What is Service Tax? Is it an indirect tax or direct tax?

Service tax means, Service tax is a tax levied by the government on service providers on certain service transactions, but is actually borne by the customers.

Hiii friend.... **Service Tax** Service tax is a tax levied by the government on service providers on certain service transactions, but is actually borne by the customers. It is categorized under Indirect Tax and came into existence under the Finance Act, 1994.

Hie Preetham, **Service Tax** - Service tax is a part of Central Excise in India. It is a tax levied on services provided in India, except the State of Jammu and Kashmir. The responsibility of collecting the tax lies with the Central Board of Excise and Customs(CBEC). Service Tax is a form of indirect tax imposed on specified services called "taxable services". - Over the past few years, service tax been expanded to cover new services and recently list of negative services has been introduced. The objective behind levying service tax is to reduce the degree of intensity of taxation on manufacturing and trade without forcing the government to compromise on the revenue needs. - For the purpose of levying service tax, the value of any taxable service should be the gross amount charged by the service provider for the service rendered by him. **Indirect Tax** - Government has to perform many functions in the discharge of its duties like infrastructure development, health, education, defence of the country, removal of poverty, maintenance of law and order, etc. To meet these requirements huge amount of capital is required. - The government collects money from public through a wide variety of sources i.e. fees, fines, surcharges and taxes. Indirect Tax is a tax that increases the price of a good so that consumers are actually paying the tax by paying more for the products. - The Ministry of Finance (Department of Revenue) through the Central Board of Excise and Customs (CBEC), an apex indirect tax authority, implements and administers excise (central excise), customs and service tax laws. Circulars, notifications and clarifications issued by the CBEC supplement these indirect tax laws.

**Service tax** is applicable on all services provided in India except a specified negative list of services that are exempt. It is paid by the service provider to the government who in turn collects it from the end user by the service provider at the time of provision of such service. It is a type of **indirect tax** as its burden can be shifted on the shoulders of another person.

Dear Preetham, **Service tax is a Indirect tax**, not a direct tax Service tax means, Service tax is a tax levied by the government on service providers on certain service transactions, but is actually borne by the customers. **Basic difference: Direct and Indirect Taxes** The primary difference between a direct and indirect tax is that direct tax is levied directly by the government from the taxpayer, but indirect taxes are collected by the intermediary. Hope the above answer will give clarity.