Most of the income sources to the Indian government come from the Service tax, and many service providers seek the legal advice to know whether they are applicable for the service tax.The service tax is the part of the Financial Act, and in the Union list they added this tax to assist the constitution to impose the tax. They impose the tax only on the services and not on the goods, but even for the services there are certain rules it has to abide to pay tax.A service provider should know the type of business he runs, he should know whether he sells goods or provides services, or providing both goods and services. And if the business provides both goods and services, then they are liable to pay the service tax along with a VAT. Example for this kind of business is Constructors, Restaurant, Builders, etc. And if the business is providing the services, they have to know about the charging section of the tax.
The services provided outside India is not liable, only those services provided in India are taxable under the service tax, and the non-profit business is not liable to tax. Two individuals are necessary to impose the service tax. Thus, even if there is any business within the department of a same company without any return is not applicable to tax.An individual has to check if the business is under the negative list or declared services; if they are in the declared service list, then they are also under the service tax, hence liable to pay the service tax. For the business that is not mentioned in the negative list have to check if there are any exemptions. Because if there are any exemptions then they are not applicable to the tax.For the business that has an annual income of less than ten thousand, are not applicable to pay the tax, because the small scale business have the SSI exemption, and the rate of the tax is also considered. Thus understanding the business and knowing the service tax mechanism will enable a service provider to know whether their service is applicable to the Service tax.