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Indian Service Tax - Service provider / Receiver / Distributor

Service Provider and a Service Receiver:
One who provides services or one who renders service to others is Service Provider, and one who receives services from these service providers is called a Service Receiver.

Input Service Distributor:
An office of the manufacturer or provider of output service who receives invoices for the procurement of input services and issues invoices for the purpose of distributing the credit of Service Tax paid to such manufacturer or provider of output service is an “Input Service Distributor”. Input Service Distribution is a mechanism to transfer input services credit to the premises where output services (taxable services) are provided.

Deciding whether Service Tax is payable or not:

If you are engaged in providing service to your customer, please check:-

  1. Whether the service rendered by you is falling under the scope of any of the taxable services as per the list
  2. Whether there is a general or specific exemption available for the category of service provided under any notification.
  3. Whether you are entitled to the value based exemption available for small service providers as explained below.

Liability to pay Service Tax?
Generally, the ‘person’ who provides the taxable service on receipt of service charges is responsible for paying the Service Tax to the Government (Sec.68 (1) of the Act),

Threshold Limit:
Threshold limit is the limit up to which no service tax is payable even for the services that are taxable in the normal case. This is referred to as General Exemption

Service tax is payable on amount received against service rendered. Hence, when service provider’s receipts exceed Rs. 8 lakhs for the financial year then he has to pay service tax. When the receipts touch Rs.7 lakhs he has to get registered under Service tax, if service provider’s receipts exceed 8 lakhs then he has to pay service tax.

As per theFinance Act 2008, threshold limit of exemption for small service providers increased from Rs. 8 lakhs per year to Rs. 10 lakh per year


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