Service Tax Rules Last Updated : 05 Apr 2020

Service tax rules state that even though the service provider has to pay tax to the government, it is the receiver of the service that actually pays the tax. Currently, it stands at 14%. There is a whole list of rules and regulations for service tax.

Note: Service Tax has been replaced by the Goods and Services Tax (GST) starting 1 July 2017.


What is Service Tax?

Service tax is a tax levied by the government on the services rendered by service providers which is borne by customers who receive this service. The service provider has to pay the government the service tax, but the service recipient is the one who actually pays for it. Service tax came into existence in 1994. The rate of service tax charged right now is 14%. Service tax comes with its own rules and regulations. Given below is a detailed explanation about service tax rules.

Service Tax Rules:

Listed below are the set of service tax rules set by the government for the purpose of the assessment and collection of service tax.

There are 9 rules excluding two sub rules. Given below is a brief description of each service tax rule set by the government.

  1. Rule 1: Rule 1 basically defines the service tax rules
  2. Rule 2: Rule 2 deals with the definitions of terms related to service tax. The rule consists of descriptions of every term that is related to service tax including terms like ‘act’, ‘assessment’, ‘large taxpayer’, etc.
  3. Rule 3: Rule 3 deals with the appointment of officers.
  4. Rule 4: Rule 4 deals with the registration of service tax.
  5. Rule 5: Rule 5 deals with records.
  6. Rule 6: Rule 6 deals with the payment of service tax
  7. Rule 7: Rule 7 deals with tax returns
  8. Rule 8: Rule 8 deals with form of Appeals to Commissioner of Central Excise
  9. Rule 9: Form of appeals to Appellate Tribunal

Service Tax Payment Rules:

Service tax payment rules are defined under Rule 6 of service tax.

Listed below are some of the important rules under the category:

  • Service tax should be paid to the Central Government by the 5th of the month following the month in which payments were received.
  • The assessee should deposit the tax with a bank designated by the Central board of Excise.
  • The assessee can adjust the excess service tax paid by them if they have paid for a taxable service not provided by them.

Service Tax Registration Rules:

Listed below are some of the important rules under the category of service tax registration:

  • Every individual liable to pay service tax should register through Form ST-1 within 30 days from the date on which service tax was levied.
  • If an assessee is providing more than one taxable service, they can mention all the taxable services provided by them in a single application.

News About Service Tax Rules

  • Finance ministry to challenge Delhi HC verdict of refunding service tax

    A recent verdict from the Delhi High Court had ordered the Directorate General of Central Excise Intelligence (DGCEI) to refund the service tax collected from travel portals MakeMyTrip, Ibibo and Ebiz, on the grounds that the payment was made under coercion. Legal experts are reviewing the High Court order and are likely to challenge the verdict.

    The court had also charged the DGCEI of arresting senior officials from MakeMyTrip and Ebiz without following procedures under the law. The order came in the light of the appeal that these companies had submitted against the DGCEI, for accusing them of evading tax that amounts to crores of rupees.

    However, the service tax probe against these companies is still in progress.

    8 September 2016

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