Service sector in India has witnessed incredible growth in recent decades. Recognising the sector’s potential, Indian government embarked on taxing services from 1994 with barely three services initially only to be expanded to 100 plus services till 30th June 2012. From 1st July, 2012, in an effort towards introduction of a comprehensive GST, new Service Tax Regime based on Negative List has been introduced.
There was a positive list of services which alone were taxable till 30th June, 2012. From 1st July, 2012, India has moved to comprehensive system of taxing services. Statutory provisions are replete with definitions relating to negative list, declared list and other issues to provide for activities not liable to Service Tax, activities declared as services and hence, liable to service tax and the persons who are liable. Generally, service providers are required to comply with service tax law but in certain situations, the responsibility is cast on the recipient of service.
Compliance under service tax law begins with registration. A small threshold limit of Rs. 10 lakhs (2012-13) has been provided which means service providers having lesser turnover are not required to pay service tax. But, a different threshold of Rs. 9 lakhs has been provided for registration. Once the value of taxable service(s) provided or received (in certain cases) crosses Rs. 9 lakhs, registration is required.
