Service Tax
Service tax is an indirect federal tax on specific services. The service provider is responsible for payment of the tax. Service tax does not depend on the source of supply.
Service tax consists of two tax types:
Service
The system calculates service tax as a direct percentage of the cost of the service.
Education Cess
The system calculates education cess tax as a direct percentage of the service tax amount.
This example shows a typical tax calculation for service tax:
Tax Name |
Calculation Based On |
Rate |
|---|---|---|
SRV |
Base service price |
10 percent |
EDCS |
SRV |
5 percent |
If the base price for a service is INR 2000.00, the system performs the following calculations to determine the final price:
Adjustment |
Calculation |
Price |
|---|---|---|
SRV |
2000.00 × (10 ÷ 100) = 20.002000.00 + 20.00 |
2020.00 |
EDCS |
20.00 × (5 ÷ 100) = 1.002020.00 + 1.00 |
2021.00 |