Statutory Provisions

As per section 66 of the Finance Act, 1994 (‘the Finance Act’), Service tax is levied ad valorem @ 12% on the value of the taxable service.

Value of the taxable service is determined in accordance with the provisions of Section 67 of the Finance Act read with Service Tax (Determination of Value) Rules, 2006 (‘the Valuation Rules’).

As per Section 67(i) of the Finance Act, the value of taxable service is the gross amount charged by the service provider for such service provided or to be provided, where the provision of service is for a monetary consideration alone.
As per the explanation (a) to the section 67 of the Finance Act, consideration includes any amount which is paid or payable for the service provided or to be provided. Further as per explanation (b) thereto “money” includes any currency, cheque, promissory note, letter of credit, draft, pay order, travellers cheque, money order, postal remittance and other similar instruments but does not include currency that is held for its numismatic value and as per explanation (c) thereto “gross amount charged” includes payment by cheque, credit card, deduction from account and any form of payment by issue of credit notes or debit notes and book adjustment.