GENERAL KNOWLEDGE

Detailed explanation-1: -The service tax in India was imposed under Section 65 of the Finance Act, 1994. With the roll-out of the budget of 1994, it came into effect from July 1, 1994, the services that were included under the service tax were increased gradually from 1994.

Detailed explanation-2: -In Budget 1994-95, Dr. Manmohan Singh introduced Service Tax at the rate of 5 per cent as the sector was contributing 40 per cent of GDP. The idea was to widen the indirect tax base. The tax was levied on telephones, non-life insurance and stockbrokers.

Detailed explanation-3: -Service tax had been first levied at a rate of five per cent flat from 1 July 1994 till 13 May 2003, at the rate of eight per cent flat w.e.f 1 plus an education cess of 2% thereon w.e.f 10 September 2004 on the services provided by service providers.

Detailed explanation-4: -The Service Tax was introduced in India around 21 years back on July 1, 1994 at the recommendations of Dr. Raja Chelliah Committee on tax reforms. The introduction of this levy in India can be termed as milestone in Indian Tax history.