Service Tax Rate Nov 2017 CA IPCC CA Final (KKC SWC)

What is the Service Tax Rate applicable for Nov 2017 CA IPCC and CA Final exams?. Service Tax Rate will now have 3 components. The reason for this confusion among students regarding Service Tax Rate is that, when ever a new finance budget is introduced in the parliament, it is most certain that either the existing Service Tax rate will be reduced or the Service Tax rate will be increased.

Must See | CA IPCC Result Date Nov 2016

Service Tax Rate for Nov 2017 CA IPCC & CA Final Exam

With effect from 1st June 2016, a new cess called Krishi Kalyan Cess has been added. Therefore, the applicable Service Tax rate for Nov 2017 exams is 15%.

So, now the Service Tax break up is 14% ST + 0.5% SBC + 0.5% KKC. No need to add any Education Cess as it is included in the 14% Standard Rate mentioned above.

Also note that, you cannot claim any Input Tax Credit on either Swachh Bharat Cess (SBC) or Krishi Kalyan Cess (KKC).

Effective Rate of Service Tax on Various Services

Name of the Service Tax Rate
Accommodation Booking Service 1.5%
Service Tax Rate on Goods Transport by Rail 4.5%
Rate of ST on Renting of Immovable Properties 9%
Renting of Vehicles carrying passengers 6%
Cases where the composite scheme is availed 4.5%
Service Tax rate on Chit fund 10.50%
Service Tax on Financial Lease Service 1.5%

Glimpse on Service Tax Rate

Even though the service tax is levied on the service providers, the truth is that, this rate is actually borne by the customers only. There is no standard rate of Service Tax. It is different for different services.

For the past three years, we are seeing a continuing trend of increasing the rate of service tax every year. Last year, the Service Tax rate has been increased by 0.5% on the name of Swachh Bharat Cess and again this year, the service tax rate has been increased by another 0.5% on the name of Krishi Kalyan Cess.

Service Tax Rate is Important in Exams

Almost all the practical questions asked in CA IPCC and CA Final exams will require students to incorporate the rate of service tax in the problem. If you entire the wrong rate of service tax, the entire problem goes wrong.

Therefore, we recommend students to remember carefully the applicable service tax rate for the Nov 2017 exam and avoid making wrong calculations.

On What amount Service Tax Rate has to be calculated Nov 2017

The gross amount charged by the service provider shall be the value of

(a) taxable service for the purpose of computation of Service Tax.

(b) No Service Tax is leviable if service provided is free of change.

(c) Invoice should show the amount of Service Tax separately. If not shown separately, the gross amount may be taken to be cum-tax price or inclusive of Service Tax.

(d) Cost of goods and materials sold to customer during the course of providing service is to be excluded from the value of service.

(e) This exclusion is allowed only if the sale and value of such goods is indicated
separately in the invoice. The assessee is expected to maintain documentary proof of the value of such goods.

(f) Further, the assessee cannot claim abatement specific to any service, under any notification, if the above exclusion is claimed.