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Sunday, January 9, 2011
Time Management - An essential part of CA preperation
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Friday, January 7, 2011
An Introduction To Service Tax By : Nidheesh Fca
"Service to human beings is service to product."
The term service means that the act of serving to or doing
work for one more or for a community etc.
therefore its stands for help or profit given to somebody.
tho' commonly for rendering such service bound payment is formed however it's not thus altogether the cases.
the number charged for such service is that the remuneration of the person providing such service.
If we glance back, tax on services isn't new as we've got been paying taxes on services in past conjointly within the variety of luxury tax, diversion tax, expenditure tax, amusement tax, gambling tax, business tax, interest tax etc.
Need for Service Tax
In any state, it's the prime responsibility of the govt to meet the increasing biological process wants of the country and its folks by method of public expenditure. Bharat being a developing economy is attempt to meet the obligations of a state among its restricted resources. The Government's primary sources of revenue area unit direct and indirect taxes.
Central Excise Duty on {the product|the products} factory-made / created in {india|India|Republic of Bharat|Bharat|Asian country|Asian nation} and Customs Duties on foreign goods represent the 2 major sources of indirect taxes in India. however revenue receipts from Customs & Excise aren't keeping pace with the expansion in economy to international organisation commitments and rationalization of artifact duties.
it's conjointly renowned that services represent a bigger proportion of the consumption of the wealthy instead of of the poor because the demand for services is income-elastic. counting on the socio-economic compulsions, every country evolved a taxation system on services adopting either a comprehensive approach or a selective approach.
whereas most of the developed countries tax all the services with only a few and restricted exemptions, a number of the developing countries tax choose services solely. Bharat has adopted a selective approach to taxation of services.
Introduction of Service Tax in Bharat
Dr. Manmohan Singh, the then Union minister, in his Budget speech for the year 1994-95 introduced the new idea of Service Tax and expressed that
Service Tax had been levied on the recommendations created in early 1990's by the Tax Reforms Committee headed by Dr.Raja Chelliah. The Committee realized that the indirect taxes at the Central level ought to be generally neutral in relevance production and consumption of products and will, in course of your time cowl commodities and services. The Committee felt that we must always move towards full-fledged worth supplemental Tax (VAT) system covering services and commodities.
Service tax should be a region of VAT at the central level. it had been envisaged that because the central excise duties on product would get step by step reworked into a worth supplemental tax at the producing level, service tax would get woven into that system. Therefore, a tax might be levied on services that enter into the productive method. The Committee emphasised the importance of moving towards VAT, for creating the system of indirect taxation generally revenue neutral in relevance production and consumption and widening the assets by covering exempted commodities. The Committee conjointly suggested charging of tax on services like advertising, insurance, share broking and telecommunication etc. to start with on the pattern of advanced economies. the fundamental objective of Service Tax is broadening the assets, augmentation of revenue and bigger participation of voters within the economic development of the state.
delivery services beneath taxation isn't easy because the services area unit intangible and area unit provided by massive teams of organized similarly as unorganized service suppliers as well as retailers United Nations agency area unit scattered across the country. Further, there area unit many services, that area unit of intermediate nature. The low level of education of service suppliers conjointly poses difficulties to both-tax administration and assessees.
Authority
The Authority of levy of Service Tax on specified services is contained in Section sixty six of the Finance Act, 1994 as amended. nowadays this, section stipulates a rate of tax of twelve-tone music of the assessable worth of those services and Education Cess @2% and Secondary/Higher Education Cess @1% in liable on the Service Tax levied and picked up beneath Section sixty six of the Finance Act, 1994.
Administration of Act.
Constitutional Validity
Article 265 of the Constitution lays down that no tax shall be levied or collected except by the authority of law. Schedule VII divides this subject into 3 categories-
a) Union list (only Central Government has power of legislation)
b) State list (only authorities has power of legislation)
c) synchronal list (both Central and authorities will pass legislation).
To alter parliament to formulate by law principles for crucial the modalities of levying the Service Tax by the Central Govt. & assortment of the yield there of by the Central Govt. & the State, the modification vide constitution (95th amendment) Act, 2003 has been created.
Consequently, new article 268 A has been inserted for Service Tax levy by Union Govt., collected and confiscate by the Union Govt., and modification of seventh schedule to the constitution, in list I-Union list when entry 92B, entry 92C has been inserted for taxes on services similarly as in article 270 of the constitution the clause (1) article 268A has been enclosed.
Formation and performance of DGST
Considering the increasing employment thanks to the increasing coverage of service tax, it's been determined to centralise all the work and entrust identical to a separate unit supervised by a awfully senior official. consequently, the workplace of Director General (Service Tax) has been fashioned within the year 1997.
it's headed by the Director General (Service Tax).
theme FOR LEVY, ASSESSMENT
& COLLECTION-OF SERVICE TAX
Service Tax collectible by whom.
The Tax is often collectible by the service supplier. However, in special circumstances, the Govt. might advise the payment not by the service supplier by an individual as notified. issues like body ease, value of assortment might need the shifting of the burden of payment from the service supplier to service receiver or the other person.
maybe,
the service Tax leviable on service provided by AN broker isn't to be paid by the broker himself however by the insurance firm consequently to Section 68(2) of the Finance Act, 1994.
what's Service Tax?
Service tax is AN indirect levy obligatory by the Union Government in terms of residuary entry No.97 in list (I) of the seventh Schedule of the constitution. The tax is applicable to services per the Section sixty four to ninety six of chapter V of the Finance Act, 1994 as amended.
the govt have conjointly notified the procedures to be followed for levy and assortment of service tax vide Service Tax Rules, 1994 as amended. nowadays the speed of Service Tax is twelve-tone music to be levied on the "Value of assessable Service" and Education Cess @2% and better Education Cess@1% is leviable on the Service leived and picked up. typically speaking "Value of assessable Service" means that the gross quantity received by the Service supplier for the assessable service rendered by him.
The one that provides the assessable service on receipt of charges is chargeable for paying the service tax to the govt.
worth of assessable Service
the worth of any assessable service shall be typically the gross quantity charged by the Service suppliers for such services rendered by him (Section 67)
In alternative words, "Gross Amount" here indicate that no deduction shall be allowed in respect of any expenditure incurred by the service supplier that has proximate affiliation in rendering the services by him.
in a very case wherever the availability of Service is for a thought not altogether or part consisting of monthly, be such quantity in cash like the addition of Service tax charged.
in a very case wherever the availability of service is for a thought, that isn't responsible, be the number as is also determined in prescribed manner.
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