LIKE A BLACK BEE PROTECTS FLOWERS AND TAKES A SMALL AMOUNT OF NECTAR IN RETURN. IN THE SAME MANNER A KING MUST PROTECT HIS SUBJECT WITHOUT LEVYING EXCESSIVE TAXES. – Vidur Niti
The centuries succeeded show distinct effects of this maxim on the way a kingdom is managed and other facets of economic administration.
According to Chanakya, who is considered as the pioneer of the field of political science and economics in India, “Taxation should not be a painful process for the people. There should be leniency and caution while deciding the tax structure. Ideally, governments should collect taxes like a honeybee, which sucks just the right amount of honey from the flower so that both can survive. Taxes should be collected in small and not in large proportions”.
Even today, one of his maxims on taxation is very much alive and calls for adherence by the governments of the world.
SERVICE TAX :
Service tax is, as the name suggests, a tax on Services. It is a tax levied on the transaction of certain services specified by the Central Government under the Finance Act, 1994. Vide Entry 97 of Schedule VII of the Constitution of India, the Central Government levies service tax through Chapter V of the Finance Act, 1994. The taxable services are defined in Section 65 of the Finance Act, 1994. Section 66 is the charging section of the said Act.
The journey of taxation of services began by selective taxation of just three services in 1994. Consequent to Dr. Raja Chelliah Committee on tax reforms recommendations, the service tax has been introduced as just-another-tax levied at a flat rate of five per cent with a very modest collection in the first year. It is an indirect tax (akin to Excise Duty or Sales Tax) which means that normally, the service provider pays the tax and recovers the amount from the recipient of taxable service.
With the collection of service tax started soaring and took giant leaps in the coming years, wide coverage of services as well as increase in tax rate have taken place. Budget 2012 revamped the taxation provisions for services by introducing a new system of taxation of services in India. In the new system all services, except those specified in the negative list, are subject to taxation. Earlier the levy of service tax was based on positive list – specified 119 taxable services.
Forthcoming topics :
Who is liable to pay service tax?
What are the taxable service?
How to decide whether Service Tax is payable by a person?