Service tax rate from 1st June, 2016 is 15% with krishi kalyan cess. I have given here service tax rate chart for FY 2016-17 to describe rate on various services with abatement and reverse charge mechanism – updated with budget 2016 changes.
Note: Budget 2016 has increased service tax rate from 14.5% to 15% by levying Krishi Kalyan Cess at 0.5% . This change will be effective from 1st June, 2016. Till that you can use chart given below to decide service tax rate.
Service tax rate chart for fy 2016-17 with new service tax rate 15%:(applicable from 1/6/2016- with krishi kalyan cess)
|Service provided||Amount( 1)||Abatement rate or Exemption rate( 2)||Value after abatement( 3=1-2)||Service tax payable (3*15%)||Effective rate to be charged on bill*( 4) =15%-abatement rate||Conditions to be followed to claim abatement or exemption|
|Tour operator service|| |
|Accommodation booking||10,000||90%||1000||150||1.50%||No cenvat credit for input, input services or capital goods.Invoice includes amount of accommodation.|
|tour (other than above) *||10,000||70%||3000||450||4.50%||No cenvat credit for input, input services or capital goods.|
|Transport of goods by rail by person other than Indian railway||10.000||60%||4000||600||6%||No cenvat credit for input, capital goods. cenvat credit on input services are available*|
|Financial lease service||10,000||90%||1000||150||1.5%||Nil|
|Transport of goods by rail service by Indian railway||10,000||70%||3000||450||4.5%||cenvat credit of input services are available*|
|Transport of passenger by rail||10,000||70%||3000||450||4.5%||cenvat credit of input services are available*|
|Transport of passenger by air in economy class||10,000||60%||4000||600||6%||Nil|
|Hotel service (club, pundal, shamiana)with supply of food||10,000||30%||7000||1050||10.50%||Cenvat credit of goods ( goods 1 to 22 classified under cenvat credit act, 1985 has not been taken)|
|Renting of immovable property (Hotel, guest house or residential house)||10,000||40%||6000||900||9.00%||Cenvat credit for input and capital goods has not been taken|
|Good transport agency services( Other than household goods)||10,000||70%||3000||450||4.50%||Cenvat credit for input, input services and capital goods has not been taken|
|Chit fund services||10,000||30%||7000||1050||10.50%||Cenvat credit for input, input service and capital goods are not available|
|Renting of motor vehicle designed to carry passengers||10,000||60%||4000||600||6.00%||Same as above|
|Transport of goods in vessel||10,000||70%||3000||450||4.5%||cenvat credit for input, capital goods are not available. Cenvat credit on input service is avaialble*|
|Consturction service|| |
|For all cases availing composition scheme*||10,000||70%||3000||450||4.5%||Cenvat credit for input used for provision of service has not been taken and value of land is included in the amount charged|
|Transport of used household goods by GTA*||10,000||60%||4000||600||6.00%*||cenvat credit on input, input services and capital goods are not available.|
* changes applicable from 1st April, 2016. For detail article about service tax changes applicable from 1/4/16 read here.
Note: Service tax rate 14.5% is applicable for period during 1/4/2016 to 31/5/2016. Refer point of taxation article for further clarification. In above chart, replace 15% with 14.5% in above chart to calculate old rate.
How to use effective rate:
Please note that effective rate is for easy calculation. You can use effective rate direct on amount (column 1)- bill charged. So service tax payable is column 1 * column 4.
Basic terms to understand more about rate of service tax:
Abatement in service tax:
Abatement is partial exemption from service tax. There are different rates of abatement for different services.
How abatement reduces amount of service tax payable?
Taking one example, suppose Mr. Kapil provided taxable services worth Rs. 400000 to Mr. Rahim. Service tax rate is 14% but abatement available is 70%.
So we will calculate service tax payable by following method:
Value of service provided = 4,00,000
Value after availing abatement = 4,00,000- 70% = 120000
Service tax payable = 120000*15% = 18000
Conditions: No cenvat credit has been availed.
Under notification no. 26/2012, many services are fully exempt under exemption from mega notification and negative list of services.
We will soon present list of exemption services. Enter your email address in sign up form so that we can mail you when we publish the post.
Remember that no service tax is payable when service is fully exempt.
Availment of abatement is optional:
It is not compulsory to avail abatement. service provider can pay service tax on full amount. The rate will be 12.36% of value that time.
Small service provider exemption:
You can avail small service provider exemption if your yearly turnover of taxable service is less than Rs. 10 Lakhs. For more details. Read the article – small service provider exemption.
Reverse charge mechanism chart:
Under reverse charge mechanism, service tax is paid full or partially by service receiver. To know more about reverse charge mechanism, read following post
Service tax under reverse charge mechanism
|Service||Service receiver||Service provider|
|Insurance agent services||15%||0%|
|Sponsor ship services||15%||0%|
|Any services by government*||15%||0%|
|Supply of manpower||15%*||0%|
|Renting of motor vehicle (If service provider is availed abatement)|| 6%|| 0%|
|Renting of motor vehicle (if service provider is not availed abatement)||7.5%||7.5%|
|Import of service||15%||0%|
Rate of service tax on work contract:
|Service||Service receiver||Service provider|
|When there is no reverse charge and no composition scheme applicable||0%||15%|
|When there is reverse charge applicable and no composition scheme applicable||7.5%||7.5%|
|When there is no reverse charge applicable and composition scheme applicable|
|Original work (construction, erection, commissioning etc.)||0%||6%|
|Maintenance, restoration, repair of goods||0%||10.50%|
|Other work contract including repair, maintenance, plastering of immovable property||0%||10.50%|
|When there is reverse charge and composition scheme applicable|
|Maintenance work, restoration of goods||5.25%||5.25%|
|Other work contract||5.25%||5.25%|
The service tax rate chart for 2016-17 is updated on 31/5/2016 after applicability of swachh Bharat cess and krishi kalyan cess covering budget 2016 changes. Use this chart for transaction beginning from 1/6/16. Refer point of taxation rules for more clarification. Use this link to stay updated about service tax circulars and notification: Service tax government site . Share this article on social media to encourage me to write more.