.2009

Is service tax on all items has been reduced ?

One of my friend has asked me ,whether service tax on all the services has been reduced or reduction is applicable on selective services only .Good news is here that reduction of 2 % is applicable on all the services.As per notification

".......................... hereby exempts all the taxable services specified in sub-section 105 of section 65 of the Finance Act from so much of service tax leviable there on under section 66 of the Finance Act, as is in excess of the rate of ten per cent of the value of taxable services."

so reduction has been done on all the services across the board.

which date is Important ,issue of bill,service rendering date ,or receiving date of the payment of bill.

Reduction of Rates is related with rendering date of service and not with the collection of amount or raising of Bill.Taxable event in service tax is rendering of service though the tax is to be deposited after the realisation/collection of the amount.

Suppose a service has been rendered before 24.02.2009 and bill is issued on or after 24.02.2009.in that case service tax will charged at the rate of 12.36 % and not on 10.30 %

suppose we have collected a payment for service which is yet to provided and will be provided on or after 24.02.2009 with tax rate 12.36 % then tax will be applicable at the rate of 10.30 % as the service will be rendered on or after 24.02.2009

Full text of the notification

NOTIFICATION NO. 8 /2009, - SERVICE TAX, DATED 24-2-2009

 

In exercise of the powers conferred by sub-section (1) of section 93 of the Finance Act, 1994 (32 of 1994) (hereinafter referred to as the Finance Act), the Central Government, on being satisfied that it is necessary in the public interest so to do, hereby exempts all the taxable services specified in sub-section 105 of section 65 of the Finance Act from so much of service tax leviable there on under section 66 of the Finance Act, as is in excess of the rate of ten per cent of the value of taxable services.

[F. No. 354/210/2008-TRU(part)]

Labels: CST REDUCE RATE, excise rate reduced, service tax rate reduced

Thursday 26 February 2009