Overview of Service Tax
Service tax is a type of indirect tax levied by the Government of India on services provided by a service provider. It was set at 15% for transactions after June 1, 2016.
Service Tax in the US
Sales tax rates range from 2.9% to 7.25% across US states, plus 1-5% in local taxes in some areas. Certain goods are tax exempt like groceries and medicine. For online purchases, sales tax depends if the retailer has a physical presence in that state.
Understanding Taxation of Goods and Services
- Any service provided by an individual or organization is taxable, including services by professionals like engineers, lawyers, and domestic help.
- Revenue under Rs 10 lakhs is exempt from service tax. Over that, rules apply for collecting and paying tax.
- Value Added Tax (VAT) taxes goods as they move from manufacturing to sale. VAT does not apply to services taxed under service tax in India.
- Customers pay VAT, companies pay excise duty. The consumer pays the service tax to the service provider while paying the bill.
- Taxes fund public services so understanding tax codes and paying obligations supports government functions. Filing taxes can be complex with frequently changing rules but resources exist to help individuals and businesses comply.