Service Tax was a tax levied by the Government of India on services provided by a service provider to a service recipient. Introduced under the Finance Act of 1994, it applied to a wide range of services such as consulting, advertising, hospitality, and more. This tax was an indirect tax, meaning the service provider collected it from the customer and paid it to the government.
Service Tax was applicable only when the total value of services exceeded a certain exemption limit (commonly ₹10 lakh in a financial year for small service providers). It was governed by specific rules for registration, invoicing, payment, and filing returns—making it essential for businesses to maintain accurate records and stay compliant.
With the introduction of the Goods and Services Tax (GST) on 1st July 2017, Service Tax was completely subsumed under GST. Today, instead of paying Service Tax, businesses and individuals providing taxable services must comply with GST regulations. However, understanding Service Tax remains relevant for businesses dealing with pre-GST audits, legacy compliance issues, or transitional credit claims.
For businesses managing legacy taxation records or needing support in income tax and GST compliance, professional assistance is highly recommended. You can explore expert-led solutions at FinTax24 for smooth handling of such matters.
Although Service Tax is no longer in force, its foundational principles laid the groundwork for the current GST system. Familiarity with this legacy tax helps in understanding the evolution of service-based taxation in India.